482 TRANSACTIONS OF SECTION F. 
(c) The recognition that if production is to be efficient no factor can safely be 
deprived of the stimulus necessary to evoke its fullest service. 
(d) The capacity of society to secure control of monopoly, and particularly 
monopoly price-making. 
8. Illustration of the principle from a consideration of transitions in industrial 
history. 
9. Its relation to the question of a national minimum. wage and to Wages 
Board awards. 
2. Some Thoughts on Economic Evolution. 
By Professor H. O. Merepiru. 
Economic evolution is due partly to changes which are external to the indi- 
vidual and are largely non-economic in their own nature. It is part of the 
business of the economist to study these changes because they are in themselves 
indubitably economic phenomena; but inasmuch as some at least of their causes 
belong to the data of other sciences, they illustrate the difficulty of drawing a 
precise line between the economic and other fields of study. 
Economic evolution is also partly due to a kind of activity which is both 
individual and in a strict sense economic. This activity may be called ‘ creative 
enterprise’: it offers close analogies to the activities which chiefly determine 
progress on other sides of human life. The working of this force has been some- 
what neglected or disguised in the development of economic science: mainly 
because it lends itself so little to scientific measurement or analysis. This 
neglect is of small moment in statical studies, since the force plays no part in 
relation to statical phenomena. Its tacit exclusion from dynamic hypotheses 
is a more serious matter : a study of dynamic phenomena which neglects one of 
their main determinants is necessarily unsatisfactory. 
3. The Rate of Interest in Australia. By A. Duckwortu, F.R.Econ.S. 
The circumstances which regulate the rate of interest have by many writers 
been treated in a somewhat loose way. The rate of interest on new investments 
of capital is that which is of chief importance. Some writers regard the real 
cause of interest as monopoly, and without private ownership of land, interest 
never would have existed, whilst compound interest is asserted to be wrong in 
theory. Such views need to be considered in any consideration of the subject. 
As regards Australia, borrowed capital has been largely availed of in the 
development of the country. The public debt of the Commonwealth exceeds 
three hundred millions, but is largely represented by productive assets such as 
railways, &c. At times the internal market has been denuded of capital by 
Governments competing with private horrowers. The State, by means of the 
savings banks, has been able to attract savings of the community to the extent of 
about seventy millions. To stop the supply of Government loans would mean 
disturbance of trade and stoppage of public works already in progress. Austral- 
asian Government loans issued in London falling due up to 1920 exceed fifty 
million pounds. The importance of renewals on good terms is obvious. Next to 
Governments, the cheque-paying banks control large sums on deposit. Average 
deposits, one hundred and one millions in 1893, in 1912 were one hundred and forty- 
eight and a half million pounds. The fire and life insurance offices form another 
financial factor with funds exceeding sixty million pounds and possibly becoming a 
dominating factor in the local markets. As they do not trade on borrowed money, 
and need not realise for long periods, they may impartially select both borrower 
and security. In England and America their operations are much more extensive. 
On the whole, Australia now owes overseas less than she did ten years ago. The 
security of the principal of her debt is of course undoubted, being based on 
public credit, backed by rates and taxes, and by the revenue from public under- 
takings and private enterprises. With a high rate of profit, such as is usually 
attendant upon the successful and rapid development of new countries, it follows 
that the rate of interest in Australia must continue for long enough to be higher 
