In 1869 authority had been obtained from Parliament to liquidate the accumulated deficits by the issue of Treasury bills for the sum of L350,000, the increased duties of Customs imposed for temporary purposes in 1866 being at the same time continued for twelve months. In January, 1872, the Treasurer (Mr. Bell) referred in committee of the Assembly to the accumulated deficit, stating that the Treasury bills which had temporarily provided for it were falling due, and that there was no hope of paying the amount out of revenue. He therefore announced the intention of the Government to retire the bills and fund the debt by issuing long-dated debentures. That having been done, the effect was to produce a surplus for the year 1872 of L487,333. This indicated that had the Government exhibited a little more confidence the whole amount of the deficit might have been paid off out of revenue; for in the next year, shortly before the Palmer Government went out of office, a further surplus of L158,874 was realised. This sum, with the excess surplus of L137,333 for the preceding year, totalled L296,207, leaving only L53,793 short of the entire amount of the Treasury bills. In the next year there would have been a surplus, but the Macalister Ministry, which assumed office early in January, 1874--Mr. William Hemmant being Treasurer--carried L240,000 to a surplus revenue account, and ended the year with a revenue deficit of L200,762. While the revenue of that year only increased by L40,913, the expenditure, in addition to the surplus revenue item, increased by L160,550. The Macalister Ministry could not keep down expenditure, and in 1875-6--the end of the financial year having been changed from December to June--with a revenue slightly exceeding 11/4 millions, they had a further deficit of L51,663. The same party continued in power for a further two years under the leadership successively of Mr. George Thorn and Mr. John Douglas. Revenue continued fairly elastic, and the deficit period was followed by two years showing small surpluses. [Illustration: HINCHINBROOK CHANNEL, NORTH QUEENSLAND] [Illustration: THE NARROWS AND MOUNT LARCOMBE, NEAR GLADSTONE]