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Rh Britain, temporarily arrested that decrease. Taking quinquennial periods from 1899 the first would show an average of 49·56 of exports to the United Kingdom, the second an average of 46·88, the third an average of 45·14. The war period 1914–9 showed an average of 53·46%.

Australian trade with Asiatic countries develops steadily; exports to these countries were valued at £4,500,000 in 1901 and £19,000,000 in 1919.

Communications.—There has been a great railway development in Australia since the foundation of the Commonwealth. In 1901 the total railway mileage was 10,123; in 1919 it was 25,657. Nearly all the lines are owned by the Commonwealth, or the state Governments. In 1917 the Commonwealth-owned trans-Australian railway from Port Augusta to Kalgoorlie was opened, and the five capital cities of the mainland are now linked by rail. The distance between Perth and Brisbane, 3,474 m., is covered in less than six days. Another trans-Australian railway, crossing the continent from N. to S., is contemplated. Unfortunately there are four different gauges in use on Australian main lines in the various states: the question of the standardization of gauge is under consideration. The capital cost of the Commonwealth-owned railways had reached to £10,950,000 in 1919; revenue did not meet working expenses. The various state-owned railways by the same date had cost £213,971,000. On these working expenses absorbed 74·26% of the gross revenue, and the net revenue gave a return of 3·01 % on the cost of construction. It has to be kept in mind that all the Commonwealth lines and some of the state lines are developmental railways built in advance of the settlement which would make them payable.

The Commonwealth adopted a policy of Government-owned shipping and of close control of private shipping. Up to 1912 Australia was content with navigation laws which sought to keep Australian coastal trade as much as possible for Australian ships, and insisted that all ships engaging in Australian coastal trade should observe Australian conditions in regard to wages, etc. Some very flourishing coastal shipping companies existed under these conditions. But war conditions affected very seriously the transport by sea of Australia's exports and, though relief to one class of producers came through the action of the British Government in buying for a number of years the whole wool crop in Australia, irrespective of when it could be shipped to Europe, there grew up the idea that the Commonwealth did not get as good shipping facilities as if she had her own Government-owned lines. In July 1916 Mr. Hughes, then Prime Minister, bought for the Commonwealth 15 steamers, each of about 7,000 tons, and a local building programme for 48 vessels was announced, with further programmes for building in Great Britain and America. Subsequently the local building programme was cancelled as regards 22 of the vessels; the local building programme for steel vessels (24) was continued, and six of them were running in 1921. In addition the Commonwealth Government had 18 ex-enemy steamers and one ex-enemy sailing vessel under its control. In Feb. 1917, a Commonwealth Shipping Board was set up to control all Commonwealth shipping matters; it has two committees, one for overseas trade with headquarters at Sydney, and one for interstate trade with headquarters at Melbourne. It has, inter alia, powers to divert privately-owned interstate shipping to overseas routes. The enterprise has not been a success either as regards the State ownership of shipping or the close State control of shipping, and there are indications that it may be abandoned. The total overseas shipping entered and cleared in Australia in 1913 was 10,601,948 tons, in 1918–9 6,180,486 tons. British ships were 73·53% of the total in 1913 and 78·90% in 1918–9. Two ports of Australia, Sydney and Melbourne, exceed in shipping tonnage entered the figures for all British ports except London and Liverpool.

Finance (Public).—The Commonwealth Government, which at its inception had a share of the customs and excise as its only great source of taxation, now collects customs and excise, land tax, probate duties, income tax, entertainments tax and special war taxes. Its revenue from taxation and from services was £21,741,000 in 1913–4 and £44,716,918 in 1918–9. The rate of revenue collected per head had increased from £4 9s. 3d. to £8 17s. 9d. The Australian, in addition to these Commonwealth taxes, has to pay state taxes. The average state taxation per head is £11 11s. 6d. and the total taxation per head £2 9s. 3d. Out of the customs and excise revenue collected by the Commonwealth a fixed sum of 25s. per head per year is paid to the states and the states impose their own income and land taxes, stamp duties and probate duties. Out of the Commonwealth revenue is met all defence votes and costs of Federal services.

The Commonwealth Government and the state Government both have power, and exercise it freely, to raise funds by public borrowing, but all the states except New South Wales admit some control on the part of the Commonwealth of their borrowings. The World War added hugely to Australia's debt. In 1919 the Commonwealth Government owed £326,000,000, of which £208,000,000 was held in Australia. The various states owed £396,000,000, of which £138,000,000, was held in Australia. The balance in each case was mainly held in the United Kingdom. Before the war it might be said that the bulk of the Australian debt, both Federal and state, was fully represented by revenue-producing assets such as railways. That could be said of the total (£337,000,000) in 1914 but not of the total in 1920 (£722,000,000), the difference being mostly represented by unproductive war expenditure. Of the state debts a total of about £35,000,000 was due to the Commonwealth Government, and that sum should be deducted from the £722,000,000 to calculate the actual debt load on the Australian people. In 1910 the Commonwealth Government by an amendment of the constitution was given power to take over all the state debts and consolidate them into one Federal issue. The power had not yet been exercised in 1921.

A Commonwealth bank of issue was opened in 1912. Its operations showed a credit balance of £1,922,000 in 1919. It transacts bank business and has a "Savings Bank" section. It had issued notes to the value of £57,000,000 by 1920 and held a gold reserve of 41·17 % against them.

Finance (Private).—There are 21 private banks trading in Australia, of which four have their head offices in London. In 1919 their paid-up capital totalled £35,696,000 and their reserved profits £23,543,000; their total liabilities £257,634,000 and their total assets £277.950,000. Depositors in savings banks numbered 2,945,000 (more than half the population) and the average deposit was £43 12s. 7d. or £25 per head of the whole population.

Government.—Under the Federal constitution the Commonwealth is governed by a governor-general appointed by the British Crown and acting on the advice of a Cabinet which is responsible to an Australian Parliament of two Houses. The Senate represents the states and is composed of six members from each state, elected for six years by the adults of the state voting en masse every three years to return three senators; the House of Representatives is about double the Senate in numbers (75), represents the people numerically, and is elected every three years by the adults of Australia voting in single-member electorates, which are approximately equal in population. The number from each state varies with the growth of population. The Australian Parliament can only act within the powers set forth in the constitution. The High Court is the final interpreter of that constitution and may veto any legislation, either of the states or of the Commonwealth, which is ultra vires.

The Commonwealth of Australia was formed in 1901 by the union of the six states of New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania. The first Government of the Union was formed by Sir Edmund (then Mr.) Barton (born in N.S.W. 1849, d. 1920). Mr. Barton entered the N.S.W. Assembly as member for the university of Sydney in 1879. His enthusiasm was aroused for the cause of the Federation of Australia. After the death of Sir Henry Parkes he assumed the leadership of the Federal movement. The convention which framed the Federal constitution had recognized Mr. Barton's services by electing him as its leader. Now as Federal Prime Minister he called to his side the premiers of all the federating states; with one exception they responded; and this ministry of "all the talents" appealed to the people for support on a non-party platform.

The Early Parliaments, 1901–7.—The first Federal Parliament was however divided into three parties, that following Sir Edmund Barton, that following the Free Trade leader, Sir George Reid (born in Scotland in 1845, d. 1918), and the Labour party, under the leadership of one of the remarkable men of Australian public life, Mr. J. C. Watson. Born of poor Scottish parents in 1867 while on the voyage to Australia, Mr. Watson was in boyhood deprived of nearly all the advantages of education, but taught himself enough to become a printer. Sagacious, tactful, resolute, he came to the front in the Australian Labour movement and was elected first leader of the Federal Labour party. The success of the Labour party under his leadership at the polls was extraordinary. The first Parliament of the Commonwealth, divided as between the Government followers and Mr. Reid's Opposition party almost equally, had the Labour party holding the balance of power. This made a position of difficulty for the Government. The common-sense and moderation of Mr. Watson saved the situation to some extent. He gave a general support to the Government and assisted them in their most pressing tasks. Nevertheless the first Parliament was hampered by party fighting, the Opposition seeking to win the Labour party over to their side, and the Government being forced to postpone a good deal, to modify a good deal, in order to keep in office. Sir Edmund Barton was deeply disappointed. He had looked to a first