It will be seen that the purchasing power of money has steadily increased since 1864 and that 20s. in 1900 would purchase the same articles of domestic export which in 1864 would have cost nearly 39s., prices having fallen 48.7 per cent. during the period of thirty-six years. The greatest decline has taken place in the three staple exports of wool, silver, and coal, many of the minor articles having maintained or increased their price during the last fifteen years.

It must not be supposed that Australia has been a loser by the fall in the prices of its exports to the extent which the price-level shows, because the power of the exports to purchase imports must also be taken into consideration. It will, therefore, be necessary to consider also the price-level of imports. As there exist no reliable data on which pricelevels for imports can be based prior to 1870, the table commences with that year :

It may be said generally that the fall in prices was somewhat in favour of the exports up to the year 1889. Since then the exports have fallen away on the average values at a much more rapid rate than the imports. A clearer view of the operation of the fall in prices will be obtained from the table which is given below, showing the price-levels of imports of merchandise for home consumption and exports of domestic

produce, for periods of five years to the end of 1899, with the relative

It will be seen that, assuming the index number of the five years 1870-74 to be 1,000, the fall in the succeeding five years was 8.5 per cent. for the imports, as compared with 6 per cent. for the exports. The average value of the imports for the five years ending with 1884 was 5.9 per cent. less than in the preceding quinquennial period, whereas the difference in the value of the exports was 2.9 per cent. During the next five years the average value of the imports declined 8.5 per cent., while the fall in the value of the exports was no less than 13.8 per cent., so that the index number for 1885-89 for both imports and exports was practically the same figure. As already mentioned, the fall for the period 1890-94 was much more heavy in regard to the exports than the imports, amounting to 18 as compared with 6.5 per cent.; but during the period 1895-99 the fall in the exports was not much greater than that in the imports, 70 per cent. compared with 5-8 per cent. It may, therefore, be said that the period 1895-99 was considerably more favourable to Australasia than the one immediately preceding.

The Australian states and New Zealand are chiefly affected by the fall in prices because they are debtor countries. In the chapter on "Private Finance" will be found certain calculations showing that the annual charge payable by the states and municipalities on their indebtedness to British creditors is £11,523,000, while the earnings of investments made in Australasia by private persons, or drawn by absentees, amount to £4,738,000 per annum. As the whole of the interest on Government and municipal loans has to be paid by exports, irrespective of the fall in prices, and as a large portion also of the interest payable to private investors is in the same category, the fall is a matter of very serious importance to these states. Fortunately the increase of production, as compared with the population, has been so great as to counteract the fall in prices, and if the change in regard to the price of Australian produce which began in 1895 be continued, the condition of these states will be in every respect more hopeful.

379

THE

INDUSTRIAL PROGRESS.

THE PERIOD PRECEDING THE GOLD DISCOVERIES.

'HE discovery of gold in 1851 divides the industrial history of Australia into two periods, the main characteristics of which are absolutely dissimilar. Prior to the discoveries of the precious metal, Australia appeared to be destined for a purely pastoral country. Its distance from the world's markets, and the fewness of its population, militated against any decided progress in agriculture; but the people were encouraged to devote their attention to a fuller development of the pastoral industry by the circumstance that a local market was not necessary. Moreover, the products of both sheep and cattle were so valuable that the heavy cost of carriage to England could be borne, and an ample margin still left to compete successfully with Russia, Germany, Spain, Portugal, and America, the great wool-growing countries of that epoch. This one-sided development of the country's resources was manifestly dangerous to industrial stability, as a succession of droughty seasons might have had the effect of disturbing the business of the whole country; and this, indeed, was what from time to time actually happened.

Other industries would doubtless have followed in the wake of the great pastoral industry as time went on, and there were not wanting signs that, with an assured market, attention would be given to agriculture, and the manufacture of certain articles of local consumption. The development of the industries of Australia along their natural lines must undoubtedly have been attended with ultimate success, but the colonists were not content to grow prosperous in such a humdrum way, and early in the forties there was intense speculation in land allotments in towns. Large and small country areas also were disposed of, and redisposed of, at prices far beyond what was warranted by any return that could be obtained from their immediate or prospective use, and many persons grew rich by the tossing backwards and forwards of title deeds. The business of land jobbing was, moreover, encouraged by the action of the local Government which from time to time disposed of considerable areas of land, and frequently altered its policy in regard to the public estate.

Land speculation, carried to excess, has tended on more than one occasion in Australia to a commercial crisis, and the disasters of 1842 and 1843 were undoubtedly attributable to this cause. They were accelerated, however, by the unwise action of the Government in

regard to its financial operations. Having sold much land, the Govern ment was possessed of considerable funds, which were placed with the banks, at one time fully £350,000 being deposited, and the highe rates of interest exacted therefor. The banks accepting these deposit. were obliged, on their part, to reissue equivalent sums in discounts, in order to pay the interest demanded of them. They, therefore, readily entered into the spirit of the times, and their willingness to lend stimulated amazingly the dealings in land purchase. It thus happened that business was transacted in a vicious circle. The Government, by selling land, thereby accumulated an amount of money, which was deposited with the banks, the money so deposited being loaned by the latter to their customers for the purpose of buying more land from the Government, the latter depositing the sums paid to them, which again was loaned for the purpose of land buying; and by this means the business of speculation was kept alive so long as the Government maintained its balance with the banks. The immigration policy of the Government, however, made large calls upon it, and the Treasury found itself compelled to withdraw its deposits upon very short notice. To meet this sudden call, the banks were compelled, to the utmost inconvenience of their customers, immediately to restrict their discounts and curtail advances, and it was this sudden contraction of credit that gave the initial downward impulse to the money market. The issue could hardly have been otherwise than as happened, and a financial crisis immediately resulted. The year 1842 was one of acute financial distress. In Sydney, property of all kinds became unsaleable, and many business houses, including some of the principal ones, became insolvent. For nearly two years the failures were at the rate of from fifty to sixty a month. A similar condition of affairs prevailed in Melbourne, and the distress was also keenly felt in Adelaide and Tasmania. The local prices of all descriptions of produce were ruinously low, and were stal further depressed by reason of the large number of bankruptcies involving forced sales of real property, stock, wool, furniture, ships-indeed, of everything which promised a return, however small. Historians of that period relate cases of enforced sales at which sheep brought very small prices-as little as 6d. being obtained for them; while cattle occasionally realised only 7s. 6d., and valuable horses only £3 each Boiling down, meat canning, and other devices were resorted to in order to revive the commerce of the country from the stagnation and lethargy into which it had fallen; yet, notwithstanding all expedien the outlook steadily becan'e more gloomy, prices continued seriously to decline, and speculation was at a standstill. South Australia was the first to emerge from the all-pervading depression. In 1844, copper arrived in Adelaide from the Kapunda Mine, and in 1845 the famous Burra Burra Mine was discovered. Other finds came in quick succession. Population was speedily attracted, and as the mines yield beyond all expectation a season of prosperity at once ensued. The discovery of copper in South Australia proved to be of advantage to the rest

of Australia. Labourers and others were attracted to Adelaide from the neighbouring provinces, though not in such large numbers as would have relieved the labour markets. The men employed in the copper mines were able to earn 7s. per day, which at the time was considered a very high wage. Skilled mechanics were not so well remunerated; plasterers were paid from 4s. to 7s., very few getting the higher wage; painters' wages ranged from 4s. to us. 6d. ; blacksmiths' from 4s. to 5s.; wheelwrights' 5s. to 5s. 6d. Carpenters' wages ranged from 5s. 6d. to 6s. 6d. per day-the highest rates paid to mechanics; bricklayers and masons earned from 5s. 6d. to 6s. per day. Farming hands were paid 10s. to 12s. per week with rations and sleeping accommodation, and were in much request. Domestic servants were in demand at wages varying from £14 to £22 per annum with board and lodging, and the supply was insufficient. The wages quoted were greatly in excess of those obtained prior to the discovery of copper and about 20 per cent. higher than for similar employment in New South Wales.

The average wages paid in New South Wales prior to 1851 were as indicated in the accompanying statement. Inferior workers, of whom there was naturally a considerable proportion, considering the origin of a large part of the population, did not receive within 20 per cent. of the rates quoted:

These rates show a great reduction on those obtaining in 1841, in which year mechanics' wages stood at 7s. 6d. to 8s. per day, and those of farm servants at £25 a year. In the Port Phillip district wages