Full text: Borrowing and business in Australia

in Victoria, there would have been no land boom and no de- 
vastating catastrophe in 1893.1 
The developments we have outlined effected peculiar changes 
in the status and policy of the banking institutions, changes 
that had an unusual significance in their relation to overseas 
trade. Melbourne and Sydney merchants, whose overseas 
transactions had exceeded their individual resources, became 
more and more dependent on the banks for working capital. 
Australian bankers, whatever be the justification for the 
development, ‘thus assumed in addition to the ordinary 
business of banking that of trading in wool and other merchan- 
dise. In the circumstances this was their legitimate business, 
but when some of the banks later on, having more money than 
they needed, sent out millions for investment, and especially 
when they lent it to speculators, the business was, to say the 
least, hazardous.’2 
Public finance, too, was unsatisfactory and troublesome from 
1860 onwards. The old, old difficulty of scaling down the in- 
flated expenditure of boom times to accord more comfortably 
with diminished revenues was the stumbling-block. It is not 
to be wondered at, therefore, that borrowing for public works 
assumed larger and larger proportions as the period progressed. 
After the recovery from 1857 the English capitalist was still 
anxious to invest, but a series of unhappy shocks at the worst 
moment made him very shy of the Australian colonies as a 
receptacle for his savings. The first of these was the uneasy 
banking situation in general, and the second the inopportune 
‘action of the United States in repudiating its liability to repay 
its loans in specie’ with its implication that the same course 
was open to Australia. Climatic adversity and poor seasons, a 
blight to which Australia for some years seemed peculiarly 
liable, constituted a third reason for hesitation. As a further 
deterrent no state had yet produced a man of outstanding 
capacity in finance despite the obvious needs of the case. 
The incident of 1866 concerns Queensland more nearly than 
any of the other colonies.3 The northern settlement had become 
1 The best general summary of Australian development in this period is contained 
in Coghlan’s Statistical Account of Australia, section on Industrial Progress, pp. 460 
ef seq. 2 Coghlan, op. cit. 
% For a full history of the Queensland trouble see Coghlan. Labour and Industry, 
pp. 1170 et seq. 

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