After that came a great depression in the price of wool, and the colony was again at a low ebb. In March, 1866, unwashed South Australian wool fetched 1_s._ 2½_d._ a pound. In March, 1869, it fetched 8_d._ In looking at the difference between these times, the reader must remember that the squatters’ liabilities were the same with the low price as they had been with the high. The normal squatter generally owes money to his banker or merchant, for which he pays some rate of interest varying from 8 to 11 per cent.,--and not unfrequently a percentage even higher than that. I have endeavoured in the former volume to explain his condition in this respect. With unwashed wool at 1_s._ 2_d._ or 1_s._ 3_d._ a pound not only will his interest not trouble him, but his debt will diminish apparently without any effort on his own part. But with wool at 8_d._ his debt, if it be at all heavy, will grow. The sum he realises from his wool will not pay the expenses of his men, keep himself, and pay his interest. After a year or two with such a result the merchant will feel that he is becoming insecure and will foreclose. Then the squatter is no longer a squatter, but takes probably to the care of sheep for some more fortunate man. In March, 1869, 8_d._ a pound was the price for unwashed or greasy South Australian wool; in 1870 it was 8½_d._; in February, 1870, it was again 8_d._ These had been three bad years, and many men were either ruined or on the brink of ruin; but in July, 1871, it had risen to 11_d._ a pound; in September, 1871, to 1_s._ 0½_d._; and in March, 1872, it was as high as 1_s._ 2_d._ and 1_s._ 3_d._ Twenty thousand sheep is by no means a large flock. On the contrary a squatter with no more than 20,000 is a small man. But a difference of 6_d._ in the pound on unwashed wool from 20,000 sheep amounts to about £3,000. It will be exactly that sum if each sheep give 6 lbs., which is a high but not an excessive average for unwashed wool. The expense of maintaining a run with 20,000 sheep, including the cost of the squatter’s own home, may be put at £2,000 per annum, being £100 for every thousand sheep. It will at once be seen how rich the poor man may at once become by such a change in the circumstances of the wool trade. And it will be seen also how speculative and precarious such a business must be. The wool-grower of Australia watches the price-list for England with an intense and natural anxiety. He can do little or nothing to regulate the market. He cannot understand why it is that the fluctuations should be so great. But he obeys the market, too often with an implicit confidence which it does not deserve. When prices are high he increases his flocks,--and with his flocks he increases his debt also. He is almost negligent how much he may owe if wool be high. The temptation is so great that if his credit be good he will almost assuredly increase his flock to the bearing capability of his run. Three years of high