Full text: Borrowing and business in Australia

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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