Colonial Finance.

Southland Times, Issue 4896, 24 March 1884, Page 2

Colonial Finance.

:■■ .- ♦— ■ — — The following artinle, one of a series appearing in the Bullionistj has been ferwarded to us by the London office of theBank of New Zealand. It is a masterly digest of the subject and worth perußal by every colonist ; — If there were needed any justification for opening out this interesting subject, it is to be found in the astounding figures which relate to the entire group of the Australian colonies. Everything connected with them is on a scale of magnitude which few would suspect before they had undertaken a careful study, of the representative statistics. The whole history of these colonies is unprecedented in the annals of - commerce and national growth. In 1860 Australasia owed 10 millions sterling. It ha» since added 86 millions to its indebtedness, and the total is now L 96,082,000. The»e figures do not embrace the recent borrowings or carry us. down to the latest Hate ; but they are the latest that are both • official and complete, and are sufficient for illustration and argument. The following is the distribution of the total, giving the net amounts owed by each colony, after deducting accrued sinking funds, down to the beginning of the yisar 1883 ' — .■■■'. New South Wales ... £18,8,97,000 r Victoria ... ... 22,693,006' New Zealand ...... 27,680,000 South Australia .... 11,482,000 Queensland ... ... 13,125,600"' •'-" Tasmania "... " ' ."."." 1,944,000* " ■ Western Australia ... 361,006 - £96,082,000 .*. ': It may .be assumed that subsequent borrowings have brought- the total to L1'00,000,000, or upwards. Nor is the appetito. for borrowing abated, for the *£ financiers of Australia, keeping in vi«w the Y*st reeourgei q£ th«r apleqdjd heri^

age and the exigencies that will press on them for the development of those resources, deliberately anticipate that by tlv< end of the present century— that is sixteen years hence— they will have raised !h ••• total debt to 150 millions. This formidable sum they regard ac a modest burden on their own industry and wealth, and tell us •with an air of self-satisfaction, not only that in all probability the population of the group will in a.d. 1900 be seven millions, bat also 'that, to maintain the proportion which now exists between population and indebtedness,' " it would require our debt then to be 230 millions." ' It appears that the colonies have determined on a large augmentation of their public debt, and indeed they frankly admit, by the mouth of their financiers, " increase it certainly will; : but not in the same ratio." We commend them, at least, for the tardy caution of this litter phrase. Lest English capitalists should glow timid through tbis princely borrowing and this open avowal, of it, we are authoritatively, as- . sured that,; during the last few years, the assets have increased nearly five times as much as the debt, and further, that jiti the progress of these wonderful colonies should continue during the unexpired term of the nineteenth c.ntnry at the same rate as for the last ten years, then, at that distinctive epoch, tho revenue will not be far from 50 millions,; the commerce 270 millions, and the assets, without counting the Crown lands, at least thirteen hundred millions sterling. These justly proud Australians boast that even now their revenue is equal to that of. many nations of Europe, and not much less than the revenue of Austria, or even of Eassia, at the accession of Queen Victoria. They are bold enough to compare their trade with our own, at a period not very remote, and they tell us that, whon Victoria ascended the throne ie 1837, ami stock was taken of the commerce of the United Kingdom for the preceding year, it was found to be. only 98 millions. The trade of Australia is now 100 millions a year. The commerce of the Australian group is indeed a most surprising development, as the following comparison with other countries shows :—

We adopt these figures of the Colonial Office, which have been carefully prepared for thif comparison.; and we may add the homely illustration from the same authority, that one Australian does as much, trade as two Englishmen, four Frenchmen, five Germans, six Americans, or eight Italians. - It is interesting to note that the ratio of New, South Wales is much higher than the average of the group, it being L4O for each inhabitant. At the same time we ou°ht not to forget how this peculiarity in favor of Australia arises. The population is sparse and the land fertile. The population, therefore, is small in relation to the products of the active industries of the country — the exact converse of the conditions that prevail in old countries. Bat the indebtedness to England is not measured by the public debt alone. It is said more than 110 millions of British capital is embarked in private loans, and, adding the trade indebtedness, the solid aggregate is reckoned up to 260 millions sterling. The tribute money paid for this huge total ib atleast L 18,000,000 per annum. The colonists claim that one-fifth of the entire amount of English capital invested throughout the world outside England is already embarked with them, and this proportion is growing greater every day. The following table shows a comparison of debt with assets at the end of the last three terms : —

It will be. seen that the proportion of debt to the assets has steadily and greatly increased, though the total of the assets has increased far beyond the increase in the total of the debt. During the whole period the debt has grown 86 millions, aad the assets 406 millions. It is a matter of great interest to learn how the sum of the assets is made up. It is indicated in the following table, which for convenience is given in millions :— •

By grouping the assets together under the chief heads, we obtain the following comparative results in millions: —

We have no means of testing the accuracy of these figures, but though official, they are probably to some extent speculative. On the other hand, it is manifest that there has been no disposition on the part of the officials unduly to magnify the wealth of the colonies, for from this striking schedule they have omitted air mention of the Grown lands, which form a splendid and improving asset. This may be - gathered from the fact that the rental of .Crown lands occupied by [squatters has risen in the last ten years from L 500,000 to LBOO,OOO. Still, there is something amusing in the sight of these substantial borrowers deliberately surveying their freehold farms and the acreage thereof, noting every steel plate on their railways, numbering their flocks and herds to the very last little lamb, and taking stock of every bale of wool and every sack of wheat they have ready for shipment. For what ?— That they may j sum up the total to something like 600 millions sterling, and pledge it all to foreign money lenders as security for loans for 100 millions — one-sixth of the •whole. As things go, no one can impeach the validity and sufficiency of the security. And, indeed, the public confidence is abundantly proved by the favor in which Australian stocks are held in this market, and the growing ease and decreasing rates at which each succeeding loan can be effected. . As we pursue the inquiry, from every direction there is forced upon our consideration the radical difference between * the debt of Australasia and the debts of Europe and even of the United States. The objects of the several loans have been directly or indirectly— and chiefly directly — for industrial development arid to favor the accretion of wealth. These colonies are burdened with no legacy of wasteful, hateful war. The chief application of th»se loans' has been to the construction of railways, and it must be admitted that the S-ate possesses a valuable property in these railways. No less a sum than 56 millions has been spent upon, them, and

thus they account for more + han half the debt. The policy of public works, as it is calied, is not more than twenty years old, but it certainly has given a new and extniordin uy impe'ns to trade activity, and ten" lot! to the dcvelo.im'-nt of wealth. It has created pp'e:. lid railways, harbors, roads, bridges, and these public works have always been the pioneers of trade and civilisation. As for the railways, the net yield is : — New South Wales. ...nearly 4£ per cent, Victoria. upwards of 4 ! „ South Australia ....... \3£ „ Queensland ..2} „ ■ New Zealand .................. 4. „ At the same time the net earnings 'of the Nbrth-Eastern system in Victoria (284 miles) now exceed 8£ per cent ; one short line in South Australia ia ; earning . 7£ per cent. ; the main trunk line in the Middle Island. N.Z. (260 miles), [?] earns s}, and other sections 6£ and 8 per cent, respectively. In view' of * these earnings, which are above the average, it ia reasonable to hope for an improvement all round, and a higher average of net earnings. The principal Australian loans are now brought out at 4 per cent., and the tendency is to decreased rates ; and indeed some are sanguine enough to expect that before long they may be effected at 3£ or even at 3 per cent." In New New South Wales, Victoria, and New Zealand, the railways, it nray be assumed, have began to pay their way ; that is to say, the average earnings cover the diminished rate of interest which is the present measure of the colonies' credit or thereabouts. The financial treasurers of the several colonies have no immediate cause of anxiety, especially as the net income will probably increase and the rates of interest will probably become less. It must, therefore, be unhesitatingly conceded that the outlay on public works — and on railways in particular — was not ill-advised, and is now becoming directly profitable. But it is open to question whether the best way of raising the money has been adopted. While in England we are attempting heroic measures to liquidate our huge debt ; while the Government of the United States is rapidly extinguishing its debt with a prodigy of persistent determination which is unprecedented ; while Franca, groans under the burden of her formidable indebtedness, but still groans for reduction of the. total ; while. many other nations are attempting to ease their load by various schemes of "conversion," and repudiation more or less covert, the Australian colonies are rushing into enormous new liabilities, and doing it with a light heart. To the eye of the true observer a shadow rises ominously on the horiizon of their future caraer. Their present prosperity and smiling wealth form a bright and gorgeous picture, but its best effect is marred by dark shadows. Debt, grim and greedy, sits at the gate, and lays a heavy tribute on the wealth of the land. Already one -third of- the exports of . these fine countries is forfeited to the exigent demands ttf a stern taskmaster. This is no idle figure of speech. We -have it on the authority of the Financial Treasurer of New Zealand, who in June last, speaking of his own colony in particular, said :— " We have paid annually, on the average, for interest outside the colony, during the last fifteen year 3, nearly Ll,700,000 ; but it must ba borne in mind, in considering our present position, that we are now paying not less than L 2,500,000 a year for interest to nonresidents. In other words, rather more than one-third of our exports do not belong to vs — that is to say, they have to go to pay our debts abroad, and bring us no return whatever, except the difference between the interest we pay for the use of our borrowed money, and the profit we make by its use, which is probably not more than two per cent." It is substantially the same with the other colonies. Of the public debts, it appears that the bonds of 84 millions out of the 96 millions are held by England. As against this debt the colonists say that their income from all sources is 133 millions a year, and is derived from the undermentioned sources: — Millions. Pastoral pursuits 39 Agriculture 37 Rents of property ... ... 13 Manufactures 11 Profits of commerce 10 Mining ... ... 8 Railways 5 Banking and other sources ... 10 133 The Government takes 21 millions for revenue, and " we hsve 112 millions to do what we like with." Now here is a fund out of which tne debts might speedily be liquidated. "We save," say the colonists, " 27 millions a year, and the rest (of the 112 milliojs) v?e spend on ourselves." Sorely there could be no better application of these savings of 27 millions than to the extinction of the debt— not to speak of the rest of the 112 millions, which, with .an extravagance "which amounts almost to licentiousness, they claim a right "to spend on themsel.es." This prodigality is begotten by the superabundance of their wealth ; but, with the foreign creditor sitting at tie door and swallowing onethird of their exports, it is not true economy. Tbefoieigndebt of the colonies, their magnificent public works notwithstanding, is i/ie danger ahead. If possible a still greater danger is the levity with which' they reconcile themselves to the probability of an early increase to 150— possibly to 230 millions. It would be an act of true patriotism if the Australians were to buy up their own public stock and keep it at home. It would be better still , if, as opportunities serve, they should purchase their railways, hold them in private proprietorship, and enable the Government to pay off, in whole or in part, the serious debts which have been incurred for their construction. boi remainder of reading matter see fourth pag

1860 1870 1882 Freehold Lands ... 49 85 182 Sheep and Cattle ... 29 47 66 Houses ... ... sft 98 178 Bailwaya ... ... 7 27 58 Merchandise, &c. ... 49 66 114 192 323 598

© - ■ g 53 5 .5.6 g ■ -I- ! sI 1 _. £ S H M"3 H NS. Wales 59 25 56 16 36 192 Victoria ... 52 11 63 17 3« 181 NewiZealand 34 9 31 11 18 103 S. Australia 24 5 14 5 12 60 Queensland 7 13 9 6 6 41 Tasmania ... 5 2 4 2 3 16 W.Australia 11111 5 182 66 178 58 114 598

Katio of Debt to Debt, Assets. Assets, (per cent.) 1860 £10,412,000 £192.000,000 5-4 1870 36.170,000 323,000,000 11-2 1882 96,082,000 598,000,000 16-1

Batio per Amount. Inhabitant, Australas-ia ... 100 millions £34 EDgland ... 571 do 16 France ... 332 de 9 United States 309 do 6 Germany ... 294 do 7 Italy...* ... 96 do 4