Authors: Michael Beggs*,
Topics: Historical Geography, Economic Geography, Australia and New Zealand
Keywords: Australia, finance, money, liquidity, credit, 19th century
Session Type: Paper
Presentation File: No File Uploaded
Between the late 1820s and early 1840s, colonial New South Wales boomed, a fully-fledged capitalist economy dwarfing the penal colony from which it emerged. Pastoral expansion burst official boundaries and furthered Indigenous dispossession, with explosive growth in the settler population, commerce, and wage labour. This transformation depended on a unique system of money and credit, with Sydney as a nexus between the financial markets of London and the colonial frontier.
In this paper we describe and explain the geography and political economy of this system. New South Wales became an attractive destination for London capital, but the vast distance meant problems of information, trust, control and timing. Coin had long been scarce in the colony, which had adapted to the assortment of currencies of the maritime world and used the Spanish dollar as unit of account for a while in the 1820s. It was now committed to a sterling base, but most commerce involved various forms of paper credit-money.
A colonial banking system developed, and in the late 1830s imperial banks arrived, their notes and deposits rapidly coming to dominate the urban money supply. But their reluctance to lend directly to squatters and other pastoralists ‘up-country’ meant that rural and remote areas depended on a semi-wild system of private credit instruments, connected to the Sydney markets in various ways.
A speculative land boom was followed by financial crisis in the early 1840s. We draw on official reports and other sources to chart this strange hierarchy of liquidity and credit.