CHAPTER 11
THE EARLY YEARS AND THE CRISIS OF 1840-3
The arrival of capitalists has raised the price of stock to an unprecedented degree.’
—Port Phillip Gazette, 14/5/1839.
As is usual in such stages of fictitious prosperity extravagance in social life followed
upon the fancied attainment of riches, the manufactures of England were largely
introduced, and a great variety of articles of consumption which might have been
produced in the country with common industry and patience were flowingly im-
ported, and made use of on liberal credit.’ —Braim, History of New South Wales.
‘The failure of the model colony of South Australia in 1840 injuriously affected the
credit of Australia. Information had been full and interest keen concerning South
Australia; and its bankrupt condition, and the untoward position of English
investors in South Australian land, caused grave misgivings concerning the safety
of land investments in other parts of Australia.’ —T. A. CogHLAN, Labour and
Industry in Australia, vol. i.
SOME surprise may be felt at the decision to carry an investiga-
bion concerning the importation of capital into Australia so far
back into our economic history. The chief justification for such
& course is to be found in the microcosm presented by the early
community in which many of the conditions affecting the
Commonwealth nearly a century later are anticipated, as well
as in the clearer correlations made possible by the smaller scale
and simpler circumstances. Before 1830 financial disturbances in
Australia were due rather to the unusual difficulties of exchange
in a primitively organized community, to the slowness of com-
munication with the mother country, and to the deficiency of
sure and equitable means of transferring capital-—all factors
which seriously interfere with the conduct of the experiment
under contemplation. By previous derangements of business
in the community, however, attention had been called to the
necessity for providing against the undue expansion of credit,!
and between 1830 and 1843 business conditions were sufficiently
stabilized to enable the conditions to be strictly comparable
with those of later periods.
Yet, even before 1830, events can be seen forming a sequence
common to later periods in our history, a sequence directly
dependent upon the uncontrolled and unwise injection of capital
which was, in its turn, due in large measure to the buoyancy
* Commissioner J. T. Bigge’s investigation, in 1823, of the affairs of the Bank of
New South Wales revealed a great deal of speculation which he blamed the bank for
pay. Bills discounted by the bank rose from £12,793 in 1817 to £107,256
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