THE DEVELOPMENT OF GROUP SETTLEMENT IN WESTERN AUSTRALIA

THE DEVELOPMEKT OF GROUP SETTLE-

I. 11. 111. IV. v.

MENT IN- WESTERN AUSTRALIA. The Position in 1925. The Group Settlement Act of 1925. The Group Settlement Board of 1927-Reconstruction. The Group Settlement Valuation Board of 1929-Capitalization. Prospects-1930.

This article is intended to supplement and bring up to date the information and conclusions contained in Professor Edward Sham’s article published in the first number of the Hecord (November, 1925).

Some words of Abraham Lincoln come to mind when the position of the Group Settlement Scheme in Western Australia is under discussion: “If we could first know where we are and whither we are tending, we could better judge what to do and how to do i t” (Sprin@eld, Ill., 1858). This sentiment appears to have been common to the group settlers and to those in charge of their destinies.

L The position at the time when Professor Sham wrote,

broadly speaking, was this. Group settlement had been in operation for some four years. One Royal Commission had in 1923-4 investigated a portion of the scheme-the celebrated Pee! Estate, some miles south from Fremantle. Its report, dated 319t March, 1924, had not been well received, particularly by the local press, then enthusiastically in favour of Group Settle- ment. Kone the less the whole scheme seemed to be going awry, and there was a suspension of Group Settlement pending inves- tigation by another Royal Commission, that of 1924-5, the report of which w a submitted in June, 1925, and published in the nest month. Professor S h a m has dealt fairly fully with the findings and recommendations of that Commission. One of the chief features of the Reports (both the Majority and Xr. Latham’s, which, on most essential points, was the same) was the condem- nation of the plan of communal action upon sustenance wages, as it had been carried out. The Commissioners seemed doubtful of the strategy of what Professor S h a m has called “the campaign’’ against the South-West, but they were at one in criticizing the tactics and characterizing them as faulty. The

28

XAY, 1930 DEVELOPMENT OF GROUP SETTLEMENT 29

original hope had been that for an espenditure of f6,000,000 there would be created and put upon a self-supporting basis 6000 dairy farms. The clearing and putting under pasture of 25 acres on each location, perhaps the main work of the group members, had been intended to give each settler an area which, according to the esperience of the Xorth Coast District of New South Wales and the Gippsland dairying districts, would support the settler and his family. The Commissioners mere in- formed of what had become an obvious fact-that the areas were not large enough, the land frequently not being uniform in quality and the summer rainfall practically non-existent, as com- pared with the dairy-farming districts of the Eastern States. The further, not unrelated, conclusion had been arrived at by the Commissioners, that an espenditure in the neighbourhood of BOO0 per settler would have to be incurred before the dairy farms mere established on a self-supporting basis. Their view had been that some 90 acres would need to be p u t under crop and pasture to support the herd of 28 to 30 COWS which they regarded as necessary to enable the settler to meet his obligations and secure a living. A total indebtedness around the figure of BOO0 was a very different result from that contemplated by Sir James Mitchell in 1921-2, who had hoped ( i t appears without justification) to see the groups disbanded by the time €750 to €1000 had been spent upon each location, and the settler, then on the basis of an ordinary Agricultural Bank client, drawing further loans for the improvement of his holding until i t became fully productive. The Repcrt (or perhaps we should rather say the Reports) was received without much emotion. The pub- lic generally scarcely understood the position beyond having a general notion that all was not well with Group Settlement. There was a disposition in certain quarters to brand the blajority Commissioners (in particular) as somehow traitors to a cause- solidarity being strong amongst Western Australians, but this may be attributed, I think, to a fear of patronizing criticism from the Eastern States as much as to any real belief that the State’s prospects mould be seriously damaged by their Report. The new migration agreement of October, 1925, was definitely more advantageous in its terms to Western Australia than that of February, 1923, had been. I t also enabled the Minister fo r Lands to substitute piece-work rates for the sustenance allowance of 10s. per day under the original agreement, and to charge the settler with the escess cost above €1000 which might have been incurred in the preparation of his location. The

30 THE ECONOMIC RECORD MAY

agreement made in February, 1923, under the terms of the Empire Settlement Act of 1922 contained a clause-“the debt charge, including charge for supervision, shall not in any case exceed f1000”-and further provided that the settler should not be charged for the 160 acres in its undeveloped state, nor for roads, railways or other works, apart from drainage and water conservation directly benefiting his farm.

As Professor Shann remarks, “At first i t mas expected that groups mould be disbanded and communal clearing cease a t the end of 24 years. Though this period has been considerably exceeded since March, 1921, no groups have yet been completely disbanded.” He then refers to the original plan under the agreement that the disbanded settler should give a mortgage to the Agricultural Bank covering the €1000 which i t had cost to develop his farm up to the date of group diasolution, and obtain from it further developmental advances under the general conditions relating to Agricultural Bank loans. The Minister for Lands and Migration in the Collier Government a t this time was Mr. W. C. hngwin (now Agent-General for W.A. in Lon- don), an admirer and supporter of Sir James &fitchell’e bold developmental policy. He, in October, 1935, introduced legislation dealing with Group Settlement, the Group Settlement Bill of 1923 (passed December, 1925) which, he erplained to the Legislative Assembly, would both embody the policy of the new agreement and enable the disbanding of the settlers and the taking over of their destinies by the Agricultural Bank. He espressed himself thus: “From my experience during the last fifteen months in connection with Group Settlement matters I am convinced that the earlier the settlers come under the direction of the Agricdtural Bank the better it wil l be for them.” Although 54 groups were alleged to be ready for disbandment in 1923, they are not yet (April, 1930) completely under the direction of the Bank.

11. The measure of 1925 was intended, in the main, to enable

the Agricultural Bank to take control of those settlers who, at the dissolution of a group, might not be able to c a v on on their own account. S’otification in the Qouernmcnt f fazcf fe was to establish group areas. Power was given by section 3 (2) of the Act to the Managing Trustee of the Agricultural Bank to ass= and determine the amount of group erpenditure on the area chargeable to the group settlers, and the par t thereof to ba

1930 DEVELOPMENT OF GROUP SETTLEMENT 31

apportion4 to each parcel of land intended to be granted (under the provisions of the original migration agreement). This sub- section was intended to meet the position explained by Pro- fessor Shann, that the farms were even in 1925 not worth what it had cost to prepare them. The unforeseen costs should, the Commissioners had suggested, be shouldered by the general com- munity as “unproductive debt,” and the Collier Government adopted the recommendation of ICIr. Latham, in his Minority Report, that “valuations of property to be taken o-ver by the Agricultural Bank should be made by the Trustees with a view to considering the debt the properties will be capable of carrying at a future date.’’ The Act provided that the group settler might, if he had not the necessary funds t o repay the Lands and Surveys Department, on the issue of his grant or lease,’ execute a mortgage to the Agricultural Bank providing for the paying off of his assessed indebtedness by instalments over a period of 30 years, subject to Agricultural Bank conditions. Jloney paid in accordance with this arrangement was to be credited in Sus- pense Account a t the Treasury, and used to cover the administration expenses of the Agricultural Bank in connection with the particular holding and then to recoup the Consolidated Revenue. Provision was made f o r the making of further advances by the Bank under the “Agricultural Bank Act 1906” and amendments, t o be equal in all respects with the advances made by the Lands and Surveys Department, the funds for which would be voted to the Agricultural Bank. The incorpora- tion of Agricultural Bank conditions was also provided for, and in addition two other fairly important clauses deserve notice. The one empowered the Minister fo r Lands and Immigration to exceed the limit of 160 acres prescribed by the original agreement when making the grant to the group settler. This resulted from the Commissioners’ finding that the areas were, owing to the variations in the class of soil, not large enough. The other provided for a partial dissolution of groups where a majority of locations were ready, a t the discretion of the Group Settle- ment Advisory Committee. Hopes were still high that the Group Settlement Scheme would work out well enough. Sir James Mitchell, speaking in support of this measure, said that no members need fear that the taxpayers mould be called upon to cover any losses in this form of settlement.

Nothing has been said so far of the Group Settlement Ad- visory Committee or Board, as the body was variously called.

I. The new migration agreement provided far the taking up of Conditional Purehue L e u c r by migrants-confirmcd in this Act.


In the early stages of Group Settlement, Mr. E. A. McLarty, whose association as Managing Trustee of the Agricultural Bank with Sir James. Mitchell had improved so materially the prospects of the Wheat Belt, acted as Controller of Group Settle- ment. Mews. Sutton (Director of Agriculture) and Hampshire (Government Dairying Expert) were added in an advisory capacity, and so the Committee was constituted to aid the Minister f o r Lands in his administration of the scheme.

Why was it then that the Act of 1925 was not immediately put into operation and the settlers put “on” the Bank as soon as the assessment of their liability had been made? The prob- able reason is that by this time some idea of reconstrutcion had entered the minds of the Minister and his advisers, and it was hoped to make the locations more acceptable as securities to the Bank, the Trustees of which were not anxious to be saddled with the hopeless propositions which some of the group areas seemed to indicate. The Advisory Committee commenced in a tentative way during 1926 in the South Busselton and Abba River districts, wherq the pastures had failed on the light lands (coastal plain type) to link up some locations and abandon others. The Minister who had succeeded Mr. An,Rmin (Mr. M. F. Troy) apparently interested himself as keenly as his predecessor in the problems bequeathed him, and invited the Advisory Com- mittee to go further into the matter of reducing the number of holdings. In view of the large number of group settlers who had left their holdings a reduction was possible without inconveni- ence. The Advisory Committee recommended the reduction of the number of locations by approximately 516.

111. One of the worst features of the Group Settlement system

was the degree to which settlers tended to drift away from the groups. Original settlers were replaced by new and less experi- enced settlers, and they in their turn gave up and others took their places. This had been so under the sustenance system- up t o the end of April, 1935, about one-third of the settlers had left the groups. When work on a piece-work basis started, the supervising authorities were unable for some considerable time to prevent settlers from pushing on with contracts, earning high rates for more or less hastily done and unnecessary clearing and improvement work, and neglecting their proper work-the care of the newly-created dairy farms. Until a limitation of €20 10s. monthly was placed upon the amount a settler could earn under


these contracts, it was a fairly common thing f o r settlers to concentrate on getting as big a cheque as possible, neglecting the development of the area as a dairy farm, and then to light out from the groups in the hope of finding a living, either in the city or in the wheatgrowing areas. So that costs continued to be run up against the locations while in a great number of instances they progressed scarcely a t a l l in the right direction- development towards becoming self-supporting dairy farms. This, of course, was not the universal rule, but it was, it would appear, far too common. The dif6culties of the situation led the Collier Government t o constitute, towards the end of Sep- tember, 1927, the Group Settlement Board, consisting of Messk. A. G. Hewby, the manager of the A,gricultural Bank, R. H. Rose and John Mazzoletti. This Board was formed after the Minister (Mr. Troy) had personally inspected some of the group areas. Its work was one of reconstruction. The Group Settle- ment Advisory Committee appears now to have been superseded by this new organization, to which was entrusted the work of re-classification with a view to linking up suitable locations where the areas seemed too small to permit of operations being carried on profitably and entirely abandoning others which had been established on unsuitable country. The result of their work between October, 1927, and July, 1928, appears t o have been that a reduction in the number of locations by 820 from 2442 to 1622 was made. This reconstruction proceeded on the basis of each settler being given a holding which would support a minimum herd of 20 cows. The chief areas affected were the Peel Estate, which almost certainly would never have been settled had not the Government been at its wits' end in 1923 to h o w what to do with the rapidly arriving migrants, the Abba River, South Bnsselton and Northcliffe areas. It was generally considered that even in the first-class country the carrying capacity of the pastures, having regard to the lack of summer rainfall, had been over-estimated and an attempt was now made to allocate larger areas. On the Peel Estate, where one of the greatest problems had proved to be that of effective drainage, the unit of holding was increased to 110 acres of clay land, or alternatively 80 acres of clay land and 60 acres of second-class country, generally sandy soil; the areas were made less here in the swamp areas h o w n as the Richardson Swamp and the Folly Flats respectively. Of an original 492 locations 227 were completely abandoned and 88 linked up with others. Expert opinion held that in the main the land here was not good enough.

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34 THE ECONOMIC BECORD MAY

As a matter of fact, the really fist-class areas had practically all gone before the land was acquired by the Government for €55,000, a price which probably represented its capabilities, being, as I understand, approximately 8s. per acre. Where there was some land of possibilities faulty drainage contributed to its going salt. Whatever justscation there may have been for the policy of Group Settlement considered as a whole, it was very hard to understand why Such risks were taken with the Peel Estate. To the 177 locations preserved were added 9 fresh ones. In the Busselton area of 923 locations 72 were abandoned and 124 linked up ; to the remaining 727 were added 5 Agricultural Bank propositions. In the Manjimup-Pemberton district things were much better. Of 364 holdings none were abandoned. The land here was most suitable and the pastures had progressed well-decidedly a brighter prospect than the majority of group areas. Here, however, it was also thought that in some cases the acreage was too small. At Northcliffe, of 374 locations there were 135 abandonments and 89 were linked up, while 82 new holdings were created. At Hester, of the 44 locations 14 were linked up to make workable areas. At the newer Denmark groups 40 were linked up with the same end in view, reducing the number to 205. To the total of 1622 locations which remained when the Board had completed its labours were to be added 144 new locations. The loss on the abandoned holdings was very close on a million pounds (€970,000), while €772,000 represented the expected loss on linked-up holdings. These figures made no allowance, however, fo r the value of the build- ings on the condemned locations which could be utilized else- where. Even making such allowance, the Minister, in reporting to the House the progress of reconstruction (August, 1928), estimated that probably over 14 million pounds would have to be written off. Up to that stage the total expenditure on Group Settlements had fallen very little short of €8,000,000, for one- sixth of which, it might be said, there was nothing to show but the abandoned holdings rapidly going back to nature. Sir James Mitchell, it is true, expressed the hope that the abandoned areas would be thrown open for selection, evidently believing that they had not yet been properly tried out. It was explained by Mr. Troy that it had been found impossible to adhere to the idea of putting settlers off the plan when 25 acres had been cleaned up and sown. There were not wanting instances where locations which had 100 acres cleared were carrying only a few cows-the holders were too far from making a living t o put


under the Bank. This was possibly, in some instances, their own fanlt-they had cleared away merrily on piece-work rates to earn big cheque-but often the pastures had not come on as expected. On the Peel Estate settlers with 15 cows and relatively large areas of cleared country found themselves unable to make a living. The Department had, in consequence of the failure of the pastures, t o repossess itself of cows in large num- bers. Sir James Mitchell about this time expressed the view that the original scheme, if properly developed, should not have cost the country such large sums, and pointed out that up to the time when he left office less than €1,250,000 had been spent. It was replied that at this stage there were but 20 cows all told on the groups and no dairying plant. Mr. Troy, in referring to the work of reconstruction which had thus been carried out, expressed the view that if Group Settlement could not now be worked out to a successful issue there was not much hope for the scheme at all.

Later in the same session, after this work of reconstruction had been explained to the Houses and received apparently with somewhat mingled feelings, was introduced an amending Bill to provide for the creation of a special body to assess the individual liability of settlers and to empower a writing off. The relevant sub-section of the 1925 Act was repealed, and by the new measure, which was assented to at the end of December, 1928, it was enacted that “the amount of expenditure on the area chargeable to the group settlers and the part thereof to be apportioned to each parcel of land intended to be granted shall be assessed and determined by a Board of three members to be appointed by the Governor, one of whom shall be an officer of the Agricultural Bank, with power to the Board at its discretion t o tls the amount chargeable and to be apportioned to each parcel of land within the Group Settlement area a t such sum below the actual expenditure as the Board may think fit, so far as such expenditure shall be found by the Board to be in ace98 of the capitalization which each group settler’s area can reasonably bear, having regard to the prospective income derivable therefrom.” The decisions of the Board were to be reported to the Governor. The Minister (Hr. Troy), in introducing the amending Bill to the House on the second reading, said that the Government had come to the conclusion that the Managing Trustee of the Agricultural*Bank (Mr. McLarty) ought not to be saddled with the responsibility of valuing the group settlement locations. It is conjectured that he was very unwilling


to be the assessor. Subject to the adoption of the measure and the completion of the Board’s work it was proposed (said Mx. Troy) to put settlers off t he scheme when the stage had been reached a t which his holding could carry 10 cows. In August, 1928, 35 settlers had reached the 15 cow stage and 93 the 10 cow stage, and at that time it was hoped that the figures for the nest year would be 168 and 283 respectively. Mr. Troy pointed out the necessity fon a speedy capitalization, as in a great many instances the capital expenditure had reached a sum upon which the settler could not possibly pay interest and at the same time maintain himself and his family. He then went into some figures which seem to have come as a shock to some, at least, of his auditor-n the Peel Estate on certain groups the average expenditure perJocation was nearly €3700 and the average area cleared and acreage sown were respectively 130 and 118, and, as he added, the country had failed; to respond, with the result that the pastures were not there fo r all the expenditure. Expert opinion considered, apparently, that over and above the initial mistake in utilizing the Peel Estate at all, an error had been committed in ploughing the sandy surface to too great a depth. The figures which Mr. Troy quoted were sufficiently high to justify the demand fo r substantial writing down in the valuations, even if the high Peel Estate figures (which did not cover land purchase charges or expenditure on drainage, roads and railways) be disregarded, as indeed it is scarcely fair to regard that area as truly representative of Group Settlement. Another aspect was that the settlers were becoming more and more dis- heartened by the load of debt heaped up against the areas, and it was necessary as soon as possible to establish a position in which the prospects of the settlers now really beginning to establish their herds would be brighter. Sir James Mitchell pointed out that whereas in August, 1925, when only €2,500,000 had been spent, there were 2273 settlers, now, when €5,500,000 (without counting expenditure on drainage, roads and railways, which brought the -re up to €7,750,000) had been espended, only 1766 settlers remained. “I cannot see where the money has gone and I do not suppose any other member can, ” remarked Sir James, and he blamed the “dragging on” as having caused the trouble. He said it was certainly not hirp fault, and limited his share t o the €1,053,000 spent up t o the time he left office in April, 1924. In the Legislative Council several members agreed with Mr. Stephenson, who said: “We have got ourselves into an unholy mess with Group Settlement.” Some consolation had


been felt when discussing the Bill in October, 1925, that any losses would be offset by the interest rebates coming to the Government under the migration agreements, but this crumb of comfort was now removed by Mr. Troy’s statement that 1685 farms carried the interest concession u g to €1000 and 81 up to €1500, but on all expenditure in excess the whole interest would have to be borne by the State. The total interest concession over 10 years would amount, he said, to approximately €700,000, and there was in addition a concession for losses of stock on holdings held by migrants at the rate of €125 per settler, which would total, for the 1623 migrants, €202,875. As the Premier interjected, on four-fifths of the money the full rate of interest would have to be paid. Sir James Mitchell had a t one time calculated that the saving owing to the interest concession would be €2,000,000 of an expenditure of €5,000,000, but the position was altered by the fact that so much of the expenditure had been in excess of the €1000 or €1500 per settler. The amending measure was passed without much further discussion, as it was obviously necessary to give some security to the remaining settlers.

IV. The Group Settlement Valuation Board was appointed,

pursuant to the amending Act of 1928, in February of 1929. Mr. W. Grogan, the Deputy Managing Trustee of the Agricul- tural Bank, was selected as the officer representing the Bank and as chairman. Of his ability and eficiency there is no possible doubt. Messrs. William Johnson and Charles A. McCormack, who are associated with Mr. Grogan in this very responsible task, are both farmers with South-West experience, the former at Man- jimup and the latter at Busselton. In the next month they commenced their labours. Not unnaturally they felt some doubt as to the meaning of the phrase “capitalization which each group settler’s area can reasonably bear, having regard to the prospective income derivable therefrom.’’ Was this prospective income to be calculated at the present time (of assessment of expenditure) or when the settler had come under the supervision of the Bank, or when his holding had become fully productive T The first re-valuations were made between, March and mid-July, and in their report presented to the Minister (Mr. Troy), not as the Act required to the Governor, though presum- ably formally made t o him, the members of the Board explained the principle upon which they had worked in dealing with the


327 properties which had fist been dealt with in pursuance of the 1928 Act. The Board had visited each of the holdings and satisfied itself by inspection as to the nature and quality of the land and pastures and the condition of permanent improvements. With such widely varying types of lands and soils (the Board had spread its activities over the groups from the Peel Estate through the older Manjimup areas, then around Busselton and right down to the newer Hester and Augusta-Karridale areas) no general standard of values, either in regard t o land or pastures, could be arrived at; the capitalization they had adopted being in each instance the sum on which it was considered a settler should, under competent methods of husbandry, be able to pay interest and instalments of principal to the Agricultural Bank on their mortgage terms, after providing a sufEcient living for himself and family. The Board had interpreted the doubtful wording of the sub-section as meaning the income that might be expected to accrue when full productivity from the development created with group settlement expenditure had been achieved. The Board saw that production on group areas generally had, not attained a stage at which it could with justice to the State be taken as a basis of permanent capital values. I t further considered three years to be a reasonable period to allow for the fruition of income contemplated by the Legislature, as in its opinion, in addition t o the perfecting of pastures, considerable building up of herds would generally be found to be necessary to ensure commensurate results. To bring expenditure into relation with income over this period, the Board recommended the application of a concession rate of interest, commencing at 4 per cent. per annum in the first year and increasing annually by 1 per cent. until the full rate of 7 per cent., which was being charged the settlers, should be reached. Advances had been made from time to time under statutory authority (the Group Settlers’ Advances Act 1925) for the purchase of live stock and other chattels. These had been kept apart from the developmental expenditure under the migration agreements and were the subject of separate contracts with the Minister in charge of Group Settlement. They were not now included in the Board’s valuations, and were only taken into consideration in so far as they affected prospective income. Like the developmental loans, they carried interest a t 7 per cent. and had been made repayable by five equal annual instalments, commencing three years from the date of advance. The Board expressed the opinion that it might be necessary to estend considerably the

1930 DEVELOPMENT OF (;BOW SETTLEMENT 39

terms of repayment of these ad-- to enable borrowers to meet their interest payments d- the early years. If the decision to charge individual settlers with a proportion of the moneys expended on drainage should be come to, a correspond- ing reduction in the capitalization of the holdings 80 charged would become necessary.

The holdings so far valued by the Board and included in its three reports rendered up t o April, 1930, are those of settlers whose areas have reached a stage of derelopment enabling them to carry at least 10 milking corn. The report of July, 1929, comprised, as has been already indicated, 327 holdings. The next report, that of December, 1929, covered an additional 143 holdings, and the third report (February, 1930) deals with 181 others. These holdings, 651 in all, are the whole of those which have reached the 10 COW stage of deveIopment and are ready to be taken over by the Agricultural B d , and the Board has therefore mspended its operations, being hopeful that by spring of this year the great majority of the remaining properties will have reached the same stage of development and be ready for valuation and transfer t o the Bank, The vduations made by the Board may be summarized:-

No. of Holdlnga ExpendItura on Valuation p h d Vdned. Such Holdhs . on Holdings.

1st Report . . . . . . 327 €1,113,191 €379,775 2nd Report . . . , . 143 48 1,143 151,305 3rd Report . . . . . 181 595,381 101,375

€722,455 _I_ - Totals . . . . . 651 €2,189,721

The expenditure includes accrued interest, but makes no aDowance for espenditure in connection with roads, railways o r drainage, or as shown above for stock and plant advances. The expenditure per holding fimre and the totals t o be mitten off may be tabulated as follows:-

- -

Amount to be Holding. (per Holdlnn). (Tot&).

Writing* Od Reeom- Expeaditw par Wrlttsn Oft mended

1st Report . . . . €3,404 €2,243 €733,422 2nd Report . . . . 3,365 2,306 329,837 3rd Report . . . . 3,289 2,232 404,006

From these figures it will be seen that in the valuation of roughly one-third of the locations developed under the scheme a writing off of S1,467,265 has become necessary. It would appear that when the whoLe of the 1743 holdings have been valued the


loss will be in the neighbourhood of €4,000,000, if it does not actually exceed that figure.

The Group Settlement Department, after the first Progress Report of the Board had been made, commenced to circularize the settlers whose holdings had been valued, asking them if they desired to acquire the property at the assessment made; if so, they had one month within which either t o pay that valuation or to give a mortgage to the Bank. While arrangements for their transfer to the Bank were pending, advances were to be made for super. for spring top-dressing and completion of p a r t i a l l y - W e d fencing or clearing contracts. The land, save where in a repurchased estate, was to be granted as ai free home- stead in fee simple; where the settler occupied repurchased land he could only secure a 30 years’ conditional purchase, but it was expressed to be the Government’s intention t o introduce legislation which would give him the freehold. Cost of survey, fees f o r Crown Qrant and registration and stamp duty were to be added to the principal debt and covered by the mortgage to be executed by the settler. The provisions for payment of interest and repayment of principal were as follows :-During the first 10 years interest only to be payable, and that to start a t 4 per cent. for the first year and rise I per cent. yearly until the full rate of 7 per cent. was reached (as recommended by the Valuation Board), then principal and interest would become payable over the next 20 years by instalments. The mortgage would also provide for payment of the advances made for purchase of stock and chattels, interest only on which would be payable for the first 4 years, after which the advances were to be repayable by instalments over a prescribed period. These arrangements mg- gested in the circular letter of the Under Secretary for Lands were in conformitp with the proposals of the Group Settlement Valuation Board. The circular letters &st went out in mid- August, 1929. A counter proposal regarding repayment of principal and payment of interest was made by certain settlers in the Manjimup area. This proposal, hewn' as the Nelson proposal, suggested that for 3 years no interest should be chargeable, in the fourth year it should commence at 3+ per cent. and rise by 1 per cent. annually to 64 per cent. (maximum) in the seventh year. Meanwhile, the advances for stock and chattels were t o be liquidated in five instalments and interest at 7 per cent. paid on outstanding balance yearly. The Nelson proposal then provided that the principal (Capital Account) should be-


come repaFble in the sisth year and be liquidated in 20 payments. This would result in the complete return to the State of moneys loaned within 25 years, instead of the 30 contemplated under the Departmental proposal. This proposal waa considered by those administering Group Settlement, including the Agricdtnral Bank Trustees, and as a result an alternative proposal on the Government’s part was disclosed at the beginning of October, as follows:-Postponement of repayment of principal on stock and plant loans for an additional two years- until the fourth year. Deferment of part of interest on principal moneys from the fourth to the tenth year-total a.n.nual payments in those years to be limited to €100 per €1000 principal debt, the interest so deferred to be capitalized and paid, with principal, over the ensuing 20 years by equalized annual payments of €115 7s. per €1000 principal debt. Interest, however, was to remain the same as in the original circular, and here the authorities felt themselves quite unable to grant the concession outlined in the Nelson proposal. This alternative proposal has a good deal to commend it in that the stabilization of payments adjusts them better to the capacity of the settler to meet them. The cancellation of portion of the interest asked for in the settlers’ proposal is met by a funding of portion of the interest instead.

v. The Group Settlement situation has now been put upon a

fairly stable basis; whether or no the settlers will adapt themselves t o the improved situation and justify the faith that is being reposed in the country and themselves remains to be seen. The inaugurator of the Group Scheme, Sir James Mitchell, has just returned to power in Western Australia. The settlers are assured of sympathetic treatment by the new administration, which is not to suggest in any way that Mr. An,oWin and Mr. Troy have not afforded it, but probably Sir James has more driving force than his two successors. However hard one tries to justify the campaign in the South-West by pointing to the fact that butter production in that region is beginning to over- take the demand of the local market with every prospect of becoming an exported commodity in a relatively short time, it is impossible to escape from the conclusion of the Commissioners of 1924-25 that the farms which have been established as the result of Group Settlement would have been more cheaply established by individual settlement under the auspices of the Agri-

42 THE ECONOMIC BECORD MAY

cultural Bank. Another suggestion has been made that local butter production could have been stimulated if the Government thought it necessary by the payment of a bonus upon production; this would have to be met, however, out of some fund provided by Parliament, and there is no doubt that the migration agreements offered attractive Gnancial concessions. In spite of the heavy losses incurred there has very definitely been a development of part of the South-West achieved. The value of butter production from the group areas for the year ending 30th June, 1929, has been estimated as in the neighbonrhood of €150,000. Bacon production is increasing, and proving, as generally, a profitable side-line. The question f o r the consideration of those interested is, however, whether the price paid for increased production under the Group Settlement scheme is not too high. In one of his speeches on Group Settlement Mr. Troy expressed himself thus : “The scheme largely was experimental, the country was experimental, the development largely experimental-the administration was blindly groping in the dark.” In December, 1925, Sir James Mitchell had said, “The South- West will do for Western Australia what Gippsland did for Victoria.” One wonders whether Sir James was aware that Gippsland ruined tmo generations before the third reaped the fruit of earlier development. If so it is possible that a considerable part of the cost had been counted. Mr., Collier, speaking at Knginew on March 29th, said that the State had suffered heavy losses from Group Settlement. The Government had not, he said, completed the valuations, but when the work was completed it was estimated that it would be found that €5,000,000 had been wasted on the mad scheme. This speech seems to suggest that Mk. Collier, in common with many others, believes that the scheme was unsound in principle and that the State had, to use a homely phrase, bitten off more than it could chew. The future of the 1696 settlers which remain wil l be watched with interest. Their herds have been built up by importations of dairy cattle from the Eastern States during the past two years, and there is an assured local market for their produce. None the less some doubt exists whether they d l remain on their holdings, even though their financial position has been cleared up during recent months. Many have quite good prospects if they are prepared to give to their herds and holdings that un- remitting care and interest which a dairy farm demands. In conclusion, some figures may be of interest as showing what h a been done. The number of holdings at 31/12/1929 waa 1743-


the number of settlers, 1696, in the 141 groups remaining of the total of 150 established between 1921 and 1925 (there had been over 4000 altogether)-the total population of the groups, 7483 (as against 9300 in 1925). The area of land being developed under Group Settlement conditions a t t h e same date was 392,444 acres, of which approximately 85,000 acres were sown in pasture. The number of cows carried on the group areas WBI~ 11,000, and there were, in addition, over 4000 yearling heifers and 290 bulls. The number of holdings carrying 10 or more cows was, as at 14/2/1930, 585, of which it was estimated that 50 per cent. were carrying 15 or more cows. The total expenditure t o 31/12/1929 was €6,484,610, to which has to be added €2,370,000, representing espenditure on drainage, roads and railways, so that altogether €9,000,000 may be said ta have been expended to settle (let us hope permanently) well under 2000 settlers. It is certainly development-at a price.

GORDON TAYLOR. University of Melbourne.

Documents

THE DEVELOPMENT OF GROUP SETTLEMENT IN WESTERN AUSTRALIA