the date that the Board commenced to credit interest on the invoice value) and the date on which the documents were negotiated in London a flat rate of exchange of 27s. 6d. per cent. was to be charged, that is, debited against the State. By this method it was thought that the interest and exchange accounts, compiled as above by the Australian Wheat Board, would have made together a provision for interest, approximating the interest that would be incurred in London and thus each State's proportion of the interest would have been properly known and allotted. Owing to various alterations in the method of advancing the loans, this method became inoperative, but the balance sheet as published at the 31st December, 1917, was worked up on these figures and at a conference of accountants of the schemes, at which Mr. Berkeley attended, another method was arranged. This method was briefly:—1. The amount of interest due to the Imperial Government on loans was to be ascertained. 2. This amount was to be apportioned between the States in the same method as were other charges and proceeds of the General Pool, that is on the basis of the exportable surplus. 3. This would involve scrapping all the provisional accounts shown in the 31st December, 1917, statement and balance sheet as soon as the correct apportionment could be arrived at. It will be seen, however, that (2) should be subject to an adjustment to any advantage or disadvantage reaped by a State through its shipments having gone forward earlier or later than the tonnage of this surplus warranted, also to adjust earlier or later payment of Advances. To get over this difficulty it was arranged—1, That the average due date of all cash receipts of the four States, in payment of the total exportable surplus of the four States, was to be considered as the average due date on which payment was due to the States by the Australian Wheat Board; that is to say, that the whole of the income of the Board against its sales (which was, of course, received at various and many different dates) was to be worked to the average due date for the one lump sum. 2, The average date of the payments as received by each State for its own exportable surplus was to be considered the date upon which payment was actually made to this State by the Australian Wheat Board. It would, therefore, be at once seen whether a State had received its proceeds or sales earlier or later than the average due date, that all income was received on account of the four States by the Australian Wheat Board. Where States had received their income earlier than they should have done, and this had reduced interest on their local overdraft proportionately, they were to pay to the Australian Wheat Board five per cent. interest on their income from the average due date from which they received income to the date on which they should have received it, that is the average due date for the whole of the States' income. The moneys paid by these States to the General Pool would be paid over to those States which had had correspondingly late payments of their income, and who had thus incurred higher interest on their local overdraft than they would have done if they had shipped in their proper order and according to their fair proportion of tonnage. It will be seen from the above that the method of working the overseas interest is thus a perfectly fair one to all States, as, whether a State was able to earn its income early or late, the means taken to adjust the total interest were equitable, for they counterbalanced any discrepancies over the shipping dates, or over the dates of the receipt of Import Advances. I have dealt above with general arrangements which were applied to both the 1915-16 and 1916-17 Pools. It will now be necessary to trace the method of separation of the two Pools. It was decided by the Australian Wheat Board that the date of separation should be as on the 31st December, 1916, that date to be the basis on which the proceeds of realisations were to be apportioned between the 1915-16 and 1916-17 crops. The apportionment of the proceeds was to be as follows:—1915-16 was to take—1, all local sales contracts made on or before the 31st December, 1916: 2, all overseas contracts made on or before the 31st December, 1916, and shipped; 3, all overseas contracts made on or before the 31st December, 1916, but not shipped; and 4, after the total quantity of the above was ascertained this has to be deducted from the total yield of that particular harvest and the balance allotted to Contract 115; this contract being the 3,000,000 tons f.o.b. one, and has also to include all the wheat sold for flour shipments on account of this contract. This apportionment was to be made irrespective of whether 1915-16 or 1916-17 wheat was supplied on account of (3) or (4). Naturally (1) and (2) were entirely 1915-16 wheat, for practically none of the 1916-17 crop had come to centres where it could be utilised prior to the 31st December. Despite this, it was arranged that all acquirements of 1915-16 wheat should be duly recorded so that any natural increase or loss on account of any Pool should be borne by the particular Pool. Thus, though a ship, perhaps, went forward with 1916-17 wheat in satisfaction of the 1915-16 portion of Contract 115 the outturn of the shipment would be shown against the 1916-17 outturn, though the cash proceeds if drawn would, as a matter of fact, be allotted to 1915-16. The result would be that, when all the 1915-16 wheat was cleared, it would be known what quantity of such wheat was delivered against the amount of certificates issued, and would thus be seen whether there would be any increase or loss. In the event of an increase the amount allotted to 1915-16 Pool on the 115 Contract would be correspondingly increased. If there was a shortage in outturn under contracts I believe that in all States, certainly in ours, the agents were responsible. No agent in this State, however, has shown a loss on his outturn of 1915-16 wheat. Money allotments, 1915-16—While these statements of apportionment deal with quantities the same allotment, however, practically covers moneys as under 1 E.S. Accounts Notes. It was known approximately what 1, 2, and 3 had realised to the General Pool, and it would be eventually known upon the receipt of the final outturns exactly what they had realised, while 4 was ascertainable under the definite terms of the contract, which fixed delivery as f.o.b. under certain conditions. The first moneys received by each State up to this amount were to be taken as being the moneys received on account of the 1915-16 Pool, irrespective of what Pool they were ear marked for at the time the advances were paid to us by the Australian Wheat Board, or at the time documents were discounted. Due date statement—It will now be seen that the moneys to allot to 1915-16 could be ascertained, and once these were ascertained it was necessary to make up the due date statement. This statement has now been prepared, has been examined by the Audit Inspector, and is known to be correct. It is with the Auditor General for his certification, and may be received back by me at any time now. I may say that this statement has been passed by the Audit Inspector without a single alteration, as was the case with the statement and balance sheet which you hold. The passing of this statement by him unaltered was not the result of a hurried examination, for the examination of the due date statement occupied a considerable period, every item being checked by him from the bank's statements of receipts and expenditure. Interest on Imperial loans—The total overseas interest on the £11,000,000 loan for all States amounted to £280,249 8s. 5d. while the credit interest on Contracts 248 and 361 amounted to £62,372 8s. 11d., making a net payment of £217,876 19s. 6d. due by the Australian Wheat Board on account of the participating States to the Imperial Government under 1915-16 contracts, with the exception of Contract 115. I do not think it probable that the Imperial Government have yet debited the Australian Wheat Board finally with the interest on Contract 115 for payments made in advance of the date they were due; but the Australian Wheat Board are keeping figures which show what our idea of such interest should be, and they will be approximately correct with the Imperial Government's figures, and the two will eventually be reconciled. The total interest incurred by all States through early payments made by the Imperial Government on account of this contract is allocated by the Australian Wheat Board to 1915-16 as approximately £90,281, making a total net interest debited against the whole of the 1915-16 Pool (all States) of £308,158. I may say that all interest to date has been at 5 per cent., an exceedingly low rate when the value of money at the present time is taken into consideration. At the present time the banks are charging, on what are reckoned to be