CRISIS OF 1840-3 11
The check to expansion was aggravated by a drought which
held the colony in its grip for nearly two years after the summer
of 1827, and this necessitated the importation of large quantities
 of grain from Van Diemen’s Land,! thus intensifying the
depression in the later stages. But the speculative abandon
continued unchecked for some time, during which the community
was financing itself on bills. ‘At length, however, the evil day
arrived: the bills which had been circulated in the speculation
of purchases in stock fell due and had to be paid. Buyers and
sellers, when they came to press each other, found how delusive
had been their speculations. Credit was shaken, confidence
was lost, and a panic ensued.’?
As events proved, however, this boom and crisis was but the
Prelude to a far more serious and extensive disaster ten years
later; a disaster, furthermore, which was marked by exactly
the same features of capital importation, credit expansion, land
Speculation, and neglect of industry. The granting of selfgovernment
 to New South Wales had the double effect of
directing the attention of British capitalists to Australia and
of stimulating speculation in that country. This was the
moment chosen by the Imperial Government to raise the minimum
 price of land, and there can be no doubt that this
action helped greatly to strengthen the confidence in the
young colony. The apparently unlimited extent of the land
offered for sale at such a seemingly low price was the morsel
that proved too tempting for British investors. Tt is recorded
that ‘the land-office on a sale day resembled some of the
London “bubbles” of last century’. To cope with the boom
finance two banking companies were established with a total
capital of 1} millions sterling, and through these institutions
 large sums were invested in Australian mortgages by
British investors.
Nor were the settlers themselves at all behind in the business
of land speculation. It is difficult at this distance to appreciate
the ardent faith of the colonists and investors in the future of
the colony, isolated and undeveloped as it was then. Only the
ager overseas competition for Australian agricultural and

! These imports indicate the position Tasmania then held as ‘the granary of
Australia’, Exports from the island to N.8.W. totalled £54,838 in 1828 and £42,640
in 1829. ? Braim, op. cit.