inculcate reliance upon individual efforts, it is somewhat strange to
note the early development of a tendency towards State socialism; but I
am inclined to think that, in this respect also, the discoveries of
gold exercised a permanent influence, not only in the Provinces
immediately affected, but throughout Australasia, from a tendency
towards imitation. In the first years of Responsible Government
British capitalists had a natural distrust of Australian securities,
and declined to advance money except at a high rate of interest. But
when they saw the phenomenal increase in the {246} yield of gold, and
the large revenue obtained from the sale of lands, they overcame their
scruples and displayed, during the twenty years which preceded the
financial crisis, a readiness to grant loans to the several Governments
which is believed by many to have been a great misfortune to their
debtors.
The political and unremunerative railways of Victoria, which have been
discussed in the chapter dealing with that Province, could not have
been constructed but for the easy access to large funds. Another
aspect of the question has been emphasised in an article published by
the Sydney _Bulletin_[1] which, however much an Englishman may demur to
its Republican principles, must be admitted to be an authority on
Australasian topics. A strong plea is put forward for the necessity of
defining by Act of Parliament what kind of works should be charged to
loan-moneys, and what should be charged to revenue. The advantages, it
is contended, will be threefold; the attention of the country will be
drawn to the matter; the Loan Estimates go through so rapidly that very
few people are aware how the thing is worked. The lender will know the
destination of his money, and all treasurers will be placed on a level,
whereas, at present, "the dishonest treasurer who makes a surplus by
using borrowed money for road repairs and all manner of other ordinary
expenditure is a heaven-born financier, while the honest one who
doesn't is driven out of {247} office, either for having a deficit, or
for increasing taxation, and is a failure either way." Official
figures are quoted for New South Wales in order to prove that during
the years 1885-1890, which covered the flotation of several loans,
surpluses and deficits alternated as the treasurer was or was not able
to dispose of borrowed funds. Indirectly, of course, many of the
public works which do not produce a direct revenue may be of financial
benefit to the State, through an increase of population and the
encouragement of settlement; but it is a hazardous principle to borrow
money for their construction.
Equally dangerous for Australia was the more recent excessive eagerness
of the British capitalist to invest his money in Australian commercial
undertakings, as, according to the Victorian Year Book,[2] a
publication of the highest merit, "there is no doubt that the feverish
financial activity that preceded, and ultimately led to, the Australian
financial crisis primarily arose from the enormous influx of British
capital--far in excess of the legitimate requirements of the
Colonies--for remunerative enterprises. This influx was probably the
result of the large amount of attention that for some years prior to
1888 had been directed to these Colonies, which were brought into
prominence by such events as the passing of the first Federal Council
Act by the Imperial Parliament in 1885, the Colonial and Indian
Exhibition held in London in 1886, and the Imperial {248} Conference in
1887; it was also much stimulated by the lowering in 1888 of the
interest on the British Public Debt, and _pro rata_ on other
first-class British securities. The first indications of this were
noticeable in the marked rise in the prices of all Colonial Government
securities which occurred just after Mr. Goschen's notification of his
scheme for reducing the interest on the National Debt of the United
Kingdom, in March, 1888. Such securities, however, being of limited
extent, the superabundant capital was forced into private channels,
which led to the growth of co-operative enterprise on an unprecedented
scale--through the medium of joint stock companies--which commenced
prior to, but probably in anticipation of, the conversion of the
British Public Debt, and culminated in the United Kingdom, as well as
in Australia, in the same year. Owing to this increasing competition
for Colonial Government securities, and the consequent fall in the rate
of interest thereon, the Colonial Governments were tempted to, and no
doubt did, borrow in excess of their immediate requirements, although
this was not recognised during the period of general inflation; but
assuming a portion of the Government loans to have been unjustified,
far worse was the condition of the large private investments, chiefly
in joint stock companies, many of which supplemented their resources by
deposits--equivalent in some cases to as much as three times the
paid-up capital--which had been drawn, by reason of the high rates
{249} of interest offered, from all sections of the community, both in
England and Australia. Between the 1st of January, 1887, and the 30th
of June, 1893, but for the most part in 1888, 1,154 companies with a
paid-up capital of no less than L28,436,500 (subscribed capital
L54,300,000) were registered in Victoria alone, and of these, 397, with
a paid-up capital of L9,469,000 (subscribed capital L19,526,000) are
known to have become defunct, to say nothing of numerous others, of
which no information has been furnished to the Registrar-General." The
crisis was most acute in Victoria, but its effects were felt largely,
and are still felt in calls upon shareholders, in other Provinces. In
conclusion, while British capitalists are still chary of industrial
investments, they appear to be willing to meet the Australasian
Governments in their resumption of applications for loans.
The danger is accentuated by the tendency towards State socialism, the
origin of which I had begun to discuss before this long digression.
The earliest concessions for the construction of railways were granted
in New South Wales in 1848 and 1853, but the companies were unable to
carry out their undertakings, owing to the scarcity of workmen caused
by the rush to the goldfields, and the Government stepped in and
completed the railways out of public funds. This assumption by the
State of a function which had been delegated to private enterprise,
coupled with the growing confidence of the British investor and the
elasticity of the revenue, {250} both from the Customs and from the
disposal of land, which had been accelerated by the rapid increase of
population, appears to have convinced the political leaders of the
advisability of the Governmental extension of the railway lines. They
were enabled to carry out this policy without difficulty, as the bulk
of the electors were engrossed in material pursuits and did not trouble
themselves about political issues. In Victoria three short lines of
railways were constructed during the fifties by private companies, but
were subsequently purchased by the Government, which thenceforward
monopolised the construction of new lines. Why Victoria and the other
Provinces should have decided in favour of State ownership and
management of railways I am unable to explain, except upon the
hypothesis that they were influenced by the example of New South Wales,
that they wished to open up the country more quickly than would
otherwise have been possible, and that they were tempted by the funds
at their disposal in surpluses of revenue over expenditure. Then, the
railways having in many instances preceded population, it was
necessary, if the lines were not to be unprofitable, that special steps
should be taken in order to promote settlement. This was done, partly
by the offer of land upon favourable conditions, partly by the payment
out of the National Exchequer of all the expenses of Local Government.
In New South Wales this state of things still prevails in many of the
rural districts; in {251} the other Provinces _pro rata_ subsidies are
paid to the Local Authorities, but are limited, in some cases, to a
fixed term of years. The Local Bodies have had no spontaneous
evolution; they are the creation of the Central Government, they are
supported and controlled by it, and look to it for assistance whenever
they are in financial difficulties. It would seem that, accustomed to
State railways and to dependency upon the State in their local affairs,
Australasians have been led insensibly to magnify the efficacy of its
intervention and to welcome every enlargement of its sphere of action.
The protective tariff appears to have had a similar effect, unless it
is to be regarded as a mere coincidence that South Australia, New
Zealand, and Victoria, which alone are avowedly Protectionist, have
authorised the widest extension of the functions of the State.
Throughout Australasia all parties in the several Parliaments are
agreed on the principle of the State ownership of railways. In
Victoria and Queensland the railways are entirely in the hands of the
Government; in New South Wales and South Australia they are so with
some trifling exceptions; in Tasmania, Western Australia, and New
Zealand a few private lines have been authorised because it has been
advisable, in the interests of settlement, that they should be
constructed, and the Governments have been unable or unwilling to
undertake further financial obligations. The recent action of Western
Australia may be mentioned in evidence of {252} the prevalent feeling,
it having taken advantage of its improved credit to purchase one of the
private lines. The waterworks of the capitals, also, are national or
municipal property; but other municipal monopolies, such as gasworks
and tramways, are mostly in the hands of private companies.
The railways of Australasia are worked, as far as is consonant with
national interests, for the direct benefit of producers, who, as has
been seen in the chapters dealing with individual Provinces, have been
the special object of the paternal solicitude of their Governments.
The various efforts in this direction may briefly be recapitulated.
South Australia, Victoria, Western Australia, and New Zealand make
advances to settlers at low rates of interest; South Australia sells
its wines in London; Queensland facilitates the erection of sugar
mills, and is proposing to establish depots in London and the provinces
for the receipt and distribution of its frozen meat; Victoria and South
Australia have given a bonus upon the exportation of dairy produce.
These Provinces and New Zealand receive such produce, grade and freeze
it free of charge or at a rate which barely covers the expenses.
Victoria has given subsidies towards the erection of butter factories;
Victoria and New Zealand have subsidised the mining industry; and
Western Australia has adopted a comprehensive scheme for the supply of
water to the Coolgardie Goldfields.
The above brief summary shows that action by {253} the State for the
promotion of enterprise has met with approval in Queensland and Western
Australia as well as in the Provinces which have adopted the widest
extensions of the franchise. It maybe noted, however, that Sir Hugh
Nelson, the Premier of Queensland, is an individualist at heart, and
consents to extensions of the functions of the State unwillingly upon a
conviction of their necessity; while, in Western Australia, Sir John
Forrest is a strong advocate of State socialism, and opposed to
private-enterprise in any matter which is of the nature of a monopoly.
New South Wales and Tasmania have not hitherto followed the lead of the
other Provinces. This tendency is one of the most marked of recent
years, and received a strong impetus from the financial crisis of 1893,
which burst the bubble of a fictitious prosperity and compelled
attention to the strenuous development of the resources of the soil.
It is likely to lead to closer relations between the Provinces, from
the appreciation of the fact that the exports of one Province, if
unregulated and allowed to fall into disrepute, may prejudicially
affect the interests of the whole continent.
As regards the intervention of the State in the direction of industrial
legislation, the Governments of Western Australia and Tasmania have had
little cause to take action, in the absence of crowded centres and of
manufacturing activity; but New South Wales, Victoria, Queensland,
South Australia, {254} and New Zealand have placed stringent Factory
Acts upon their Statute Books. Measures have also been passed, largely
under the influence of Labour Representatives, dealing with the
liability of employers, the regulation of mines, the protection of shop
assistants, and other matters affecting the welfare of the working
classes. Upon their enactment complaints have been made of undue
interference with employers; but the administration is now, in most
cases, carried out efficiently and without unnecessary friction.
Indirectly, the various Provinces have, through their schemes of public
works, exercised considerable influence upon the demand for labour and
have, upon the completion of the more important undertakings, been
subject to continual pressure with the object of inducing them to
authorise special works for the benefit of those who have been deprived
of their livelihood. New South Wales, indeed, and, to a lesser extent,
Victoria, have almost admitted an obligation to provide work or rations
for the unemployed. In Victoria the tension has been relaxed by the
formation of the Labour Colony of Leongatha, at which the destitute can
obtain temporary subsistence. Australian politicians, generally, were
appalled by the undeserved misery which resulted from the cessation of
public works and from the financial disturbances, and, under the stress
of humanitarian motives, failed to temper their humanity with
discretion, and initiated a policy of {255} indiscriminate assistance
from which, once entered upon, it has been difficult for them to draw
back. The formation of village settlements in all the Provinces except
Western Australia was based upon the necessity for special efforts in
the face of the prevailing distress. Australians have never been able
to regard the unemployed as a necessary factor in their economic
system. The ordinary problems of pauperism have been felt acutely in
Australasia and have been met in somewhat similar fashion in the
different Provinces. Destitute children are, in most cases, boarded
out; the aged and incapable are provided for in Benevolent Asylums. In
Victoria, New South Wales, and New Zealand a movement has recently
arisen for the adoption of a system of old-age pensions, which has had
no appreciable results in the former Province, but has led in New South
Wales to the appointment of a Parliamentary Committee which reported
favourably and suggested forms of additional taxation by which the
necessary funds might be obtained, and in New Zealand to the
introduction of a Ministerial measure which sought to establish the
general principle and left to the House the elaboration of the
financial details. The Bill was accepted on its second reading, but in
Committee an amendment was carried against the Government to the effect
that all persons above the age of sixty-five, irrespectively of their
means, should be entitled to receive a pension. An Act was, however,
subsequently passed of which the {256} object is to ascertain the
probable cost of a pension fund. All persons of the age of sixty-five
and upwards, who have resided in the Province for twenty years,
imprisonment being reckoned as absence, and are not possessed of an
income exceeding L50 a year, are entitled to apply for a pension
certificate which will be issued to them upon the verification of their
claims, and will be regarded as conclusive if a pension fund be
established hereafter. The success of the Government at the recent
elections renders it probable that the matter will shortly receive
attention. In neither of the Provinces in which the subject has been
discussed is it proposed that the pension should be earned by previous
contributions; it is to be offered as a free gift in recognition of the
services which every worker must have rendered to the community.
To conclude a superficial summary of the functions undertaken, or
likely to be undertaken, by the State in Australasia, it may be
mentioned that the State system of primary education is in all the
Provinces compulsory and undenominational. In South Australia,
Victoria, Queensland, and New Zealand it is also free; in the other
Provinces fees are charged but may be remitted, wholly or partly, in
the case of the inability of parents to pay them. There are no signs
that the advocates of grants in aid of denominational education are
gaining ground; in the direct reference to the {257} electors taken in
South Australia they were defeated by a large majority, and have
equally little chance of securing subsidies to religious bodies.
In the presence of great activity on the part of the State, it is
interesting to note to what extent the working classes have exerted
themselves on their own behalf. Distributive co-operation has not
become popular owing, partly, according to the _Australasian_,[3] "to
the vicissitudes in trade which are inseparable from new countries, and
to the temptations which are consequently held out to the workers from
time to time to change their occupations and abodes. Partly, too, an
explanation may be found in the efficacy of existing agencies for
distribution. But we cannot help thinking that it is due also, in
part, to the pernicious ideas which lead so many of our artisans to cry
out against capital, and to seek the aid of the State, instead of
trusting to their own efforts and determining to become capitalists
themselves in a way which has been proved by the co-operative societies
at home to be thoroughly practical." Though the _Australasian_ is
strongly individualistic in its bias, it appears to be justified in its
reference to a certain lack of initiative shown by Australasian
workmen; they are inclined to look upon the State as a gold mine from
which they can draw permanent dividends, especially as they are
scarcely, if at all, affected directly by the periodical calls upon the
{258} shareholders; but, in his strictures upon the attitude of labour
towards capital, the writer should have added that the wealthy classes
are at least as ready to misjudge every effort made by the Labour
Representatives to pass remedial measures through the legislatures.
Proceeding to deal with the co-operation of producers, he says that
"there is co-operation of this kind already in our butter and cheese
factories, where the farmer who conveys his produce to the factory may
also be a shareholder, and at the end of the half-year may receive a
dividend on his shares and a bonus on the milk supplied, in addition to
the established price. Co-operation of a like kind prevails, to some
extent, though not so largely as might be desired, between the graziers
and the companies for the export of Australian meat." These remarks,
which refer primarily to Victoria, are generally true of Australasia.
But, while the working classes look constantly to the State for
assistance in various forms, they can be shown to have made
considerable provision against the future. In spite of bad times, the
number of depositors in Australasian Savings Banks rose from 742,000 in
1891 to 895,000 in 1895, and the total amount of deposits from 19 to 26
millions. Victoria and South Australia, which are followed closely by
New Zealand, have the largest number of depositors in proportion to
population, 29 and 24 per 100 respectively, and Queensland and New
{259} South Wales the highest average amount of deposits.[4] In the
three Provinces, therefore, in which the paternal action of the
Government is carried to the furthest extent, we find the widest
diffusion of an important exemplification of the spirit of thrift. I
am far from suggesting a relation of cause and effect, as the amount of
savings must depend largely upon the rate of wages, the abundance or
scarcity of employment, the cost of living, and many other factors, and
would merely point out that the policy in question does not appear to
have deterred the working classes from individual efforts.
As regards Friendly Societies, South Australia takes the lead with a
membership exceeding one in ten of the population; Victoria comes next
with one in fifteen, and is third in the average amount of funds per
member. Under the latter head New Zealand occupied the first place
with L18 8s. 2d., and is followed by Western Australia with L17 10s.
4d., but the latter amount is of no comparative importance owing to the
very small number of subscribers.[5]