Trade and Travel in the Far East / or Recollections of twenty-one years passed in Java, / Singapore, Australia and China.

by G. F. Davidson

I come now to the second main cause of Australian distress, viz. the speculation-mania that took possession of the entire population of this fine Colony. No one who did not witness the effects of this mania, can imagine to what an extent it was carried. Scarcely a day passed without one or more public auctions of stock of all descriptions; and not a sale took place, that was not crowded with eager purchasers. Many large stock-holders took advantage of the high prices obtained at those sales, to sell off, in the delusive hope that they would in this way be enabled to retire from active life, and perhaps to return to their native country. The terms offered at those public sales, were such as to induce many persons who never even dreamed of sheep or cattle farming, to enter the market and purchase to a large extent. These terms were, in general, something like the following:—

Ten per cent, on the fall of the hammer;

Thirty per cent, by bill at twelve months;

Thirty per cent, by bill at two years;

Thirty per cent, by bill at three years: these bills bearing interest at ten per cent, per annum.

I have seen tens of thousands of sheep and cattle sold in this way, many of the buyers being men who had never even seen one of the animals they were bidding for, and who knew literally nothing about the management of flocks and herds; being tempted to make the purchase by the long credit given. But, strange to say, many old settlers were led, with their eyes open, into extensive purchases at most exorbitant rates, thinking that nothing could check the career of splendid prosperity upon which the Colony was then supposed to have entered. How dearly those parties have paid for their folly, the world generally, and their creditors in particular, well know. Besides the numerous public sales of stock all over the Colony, and the large amount of property that changed hands on those occasions, many important private sales took place about the same time. There was not a sheep, cow, or horse in the Colony, too old or too bad to find a purchaser! Any thing would sell, provided only that time was given to find the money. Nothing could exceed the madness of the people, buying, selling, and exchanging accommodation-paper from end to end of the land. Then came the land-jobbers, a set of sharks who did great harm. It was a common practice with those jobbers, or rather robbers, to apply to the Surveyor-General's department, to have lots of land put up for sale, which they were aware that certain landed proprietors could never allow to fall into the hands of strangers, and then to go to the party whose estate the sale of the land in question would injure, and demand a bribe to stop their bidding against him. If this quietus was refused, these scamps would attend the sale, and bid the land up to some exorbitant price, knowing that their victim must be the buyer. Land once advertised by Government must be put up to auction; and the jobber's victim was obliged either to purchase, or to run the risk of having a stranger sit down as the proprietor of a few hundred acres in the midst of his thousands. Another class of scamps used to attend land-sales, who would conspire to keep down the prices of lots they wanted, by not bidding against each other, and by playing various other tricks, to the detriment of the revenue. The Attorney-General got hold of half a dozen of those gentry in 1839, and prosecuted them for conspiracy. He obtained a verdict of guilty against them, but assented to their petition for a new trial. Again they were convicted, and they were fined a hundred pounds each; the Court telling them, that the penalty would have been much heavier, had not the judge taken into consideration their humble petition for mercy, and the heavy expenses they had incurred in standing two trials.

This system of selling by auction and by private sale, large herds of cattle and flocks of sheep at high prices, went on till some of the twelve-month's paper became due. Cash not being then forthcoming, renewals were asked for in many instances, which somewhat damped the ardour of speculation; but the wild career did not receive any very serious check, till the two-years' paper began to come into play. Very little cash could be got from the drawers, who were, in many cases, obliged to bring a large portion of their stock to the hammer, in order to meet their acceptances for thirty per cent, of the purchase money. This alarmed people. The price of stock began to fall; and, long before the three-years' paper became due, ewes that had cost the buyers 3l. per head, could be got for 7s. 6d.

Thus, many a poor fellow, after labouring hard for three years to keep his flocks and their increase together, had to part with the whole, and still had not enough wherewith to satisfy his original creditors. Hundreds of instances of this kind might be specified, did I feel at liberty to publish names.

As to the operation of the third main cause of the distress, the system that obtained, of giving long credit to purchasers of stock, the evils arising from this practice have been partly exposed in the foregoing remarks; but I will proceed to point out a few other evil consequences, as they occur to me. To begin with one that more than once came under my own notice; many persons of property, trusting to the long prices obtainable for stock of every description when sold on credit, and forgetting that there was absolutely no cash price at the time, deemed themselves much richer men than they were in reality. Giving to their overseers the charge of their country residences, they took and furnished houses in Sydney for their families, set up their carriages, and commenced a style of living far beyond their means. This fact (the want of cash) came upon them the moment the first half-year's bills for rent, household supplies, &c., became due: these proved to the deluded settler, that, though he had flocks and herds, he had no money, nor could any be got, except at a sacrifice. To a man, they had to sell off and return to their estates, where dire necessity has since compelled them to remain, and where, I hope, renewed prosperity and common sense will induce them to stay.

Another evil caused by the long-credit system, was its inducing many persons to purchase stock for the purpose of raising money upon it. This practice was carried to a ruinous extent, and caused immense distress in this way. A hundred head of cattle might be parted with to day, by a needy settler, say, at 3l. per head, six months' credit; the seller took the buyer's note of hand for the purchase money, 300l., which was immediately taken to the bank, and discounted; and the settler returned to his farm, satisfied that he had made a good sale of his beasts. The buyer, having no use for the cattle, re-sold them, taking the second buyer's note for the money, which, like that of the first, went at once to the bank. This transaction was frequently repeated six or eight times, before the cattle found a bonâ fide purchaser; and it was no uncommon thing, to find paper in the market to the amount of 1800l. or 2000l., the only representative for which was the hundred head of cattle originally sold by the settler; the whole of the parties concerned being, with the exception of the first seller and the last buyer, mere men of straw. When the six months expired, not a single bill of the six or eight negotiated, was taken up, excepting, perhaps, the last one: all the others had to be renewed; and it was the forcing the payment of such bills, that ruined so many people, and ultimately shook the credit of every bank in Australia.