PART III 
THE BOOM OF 1890 AND ITS ECONOMIC 
CONSEQUENCES 
CHAPTER V 
THE PRELUDE TO THE COLLAPSE OF 1893 
‘It is difficult to reduce to their just proportions the various elements in the financial 
outlook, but it is impossible to ignore an impression that it is overshadowed by the 
gigantic speculation in land that is now in progress.’ —Insurance and Banking 
Becord, April, 1888. 
“The land banks were material factors in the growth of extravagant expenditure 
- « . fungoid growths . . . which enabled men of the smallest means to buy a few 
shares and so participate in the largest dividends which were too often the produce 
of specious book-entries and not legitimate earnings.’ —H. GyLES TURNER, History 
of Victoria. 
“What Bacon called the “heroic work of colonization” has been thrust aside in 
Australasia in favour of a more showy development, which has crowded people into 
tities and piled up a mountain of debt, a bigger one than ever before burdened a 
population of four millions. It is time the position was reviewed, the borrowing 
checked, and more earnest attention given to the creation of actual wealth.'— 
Epwanp PoLsrorD in the Sydney Morning Herald, 1892. 
‘As regards the amount of wealth per inhabitant the United Kingdom stands second 
only to Australia; and when we consider that most of Australia is mortgaged to 
British capitalists, we may say that in reality the United Kingdom has most 
wealth per head.’ —MULHALL, Dictionary of Statistics. 1891. 
FoR the economist as for the historian the years from 1880 to 
1890 form a period of extraordinary interest.! No other decade 
in Australian history focuses within itself so many tendencies 
in our national development, nor throws upon the screen quite 
such an abrupt alternation of prosperity and poverty. Along 
with the social forces which were working to shape our national 
consciousness were the factors giving form and character to our 
financial and industrial organization. It is in this period that 
1 The following are the best general sources for the financial history of this 
period: vicToris. H. Gyles Turner, History of Victoria, pp. 297 et seq. ; Memorandum 
prepared for the British Treasury by A. G. V. Peel, and the reply by Sir Geo. Gibbs; 
the appendix to the Victorian Year Book, 1894; and Coghlan’s Statistical Account 
of the Seven Colonies of Australasia, 1894. NEW souTH wALES. Fora critical examina- 
tion of the period the paper, Financial Crisis of 1893 in New South Wales, given 
before the Australian History Society by H. L. Harris is invaluable; Coghlan, 
Wealth and Progress of New South Wales, is the official year-book of the colony, and 
indispensable, 
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