The debts of Australia have mostly been incurred by the states; until recently the Com monwealth carefully avoided any line of policy which would involve it in any necessity for em barking on a borrowing policy, on its own account. Indeed, as has already been sug gested, the Commonwealth Parliament deter mined to construct all such public works as post-offices, fortifications, etc., out of revenue. It has taken over from the states all the customs houses, post-offices, naval and military defenses, stores, etc., which were the property of the states, prior to the establishment of the Commonwealth, and will ultimately have to recoup the states for them, either by taking over states' debts to an account equivalent to their value, or in some other way, which must almost of necessity involve the Commonwealth in a debt. There are further schemes in con templation for the transfer of state obliga tions on certain terms to the Commonwealth, besides which there are proposals under con sideration for the construction of trunk lines of railway across the continent of Australia; the line from South Australia to Western Australia has been approved and is in course of construction. All the states have some provision of the nature of a sinking fund for the ultimate extinction of the debts and in several cases stock is from time to time pur chased and canceled out of funds set apart for purposes of redemption. None of these funds have, however, as yet assumed propor tions sufficiently large to modify materially the facts as to the total debts. The debt of Australia up to 1915 in no case represented the cost of the war. The whole of it had been incurred with a view to the development of the vast resources of the continent and for practically the whole of it there are very valuable permanent assets. Of the total debt of the Australian states for 1914 £317,598,788 £177,000,000 was spent on railways and tram ways, on water supplies and sewerage, on harbors, rivers and navigation; and for public works and buildings about £75,000,000 has been spent, besides other sums for telegraphs, tele phones, defense and other items. The net revenue produced by these works aggregated, in the year under review, over and above work ing expenses and maintenance, nearly 3 per cent on their cost. It should also be remarked that the year 1914 for which the figures are given was not a normal year, the effects of the previous, year's drought having by no means passed away. The revenue from this source could be increased to an amount suf ficient to meet in full the interest charge, if it were desired to do so, but the charges for railage and harbor dues and water supplies, etc., are all kept down with a view to the encouragement of settlement and of produc tion, it being recognized that the direct return received from the enterprises is by no means the sum of their earnings, as they produce through the resulting prosperity of the people, a very large indirect return through the customs house, and in many other ways. It is the general prosperity rather than the direct revenue which is the primary objective for the time being. Meantime the works are permanent assets of constantly increasing value and revenue earning power. As has often been pointed out, Australia could, by sale of her railways, harbor works and water services, im mensely reduce her public indebtedness, for the undertakings would sell readily for what they cost, but she would be poorer, rather than richer, by the transaction at once, to say nothing of the folly of such a policy from the point of view of the future. There is, further, one great asset of Australia which cannot be over looked in any consideration of her financial position, and that is her unalienated land. In Jour out of the six states the areas are very large and the values vary very widely accord ing to climate and other conditions.
It is necessary to bear in mind that the public indebtedness of the Australian states was not contracted against their specific security, but against the public credit of each generally, so that there is behind it, not only the public estate in the shape of the land and works of every kind, but also the whole taxing power of the respective governments. In view of this it must be manifest that the securities are absolutely egilt edged)) The extent of the financial operations con ducted within the Commonwealth will appear from the sworn returns of the banks other than the Commonwealth Bank, doing business there for the year 1914. The totals were:
Notes in circulation not bearing interest, 1.306,809; bills in circulation not bearing in terest, f1,089548; deposits not bearing in terest 170,195,462; deposits bearing interest, f93,659,093; balances due to other banks, 1.2,750,788; total liabilities, f168,001,700. The assets are shown as follows: Coin, i35,585,924; bullion, f1,024,100; landed property, £4,592,951; debts due to banks from other banks, includ ing notes and bills discounted, f115,509,000; balances due from other banks, including notes and bills of other banks, £16,186,000; total as sets, £175,449,306. Besides the joint-stock banks whose returns have just been quoted, there are numerous investment companies carrying on business in the Commonwealth, such as savings banks, land, building and investment, trading and commercial companies, complete returns of whose business are not available. For the savings banks, which are under govern ment supervision, the following figures will be suggestive: Number of depositors, 2,108,000, or over 40 per cent of the whole population. Amount of deposit at close of 1914, over $400,000,000, or $80 per head of the whole population, and $200 per depositor. The volume of business done in the Commonwealth by the various life assurance offices is very large as the figures quoted below will show, and there are also a number of friendly benefit societies, whose roll of membership is indicative of the widespread practice of habits of thrift and self-help. Industrial life assurance is also widely availed of by persons who are not able to afford large premiums for life assurance of other types. The receipts and expenditure of the 17 life assurance institutions for the year were, receipts £6,000,000, expenditure f3,950,000. The average amount of life assurance per head of the population was £25. There are 477,000 members of the friendly societies, and their funds amount to f6,237,000.
Commonwealth Bank of The Commonwealth Bank of Australia is the only state-owned bank in the British empire. It has had a most rapid growth and remarkable progress. The Commonwealth Bank Act was passed in 1911. On 15 July 1912 the act was brought into force by proclamation and sav ings bank business was commenced on that date. Every post-office throughout the whole of the Commonwealth of the rank of a money order-office is an agency of the Savings Bank Department of the Commonwealth of Australia, and at present there are 2,700 such agencies in addition to the six central offices, one in each of the state capitals.
General banking business was commenced in January 1913, and the expansion of business in the general as well as the Savings Bank Department has been phenomenal.
The outbreak of the European War in August 1914 found the Commonwealth Bank in a strong position, prepared to meet generally any emergencies which might arise, either in Australia or concerning Australian affairs in London, and an important part has been taken by the bank in the finance of Australia. Amongst the many matters of war finance which the bank has handled, the one which has brought it most before the public has been the Commonwealth war loans, the flota tion of which was placed in the hands of the bank by the Federal Treasurer. Until the first Commonwealth war loan was issued in July 1915, no financial operations on a large scale had been carried out in Australia, and the issue of a loan for such a huge sum as 15,000,000 was, to a considerable extent, an experiment. Complete arrangements were made by the Commonwealth Bank with all the private banks, states savings banks and money-order offices throughout Australia to receive applications, and the loan was kept before the public in such an energetic manner that over #13,000,000 was subscribed in Australia. Since then two further loans have been issued. Each flotation has been carried out in the same energetic manner and the results of the three issues may be summarised as follows: First issue subscribers, 18,748; amount applied for, £13,389,440. Second issue subscribers, 28,945; amount applied for, #21,655,680. Third issue subscribers, 81,727; amount applied for, 122,276,200. The Common wealth Bank acts as bankers in London to the governments of the Commonwealth of Aus tralia, of South Australia, Tasmania, and mostly to the Western Australian government.