THE PRELUDE TO THE COLLAPSE OF 1893 55 
In Melbourne the speculation in land-company shares exhibited 
an exuberant confidence to which the banks once more re- 
sponded readily! A positive mania for the creation of these 
companies ‘pushed ordinary business quite out of court. In 
Victoria alone hundreds of these parasitical concerns were 
flourishing, every week saw the flotation of half a dozen new 
ones, and they were obtaining deposits totalling five millions 
a year from Britain. 
The second phase of the boom in the eastern states chiefly 
developed around city property, and manifested itself in the 
marvellous increase in the values of city frontages in main 
streets. But the frenzy soon spread to suburban estates, and 
subdivisional sales became an obsession in all three communities. 
Profits of fifty per cent. were quite common on city blocks, and 
in every way the position in suburban districts was quite as un- 
sound. Free carriages for prospective buyers, pavilions erected 
upon the estate to be subdivided, free champagne lunches at the 
sale, and other amenities placed in the way of the purchasers, 
bear witness to the reckless character of the business of land 
selling. Added to this were the offers of longer and longer 
terms for repayment, with smaller and smaller initial deposits. 
Prices bore no relation to returns, the buyer made no attempt 
to improve his holding, and was solely interested in the prospect 
of turning it over at a profit before he was called on to pay any 
large proportion of the purchase-price. Some land companies 
in their advertisements guaranteed profits of twenty and thirty 
per cent. within a few months of purchase.? 
These unsound conditions reached their dizziest heights in 
Melbourne. The year 1888 proved to be the ‘annus mirabilis ’ of 
the whole boom period. In that year reckless speculation in 
mining and land transactions reached its pinnacle. Nor was the 
mania confined to those fields, for the community was seized 
with a gambling frenzy. The banks played their part by 
! The lengths to which it was possible for imprudent finance to go are shown by 
the report of the Banking Commission appointed by the Victorian Government. 
Among its recommendations was one to the effect that banks should be allowed to 
advance money on debts before they were incurred, and a Bill was actually prepared 
to this end. Happily it got no farther. 
% The scramble for the profits in these companies pushed up the market-price 
of the shares of thirty land companies by more than two million pounds in a few 
months.