Borrowing and business in Australia

Bibliographic data

Monograph

Identifikator:: 183051623X

URN:: urn:nbn:de:zbw-retromon-222122

Document type:: Monograph

Author:: Wood, Gordon L. http://d-nb.info/gnd/1239193688

Title:: Borrowing and business in Australia

Place of publication:: London

Publisher:: Oxford university press, H. Milford

Year of publication:: 1930

Scope:: xv, 267 Seiten; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part II. Prosperty and crisis after the gold discoveries

Collection:: Economics Books

THE GOLD DISCOVERIES 35 as the effects of the new gold production could be expected to reveal themselves. From a credit balance of £6,086,000, there 1s an abrupt change to a debit balance of £6,601,000in the follow- ing year, that is a swing of nearly £13,000,000 following the wonderful year that yielded £19,000,000 of new gold. With the exception of one slight recovery in 1855, the excess of imports continued until the community had, by severe crisis and sus- tained depression, been brought to 2 realization of the over- trading which had occurred. (Fig. II, p. 36.) The course of exchange during the early years of this golden age affords unique testimony to the unusual circumstances of the time. The graph (Fig. I, p. 36) will indicate the extent to Which the sensitive foreign exchange will respond to changes In the complexion of trade, and the handicap imposed upon a community by such high charges as £12 for the transfer of £100 to London needs no further comment. Examination of the banking statistics for Victoria and New South Wales, for the periods immediately before and after the inflation due to the gold discoveries, has a particular relevance to the matter under discussion. The chief factor which accen- tuated the inevitable pinching of the financial shoein the moment of crisis is exposed ; and the partial, even if involuntary, abandon- ment of the principles of sound banking stands revealed as one of the elements of the unsatisfactory trading position. Whether we have regard to the ratio of reserves to liabilities, the cover of coin for notes, or the ratio of reserves to total deposits, there does appear to have been a serious disregard on the part of the bankers of what might be considered, especially under most unusual circumstances, to be the necessary policy of safety and caution. By 1853, when the full effects of the gold discoveries Were making themselves felt, the position of the banks was, on Paper, a very strong one indeed. But, after that date, the drain upon their resources to cover commitments of Australian merchants to British consignors caused a rapid decline in the ratio of reserves to both liabilities and deposits, to a point below the normal for the years preceding the inflation, i.e. 32 per cent. and 26 per cent. Tespectively below the ratio held in 1853. Between 1853 and 1855 the ratio of notes in circulation to the reserve of coin rose from 37 per cent. to 75 per cent.

Access restriction

Copyright

fullscreen: Borrowing and business in Australia

Monograph

Chapter

Table of contents

Download

Monograph

Chapter

This page

Image fragment

Citation links

Citation recommendation