CRISIS OF 1840-3 13
while land mortgages increased enormously. Exports for the
same period, despite the fall in the price of wool, increased to
£950,000, but imports rose to nearly £2,250,000, for which
luxuries of different kinds were largely responsible.
The earlier menace of drought was now fully realized, and
the failure of two successive harvests left the colony almost
destitute of supplies. This disaster, it might easily be supposed,
would have effectively checked the speculation in land. On
the contrary, the fever ran its course quite unchecked. Around
Sydney the average price per acre had advanced to £69 by
1840, while the revenue from land sales reached £313,000.
This is only a slight indication of the inflation which had taken
Place, since far higher prices were paid by immigrants impatient
for cleared blocks.
At Port Phillip, where the restrictions on the sale of land
Were greater, speculation reached even greater heights! The
price of land soared from £138 to £488 per acre, town blocks
changed hands at more than eighty times the original price,
and suburban land rose in value correspondingly. Profits of
two to three hundred per cent. were not uncommon, and the
process was largely sustained by the long terms of credit that
were allowed to the purchasers. In the light of after events one
is struck by the prophetic features of this outburst at Port
Phillip. Fifty years later the wheel came round again full circle
to what is probably the most amazing land gamble of modern
times.
This inflation of land values had an enormous effect on
general prices; and in this way the whole community was
affected. Those who were mainly responsible for the boom,
however, were the business men of Sydney, where the bulk of the
imported capital was domiciled—in fact too great a bulk to be
employed with advantage. The connexion between banking
Policy and speculation in land is indicated by the banks’ reserves,
which for five banks owning a paid-up capital of £1,300,000
shrunk to £398,000. They were flooded. too. with bills for the
! “The attractions of Port Phillip caused a prodigious influx of British capital
which wag rapidly, and in most cases ruinously, invested in the purchase of land.’—
Braim, op. cit, City land in Sydney was selling at the rate of £28,000 an acre as early
a8 1834, In 1840 one small block sold for £40,000 an acre. In June, 1840, 29,000
acres of the best land in the vicinity of Melbourne was put up for sale at 12s. per
acre, but no bid was received