PROSPERITY AND CRISIS AFTER 
small part of the public works. By the autumn of 1855, 
therefore, the colony had arrived at a point—the first 
time since 1851—‘when the supply of labour became 
temporarily in excess of the demand and the question of 
a reduced Rate of Wages had to be considered in its most 
urgent form’—the First Period of Lower Wages. 
VI. The Period of Recovery and Return to Normal, when trade 
and industry became stabilized at the lower level of 
costs, the Second Period of Lower Wages. 
The interpretation placed upon this succession of events by 
Tooke and Newmarch also has a peculiar significance in the 
light of later social and industrial tendencies. 
‘It is clear beyond all doubt that the whole train of commercial and 
social phenomena in Victoria subsequent to August 1851, resolve 
themselves into consequences flowing from the sudden increase in 
the proportion of about four to one of the wages of all kinds of 
Labour, but especially in the wages of the most numerous class of 
Labour, namely those possessing no peculiar kind of skifl.”? 
They proceed to show that the efficient cause of the situation 
which arose is to be found in the vast expansion in the purchasing 
power of the community, which was translated so rapidly into 
an enormously increased demand for imported commodities.2 
Further : 
‘the appearance in the market of these amounts of capital in the 
bands of persons anxious to become buyers produced its full and 
natural influence in raising prices, notwithstanding the difficulties 
connected with the command of a circulating medium of coin and 
bank-notes. We may, indeed, go a step further and say that the 
greatly extended quantity of coin and bank-notes ultimately em- 
ployed in Victoria was a consequence and not a cause of the high 
prices.’ 
It will be shown that in later periods, which were marked by 
huge and over-rapid capital borrowings, effects very similar to 
those here described have followed, and that the more or less 
sudden cessation of fresh supplies of capital has always tended 
! Tooke and Newmarch, p. 805. 
? “The demand for all those articles which constitute necessities, comforts, and 
luxuries for a vigorous population was increased fourfold, or, to state the same result 
in probably the more effective mode, for every article for which there had been but 
one buyer there suddenly appeared four buyers.’ —Tooke and Newmarch, bid.