A Pathology of Insolvents: Melbourne, 1871-1915 - [2004] AJLH 5; 8(1) Australian Journal of Legal History 109

A PATHOLOGY OF INSOLVENTS: MELBOURNE, 1871-1915

JOHN C WEAVER[*]

‘The Rise and Fall of Marvellous Melbourne’ in the 1880s and 1890s is renowned. Michael Cannon’s The Land Boomers has been such a popular account that to imagine Melbourne insolvents is to envision a Toorak financier meeting with creditors to arrange a composition.[1] From 1892 to 1895, scenes like these occurred. Major debtors whose public falls would further shake public confidence negotiated settlements which concealed details and left them professional income and assets. However, a systematic study of insolvency in Melbourne from 1870 to 1915 discloses more than this about business, society, and culture in the city that Asa Briggs characterized as the British empire’s most American. Some insolvencies reveal a gambling culture; others depict sloppy business practices, or the caprices of illness and accidents. Many insolvency files show the consequences of these matters for merchants, artisans, and labourers. Starting in the late 1880s, insolvencies suddenly include failures among land boomers; these collapses too had an impact on trades-people and labourers. Insolvency records after the crash illustrate continuing repercussions among the city’s poor. They also show a community’s late aversion to risk. In all eras, insolvency files disclose retailers and labourers coping with failing businesses, illness, injury, and unemployment. If there are authentic composite portraits of insolvents, they should not just include the top-hatted financier, but the cab driver whose horses had been lame, and the green grocer who lost a child. An analytic organization of insolvents can be arranged which does not focus on specific trades and classes, but considers five groups, namely hard-luck traders and toilers, inept but honest entrepreneurs, foolish gamblers, crooked boomers, and the boomers’ victims.

For this study, three data sets were created. A first data set was assembled from aggregate statistics on insolvencies reported annually in Victoria’s parliamentary papers. The second included every tenth file (n=1559) of cases in the Melbourne Court of Insolvency under the 1871 Act (Victorian Public Record Series 762), Deeds of Composition, 1871-1898 (VPRS 763), Schedules under the 1890 Insolvency Act (VPRS 765), and Deeds of Arrangement, 1889-1928 (VPRS 766, to 1915). The sample consisted of 1243 insolvency files handled by the court under the 1871 and 1890 acts, and 316 files of registered compositions. Each of the 1559 cases in the data set included the person’s name, place of residence, occupation, date of insolvency, declared value of assets, and sum of liabilities. The third data set was derived from a random twenty per cent sample of the 1559. Each file from the resulting 314 cases (2% of all insolvency cases from 1871 to 1915) was read, and notes taken. References to litigation in these insolvency files led to further research in the equity and civil court records (VPRS 259 and VPRS 267). While insolvency records are rich sources, they are flawed. Lists of creditors and amounts owed were reasonably accurate, because the sequestration of an insolvent estate required a public call for creditors to come forward, and the insolvency court reviewed these claims as well as those of creditors listed by insolvents. Least accurate were estimates of assets. Insolvents over-valued their estates, and during the bust, many so-called assets had no value. Some insolvents attempted to hide superior assets, or shifted them to a spouse’s estate. A further weakness is that explanations for insolvency were provided by the insolvents who may not have been completely

candid. Accounts of accidents and illnesses, for example, never mentioned alcohol or alcoholism, but lists of unsecured creditors frequently included spirit vendors and publicans and some parties seem unusually accident prone.

I HARD-LUCK TRADERS AND TOILERS, AND INEPT ENTREPRENEURS

Table 1

Mean Sum Owed by Insolvents in Sample, 1871-1915 (n=1559)

The first and second data sets show that from 1871 to 1887, colony and city experienced only a few years when insolvents and their average debts increased (Graph 1). There was no severe shock to the economy. Information from the third data set adds details that confirm a relatively tranquil period. Many insolvents included small retailers and artisans who failed for diverse reasons, many not of their making. Bricklayer Thomas Barr who could not meet his debts in 1879 advanced the commonplace explanations: ‘want of employment, sickness in family, and pressure of creditors’.[2] Groom Patrick Haydon faced insolvency in 1877 because of ‘sickness and deaths in family and want of remunerative employment’.[3] George Williamson, a music teacher at the ‘Government Ragged School’ on Little Burke Street fell ill and left without pension. Having borrowed money at high interest from a spinster, a money lender, a merchant, and a hotel keeper, he declared insolvency in 1875.[4] Dairyman Josiah Baines became insolvent in 1876, claiming medical expenses and his mother’s funeral costs. Carpenter James Mackenzie lost on contracts due to his illness. His children’s medical expenses added burdens.[5] In the years before the crash, illness figured often in failures, appearing in roughly a quarter of the cases. Other misfortunes having little to do with poor management afflicted people. Fires, strikes, thefts, and laws suits drove a few under. Grocer Thomas Chambers failed in 1871 because of insufficient fire insurance and loses on the sale of damaged goods.[6] When publican and coal merchant William Mackie became insolvent in 1873, he blamed it on a Newcastle strike.[7] Tailor Robert Greathead reported that his 1886 insolvency was due to a ‘dullness of trade. Severe losses through goods having been destroyed in consequence of bad state of repair of premises. Goods stolen from our shop.’[8]

Certain trades suffered weather-related emergencies. Summer heat in 1888 spoiled butcher Henry Passmore’s meat.[9] Pritchard Burton ran a well-organized gardening business; however, he sustained losses in 1879 from a flood, a drought, and his daughter’s medical expenses.[10] The grasshopper scourge and pressure of creditors defeated grazier Robert Kerr in 1889.[11] Cab operators and carters failed when horse went lame or died. Two lame and one dead horse put cabman Charles Leonard out of business in 1871. He rented his cab, owed money on horses, and was indebted for room, board, and blacksmithing.[12] In 1873, bad health plagued carter William Watson and his family, and his horses died.[13] When he went insolvent in 1886, cab driver John Higgins owed eighteen creditors for food, milk, medicine, coal, and money borrowed. One horses had been sick for sixteen weeks, and he could not afford another.[14] Disabling accidents felled men. A Collingwood volunteer fireman, Thomas Debres fell through a cellar while fighting a blaze. He could not work for thirteen weeks. The Good Samaritan Lodge, of which he was a member, provided, one £ a week. Later he fell on steps and fractured a thumb. A month later, while wheeling a coffee stall down a hill, he slipped and broke his leg in three places. This time, around 1878, he was incapacitated for six months[15]. When Thomas Redmond broke his ankle in 1875, he could not work and ran up debts to the grocer, baker, butcher, publican, and doctor.[16] An accident put labourer James Payne out of work for four months. Insolvent in 1885, he had run up debts for groceries, bread, and meat.[17]

In debt schedules, it is possible to detect causes of failures among grocers, bakers, and butchers. They extended credit to retain customers. When they could not collect, they became insolvent. In every year of the study, small retailers led all occupational groups in insolvencies. They accounted for a low of 22.2% in 1871-5, a high of 33.3% in 1910-15, and 26.2% in all years. Credit chains tied small businesses and households. Baker and grocer John Drummond owed money for flour when he went out of business in 1878 due to ‘bad debts and losses in business’. Forty clients, mostly women, owed a total of £282 for bread.[18] Baker William Little was owed for bread by twenty-one customers.[19] Coach builder James Liddy was owed small sums for cab repairs by eighty people. He declined to press them. ‘I would have lost their future custom.’[20] Seventy-six people owed publican William Cain, an 1879 insolvent, for spirits, board, and lodging.[21] Roughly eighty clients owed storekeeper John Dwyer when he failed in 1885.[22] Due to sickness and death of child in 1887, drayman John Shannon failed to collect what eighty-two clients owed for milk delivery.[23]

Table 2

Insolvents by Occupational Groups, 1871-1915

A few individuals admitted poor judgement. These were the inept entrepreneurs. Miscalculating on two contracts, builder James MacPherson went into insolvency in 1871.[24] Gas fitter Charles Mitchell explained his insolvency in 1885 to ‘losses on work through having taken contracts at too low a price’. He had not kept proper accounts.[25] Estimating costs and keeping track of operations during the boom of the late 1880s was more difficult than ever, although even in more stable times insolvents reported keeping such faulty records that they could not track business. Then the trustees of grocer Edwin Fuller’s estate attempted to reconstruct his accounts they were defeated by his poor bookkeeping.[26] Confusion indicated poor business sense, but there were other admissions of error. Trunk maker Michael Murphy failed in 1885 because of outlays ‘for a patent for pressing port manteaux by machine which proved a failure’. Under-capitalization weakened many businesses, forcing them to borrow at high interest rates.[27]

From 1871 to 1887, most insolvents owed relatively small sums and struggled with assorted personal and business problems, though there were hints from a handful of cases of what could happen when people gambled on stocks and real estate. A few professionals and merchants had plunging into mining shares or so-called ‘tribute’ partnerships where investors staked miners in return for a share of what they found. Merchant and brewer Henry Black Chalmers ran a large operation in 1871 with debts of over £10,000 owing to Melbourne wholesalers and millers. His principal businesses lost some money, but he lost far more in mining adventures and the depreciation of properties in Ballarat.[28] George Hopeful Reynolds was a seed merchant, but losses in mining shares purchased for £5000 put his back to the wall in 1872.[29] In his 1874 insolvency schedule, Civil Engineer George Francis reported he ‘became embarrassed from investments made in Shares in mining companies’. He had to pay instalments or calls on these shares.[30] Real estate speculation rarely appeared in the declarations of insolvents from 1871 to 1887, but mining speculation suggests that there was fertile ground in Victoria for get-rich-quick schemes. Commencing in 1889, there was a marked increase in the average debt of insolvents. Small trades people and labourers continued to report insolvencies after 1889, and for the usual reasons. In 1896, for example, labourer Walter Heilbronn declared that sickness in the family and the death of three children kept him out of work.[31] From 1889 to 1895, a group of insolvents with enormous debts appeared. A study of the 2% sample, 314 insolvents from 1871 to 1915, revealed that from 1892 to 1894, forty-seven per cent of them failed due to real estate speculation; from 1895 to 1898, twenty-four per cent (Graph 2).

The scale of debt among insolvents altered with the appearance of land speculation. As land speculation surfaced as a cause of failure, the mean debt for insolvents soared. For the years prior to the crash, it hovered around £700; in 1891-5, the mean reached £10,372 (Graph 3, Table 1). Data for Victoria show that the per capita insolvency debt (total debt of all insolvents in a year ÷ population of Victoria) was around half a pound before 1890; it averaged £2.5 during 1890 to 1897, and peaked at £7 in 1892. The mean per capita debt of insolvents increased approximately tenfold. The specific debt load differed according to occupational group, although a more telling distinction was whether or not insolvents speculated in real estate. Land speculation accounted for a remarkable rise in debt load. During the period 1891-5, the mean for non-boomers among the 314 stood at £1,519, but £13,206 for boomers. This sample also reveals that failed land speculators came from many backgrounds, including contractors, merchants, manufacturers, professionals, financiers, civil servants, but also labourers, clerks, publicans, and women.

The sounds of major rending and crashing emanated first from building contractors. Their failures impacted sub-contractors and suppliers who in turn had sub-contractors and suppliers. In 1890, building-supplies dealer Thomas Allen owed £2,057 to seventy-two unsecured creditors, among them saw mills, plumbers, carters, printers, brickyards, ironmongers, and fourteen timber merchants. Allen operated a plant for manufacturing and delivering building materials.[32] When timber merchant George Page failed in 1892, he shut down his planing and moulding mill.[33] While the failure of builders hurt small contractors and labourers, it was also the case that problems for small operators could weaken a large firm. Timber merchant Law Oldfield filed his insolvency documents in 1894, and reported that roughly 400 small clients owed him £13,834 for goods and money lent, though thirteen large clients owed £33,803. When suburban construction stalled, so did public works. Carter James Quayle who became insolvent in 1894 had lost work when construction of the Moorabbin waterworks stopped. He tried to dispose of horses and carts, but others carters were flooding the market.[34] The domino effects of failures are understandable during construction slumps.

What is stunning is the failure of merchants and manufactures whose primary trade was solvent, but who speculated in real estate. Edwin Jenkin’s iron foundry was in the black, but in early 1889, he declared insolvency, owing £83,208, mostly for land purchases. He failed because of ‘depreciation in the value of properties purchased by me’.[35] Brush manufacturer Thomas Mitchell failed in 1889 on account of partnership with a boomer. In early 1890, biscuit manufacturer William Andrew vanished. His father reported ‘he also however dealt in land’.[36] Boot manufacturer John Jones failed in early 1890 on account of speculations.[37] Speculative losses contributed to declines in employment when the operators of viable concerns sank due to real estate and stock gambles. Luxury consumption dropped; restaurateurs, importers, and entertainers joined insolvents. Many non-boomer insolvents noted a fatal ‘dullness of trade’. For two years prior to November 1889, furniture dealer Thomas Penman noticed a rise in delinquent accounts. ‘Numbers of my debtors removed from their residences and could not be found.’[38] ‘Business of every kind went to pot,’[39]

II FOOLISH GAMBLERS, CROOKED BOOMERS, AND VICTIMS

What accounts for Melbourne’s land boom? Some answers can be found in the schedules of 35 insolvents from the 314 randomly sampled from the 1559 data base; these 35 were definitely boomers. There were 8 from 1886 to 1890, 19 from 1891 to 1895, and 8 from 1896 to 1900. Information was also sought in the history of Melbourne and of finance in Victoria. Investment decisions originate in conditions of uncertainty; people act for complex reasons, including, assessments of what passes for information about the future. Attitudes about an unknowable future influence credit, and culture affected appraisals of the future. The boom also had to rest on evidence of expansion, on evidence that land speculation could be rewarding. In the early 1880s, Victoria borrowed heavily to expand its state railway, improve Melbourne’s harbour, and extend the city’s water and sewer systems.[40] The related rise in demand for shelter in the first half of the 1880s fostered a robust land market. Public transit advanced suburban high streets in South Yarra, Prahran, and Collingwood. These developments translated into profits for ground-floor land vendors. It appeared that real estate delivered huge profits, because a handful of boomers built lavish mansions, advertising successes.[41] Real estate advertising played a part in spreading the word about making money in land. By the mid-1880s, real estate agents and auctioneers employed hoarding posters and newspaper advertisements. Prospectuses for new companies that sprouted in the 1880s were ‘the most splendid specimen[s] of the art of imagining’.[42] The prospectus of the Essendon Land, Tramway, and Investment Company illustrates the art of deception. Incorporated in 1888, it purchased 1875 acres at £223 per acre, and alleged that nearby land had sold for £1,800 at auction. Sales were faked to create high market prices. This firm reported that 3200 shares had been ‘taken up privately, the names of the shareholders being a sufficient guarantee that this is a genuinely good investment’.[43] Gullible people believed in the talents of wealthy men, as we will see.

Melbourne’s suburban form, the prospector and gambler’s mentality, unchecked materialism, unorthodox banking practices, and unsound land-valuation practices heightened the city’s susceptibility.[44] Melbourne’s pattern of growth during the 1880s helped land speculation. Boosters of particular communities used local councils to built local markets and town halls. Civic pride and the profit motive persuaded merchants like chemist James Cavendish of Toorak Road, South Yarra, to invest in shops, houses, and allotments on neighbouring streets. Cavendish bought shares in an investment company because ‘the main object [was] to deal in land, more particularly in South Yarra and Chapel Street, Prahran, where land was then [1888] at increasing prices’.[45] The many nodes of decentralized development made the entire city appear on the move. City building in Melbourne presented a cornucopia of neighbourhood investment opportunities, but localism obscured how quickly the city was becoming over-built. Melbourne’s fragmented civic government and its local identities, expressed by sporting clubs, high streets, markets, town halls with libraries and theatres, and local building societies narrowed the vision of merchants and professionals. They ignored that the suburbs shared a uniformity of allotments, commonplace terrace housing, and similar high-street shops. The extensive network of trams and trains furnished many locales with comparable access to workplaces and shops. Metropolitan urban services facilitated low density development.[46] Footscray, Brunswick, Hawthorn, and Essendon experienced stunning growth, while new suburbs formed at Malvern, Caulfield, Northcote, Coburg, Preston, and Camberwell. Boomers and boosters claimed to advance the interests of particular communities, but contributed willy-nilly to a replication of common streetscapes and an over-production of urban space.

The city was vulnerable because of another circumstance. It had serviced mining frontiers since the Ballarat gold rush of 1851-2. Tales of lucky strikes periodically swept the city. The gold fields attracted fortune seekers from around the world. The prospectors’ mentality that emerged from mineral discoveries comprised beliefs about the possibility of sudden wealth for anyone; it included an urge to reap material rewards quickly, and a trust in inexhaustible bounty. In 1869, Marcus Clarke sketched the turns-of-fortune of a cabman. ‘I drove a Hansom myself once, and made a fortune; only to invest it in mining shares, and lost all of it.’ Fortunes, such lore proposed, could be made and lost.[47] That was life. Mining schooled boomers about syndicate formation, and whetted appetites for new adventures. During the crash, a number of insolvents listed both mine and land investments assets. Land speculation fit familiar practices.[48] Geoffrey Searle described a rampant materialism during the 1880s when most churches failed to engage in social criticism. Tales of success confirmed immigrants in the wisdom of their move. Melbourne was a city where the cunning of ‘Special Survey Clarke’ and ‘Money Miller’ – legendary hustlers – featured in folklore. Searle concluded that:

shrewd and simple alike were bemused by the notion of the inevitability of progress ... and by the long-delayed chance to make the golden pile for which they migrated.[49]

A gambler’s mentality supported illusions. Mining and sheep grazing generated male communities where punting thrived. Land speculation offered another game for grand prizes. The approach of Spring race meets saw the flow of funds out of the stock exchange and onto race courses.[50] Restaurant keeper Pierre Noel Lacaton ran a fancy establishment and rejoiced in the gaming life until he declared insolvency in 1888. He applied his Baccarat philosophy – a statement of the ‘gambler’s fallacy’ – to investment in land syndicates. ‘On the whole I am not a loser. I only played high while I was winning. If I was losing I would play low.’ He seemed to be winning at real estate until late 1888. Losses should have cautioned against further risk taking, but reverses amidst apparent opportunities made some people desperate for a recuperative exploit. Land speculation presented a last roll of the dice. Lacaton speculated in real estate because he had lost heavily at the race track. ‘[I wanted] to recover myself.’[51] In 1901, during the city’s revulsion with its reckless past, insolvent police constable George Answerth wanted it known that he had never gambled, bet on races, or speculated in mining stock.[52] Given his profession, an emphasis on propriety is understandable, but the linked taboos were Melbournian.

Australian thinking about banking relaxed credit restrictions. An insider wrote that bankers ‘banished care and became daft’.[53] Melbourne’s business culture accepted unorthodox practices. As a new settlement region, Victoria had the challenge of attracting capital. Australian colonies faced the complication of being scrutinized by the Colonial Office which had in earlier years discouraged departure from conservative English banking practices; however, experiments became accomplished facts before London could disallow them.[54] Bank loans secured by a future wool clip pioneered in the early 1840s were innovative. By the 1830s, private lenders and banks were doing two things that English ones could not do.[55] First, they changed laws against usury; they could charge higher rates of interest than permitted in England.[56] That made colonial investments attractive. Second, banks extended their business from discounting commercial paper to lending on real property. The banks’ involvement with land had a complicated history, because they operated under British charters, colonial enabling acts, or colonial charters. Drafted at different times, these stipulated a variety of rules. Founded in 1854, the Bank of Victoria, for example, could not lend money on security of land, though it could seize real property and sell the same to satisfy debts.[57] Banks debarred from mortgage lending penetrated the business by claiming they were covering overdrafts and taking deeds later as security.[58] The entanglement of financial institutions in land dealings had accelerated in Victoria due to an 1864 companies act which allowed financial institutions incorporating under it ‘to lend on land and take a security coincident with the advance’.[59] Shareholders of restricted banks debated whether to ignore the ban.[60]

Concurrently, building societies shed procedures originated when they were mutual benefit societies. After mid-century, they emerged as complete lending enterprises, pressing hard against restrictions. By the 1880s, moreover, they were ‘as plentiful as fleas’.[61] The more aggressive ones ignored legislated limits on loans to paid-up capital and the percentage of a property’s appraised value that could be lent. There were also land mortgage banks which lent on real estate. One of the first, the Land Mortgage Bank of Victoria founded in 1864, could not lend beyond fifty per cent of a valuation, but violated the rule. Mortgage lending flourished in the 1860s and 1870s. Wondrous engines for manufacturing credit had been assembled. In 1887, a Victorian royal commission examined the colony’s banking laws with the aim of standardization. Chaired by boomer Matthew Davies, it focused on the reserve requirements for bank notes and the lingering illegality facing some banks that lent on land. One of the other members, Henry Gyles Turner, favoured lending on landed security. He felt justified supporting Australian practice, but reached that conclusion by ignoring history.[62] Numerous bank failures in the United States occurred with real estate speculation, and there had been bank failures in Australia due to a land boom in the 1830s. Lenders fell into risky practices or lost business. There were other reasons why the asset quality of lending institutions deteriorated; accounting skills were scarce, and lenders seldom found clients with long business histories.[63]

Speculators lacked an appreciation for land’s hazards, its poor liquidity and potential for inflated valuations. The state of land valuations epitomized the paltry information generally available to investors.[64] On the surface, lenders seemed prudent by advancing money secured by real property to the value of 60 per cent of appraised value.[65] However, that margin was based on so-called market values. Without a process to determine real property’s intrinsic worth, its so-called value originated in dubious assessments. A popular commercial handbook placed Australians ahead of Britons, Americans, and Canadians in per capita wealth by including land values; this was misleading.[66] How were land valuations prepared? George Meudell claimed ‘revenue or rents were never used to test values’.[67] Valuers ‘departed from capitalizing the earning power of a property, and estimated to suit their clients’.[68] In some English-speaking jurisdictions, assessors estimated the value of real property on potential rents factored at a six per cent annual return. Another way was to value property as if it faced a forced realization, which would have acknowledged liquidity problems.[69] Instead, to shape market values, boomers auctioned suburban allotments. Auctioneers worked with ‘puffers’ or ‘dummies’ who pushed up bids.[70] If these agents placed the winning bid, then a reserve price had been made. This dodge put no coins in vendors’ pockets. In fact, it cost auction fees, though friendly auctioneers might reduce commissions.[71] A fake sale might have fooled a lender into maintaining a vendor’s overdraught coverage. Lenders were misled by ‘false valuations and silly asses of auctioneers’.[72]

High market valuations also originated in a structural feature of land markets. There was no futures market for urban space.[73] The inability to arrange land sales for a future transfer date precluded involvement by doom-sayers. Not only had these players in commodity markets introduced caution, but they sold short, increasing contracts, easing supply pressures. Land markets could only accommodate bulls who demanded land immediately to meet growth, or an assumption of continued growth. Acting quickly in expectation of profits, they heavily discounted the future, accepting both a premium price and heavy debt burdens. Victoria had acquired the preconditions for a land bubble. Alterations to cautious English banking practices had allowed a differential in interest rates that helped draw British investors to the colony and promoted a cavalier attitude toward land as collateral. Australians borrowed more abroad on mortgage security than any other primary producing area.[74] Land valuation was biased toward unrealistic heights. Corporate evolution provided Melbourne with competitive lending firms which increased the availability of mortgage funds. The ways funds could be lent multiplied. Some land vendors borrowed against contracts from buyers.[75] Easy credit encouraged participants in the city-building process to produce new urban space.[76] It was not just institutional credit that expanded. Booms could be financed through personal credit. Insolvency records show that Melbourne witnessed an explosion in personal credit, as promissory notes financed land sales and contributed to market price inflation. Many who signed notes believed that a quick land sale would quickly relieve them of the contracted debt. It shocked them when creditors enforced obligations when the land market became sticky. One witness to manipulation recalled that ‘if a suburban estate was turned over and sold five or six times at a paper profit that meant five or six sets of bills owing on one property’.[77]

The floating of land syndicates and land companies contributed to Melbourne’s boom and bust. It is impossible to know how many land syndicates operated in the boom, but they proliferated on lists of worthless assets submitted by insolvents in the late 1880s and early 1890s. Syndicates differed in details. Some concentrated on a single suburb.[78] Others had scattered holdings because, when a single syndicate lacked the resources to buy and subdivide a large estate, the vendor would approach several syndicates.[79] Consisting of a handful to several dozen investors, land syndicates usually had a forceful boomer in charge.[80] Builder John Handley took four people into his Oakleigh syndicate in 1888.[81] Syndicates formed by jewellery manufacturer Gustave Lachal consisted of from six to thirty-five people. Lachal was entirely in charge of manoeuvres.[82] Boomers used syndicates to offset risks and assemble collateral for loans. When purchasing a large tract by credit, the boomer canvassed others to join, through newspaper advertisements or circulars. Land agents and auctioneers were sometimes solicited for the names of individuals who appeared interested in speculation.[83] Friends importuned friends; employers enrolled employees. Lachal recruited in the jewellery business. Past profits were the bait. Because syndicate membership was small, each member had to pledge a large sum. Insolvency schedules show that syndicate speculators included the affluent or influential: merchants, manufacturers, solicitors, building-materials suppliers, pastoralists, share brokers, and politicians. Some joined several syndicates. Members committed themselves to instalments, preparing promissory notes in favour of the syndicate organizer. These obligations were an asset that provided collateral for organizers to use when borrowing bank money to pay the pending instalments to the vendor, engage in other purchases, or speculate in unauthorized personal dealings. Syndicate managers and members increased the credit-based volume of transactions.

When sales faltered, syndicate organizers insisted on calls, enforced with threats about the investors' loss of equity; failing that, syndicate heads used writs.[84] As a leveraged investment, a syndicate could pile up enormous liabilities. Take Lachal’s case. He first plunged into land in 1884. By 1889, he valued his land holdings, scattered in twenty Melbourne suburbs, at almost £300,000. His insolvency file shows involvement in at least ten syndicates. With Edward Comber, he attracted affluent investors from the jewellery business, but also accountants, manufacturers, wholesalers, publicans, and relatives. Lachal’s brother-in-law recalled that he joined because:

I had full confidence in his ability as a land speculator. Whenever he asked me to join him I went in blindfolded. I gave him whatever money he or his agent Comber asked for.[85]

By 1887, Lachal and Comber were manipulating syndicates. Naive syndicate members believed they were buying from an original vendor, such as a farmer, market gardener, or orchard operator. In truth, an earlier Lachal syndicate was the vendor. In Kew, Lachal and Comber purchased a tract and financed it though an initial syndicate, paying £120 per acre. Comber organized a second syndicate, with seven members from the first, and represented Lachal as the sole vendor to six new members of the second syndicate. Lachal and Comber hoped to fleece the second group by persuading it to pay £400 per acre. In addition to disguising the vendor’s identity, the cabal falsified plans to show a main road. Investors in the Barryville Estate Syndicate had been similarly told the tract was ‘a stone’s throw of the Station’. It lay a mile away.[86]

Speculators who misrepresented themselves as neutral agents were often vendors. Agents sometimes served as principal vendors and buyers in the same transaction. Real estate agent Frederick Illingworth, member of the Legislative Council of Victoria, engaged in double dealing. Boomers had run up the price of the estate he wanted from £35,000 to £60,000, the sum he finally accepted in September 1888. He then formed a syndicate of forty investors and persuaded his partners to pay £105,000 for the land without disclosing his status as owner. Using the syndicate members' promissory notes as collateral, he secured a bank loan to cover his own promissory notes issued to cover the purchase.[87] As Comer put it ‘I got up this Syndicate to buy this land from ourselves’.[88] Accountant William Thomas Wright entered a real estate business with William James Runting in August 1886. They bought land on credit and formed syndicates to take the property off their own hands. When accused of concocting transactions to inflate prices, Wright declared ‘we consulted Auctioneers and Estate Agents of long experience and their opinions coincided with ours as to values’.[89] Journalist Edward Finn fronted as a ‘dummy’ for a banker and a land agent who hoped to sell to ‘sub-buyers’.[90] Syndicate organizers could also profit from taking secret commissions from vendors. Boomer James Miriams assured his syndicate partners that he would never take a kick-back commission when he bought on its behalf. Instead, he persuaded boomer Donald Munro to sell him the land for £15,000 less than the formal asking price, so he could pocket the difference and deny taking a commission.[91]

Land-boom companies differed from syndicates in the number and character of investors. Hundreds of shareholders from modest-paying occupations bought shares with calls pending, investing in a local land company, mortgage bank, building society, or tram line. When The Real Estate Mortgage and Deposit Bank failed in 1892, about 215 shareholders could be located. They included salesmen, ministers, priests, carpenters, tailors, drapers, grocers, bootmakers, teachers, clerks, widows, and spinsters. Fifty-five were women.[92] Prominent among the 164 shareholders of The South Melbourne Permanent Building and Investment Society and Deposit Institute were teachers, labourers, publicans, spinsters, and widows.[93] After the crash, liquidators drafted shareholder lists so creditors could call on unpaid capital which often constituted a company's only unmortgaged asset. Calls in turn pushed a number of middle-class and artisan investors into insolvency. Shareholder lists not only disclosed the wide social base of investment, but the hopes of victims. Howard Harmsworth started as a journeyman in 1880, and made ‘a precarious livelihood’, but in 1891 made a fateful decision, a gamble. ‘I thought I could make a little money by taking some shares in the Coburg and Somerton Estate Company.’ Speculation forced his insolvency in 1895.[94] Grocer Maria Dunlop held scrip for 120 shares in The Real Estate Mortgage and Deposit Bank Limited. During the collapse, this left her with liabilities; she owed £240 to this firm’s calls on capital. She claimed to earn £80-£100 per annum ‘out of which to support myself’. During the boom she speculated, buying 100 shares in Northern Tram Company, 100 in New Northcote Brick Company, 40 in Excelsior Building Society, 150 in Land Investment Building Society, 40 in Melbourne Cyclorama Company.[95] The mania enticed people from many occupations into buying shares in neighbourhood firms. Hundreds of companies originated in the 1880s. From 1891 to 1893, 450 companies vanished or went into liquidation. Land companies accounted for about half, and financial services more than a quarter.[96]

Unscrupulous officers of boom companies engaged in deceptions. Incorporation often came as a search for emergency capital. Company founders bought land in their own name or for a syndicate, then sold to their captive company. Boomer Emmanuel Sydney Raphael floated the Dandenong Estate Company for this purpose. The first shareholders, parties to fraud, participated in a syndicate that initially purchased a tract of land, but they aimed to profit from the vending syndicate, not the purchasing company. Company promoters falsely indicated that they had retained the land for a long time and now wanted to realize profits from allotment sales. The company's promoters had actually bought the land for £13,000 and sold it to the company for £46,000. Shareholders unearthed the deceptions. A committee representing 183 investors sued Raphael in 1889, starting a sequence of litigation leading to his insolvency in April 1891.[97] Time and again, boomers filed insolvency papers after an adverse judgement in the Supreme Court. No better example of connections linking investors’ forebodings, subsequent litigation, and insolvency exists than the fate of railway contractor and boomer David Munro. In 1887, he had been named in one writ, but then they piled up: 14 (1888), 38 (1889), 16 (1890), 3 (1891).[98] Munro filed for insolvency in early 1890.

The market for urban space was saturated by at least late 1887. Building contractors, mercury in a barometer of urban economic change, struggled under the boom's price pressures. Dear supplies choked growth. As well, some builders tendered recklessly on jobs, planning to profit by skimping on material. Builder Francis Sims colluded with architect William Wolf who told him what the winning bid should be, and then certified Sims’ shoddy work as ‘well up’.[99] When the market slowed, contractors were caught either with stock that could only be sold at a loss or were losing money on contracts. David Munro is alleged to have lost £70,000 on suburban lines; as early as December 1886, he could no longer pay a supplier.[100] Munro and other contractors miscalculated profit margins, and fell in record numbers in 1886 and 1887.[101] The boom jeopardized builders in many ways. Contractor Joseph O’Brien found that the more work he accepted, the less capably he could supervise. ‘I was not able to attend to the job and supervise the men – the men loafed.’ Like many builders, he did not know how to keep accounts and could not ascertain his position until too late.[102] The boom’s skimped jobs brought contractors financial headaches, because inspectors from lending institutions began to refuse certificates that allowed builders to collect ‘progress payments’ on operating loans. When contractors sued and lost, their woes multiplied.[103] From 1886 to 1890, contractors, builders, plumbers, and painters were prominent among insolvents. In the sample of 1559 insolvents covering forty-five years, the building trades counted twenty per cent of their total insolvents from 1886 to 1890. Their reported losses – which had averaged approximately £500 from 1871 to 1885, averaged nearly £6,000 from 1886 to 1890. Worse came in the deep crisis years, but the plight of the building trades in early 1887 marked the boom’s end.

Something forestalled a severe economic crisis in 1887-8, and sustained many boomers and speculators until a resounding crash in 1891-3. Insolvency records suggest what it was. Some activity continued because it could not stop. As bad as conditions were for contractors, they could not readily halt production of houses, shops, and office buildings. Once a project had begun, work usually proceeded to completion. For a few builders, a rational response to a precarious future was to continue to seek work and ride out the crisis. To gain survival work, they bid lower still. Contractors John Grenfell Uren realized he would lose money, but needed visibility to persist, and so in the late 1880s he was ‘taking contracts at a price which was not remunerative’.[104] Painter Howard Harmsworth ventured into contracting in 1891 when business soured. He borrowed from relatives to pay tradesmen.[105] Boomers resorted to desperate measures to inflate land and share prices, and to scrounge capital to meet obligations. A few speculators who lacked helpful contacts failed immediately when creditors pushed them. However, ingenuity, threats, fraudulent conduct, and networks of implicated speculators and bankers worked to forestall a correction. Individual speculators, land syndicates, and shareholders in concerns that purchased tracts of land late in the boom practised extreme survival tactics. Syndicates and companies called up capital. When instalments came due, speculators tapped savings and scoured for credit. Uncertain about the scale or duration of the check to property sales, speculators struggled to avoid forfeiting deposits and real estate. Speculators who held shares in land development companies, building societies, land mortgage banks, tram companies, brickworks, and lumber mills endeavoured to pay calls. Threats of litigation countered any investor stalling.

Many people paid calls as long as possible. James Warnock began to buy land bank shares in 1888. Soon, his companies ran into difficulty and ordered calls. From 1891 to 1893, he paid calls worth £8,163, meeting obligations, up to the day his creditors hauled away his furniture and clothes. His losses from 1891 to 1893 amounted to £170,958 and included a business of thirty-five years.[106] South Yarra chemist James Cavendish kept up payments on shares, syndicate units, and real estate loans by draining assets that he had build up since 1876. In 1894, he came to the end of his tether.[107] Tea broker Philip Taylor started to speculate in land allotments, mining, and land bank shares in July 1888, and though he saw a depreciation of these assets in January 1889, he tried to meet payments. Just prior to declaring himself insolvent in 1892, he surrendered his furniture.[108] Contractor Gustav Einseidel had dealt in land and houses since the early 1880s, but in 1889, when easy times were over, he recounted ‘I had the life of a dog and did not know what to do’. He started to sell at a loss to meet creditors. This staying measure lasted a year.[109]

Boomers and victims trekked to pawnbrokers and moneylenders and accepted interest rates of 15-25 per cent.[110] Some met demands by selling stock.[111] These actions depressed stock prices which provoked deceptions, this time by debtors with share assets. A son of the director of the Federal Bank, for example, placed orders for the bank’s shares and paid for them by loans from the bank which took the shares as collateral.[112] Rational loss-cutting must have been difficult to accept; people chose to hang on. Squeezing for capital descended, at times, to shameless exploitation. Some land syndicates originated in 1888, expressly to rescue boomers. In 1888, David Munro sold several large estates to a syndicate in which he was a partner. The Somerton Estate Syndicate had the purpose ‘to keep [Munro’s] contacts with the original vendors alive’.[113] Deception and high-pressure sales from the likes of Munro occurred from top to bottom. Land agents worked to dispose of whatever they could. One Sunday in 1888, an officer at Janet Brown’s church invited Janet and her sister to stop by his house. This seductive Mr Robertson, a salesman for Munro and Baillieu, proceeded to tell the sisters about the excellent land he could sell them. A quick profit was a sure thing. They paid the deposit and signed a series of promissory notes. Janet and her sister continued to pay instalments until early 1893 when they realized that further payments were a waste. When they ceased paying, the company which held their notes sued them and Janet filed as an insolvent.[114] In other cases, vendors flashed the Midas-touch aura and seduced buyers months after failing contractors and alert boomers recognized a crisis. Lachal’s syndicates made profits for participants in previous years. Therefore, as he faced creditors pressure in 1887 and 1888, he convinced others to join another venture. One of those stung, James Kelly, admitted that, because he joined Lachal in earlier syndicates, he never asked questions about new ones. Kelly trusted Lachal’s money-making skills. Estate agent Frederick Illingworth likewise continued to lure investors. ‘They had confidence in me.’ ‘All the persons were my personal friends and trusted me implicitly.’[115]

To place food on tables, failing speculators boasted of their wealth and extracted credit from small merchants and trades people. Thomas Hanson admitted boasting about his affluence in 1887 when actually carrying an overdraft of over £4,000. His deceptions continued a year before insolvency.[116] Williamstown auctioneer and estate agent Robert Hutton engaged in a greater deception. From 1888 to 1890, he may have survived by legitimate means, but then ‘it was impossible to pay expenses’. He owed £600 a year in interest alone:

I need hardly say that the money could not be made in the business, and of course that accounts to some extent for the disappearance of the trust money that I have been dealing with.

He disappeared and became ‘an outcast upon the world’ ‘I have lost all. My name, reputation and credit, and the sole cause is myself. I could not lower myself to come out of the Boom’.[117]. The most prodigious dispensers of respites were corrupt officers of building societies and land banks who covered speculators’ overdrafts. A group of large conservative banks agreed on 22 October 1888 to refuse further overdrafts for land purchases and to raise interest rates one per cent. This precipitated a drop in land and share values, but the Associated Banks were not the only lenders.[118] Many financial institutions had emerged to service land speculators, and now they helped to keep solvent the founders, shareholders, and major clients. They sought outside money. James Clarke – ‘both Father and Mother’ of the Imperial Banking Company – sold land to his bank which paid him with an overdraft coverage from the Bank of South Australia.[119] Institutions found money in the United Kingdom. Many of Melbourne’s financial institutions refused to write off bad loans, so outside capital merely rolled over bad accounts, a classic problem with delaying the day of reckoning.

IV AFTERMATH

Local savings had been squeezed mercilessly and off-shore capital had been lured by high interest rates to Victoria. A salvage drive had occurred just as the slump started. Boomers who misjudged demand for urban space around 1887, succeeded for several years in locking more capital in unproductive assets. Their eventual loses were remarkably higher than for other insolvents, and their failures had unpleasant consequences for other people (Graph 5). One implication of the bustling to stave off collapse was that, after the banking crisis of 1892-3, little capital could be found locally to support the expansion of going concerns. Offshore, the city had earned a bad reputation. For many years after the mid-1890s, faith in the future and trust of the city’s business community plummeted. Both faith and trust were vital for entrepreneurial risk-taking, for committing contractual obligations. A look at the post-crash insolvents, based on the sample of 314, reaffirms the idea of a new culture of caution. For the years after 1900, insolvents in this sample resembled pre-crash counterparts. Most were small retailers and labourers rendered insolvent by illness, accidents, under-capitalization, and miscalculation in their principal line of activity. Always the leading group of insolvents, retailers failed in record numbers between 1901 and 1915. Labourers also had unusually hard times during these years. Significantly, from 1901 to 1915, forty-five percent of insolvents in the sample of 314 cited health problems. William Riddell, a watchman, filed for insolvency in 1900 because of medical expenses for two sick children. A creditor took the bed from underneath one child.[120] Injured in a sewer construction accident in 1899, labourer Timothy Reardon could not secure steady employment thereafter.[121] Incapacitated or caring for a sick spouse or children, people turned to money lenders. Tobacco worker George Nickels and his wife had been ill and forced to borrow money in 1906-7. His 1907 schedule listed debts to a money lender, grocer, baker, draper, and dentist.[122] Failures originated more than before in personal misfortune and poor business decisions, not gambling or fraud. Barmaid Bertha Mahoney became insolvent in 1902 because the business was unremunerative.[123] Boarding house operator Kate Gibbs gave up in 1903 after two years of losses.[124] Wonthaggi brickmakers Arthur and William Walkerdon took unprofitable contracts.[125]

Among post-1900 insolvents, signs of risk-taking were rare. Melbourne’s boom and bust scarred it for years. The crash tied up capital and blunted risk taking. Melbourne headed for stagnation. Insolvencies can stand as a measure of enterprise; there will be losses when there is risk-taking. After 1900, Victorian insolvencies plummeted, as did the mean debts per insolvent. They fell below levels recorded for 1871 to 1888. For Melbourne, the sample of 1559 shows a more complicated picture of post-crash insolvencies. There were fewer insolvents per capita after the crash, and the mean debt for insolvents was often lower than in pre-crash times, but there were exceptional years (1904, 1910, 1911, 1913) when the mean debt exceeded the pre-boom peak of roughly £1,200. Even in these years, though, insolvents were mainly hard-luck toilers and inept entrepreneurs. The rise and fall devoured gamblers, boomers, and victims. Asa Briggs wrote that after the fall Melbourne ceased being the empire’s most American city, and became its most British. He was right.

[*] Professor of History, McMaster University.

[1] Graeme Davison, The Rise and Fall of Marvellous Melbourne (1978). Michael Cannon’s The Land Boomers, a popular account of financial scandals that proliferated during the crash, has often been reprinted. The Land Boomers (1977). First published in 1966; first paperback with correction, 1967. Reprinted 1973, 1977. Geoffrey Searle’s The Rush to be Rich captured the materialism of boom-time euphoria. The Rush to be Rich: A History of the Colony of Victoria (1971). E A Boehm published an economic history of 1887 to 1897. Prosperity and Depression in Australia, 1887-1897 (1971). The stunning growth and collapse caught Asa Briggs’ attention. In Victorian Cities, Briggs proposed that the depression altered Melbourne’s ‘personality’. It lost self-confidence. Once the Empire’s most ‘American’ city, Melbourne became its most British. Victorian Cities (1971) 286-7. First published in 1963. A crisis of grand proportions forced the transformation. It began with a sluggish real estate market in late 1887; an unusual number of builders, estate agents, and speculators failed. The slump ripened into panic from 1891 to 1893. Building societies and land mortgage banks failed in 1891 and 1892, and a wave of reorganization among some major banks transpired in 1893. N G Butlin offers a good summary in Investment in Australian Economic Development, 1861-1900 (1964).

[2] Melbourne Court of Insolvency, Deeds under 1871 Act, Public Record Office of Victoria, Victoria Public Record Series (henceforth VPRS) 762, unit 138, case 2931, Thomas Barr.

[3] VPRS 762, unit 106, case 2381, Patrick Haydon.

[4] VPRS 762, unit 76, case 1721, George Williamson.

[5] VPRS 762, unit 87, case 1961, James Mackenzie.

[6] VPRS 762, unit 7, case 141, Thomas Chambers.

[7] VPRS 762, unit 35, case 811, William Mackie.

[8] VPRS 762, unit 263, case 5021, Robert Greathead.

[9] VPRS 762, unit 306, case 5541, Henry Passmore.

[10] VPRS 762, unit 129, case 2811, Pritchard Burton.

[11] VPRS 762, unit 331, case 5771, Robert Kerr.

[12] VPRS 762, unit 15, case 311, Charles Leonard.

[13] VPRS 762, unit 34, case 711, William Watson.

[14] VPRS 762, unit 269, case 5091, John Higgins.

[15] VPRS 762, unit 113, case 2521, Thomas Debres.

[16] VPRS 762, unit 61, case 1411, Thomas Redmond.

[17] VPRS 762, unit 248, case 481, James Payne.

[18] VPRS 762, unit 110, case 2471, John Drummond.

[19] VPRS 762, unit 278, case 5191, William Little.

[20] VPRS 762, unit 394, case 1251, James Liddy.

[21] VPRS 762, unit, 137, case 2911, William Cain.

[22] VPRS 762, unit 235, case 4671, John Dwyer.

[23] VPRS 762, unit 293, case 5361, John Shannon.

[24] VPRS 762, unit 5, case 91, James McPherson.

[25] VPRS 762, unit 236, case 4681, Charles Mitchell.

[26] VPRS 762, unit 46, case 971, Edwin Fuller.

[27] VPRS 762, unit 48, case 1021, John Richard Tanner.

[28] VPRS 762, unit 11, case 231, Henry Black Chalmers.

[29] VPRS 762, unit 29, case 621, George Reynolds.

[30] Melbourne Court of Insolvency, Deeds under the 1871 Act, VPRS 762, unit 404, case 1362, George Francis. This case replaced 1361 which was the random number for the sample; however, the case was missing.

[31] VPRS 765, unit 242, case 2821, Walter Heilbronn.

[32] VPRS 762, unit 353, case 5963, Thomas Allen.

[33] Melbourne Court of Insolvency, Schedules under the 1890 Insolvency Act, VPRS 765, unit 65, case 691, George Page.

[34] VPRS 765, unit 179, case 2021, James Quayle.

[35] VPRS 762, unit 323, case 5715, Edwin Jenkins.

[36] VPRS 762, unit 377, case 6201, William Andrew.

[37] VPRS 762, unit 363, case 6056, John Jones.

[38] VPRS 762, unit 357, case 6011, Thomas Penman.

[39] George Meudell, The Pleasant Career of a Spendthrift (1929) 143.

[40] Victoria maintained extensive statistical reports that chart the construction of public works, and an increasing debt. See: Victoria, Statistical Register for the Colony of Victoria for the Year 1889 (1890) Part III, Interchange, Part V, Finance.

[41] For a reconstruction of possible profits, see: R Silverberg, ‘A Rates of Returns on Melbourne Land Investment, 1880-92’ The Economic Record 203-217. He uses the prices stated in registered land transactions. The strong likelihood that the prices cited in many of these ‘transaction’ were inflated or ‘faked’ does not weaken the point that at least some speculators believed the sales were legitimate, or at least presented opportunities for gain.

[42] Meudell, above 39, 13.

[43] Master in Equity, Supreme Court of Victoria, Equity Case Files, VPRS 259, unit 224, case 426, Essendon Land, Tramway, and Investment Company.

[44] For the banking crisis see: D T Merrett, ‘Australian Banking Practice and the Crisis of 1893’ (1989) 29(1) Australian Economic History Review 60-85; ‘Preventing Bank Failure: Could the Commercial Bank of Australia Have Been Saved by its Peers in 1893?’ (1993) 64(2) Victorian Historical Journal 122-142. Merrett argues for ‘free banking’, but suggests that easy entry into banking lowered prudential standards. Safe business was scarce; risky accounts were sought. Merrett ignores that financial institutions, including some banks, had been corrupted or established to pursue land market risks. Merrett proposed that better disclosures could have strengthened prudential standards. It is questionable whether ‘free banking’ was capable, at that time and place, of sound information.

[45] VPRS 765, unit 185, case 2081, James Cavendish.

[46] Lionel Frost, The New Urban Frontier: Urbanisation and City Building in Australasia and the American West (1991) 24-6.

[47] L T Hergenban, A Colonial City: High and Low Life: Selected Journalism of Marcus Clarke (1972) 57.

[48] Meudell, above n 39, 102.

[49] Searle, above n 1, 271.

[50] Geoffrey Blainey, The Rush that Never Ended: A History of Australian Mining (1978) 99.

[51] VPRS 762, unit 325, case 5723, Pierre Noel Lacaton.

[52] VPRS 765, unit 319, case 3841, George Answerth.

[53] Meudell, above n 39, 68.

[54] Imperial supervision of Australia was more enduring than that for Canada. The control over crown lands is a notable case. Eg: Peter Burroughs, Britain and Australia, 1831-1855: A Study in Imperial Relations and Crown Lands Administration (1967) 373.

[55] For an account of the elimination of laws against usury in the United States see: Morton Horwitz, The Transformation of American law, 1780-1860 (1977) 237-45. An 1817-1819 land boom in the United States combined with the launching of numerous new banks, many of them formed primarily to profit from land speculation, ended in a serious financial crisis. See: Daniel Feller, The Public Lands in Jacksonian Politics (1984) 18-22. Charles Sellers, The Market Revolution, 1815-1846 (1991) 132-8.

[56] For an account of the practices of Australian lenders prior to 1833 and also of the reasons adduced by the Supreme Court of New South Wales to condone their evasions of English usury law see: Macdonald v Levy (1833) in J Gordon Legge, Selection of Supreme Court Cases in New South Wales (1862) 39-64.

[57] Travers Adamson (ed), Acts and Ordinances in Force in Victoria (1855) 35-42.

[58] Wyatt et al (eds), Supreme Court of Victoria, vol I, Bank of Victoria v Cozens 93-5.

[59] Boehm, above n 1, 220.

[60] ANU, S J Butlin Collection, item 757, The Argus, 30 December 1868. This clipping reported on a heated shareholders meeting of the Bank of Victoria.

[61] Meudell, above n 39, 16.

[62] Boehm, above n 1, 222-23.

[63] Merrett, above n 44, 72.

[64] Financial institutions did not have to disclose loans to directors. Victoria, Report of the Select Committee of the Legislative Council on the Companies Act 1890 Further Amendment Bill; together with the Proceedings of the Committee, Minutes of Evidence, and Appendices (1896) 30.

[65] The high ratio of loan to valuation of property may have been promoted on the grounds that in the case of real property registered under the Torrens system there technically was no equity of redemption; in other words, the mortgagor had less difficulty foreclosing and the mortgagor’s interests in the land were not diluted by those of others who may have purchased the equity of redemption (a second mortgage).

[66] Michael G Mulhall, Industries and Wealth of Nations (1896).

[67] Meudell, above n 39, 256.

[68] Table Talk, 30 September 1892.

[69] This was practised in Ontario as a means of arriving at assessments for municipal taxation. It was also recommended by directors of the Freehold Assets Company in 1908. ANU, 12/1, David Fell and Company, Directors’ Minute Books, 20 August 1908.

[70] ANU, 24/1/3, Modern and Permanent Building Society (henceforth MPBS), Minute Books, 2 July 1886; 15 July 1886. Table Talk, 7 October 1892.

[71] La Trobe Library, Ms 9342, Yoe, Crossthwaite & Co, Correspondence 1882-9, H S Merrin to Malcolm McLean, 2 July 1888.

[72] Meudell, above n 39, 256.

[73] Edward Shann, An Economic History of Australia (1930) 311.

[74] J D Bailey, ‘Australian Borrowing in Scotland in the Nineteenth Century’ (1959 2nd series) 12 Economic History Review 268-79.

[75] Meudell, above n 39, 256.

[76] R Silberberg, ‘The Melbourne Land Boom’ (1977) 17 Australian Economic History Review 125.

[77] Meudell, above n 39, 14.

[78] VPRS, 765, unit 5, Melbourne Insolvency Court, 1891-3, Alfred Strongman.

[79] La Trobe Library, above n 71, H Merrins to Malcolm McLean, 11 October 1888.

[80] Ibid Yeo Bretnall Merrin to G Pallett, 25 June 1889. Land held by the McKinnon Heights Syndicate had not sold an auction in January and the members were being called upon for capital.

[81] VPRS 762, unit 348, case 5911.

[82] VPRS 762, unit 322, case 5706, Gustave Lachal.

[83] La Trobe Library, above n 79, October 1888; 25 June 1889.

[84] La Trobe Library, above n 79.

[85] VPRS 762, unit 322, case 5706, Gustave Lachal, testimony of Richard Donnovan.

[86] VPRS 762, unit 322, case 5706, Gustave Lachal; Prothonotary of the Supreme Court of Victoria, VPRS 267, unit 879, case 4422, London Chartered Bank of Australia v Lachal Brothers.

[87] VPRS 762, unit 322, case 5706, Gustave Lachal, testimony of Frederick Illingworth.

[88] VPRS 5706, unit 322, case 5706, Gustave Lachal, testimony of Edmund Comer.

[89] VPRS 762, unit 324, case 5716, William Thomas Wright.

[90] VPRS 765, unit 52, case 561, Edmund Finn.

[91] VPRS 267, unit 867, case 3482, Miriam v Munro; VPRS 762, unit 397, case 6107, David Munro.

[92] VPRS 259, unit 223, case 405, The Real Estate Mortgage and Deposit Bank Limited.

[93] VPRS 259, unit 232, case 526, South Melbourne Permanent Investment Society and Deposit Institute.

[94] VPRS 765, unit 194, case 2191, Howard Baxter Harmsworth.

[95] VPRS 259, unit 223, case 405, The Real Estate Mortgage and Deposit Bank Limited, Affidavit of Liquidators in Support of Compromise with Maria Dunlop.

[96] ‘A List of Trading Companies in Victoria Incorporated since 1886, and the Names of Directors of Each Company, Showing which Companies Have Gone into Liquidation or Otherwise Failed to Meet their Liabilities’ (1897) 1 Votes and Proceedings of the Legislative Assembly, Session 1896 881-902.

[97] VPRS 267, unit 885, case 940, Walker v Raphael; case 939, Wright v Raphael; unit 888, case 1267, Ballantyne v Raphael; unit 904, case 2520, Munro v Raphael; unit 912, case 3210, Andrews v Raphael; VPRS 762, unit 370, case 6130, Emmanuel Sydney Raphael.

[98] This count of writs is based on an examination of ‘Cause Books’. See: Prothonotary of the Supreme Court, Index to Action/Cause Books, VPRS 5327, volumes 1887-1891.

[99] VPRS 762, unit 310, case 5589, Francis Sims.

[100] Cannon, above n 1, 106. VPRS 267, unit 789, case 618, Harry Lazarus v D Munro & Co, 10 February 1887.

[101] Melbourne Court of Insolvency, Correspondence Files, VPRS 76, unit 2, file 1887, Returns of Insolvencies in the Metropolitan District (1886); file 1888, Returns of Insolvencies in the Metropolitan District (1887).

[102] VPRS 766, unit 71, case 1692, Joseph O’Brien.

[103] VPRS 762, unit 313, case 5619, William Wrigley.

[104] VPRS 762, unit 354, case 5971, John Grenfell Uren.

[105] VPRS 765, unit 194, case 2191, Howard Harmsworth.

[106] VPRS 259, unit 218, case 372, British Bank of Australia, affidavit of James Warnock.

[107] VPRS 765, unit 185, case 2081, James Cavendish.

[108] VPRS 765, unit 76, case 821, Philip Taylor.

[109] VPRS 765, unit 3, case 31, Gustav Einseidel.

[110] VPRS 762, unit 363, case 6065, John Jones.

[111] Meudell, above n 39, 91.

[112] VPRS 259, unit 227, case 470, Federal Bank, Examination of Witnesses, lodged 13 June 1895.

[113] VPRS 762, unit 397, case 6107, David Munro.

[114] VPRS 762, unit 182, case 2051, Janet Brown.

[115] VPRS 762, unit 322, case 5706, Gustave Lachal, Testimony of Frederick Illingworth.

[116] VPRS 762, unit 312, case 5615, Thomas Hanson.

[117] VPRS 795, unit 91, case 991, Robert Hutton.

[118] Searle, above n 1, 257-8.

[119] VPRS 259, unit 218, case 369, The Imperial Banking Company, Transcript of the Notes of Evidence in the Matter of Frank Rogers Praying for the Compulsory Winding up of the Said Company.

[120] VPRS 765, unit 302, case 3591, William Riddell.

[121] VPRS 765, unit 346, case 4191, Timothy Reardon.

[122] VPRS 765, unit 402, case 5091, George Nickels.

[123] VPRS 765, unit 331, case 3981, Bertha Mahoney.

[124] VPRS 765, unit 337, case 4071, Kate Gibbs.

[125] VPRS 765, unit 467, case 5881, A and W Walkerdon.