and the men that directed them began to imagine themselves statesmen. To nourish the prevailing sentiment of national self-satisfaction, the Governments instituted that peculiar form of national advertisement which is known by the name of statistics'-statistics of 'realized wealth,' 'national resources,' 'national assets,' and the like-all designed to assure the world in general, and the people of England in particular, that the Australians were, for all their State comforts, the most energetic, industrious and enterprising folk in the world. Now, no one likes to be called energetic and industrious so much as the man who never does more work than he can help; and accordingly the Australian working man heard and was delighted. Nor was he altogether without justification. All official documents declared Australian prosperity to be phenomenal; and that prosperity was certainly due to some one's exertions-why not, therefore, to his own (as every one assured him), with the help and guidance of an enlightened abstraction called the State? Deity and devotee alike live on faith, and thrive with its increase. So the game went merrily on during the eighties, becoming fast and furious towards their close, till at last it culminated in the year 1888. That year was marked in Sydney by a great festival to celebrate the centenary of the arrival of the first two convict ships at Botany Bay; and in Melbourne by a great Exhibition to commemorate the fiftieth anniversary of the foundation of Victoria.

Shortly after, the tide began to turn. The first blow dealt at the omnisufficience of the State was struck by an Australian newspaper, the Melbourne Argus, which discovered and gave publicity to the fact that the surplus shown by the Victorian Treasurer for the financial year just expired (1889) had no existence except in imagination. Further inquiry showed that the surpluses of some previous years had been obtained by a manipulation of the public accounts, which in a private firm would not have been considered straightforward. Though known and remarked in the Colonies, this incident of the sham surplus of 1889 was unheard of in England until Mr. Charles Fairfield made it public in the pages of A Plea for

Liberty. Other attacks followed Mr. Fairfield's, as the mysteries of Australian State Socialism were gradually unveiled; and at last the ministers took fright and began to admit, in Australia at least, that matters might not be in quite so satisfactory a state as could be desired. In England they continued, through their instruments, to puff the perfection of their system and to denounce the attacks of critics as persistently as ever. Still, the steadiness of the downward tendency was too strongly marked to make denials and denunciations of any avail. The Colony of Victoria, wherein Dr. Pearson made his principal study of the success of State Socialism, presents, perhaps, the most instructive picture of financial collapse-Victoria was the enfant gâté of the British State Socialist, the darling example of such critics as Sir Charles Dilke. Her decline and fall may be traced in the following brief statement.

July, 1889. The Treasurer announced a surplus of £1,600,000. Nov. 1889. The Treasurer announced that the surplus of £1,600,000 had sunk to £142,000; and that there were liabilities of £5,600,000 to be met. Liabilities accordingly met by means of loans, and finance declared (by Mr. H. Willoughby, Nineteenth Century, Sept. 1891) to have been 'put straight without the slighest confusion.' 1890. Treasurer announces a surplus of £600,000 on the past financial year.

1891. Treasurer announces a deficit of £797,000 on the past financial year, reckoning to June 30; and of £1,418,000, reckoning to July 1; also that £1,700,000 had been borrowed from trust funds (Government Savings Bank deposits) in anticipation of loans. £3,000,000 were

borrowed in London during the year, of which £900,000 were for conversion of a matured loan.

1892. Treasurer announced a deficit of close on £1,600,000 for the past financial year. £3,000,000 raised by loans during the year 1892.

1893. Estimated deficit of £2,500,000. Collapse.

There is no necessity to dilate further on the present finan

cial condition of Australia-it has been all too sorrowfully brought home to hundreds of ruined Englishmen. When a State undertakes enterprises beyond its strength, it always does it at the risk of bankruptcy,' writes Dr. Pearson, very sagely; and bankruptcy is the fate that has overtaken Victoria, New South Wales and Queensland. Now it is agreed by common consent that finance is the principal test whereby the success or failure of a system of administration should be tried. Applying this test to Australia we are surely forced to the conclusion that State Socialism, so far from succeeding there, is a hopeless and disastrous failure. Now, the practical certainty of bankruptcy in these three provinces, and particularly in Victoria, has been patent to any man who chose to use his eyes, since the year 1890, if not from still earlier times. Dr. Pearson's book bears date 1893; and we must, therefore, assume that, at all events to the close of 1891, he still considered State Socialism to be a success in Australia. Consequently we can only conclude that he would not regard such a test as final, and would require further evidence to convince him that he was mistaken. I can hardly believe, I confess, that if his book were still unprinted he would leave the passage about the success of State Socialism in Australia unaltered. But his subject is a wide one; and he expressly disclaims the consideration of such possible contingencies as the trial of impracticable experiments, and the resort to such old failures of the past as unlimited issues of paper money by 'ignorant tribunes of the people.' We are, therefore, driven to apply some other test. It may, of course, be said, and indeed it has been said, that the financial collapse in Australia is due merely to a fortuitous concurrence of unfortunate circumstances; that it is merely transitory and superficial, and that it will be followed by speedy and solid revival. It has also been said that the collapse was due to the malicious attacks of English critics, who sought notoriety by uttering dismal prophecies of Australia's failure, and secured fulfilment of those prophecies by decrying her credit. But it would be as reasonable to attribute the outbreak of an epidemic of typhoid fever to

the predictions of a doctor who condemns the sanitary condition of a town. The fact that it could be predicted is sufficient evidence that the collapse was due, not to unlucky mischance, but to simple and ascertainable causes. If, in spite of national bankruptcy, success can still be claimed for State Socialism in Australia, it can be upon one ground only-viz. that, though the State may have failed (let us say through excessive zeal) in its duty to the citizens, yet the citizens have redeemed such failure through their infinite devotion to the service of the State.

Now, I have already described, in Dr. Pearson's own words, the consummation which he hopes may be reached in the growth in each individual citizen of a proper sentiment of gratitude, loyalty and piety toward the State I have sketched what the State has undertaken to do, and what it actually has done (no matter at whose expense), for its citizens in Australia; and it now remains to examine what return the citizen seems likely to offer to the State. 'It is the note of every true religion that, if it promises great good, it demands proportionate sacrifice.' 'What reward shall I give unto the Lord for all the benefits that He hath done unto me?'

The peculiar tendency to accumulate large debts, which present experience has shown to be characteristic of State Socialism, has not escaped so keen an observer as Dr. Pearson. His residence in Victoria cannot but have forced this danger upon his notice, and presented it to him as real and pressing. It is evident, indeed, that this peculiarity has puzzled and disturbed him not a little. The day may come,' he hopes, 'when a man who leaves an old and indebted State will be like the partner who peremptorily withdraws from an embarrassed firm'; but he admits that if thousands of citizens who have supported a policy of lavish expenditure leave the country when the burden of taxation becomes unpleasant, the very existence of the State may be imperilled. I have little doubt but that this latter sentiment was suggested to Dr. Pearson by (among other examples) what happened in New Zealand in the year 1888-9. New Zealand, it should be mentioned, at that time led the race

of extravagant administration among the Australian Colonies; and, indeed, is still rather ahead of her sisters in the matter of certain State institutions-e. g. State insurance. Her career was, however, cut short in the nick of time by Mr. Froude's strictures in that delightful but inaccurate book Oceana. New Zealand gained a bad reputation in the English money market; the supply of loans was cut off; and she found herself on the brink of bankruptcy. Now, there can be no doubt whatever that the adventurous politician who initiated and encouraged the policy of extravagant borrowing in New Zealand was cordially supported by the mass of the people. To this day, I venture to affirm, there are many in the Colony who still swear by him. Nor is it altogether surprising considering that, as if by the waving of a magic wand, he flooded the country with money, and began an era of apparently unexampled prosperity. Let it be noted meanwhile that in New Zealand there was no concealment of the financial position by mishandling of the accounts. The annual balance sheets showed faithfully enough a deficit just about equivalent to the amount of the annual interest due on the loans; so that it was sufficiently patent to any intelligent man that the interest on old loans was discharged, not by the labour of the citizens, but by the complaisance of the British capitalist. No sane man could believe that such a system would last for ever; yet it was stopped, not by the unwillingness of the citizens to continue it, but by the refusal of the British capitalist any longer to support it. Now, innocent people might suppose that citizens under such obligations to the State as in New Zealand would have stood by her in the hour of her trial. Nothing of the kind. No sooner was the borrowing stopped than the 'working men,' the adult males, who are generally reckoned to be the cream of the population, streamed away in thousands to Australia. So far from making a sacrifice for the State, which had nursed them so tenderly, they not only forsook her, but in many cases left their wives and children behind to be a burden to her. Those who remained sought by every means in their power to shift the weight of their obligations to the State