One of the advantages which Canada has reaped {275} from internal confederation has been the greatly decreased rate of interest which she pays for her borrowings. A high financial authority has estimated that the Australasian colonies would gain, from a consolidated federal stock, an advantage equal to a diminution of more that £20,000,000 on the general indebtedness. Facts such as these have naturally led the advocates of national unity to suggest a further step and to urge that a financial federation of the public debts of the Empire, guaranteed by the strength and resources of the nation at large, would reduce the cost of public money for the colonies and dependencies to at least the level of interest paid on the National Debt. It has been pointed out with force and reason that the saving which might thus be effected under a guarantee of Imperial unity would of itself be sufficient to enable the colonies to contribute a large sum to the national defence without any addition to the burdens which they now bear, while sensibly relieving the taxpayer of the United Kingdom. The fixing of a reasonable limit to thus borrowing on national credit for each portion of the Empire would, of course, present a difficulty, but it is one which has, on a small scale, been grappled with in the provinces of the Canadian confederation, and does not seem to be altogether insuperable. The federally guaranteed debt would certainly be held almost exclusively within the Empire itself, and the general desire for its complete security might fairly be expected to act as a strong national bond. {276} Enormous as is the amount which the mother-country has already staked in the colonies and dependencies, it seems certain that under favourable conditions capital will more and more seek these areas of peaceful industrial development rather than take the risks of internal revolutions in South America or military convulsions in Europe. With closer union this tendency, in itself essentially healthy, would increase. With separation, it would be deeply affected by two considerations: first, the weakened guarantee of safety to the individual colony: and second, the new burden which would be laid upon the separating colony in undertaking single-handed the whole task of defence, and the whole diplomatic, consular and other organization incident to national independence. Inevitably expenses would go up while credit went down. I am satisfied that people either in England or abroad who for colonial relations thoughtlessly borrow the simile of the ripe fruit dropping easily from the parent tree, have formed little conception of the violent financial wrench involved in the separation of even one great colony, or of the strength of the financial bond which, every day increasing in strength, is binding more closely together with ties of common interest the mother-land and her greatest offshoots.