Full text: Borrowing and business in Australia

ture shrinking, and, before 1890, the government was facing a 
deficit of nearly one and a half millions. Everything indicated 
that the crescendo of speculation was finished, and that the 
diminuendo of depression was about to commence. 
Events in South Australia during the decade ran a very 
chequered course. There are reasons for believing that the specu- 
lation of the time originated in that state, but if so it was very 
soon over. This activity reached its peak as early as 1882, when 
it was suddenly checked by the banks closing down on all 
advances of a speculative character; and, to point the moral, 
even the government was denied accommodation. Pronounced 
credit shortage prevailed until the depression touched bottom 
in 1885. Unemployment was rife, population was trickling away 
to other states, most of the copper mines had stopped work on 
account of the low price of the metal, wheat and wool prices 
remained hopelessly low despite the almost total failure of the 
harvest and a small clip, and the government budget showed a 
deficit of £700,000. Such a conjunction of evil circumstances 
South Australia had not known since the Gawler crisis. The 
universal distress and the general economic situation were most 
reminiscent of the bad times of 1840. 
The finishing touches to a picture of unrelieved gloom were 
given by the failure in February 1886 of the Commercial Bank 
of South Australia, a local institution that had become largely 
identified with the rural interests of the province and which had, 
therefore, been very severely hit by bad seasons. Even more 
sensational than the actual failure were the revelations of fraud 
and embezzlement. The resulting suspicion, under which all 
the banks fell, added to the general uncertainty and affected 
business disastrously. A crop of bankruptcies followed closely 
on the heels of the Commercial Bank failure, bank reserves 
disappeared, and the Savings Bank suffered from a run on its 
deposits which not even a government guarantee could stop. 
The straits to which the land finance companies were reduced 
can well be imagined, for the land boom in this state was by 
this time merely a matter of history. 
But this proved to be the darkest hour preceding the dawn 
of better days for South Australia. With the breaking of the 
drought, the rise in the price of copper, and the wonderful 
discoveries at Broken Hill, confidence crept back into business ;

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