252 A HISTORY OF THE COLONY OF VICTORIA 



of the purchases exhausted the people, and, as much of the outlay 

 was financed by the banks, with whom the Government deposited 

 the proceeds of the sale at an exorbitant rate of interest, running as 

 high as 7 per cent, per annum, the seeds of financial disaster were 

 sown. The withdrawal of the Government balances some eighteen 

 months later precipitated a crisis, which involved the steady trader 

 in the same downfall as the speculative land jobber, by the uni- 

 versal depreciation in the value of all kinds of property for which 

 there were then no buyers. 



Meanwhile the community, happily unconscious of the instruc- 

 tions which Lord John Eussell was then transmitting to Governor 

 Gipps, to fix the uniform price of 1 per acre on all lands outside 

 the town boundaries, continued to plume themselves on the success 

 of their speculations with borrowed money, and to live extravagantly 

 up to their ideas of the future in store for them. Pastoral properties, 

 with very vague boundaries and very uncertain tenure, changed 

 hands at rapidly advancing prices. As much as 2 per head was 

 given for sheep with station rights, such improvements as there 

 were being extravagantly paid for. The banks occupied a very 

 invidious position. The rate of interest exacted from them by the 

 Colonial Treasurer precluded them from giving accommodation 

 to the settlers at anything like reasonable rates, and discount of 

 from 10 to 12 per cent, was resentfully paid because there was no 

 other channel for borrowing. The managers had to make large 

 profits to meet the usurious claims of the Government and have 

 anything to divide amongst their shareholders, so they lent freely 

 on the securities arising out of land speculations, the very margins 

 on which were created by their known readiness to assist im- 

 pecunious buyers. But when the Government began to withdraw 

 the funds for immigration purposes, and the borrowers had to be 

 pressed, it soon became evident that land was quite unsaleable, 

 because no one had the money to pay for it. 



In the report of the Legislative Council on immigration, as the 

 result of an inquiry into the causes of the crisis, occurs the following 

 passage : 



" But the greatest, the most fatal error connected with the sale 

 of the waste lands of the colony was committed in the appropriation 



