LETTER FROM LIEUTENANT KING,

NOW EMPLOYED IN COMPLETING A
SURVEY OF NEW HOLLAND.

[It is known that our Government, anxi. ous for the completion of a survey of New Holland, has sent an expedition, under Lieutenant King of the Royal Navy (son of Governor King), to examine all the coast of that immense country which has not been already visited and laid down by British navigators. We are extremely obliged to a Friend, who has communicated to us a private letter from Lieutenant King, which gives some account of his proceedings down to the middle of June last, and which, slight as it is, will interest our readers; and the

more, because some unfounded reports were in circulation of the loss of the Mermaid (Lieutenant King's vessel), and of all her crew, in the preceding February. The French expedition, which sailed long after Lieutenant King, for this coast, will find themselves anticipated by Lieutenant King's EDITOR.]

visit.

H. M. Cutter, Mermaid, Timor, June 11, 1818.

DEAR SIR,

It is with much pleasure that I have met with an opportunity of forwarding a brief account of my first proceedings; the more so that I have been enabled to ascertain the most particular points pointed out in my instructions, viz. the Great Bay of Van Diemen, and the opening to the eastward of the north-west Cape, and behind the Rosemary islands. These I have examined with the greatest care; and I trust that, although not fortunate enough to meet with any opening to the eastward of the north-west Cape, I shall not be considered to have lost my time. The size of the vessel I am in, puts it out of my power to form a finished chart; but, having every thing in right form and order, I shall not be long after my arrival ere I shall be able to finish one, to send to the Admiralty by the first following opportunity, as well as a detailed account of my proceedings. Suffice for me at present to say, that the north coast, and, I fear, the whole of the north-west coast of New Holland, will turn out to be entirely unprofitable for any settlement or improvement; for, as yet, we have seen nothing to offer the least inducement towards colonization. The natural productions are, in fact, nothing but the sago, which, in some parts on the

north coast, is abundant. There appears to be very little land that could be brought into any cultivation; and that is so surrounded with marshes and overflowings of the sea, that it could be made little use of. The country, as far as 12° 38′′ south, to which point 1 ascended a river which I discovered at the bottom of Van Die men's Gulf, was not an atom better.

The coast about Exmouth's Gulf (an opening to the south-east of the N. W. Cape), is truly deplorable, worse than any description I have seen of the Deserts of Arabia. During the night, as well as the day, the heat is almost insufferable; the soil producing nothing useful for man that we could discover; but the tracks of natives in many parts convinced us, that human beings existed in this condemned corner of Australia. Emic tracks were also seen.

The natives on the north coast were very annoying; and though I did every thing I could to conciliate them, and bore many things from them without resentment, yet I was obliged once or twice to fire in self-defence. I am now sufficiently convinced that we cannot hope to be able to maintain peace with them, acquainted as they are with the Malays, who have, whereever they land, when fishing for trefan, battles with them, in which the Malays use musquetry, to which, of course, the Australians are become so accustomed, that I do not think they have such a dread of fire-arms as might be imagined. From a conversation I had with the Rajah of a fleet of proas who were at anchor here, and who fish on the coast of Australia every year, I confirmed the above observation; and learnt further, that no-rivers, except what are produced by the rains in the rainy season, are known to them. The coast is called by them " Marega," and the natives "Maregas." The Rajah described them to me as treacherous and cruel; but that character so well applies to his own nation, that if it is the case (of which I have little doubt), they may have been the pupils of the Malays themselves.

As to our health, we fortunately passed through the trying time of the change of the monsoon without any sickness; and we are all without exception well. I am, &c.

PHILIP P. KING, Lt. R. N.

ON THE STOCKS, OR PUBLIC FUNDS.

MR EDITOR,

IN a former communication on this subject, I had proceeded so far as to explain the general principle of the transactions between government and the original lender, who advances money for the public use, as well as the manner in which the latter transfers or sells to others the bills or securities which he receives for the money so advanced. For the sake of illustration I conceived it necessary to take a very simple case, though in doing so I was under the necessity of representing the transaction in a somewhat different point of view from what actually takes place. Presuming, however, that such of your readers as real ly desire information upon the subject, have made themselves masters of my former communication, I shall now, with your leave, proceed to give a more particular, as well as a more correct account of the public funds, and of the transactions to which they give rise.

If, as was formerly supposed, the bills or securities which the lender receives for his money, uniformly bore interest at per cent. on the sum specified in the bill, it is obvious that the whole national debt would consist simply of 5 per cent. stock, because it is these securities that constitute what is called government stock. Our rulers, however, for reasons afterwards to be explained, have thought it expedient to grant securities to the pub lic creditor, bearing a lower rate of interest, viz. 4, but in most cases only 3 per cent. on the sum specified in such securities; and it is this circumstance that has given rise to the various denominations of 3, 4, and 5 per cent. stock. But though government thus fixes the rate at which its own securities are to bear interest, it must not be supposed that it actually borrows money at 3, or even at 4 per cent. Notwithstanding the superiority of government credit to that of companies or individuals, the minister who transacts the loan, on the part of the state, is seldom able to borrow at a rate much below the legal interest of 5 per cent.; and in proportion as he lowers the rate at which the securities are to bear interest, in the same proportion must he increase the nominal amount of the securities VOL. IV.

granted. To explain this by an example, let it be supposed that government wishes to borrow £100, and that the bills or securities, to be granted, are to bear interest at 4 per cent. on the sum specified in the bill; but that the lender refuses to take less than 5 per cent. for the money that he advances. It is obvious, that the only way in which a bargain can be concluded is, by government granting to the lender, for the £100 borrowed, an acknowledgement for such a sum as at 4 per cent. will yield an annual interest of £5. Now, at 4 per cent., it will require £125 to yield £5 of interest; and consequently, for every £100 Sterling borrowed on 4 per cent. securities, government actually grants to the lender an acknowledgement for £125; or, which is the same thing, for every £80 Sterling borrowed, an acknowledgement is granted for £100. In like manner, when the government securities bear only 3 per cent. the lender receives an acknowledgement of £100 for every £60 Sterling which he advances, and in both cases actually lends his money at the rate of 5 per cent. interest. These two species of securities constitute what are called 3 and per cent. stock, and their price is affected in the same way, and by the same circumstances, as that of the 5 per cent.

The term stock, in its proper acceptation, denotes that capital with which a trading company, as the Bank of England or East India Company, carries on trade; and a stockholder or partner is one who has advanced a certain share of that capital, and is thereby entitled to draw a proportional share of the concern. The term, therefore, cannot, strictly speaking, be applied to government securities, be cause then the capital or sum advanced is not employed in bringing in an immediate return of profit, but is actually expended without the smallest prospect of being recovered. At the same time, the public creditor is in a situation in many respects so similar to a partner in a mercantile concern, and the word stockholder has been so long and so generally applied to him, that the application may now be considered as sanctioned by use. The term fund is sometimes substituted for that of stock, and the person who purchases government securities is said to invest his money in the public funds. 20

This

supposition that it is not in the contemplation of government ever directly to pay off the national debt, and that its object, therefore, is to borrow on the lowest interest possible. Now, the plan that has been adopted will certainly enable it to do so, better than paying on the sum borrowed such an interest as the lender would be willing to accept. It was formerly shewn that, in time of peace, or when the amount of government securities ceases to accumulate, while the demand for them increases, the price of stock may, and does actually, rise higher than what it cost the original lender. This will take place on all kinds of stock, but in a greater degree on 4 per cents. than 5 per cents., and on 3 per cents. than 4 per cents. Though government cannot oblige the public creditor to take less, in payment of his capital, than £100 Sterling for £100 stock, it can at all times oblige him to take that sum, whatever the nature of his stock may be. Whenever stock, therefore, reaches par-that is, whenever £100 of any sort of stock rises in the market to £100 Sterling; a stop is necessarily put to a farther rise of price; because the purchaser, who gives more than £100 Sterling for it, may be called upon the next day to give it up to government for £100. Now, as £100 of 5 per cent. stock is worth £100 Sterling, while £100 of 4 per cent. is worth only £80 Sterling, and £100 of 3 per cent. stock only £60 Sterling, reckoning that price their true value which yields 5 per cent. to the purchaser, it is obvious that 5 per cent. stock cannot rise above its true value, without making the purchaser run the risk of being paid off with less than it cost him; while 4 per cents. may rise £20, and 3 per cents. £40, before the purchaser runs any such risk. The prospect, then, of this rise induces the lender to advance money to go vernment on easier terms than he would be disposed to do if there were no such prospect; and though, with all this advantage, government has seldom been able to borrow at a lower rate than 5 per cent., there is no doubt that the loans have been procured on more favourable terms than they would have been, had the interest been paid on the actual sum borrowed, and not on a nominal capital. It is for the same reason, that when stock rises aDove its true value (meaning always,

by its true value, the price at which the purchaser has 5 per cent. for his money), the 3 per cents. are higher in proportion than the 4 per cents., and the 4 per cents. than the 5 per cents. Thus, on a late occasion, when the 3 per cents. were at 75, the 4 per cents. were at 93, and the 5 per cents. at 106; whereas had the two last risen in the same proportion with the 3 per cents., according to their respective interests, the 4 per cents. would have been at 100, and the 5 per cents. at 125. The latter, indeed, would seldom or ever rise above par were it not understood, or rather had it not been at different times enacted, that the holders of this stock should not be obliged to take payment of their capital till such time as a certain quantity of the other kinds of stock be paid off.

When a loan is negotiated, the pub lic creditor sometimes receives his se curities all in one sort of stock or fund. Thus, in 1808, when eight millions were raised by loan, the lender had assigned to him £118:3:6 of 4 per cent. stock, for every £100 Sterling that he advanced, being at the rate of £4: 14 6 per cent. of interest on the sum borrowed. In general, however, the security granted to the lender, or the capital for which he receives credit, consists of a quantity of stock of different kinds. Thus, in the loan of twenty-two millions in 1812, the lenders received £120 of 3 per cent. red. and £56 of 3 per cent. consols, for every £100 Sterling advanced. Now, £120 at 3 per cent. yields £3, 12s., and £56 at 3 per cent. yields £1: 13: 7, consequently the lender had £5: 5:7 per cent. for his money. While the loan is going onthat is, before the last instalment is paid up, the lender or contractor is at liberty to sell or transfer to another; at once, the different kinds of stock which he himself receives, and in the same proportion as he receives them. Thus in the loan of 1812, mentioned above, the contractor had it in his power, so long as his instaliments were not all paid up, either to sell the 3 per per cent. red. and the 3 per cent: consols, separately, or to transfer them together, as he received them; in the proportion of £120 of the one and £56 of the other. These two sums, taken together, constitute what is called the omnium of that loan; and as they cost the contractor exactly £100 Sterling