expenditure was moderate, loans being difficult to raise and interest high; but latterly, as the conditions under which loans could be contracted became favourable, especially since 1881, few of the colonies have set any bounds to their requirements. It was a repetition of the old experience the opportunity engendered the desire, and the open purses of the investors tempted the colonies to undue borrowing and lavish expenditure. What is termed a "vigorous public works policy" was the order of the day, and works were pressed forward which under other circumstances would not have been undertaken, or have been held back until the growth of population warranted their construction. The plethora of money has been harmful in many ways, the most apparent being the construction of not a few branch railways, in outlying and sparsely-settled districts, which do not pay even their working expenses. The consequence is that the interest on loan capital has to be met out of general revenue, and in some instances the present generation will pass away before this condition of affairs will be remedied. But when every allowance has been made for unwise or improvident expenditure, it will be found that by far the larger portion of the proceeds of loans has been well expended. In some instances it will be years, taking a most hopeful view of the situation, before many of the revenue-producing works will yield a sum sufficient to pay working expenses and interest; nevertheless, a practical consideration of the conditions which surround Australasian settlement will demonstrate that in some instances the construction of these works was justifiable, for apart from the consideration that they will ultimately be self-supporting, they have already materially assisted in developing the country's resources, and have largely enhanced the value of the public estate. Whether their cost in all cases should have been charged against the loans account is a different matter, seeing that the rents obtained from public lands, and proceeds of sales, invariably go into the ordinary revenue of the colonies. The following statement gives, under a convenient classification, the loan expenditure of each colony during 1896-7 : The expenditure of Australasia during 1896-7 from funds derived from the proceeds of loans was £7,112,838. Of this amount, the sum of £4,720,064 was spent on services directly revenue-producing, and the remainder was chiefly devoted to works of a substantial nature, such as the construction of roads and bridges, the improvement of harbours and rivers, and the erection of lighthouses, schools, and public buildings. The amount expended on fortifications and military works was relatively small. In most of the colonies the expenditure from loans has been greatly reduced during the last few years. In some cases this may be attributed to a settled policy of retrenchment; but in others, the difficulty of raising a loan in London affords a more probable explanation. The expenditure, however, now shows a tendency to increase, the figures for the last financial year being largely in excess of the previous three years in the colonies of Queensland, Western Australia, and New Zealand. In those three provinces the increased expenditure was chiefly made on account of the railways; and, also, in the case of New Zealand and Queensland the amounts partly represented loans to local bodies. The expenditure of each province during the last five years is given in the following table : The total expenditure of the proceeds of loans from the commencement of borrowing to the year 1896-7 was £212,971,819. Of this sum, £156,670,782, or nearly three-fourths, was spent in the construction of railways, water supply and sewerage works, and electric telegraphs; and the balance was expended on works and services which, though classed as non-productive, for the most part assisted in the national development. The expenditure on defence and the payments made to meet deficiency in revenue are the exceptions to the rule which has governed the expenditure of the proceeds of loan issues. The expenditure to cover deficiency in revenue has not been large, and is looked upon as but a temporary charge on the loan funds; while the expenditure on defence has been extremely small in all the colonies except New South Wales and New Zealand. The following table shows the total loan expenditure of each province up to the close of the last financial year : £ £ £ £ £ £ 40,273,797 7,786,584 935,396 48,995,777 9,549,397 58,545,174 35,689,134 8,052,285 43,741,419 2,680,758 46,422,177 19,477,988 311,827 853,992 20,643,807 9,263,477 29,907,284 12,789,342 3,994,654 889,315 17,673,311 4,667,977 22,341,288 5,136,939 1,455,522 6,592,461 3,803,446 3,780,279 7,583,725 771,351 16,676,083 24,903,627 41,579,710 4,843,830 23,801 269,308 117,986 598,159 132,066,124 20,767,310 3,837,348 156,670,782 56,301,037 212,971,819 In the New Zealand returns old provincial debts contracted prior to 1876, amounting to £11,535,469, have been included under the head "Other works and services," as there is no available record of the services upon which the loans of the old Provisional Governments were expended, except where such was for the construction of railways. The figures given for New South Wales, South Australia, Western Australia, and Tasmania under the head of "Railways" include loan expenditure on State tramways, but, except in the case of the firstmentioned colony, the amount thus expended is unimportant, as this service in the other provinces is generally in the hands of municipal authorities or private companies. In the preceding table a large sum has been placed under the head of "Other works and services"; in the following statement this amount has been subdivided and is shown under several heads. In regard to New Zealand, the sum under the heading of "Miscellaneous also includes the provincial loans prior to 1876; but it is certain that a very large proportion of this miscellaneous expenditure was incurred for war purposes, the cost of suppressing the Maori risings between 1860 and 1870 being charged to loan votes : In the case of New South Wales the sum of £705,200, which was spent on immigration before the inauguration of the Loan Account, is not included in the above table. If this amount were included, the loan expenditure on immigration by that colony would be £899,630. The subjoined table shows the expenditure per inhabitant on the basis of the figures given in the table on the preceding page: The question of Local Government is dealt with in another chapter It is well, however, to give here a statement of the total amount which passes through the hands of the general and local governments. The sum can in no sense be taken as the cost of governing the various colonies; as will appear from page 384, this may be taken as £19,713,108. or The total sum expended by the general and local governments of Australasia during the year 1896-7 was over £41,000,000, £9 10s. 11d. per head. Of this large sum, £30,412,245, or £7 Os. 11d. per inhabitant, was spent by the general governments from their revenues, and £7,112,838, or £1 13s. per inhabitant, from loans; the local expenditure-exclusive, of course, of a sum equal to the Government endowment-was £3,668,448, or 17s. per inhabitant. The following table shows the general, loan, and local expenditure for each colony : The expenditure per inhabitant, under the same classification, will be found below. The average expenditure for New South Wales is to some extent misleading, as about 40 per cent. of the population live outside the boundaries of the municipalities:— |