Borrowing and business in Australia

Bibliographic data

Monograph

Identifikator:: 183051623X

URN:: urn:nbn:de:zbw-retromon-222122

Document type:: Monograph

Author:: Wood, Gordon L. http://d-nb.info/gnd/1239193688

Title:: Borrowing and business in Australia

Place of publication:: London

Publisher:: Oxford university press, H. Milford

Year of publication:: 1930

Scope:: xv, 267 Seiten; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part III. The boom of 1890 and its economic consequences

Collection:: Economics Books

66 THE COURSE OF THE CRISIS OF 1893 almost at once in the poor support given to Australian govern- ment loans. The ‘considerable creditor’ had concluded ‘that the present earning capacity of the debtor no longer warranted the capital upon which his collateral was appraised’, and the liquidation was not long in beginning. The Baring episode calls for some further application to Australian conditions. The ‘banking hierarchy’, as Powell calls them, had, by carrying out an agreed course of action in England, saved a great house from collapse and had given a demonstration of the virtues of unified financial control such as the world had never seen.2 But its value was not appreciated by Australian bankers. The wonderful lesson, that, under the threat of a great financial collapse, the banks must act together instantly and with concentrated energy was not assimilated. The failure of the banks to support one another and the mer- cantile community, until half Australia had been plunged in nancial ruin, is paralleled by the inability of the government »f the colony chiefly concerned to rise to the emergency. The criticism voiced in England with reference to Australian finance met with immediate response in Victoria. On all sides the cry for a full and immediate examination of financial affairs was raised. In anticipation of such a development institutions of all kinds undertook feverish preparations to stave off disaster. But both government and private credit were now thoroughly andermined, the public finances were in a hopeless condition, and the exchange position was so full of menace that large shipments of gold to Britain became necessary, thus propor- tionately weakening the domestic situation. With the stream of British deposits already dry and every Australian depositor anxious to withdraw, the position of the land and building companies was thoroughly desperate. After the middle of the year a procession of failures, affecting twenty companies with 13} millions of liabilities, took place. Business of all kinds was soon in the depths of depression3 Building ! The bank clearances indicate the inflated nature of business and the lack of restraint even yet in bank advances. These totalled £310,000,000 for the year. [£ normal clearances are taken at £200,000,000 a fairly correct idea of the extent of the inflation will be obtained. ? Powell, Evolution of the Money Market, p. 639. 3 Bank clearances were £129,000,000 for the first six months, a decline of £35,000,000 on the corresponding period for 1890.

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