During the extravagant ways of the colonists in the 1840’s many of the younger merchants were on their way to ruin and the great bulk of the community were kept impoverished by their habits. Added further to their woes was the English Government, who brought matters to a crisis by its injudicious interference with the Land Laws.
In 1840 South Australia was on the verge of bankruptcy and the Wakefield policy of maintaining the land at a high price had not produce the results predicted. Now, many of the greatest men in England were in favour of the Wakefield theory and in particular Secretary of State for the Colonies ie the member of the British Government, whose duty it was to attend to colonial affairs, was a warm supporter of the views of Wakefield. So much so that when the people of South Australia complained that their scheme could not be successful so long as the other colonies charged so low a price for their land, he sympathized with them in their trouble. “Who”, they asked, “will pay £1 an acre for land in South Australia, when, by crossing to Port Phillip, he can obtain land equally good at 5 shillings an acre ?”.
Introduction of Land Laws
To prevent the total destruction of South Australia, the Secretary of State ordered the other colonies to charge a higher price for land. New South Wales was to be divided into three districts. 1) The Middle District (Sydney), around Port Jackson, where land was never to be sold for less than 12 shillings an acre. 2) The Northern District (Brisbane) around Moreton Bay, where the same price was to be charged. 3) The Southern District (Melbourne), around Port Phillip, where the land was of superior quality and was never to be sold for less than £1 an acre.
Discontent
A great amount of discontent was caused throughout New South Wales by this order, but as a result of it South Australia was saved from absolute ruin and the Secretary of State declined to recall the decision. It was urged, in vain, that a great part of the land was not worth more than two or three shillings an acre. The answer was given that land was worth whatever people were willing to pay for it. For a time it seemed as if this view had been a sound one and land was eagerly purchased, even at the higher prices.
Land Value Incorrect
In 1840, the amounts received from land sales were three times as great as those received in 1838. But this was mostly a result of speculation and disastrous effects soon followed. The prices paid by the purchasers were far above the real value of the land. If a man bought a £ 1,000 into the colony and paid it to the Government for a thousand acres of land, he would reckon it was still worth a £1,000 and the banks would be willing to lend him nearly a £1,000 on the security of his purchase. But if he tried to sell the land, after a year or two, he would discover its true value, and find himself in reality owning only two to three hundred pounds worth of property. Every purchaser discover the land was less value than he had expected. Everyone became anxious to sell and, there being few buyers, most sold at a ridiculously low price. Men who had borrowed money were unable to pay their debts and became insolvent.
Land Owners and Banks Lose
The banks who had lent them money, were also brought to the brink of ruin and one of the oldest banks, Bank of Australia, became bankrupt in 1843, which increased the confusion in monetary affairs. In order to pay their debts, the squatters were now forced to sell their sheep and cattle, but there was scarcely anyone willing to buy and the market being glutted, the prices fell to such an extent that sheep, which, two years earlier had been bought for 30 shillings , were gladly sold for 18 pence per head.
Forced To Make Tallow
Fortunately, it was discovered by Mr O’Brien, a squatter living at Yass, that about 6 shillings worth of tallow (fat) could be obtained from each sheep by boiling it down. If it had not been for this operation being extensively used by many of the sheep owners, they would, without doubt, have been completely ruined.
Problem Grows Worse
So great was the distress in 1843, the Governor issued provisions at less than cost price, in order to prevent the starvation of large numbers of people. Yet the Secretary of State in England knew nothing at all of this and in 1843 he raised the price of land even higher, ordering that, throughout all Australia, no land should be sold foe less than £ 1 an acre.