THE GOLD DISCOVERIES 25 
of a certain type from one end of the country to the other. 
Ordinary canons of business went by the board, prices were 
gauged by no economic standards, and the trade practices of the 
time left ample scope for the unscrupulous. Coin shortage was 
a common feature of the finance of the day, and during the first 
few years banks in all the colonies had to go to the expense of 
importing coin in large quantities. Much unhealthy competition 
for deposits was excited by the large profits made by the older 
banks which had established agencies on every gold-field, an 
evidence of that competition which has more than once mani- 
fested itself in different forms in our banking history. 
In 1853 the scarcity of merchandise in Victoria was relieved 
with some suddenness by the arrival of large consignments 
which had been sent out on speculation by English merchants. 
Prices, however, rose with monotonous regularity for every 
service or commodity, although the large importations of coin 
had the effect of making trading transactions cheaper and more 
regular. Still, there were no signs that the boom was even then 
near its crest. Gold still threw its spell over every one, and the 
glamour of gold digging affected detrimentally both industry 
and methods of finance. 
Never was there a prettier example of crisis-breeding pros- 
perity in the whole course of our history. The rise of prices, the 
spread of extravagance, the rush of imports, and the evils of 
inflation went on unchecked month after month ; but, by the 
middle of 1854, there were many indications that the peak of 
prosperity had been passed. Never before had extravagance, 
wages, or prices risen to such heights in the country, but the 
inevitable reaction and collapse were near at hand. The débdcle 
began in June; and, as would be expected, the gravest effects 
were felt in Victoria, where a crisis of the first magnitude, 
precipitated upon an unsuspecting community, raged for 
uearly two years.! The critical factor that set the avalanche in 
! In the quotation which heads this chapter Cairnes passes judgement’ after an 
exhaustive survey of what he calls in the Essays ‘The Australian Experiment’. ‘It 
followed that the comparative cost of gold in relation to these things produced at 
home and to other things produced abroad had changed; and so a situation was 
brought about under which, according to Ricardo, “an immense change ought to 
take place in the external trade of the colony >, and this is precisely what happened. 
From this time until the conditions of trade were modified, partly through the 
exhaustion of the richer deposits and partly through the advance of Prices in foreign 
markets, Australia became an importer of everything that from its nature 
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