BY R. M. JOHNSTON, I.S.O., F.S.&. I3 



whole of the accumulated unredeemed Debt of 240.14 

 million pounds. 



The fundamental error in the views of certain critics, 

 who lack expert knowledge of matters pertaining to the 

 economics of State finance as applied to the Australian 

 States, is the evident common failure to appreciate the 

 scope of the functions of the general governments of 

 the various States of Australia as compared with those 

 of the United Kingdom, and fail to discern the impor- 

 tant distinction between debts incurred for purposes of 

 protection or aggressive warfare and capital invest- 

 ments (also bearing the name Public Debt) incurred 

 and expended in improving and permanently enhancing 

 the value of the Public estate by means of railways, 

 roads, and harbours. In the self-governing States of 

 Australia, the scope of general government — owing to 

 the peculiar conditions of lands thinly populated wit'h 

 vast undeveloped areas — embraces many functions 

 which, in the earlier stages of development, would be 

 impossible to resign either to local bodies or to private 

 enterprise as in the older more densely-populated 

 countries. 



Unless this fundamental distinction of the scope of 

 the general government in old and new countries be 

 thoroughly considered and allowed for, all comparisons 

 relating to the proportion and Cost of Public Services 

 and public debt between countries so differently con- 

 ditioned would be worse than useless. In the United 

 Kingdom the g'reater part of these services (70.89 per 

 cent.) is left to private enterprise (railways) and to local 

 government. 



Only 29.11 per cent, of the Total Debt for all such 

 purposes in the United Kingdom comes directly within 

 the scope of the revenue and expenditure of the Im- 

 perial Government. In Australia as much as 93.74 per 

 cent, of such functions come directly within the scope 

 of the responsibility of the general government of the 

 various States. 



This is best appreciated by contrasting the propor- 

 tion of Loans or Capital expenditure incurred under the 

 general functions of government in respect of special 

 public works and services in Australia and the United 

 Kingdom, as in the accompanying corporation table : — 



