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1853 it was arranged that the Imperial Government should make an annual grant of £1,000 for the salaries of magistrates and pay two-thirds of the gross expenditure of the colony upon its police, exclusive of a small force in the north. This agreement held good for a number of years, although one Secretary for the Colonies, Mr. Labouchere, objected to what he considered the enormous cost of police maintenance. The question was opened up in 1854, when the Lords of the Treasury proposed to reduce the Imperial proportion to half the gross expenditure, but their Lordships decided, as transportation was to cease in 1867, to postpone making any arrangements. When 1867 arrived, the matter escaped their attention, and the payment went on as usual. During the latter years the cost of police on the two-thirds basis to England, averaged over £15,000 annually, or more than double the amount of 1853, or 22 per cent. more than that of 1867. Governor Robinson proposed that the grant should continue at £15,000 for 1877-8, and thereafter sink by slow degrees until 1893, with which year it would wholly expire. Assistant Comptroller-General Thompson, however, recommended an immediate drop to £10,000, and a future annual reduction of £1,000, in which event it would expire in 1886-7.

The Lords of the Treasury, on 28th November, 1877, sent a despatch to Governor Robinson requesting the adoption of the following scale:—The grant for 1877-8 to be £14,000, and then to sink by £1000 per annum until 1883-4, and thenceforth by £2,000 per annum until 1887-8, when, twenty years after the cessation of transportation, it would cease altogether. An important and gratuitously annoying alternative, however, was appended:—"My Lords have only to add, with regard to both these grants in aid for magistrates, police, and chaplains, that payment of them will depend absolutely upon the colony not being given .... Responsible Government. If such form of government be insisted upon, all payments will cease." They first proposed to disband the pensioner force, not believing it necessary to guard convicts inside the Fremantle prison; but they decided that it might be expedient to maintain some description of armed force in addition to police and volunteers. They therefore expressed their willingness to support the pensioner force out of Imperial funds for a period not extending under any circumstances beyond March 31, 1887. After some demur arrangements were come to, and the English grant to these funds was gradually reduced as proposed.

The expansion, of export and trade to some extent acted as a counterpoise to the diminution of expenditure of outside capital. Whereas in 1869 colonists drew to themselves £205,502 by export, in 1878 they obtained £488,491, and the balance of imports and exports changed sides. In 1869 the imports totalled £256,729 and in 1878 £379,049 (including £22,040 in specie)—that is, in 1869 the imports were £51,227 larger than the exports, and in 1878 the ports were £49,442 larger than the imports. Had it not been for the small yields of wheat in the bad seasons the difference would have been greater. In 1878 (in addition to £22,040 for specie), grain, flour, potatoes, and butter, valued at £54,785 were imported. Wool, timber, guano, lead, pearls, pearl shell, and sandalwood principally served to swell the exports. The colony had now become an exporting instead of an importing one—a sure indication of progress, and (had it not been for the reduction in outside expenditure) of prosperity. Various causes tended to give an impulse to production. The year 1874 was the best, because of wool, sandalwood, and pearls; the year 1878 next, because of timber, guano, lead, and pearls. The balance for the ten years is on the side of exports. The annual returns (Blue Book) are:

The yield of wool varied with the seasons; lean years produced lean returns. In 1874 the wool export was £215,624, in 1877 £199,624 and in 1878 £150,952. In 1869 there were 648,683 sheep in the colony, and in 1878, 869,325 sheep, a reduction of the number in 1876 by over thirty thousand. Wool continued to hold first place in the export. The drought of 1869-70 was so severe that the wild horses, which had congregated in great numbers in the east of the Avon River, died in dozens, and their carcases were strewn round the dried up pools and swamps. The lambing season was fatal and the clip of wool small. In 1871 a more favourable autumn and spring afforded some compensation for the drought, and the clip exceeded that of 1870 by about 20 per cent., while the prices were about 20 per cent. higher. In 1875-6 the price of wool declined and reduced the profits of pastoralists, who from bad seasons and other causes suffered during the succeeding years. The Plantagenet District gained a great increase in stock. The North-West district did not progress in proportion to its rise in previous years. The stock statistics show a considerable increase, but north-west runs were not selected with the eagerness evinced during the three or four years after the settlement was formed. The pioneers had overcome many of their difficulties, and more regular communication was established with Perth. Settlement was not materially extended, but many of those station-holders who had selected good areas of land were obtaining substantial returns. Proposals were made at Roebourne in 1869 to open a trade in sheep and cattle with Singapore. A slight small-pox visitation took place in 1870. The native difficulty seriously hampered the enterprise of several pastoralists. In 1869 a shepherd in the employ of Mr. Hooley on the Ashburton River was killed; he was surrounded by the natives on a plain, and after shooting two of them he was speared and stoned to death. A few days later the same natives challenged two other white men to a fight. A party went out to punish the murderers, and met with stronger opposition than has occurred in the history of warfare between whites and blacks in the colony. It seems that the natives fought with unyielding spirit, but superior weapons soon told on their numbers. Next day, however, they tried to spear other shepherds, who consequently refused to remain in the neighbourhood, Mr. Hooley was compelled to abandon his run and remove to the Fortescue River. On this river at that time were the flocks of Messrs. Grant and Anderson, who in an attempt to pass overland to Champion Bay were driven back by the drought and lost numbers of their sheep.

A new town—Cossack—was declared in the north-west, but as Roebourne was the official centre it did not gain many inhabitants. In 1878 a Court of Quarter-Sessions was established at Roebourne. Several hurricanes had already visited the north country during the period of settlement, but none equal to that of March, 1872. For many days the weather had been oppressive, close, and moist. The barometer remained for nineteen days at 29.83. During the 20th March rain fell, reported Mr. Sholl, in cataracts, and the wind increased in velocity until at night it developed into a cyclone, "In the course of a few minutes," said Mr. Sholl, "the building was