Section 5 of the statutes requires a brief explanation. In the first year, the calculation of the advances to be made to the association members could not, of course, be based upon the net profits of the previous year, and the committee therefore suggested a fixed sum of one shilling per hour. This strikingly high rate will perhaps excite surprise, particularly in view of the scale of prices that prevailed at the Kenia; and it may reasonably be asked whence the committee derived the courage to hope for such a high rate of profits as would justify the payment of such an advance. But this valuation was not recklessly made, it was in truth the expression of extreme prudence. The results of the associated productive labour hitherto in operation had actually been much more favourable. The corn industry, for example, had yielded a gross return of a little over 41,000 cwt. of different cereals for a total expenditure of 44,500 hours of labour. The average price of these cereals in Eden Vale at that time was not quite 3s. per cwt., as we had grown more than we needed, and the export through Mombasa yielded only 3s. on account of the still very primitive means of transport. We had therefore, in round figures, agricultural produce worth 6000£. The cost of producing this was: materials 400£, amortisation of invested capital (implements and cattle) 300£; so that 5,300£ remained as net profit. As a tax to cover all those expenses which, in accordance with our programme, had to be incurred by the commonwealth, and which will be spoken of further on, not less than thirty-five per cent. was set aside. Thus a round sum of 3,400£ remained as disposable profit. Divided by the 44,500 hours of labour, this gave 1s. 6d. for each hour. This was also approximately the average profit of the other kinds of production, so far as it was possible to assess it in the absence of a general market at the Kenia. Thus it could be assumed with the utmost confidence that, had we been able to control the prices of all commodities by means of supply and demand, there would either have been paid, or might have been assessed, at least a price equivalent to that which produced the agricultural profit. For we could at once have produced--as far as our supply of labour went--and disposed of cereal crops valued at 3s. per cwt. at Eden Vale; therefore, in the period of work through which we had already passed everyone was able to earn at least 1s. 6d. by one hour's labour. But, as will presently be seen, we were entering upon the next period of work with much improved means; therefore, apart from unforeseen contingencies, the productiveness of our labour must very considerably increase, so that, in granting an advance of one shilling for each hour of labour, we calculated that we were advancing scarcely the half of the actual earnings--an assumption that was fully borne out by the result. In later seasons it became the practice of most associations to make the advance as much as