Tag Archives: colonial economies

Making a motza in Port Phillip

Let’s be quite clear about this: people came to Port Phillip to make money as individuals.  It wasn’t a penal colony like Van Diemens Land or Sydney. It wasn’t a philosophical-cum-evangelical political experiment like South Australia.  It was not a privately-run settlement scheme like Western Australia.  It was conceived in the pubs of Launceston, and talked over and gesticulated to by the pastoral overlanders of Sydney, by men out to make a motza and the government could just get stuffed.  And even more importantly, in the early years people came to Port Phillip from another Australian colony, rather than coming out straight from Europe.

As part of thinking about financial security in 1840s Port Phillip, I recently read Simon Ville’s article ‘Business development in colonial Australia’ .  He points out that New South Wales (of which Port Phillip was part) had strong entrepreneurial capacity:

1. There were the ex-convicts and emancipists who had been either pardoned or their sentences had expired, who, swept by fate onto the other side of the world were denied conventional routes to achievement, but had scope to forge their own, too.  Certainly some had only a poor education, and they often lacked institutional and infrastructure suport.  But some also had a strong desire for legitimacy, esteem and recognition.

2. There were the government officials, who had had access to higher educational levels, but were not motivated by the need for social elevation.  Because of their position in a penal colony, they had access to a means of overseas payment and free labour.  Particularly in the first decades, there was scope to indulge their entrepreneurial proclivities.  This was less true of Port Phillip than Sydney, but is nonetheless worth bearing mind when Judge Willis started castigating government officers for “speculation”.

3.There were colonial merchants living locally.  They were usually from Britain; sometimes from India, and they brought with them their accumulated experience of previous success, capital, information and credit links of their overseas partners and agents.

I suspect that there’s a fourth group too. Jim McAloon speaks of settler capitalists, of lower middle class origins who brought with them the values of the British middle class: thrift, deferred gratification, self reliance and steady capital accumulation.  Although his research is based on the South island of New Zealand, he cites Paul de Serville’s work in Port Phillip  on the colonial elite which distinguishes one fifth of them as  gentlemen by ‘birth’ as distinct from gentlemen by education and profession and a large group of unclassifiable middle-class gentlemen.

Industries and opportunities draw on innovation for success (Ye Gods! I sound like a management textbook!). Innovation doesn’t just mean invention of the completely new- it also involves the modification of imported technology to local circumstances.  Often entrepreneurial decisions of this kind are made under conditions of great uncertainty and highly imperfect information- and you can’t get much more uncertain and imperfect than settlement in a new colony on a new continent in a different hemisphere.

Ville points out that vertical integration is common at the start of an industry’s life, and a signal of a low-trust environment, but that as an economy matures, vertical integration is replaced by specialization .  Vertical integration is a form of management control where all aspects of a product or process are under the control of a common owner.  For example, the Sydney merchant Robert Campbell was involved in whaling, shipbuilding, shipping, banking and farming.  Early NSW certainly qualifies as a low-trust environment: the convict origins of the colony were reinforced by mutual suspicion between convicts, officers and immigrant merchants.  Networks, bound by social, religious and kinship ties provided a high-trust organizational form based on common interests and propinquity.  Often individual entrepreneurs operated several distinct partnerships with different business associates. Certainly in Port Phillip, we can see that entrepreneurs were involved in diverse activities- e.g. general mercantile, shipping and commission agencies, wool purchase and consignment. Their ubiquity and prominence makes them particularly important when we consider who backed whom in the local politics of the district, and especially in relation to Judge Willis’ dismissal.

Edmund Finn (‘Garryowen’) speaks of the Twelve Apostles who were dominant in financial circles in Port Phillip in these early days. They are:

  1. William Frederick Augustus Rucker, Merchant
  2. Thomas Herbert Power, Auctioneer
  3. John Pascoe Fawkner, Landholder
  4. Alexander McKillop, Settler
  5. John Moffat Chisholm, Landowner
  6. John Hunter Patterson, Landowner
  7. James Purves, Landowner
  8. John Maude Woolley, Settler
  9. Abraham Abrahams, Merchant
  10. Jonathan Binns Were, Merchant
  11. Horatio Nelson Carrington, Solicitor
  12. Patricius William Welsh, Merchant.

I can tell you now without going any further, that this group of men, like nearly every constellation in Port Phillip was split right down the middle in relation to Judge Willis.  Fawkner was his staunchest ally, Carrington his most ardent enemy, and the rest are distributed between them (with perhaps, at first glance, more opposed to him than for him).

My task is to look at these 12 men.  Do they fit into Ville’s three categories at all? How does de Serville classify them?  What was their entrepreneurial story in Port Phillip? How did the 1840s financial meltdown affect them?  And what position, if any, did they take in relation to Judge Willis?

References

  • Ville, Simon P. ‘Business Developmentin colonial Australia’ Australian Economic History Review vol 38 no. 1 March 1998 pp.16-41
  • McAloon, Jim ‘Gentlemanly Capitalism and Settler Capitalists: Imperialism, Dependent Development and Colonial Wealth in the South Island of New Zealand’ Australian Economic History Review, Vol 42, No. 2, July 2002
  • de Serville, Paul  Port Phillip Gentlemen and Good Society in Melbourne before the Gold Rushes, Melbourne, Oxford University Press, 1980
  • Finn, Edmind, The chronicles of early Melbourne, 1835-1852: historical, anecdotal and personal (by “Garryowen”, Melbourne, Fergusson and Mitchell, 1888 p. 707



An economic downturn 1840s style

What strange times we live in.  Each night, the news bulletin starts off with the financial report, extending over about ten minutes, then briefly the “other” news, then a return to the usual financial report, sport and weather.  Each morning I unwrap the paper and marvel at the increasing size of the headlines reporting on the latest falls on the Australian Stock Exchange, or Wall Street, or the FTSE,  or the Hang Seng.  How do I even know about such entities?  I think it’s probably indicative of the recent financial bubble that we’ve all been caught up in over the past 10 years,  that even before this crisis, every news bulletin has  the financial report as a staple item each night- I really don’t particularly remember it having such prominence, say, twenty years ago.  Ah, but we’re all investors now-unwittingly and sometimes unwillingly through our compulsory superannuation, and cajoled to “unlock the equity in your home” by drawing back on our mortgages to spend on the sharemarket.

And of course, it’s all on such a global scale.  There’s no shutdown period at all on a sharemarket somewhere- Australia wakes up and looks at what America has done overnight, responds by a rise or a fall on the ASX, the day moves on, that night the UK market responds, the US market responds to that, and it all goes around again.  There’s no sigh of relief of “thank God that’s finished”- although at least the weekend allows a global breather, until the whole merry-go-round starts again on Monday.

Our whole system is predicated on credit in a way that is largely unconscious and invisible to us.  With just-in-time manufacturing, there are no storehouses any more of goods waiting to be sold- instead the credit system balloons forward to buy in a consignment as it is needed right now, retracts when it’s sold only to balloon out again to replenish the shelves next week.  We’re bombarded with “buy now, no deposit!!” advertising; we’re asked as a matter of course for every transaction with a swipe card “will that be on credit?”

And so, conscious of all this, I’ve been thinking about the recession (depression?) in the early 1840s in Port Phillip, and the way it impinged on the worldview of people there at the time.  I surmise that, like me, their understanding at the time was incomplete:no doubt more so, given the four-month delay in any information from Britain compared to our instantaneous communications now, and the dependent state of a colonial economy within the Empire as a whole. What they understood of the financial situation was filtered through the newspapers, gossip, and lived economy of their own experience.

Contemplation of this- and I’m doing quite a bit of reading on this which I shall, dear reader, share with you- is not completely irrelevant to my Judge Willis thesis work.  As sole Resident Judge, he heard all of the civil cases that came to the Supreme Court; he oversaw (but was not directly involved in) the Insolvency Court, and his own propensity to “sift to the bottom of things” characterized his approach to the bankruptcy cases that crossed his bench.  I feel sure that the general ‘anxiety’ and ‘excitement’ of Port Phillip reflected both the economic and political currents of the day, and directly fed into his dismissal.

So how did the Port Phillip communications of the day portray the financial crisis?  Newspapers had always carried a column showing the price of goods on the local market -wheat,  bread, spirits, sperm candles, parsnips etc. (The parsnips have particularly taken my attention because at my local supermarket they have been $5.95 per kilo for the last few months.  For bloody parsnips!!!!! Fine words may butter no parsnips, but obviously $5.95 a kilo will!)  The shipping reports were often followed by correspondence from the wool agents in London, reporting on the wool sales- generally chiding the Australian suppliers for lack of quality, and sighing at the dearth of buyers.

Much of a four-page Port Phillip newspaper of the 1840s was devoted to Court reports, and as the judicial system expanded in Port Phillip, so did the scope for court reporting- the Supreme Court, the Insolvency Court, the Police Bench, Quarter Sessions, the Court of Requests.  The tales of drunkenness and violence that ran through these courts were increasingly supplemented by stories of insolvency, defections from debt, unemployed immigrants, forced sales etc. as we move from 1841 into 1842.

And increasingly as we move from late 1841 into 1842 there are also  the required advertisements of bankruptcy posted in the newspaper, notifying of the first, second or third creditors’ meeting of one bankrupt after another.  By April 1842 (which is where I’m up to at the moment), the Port Phillip Herald regularly published a table of insolvent debtors, their assets and liabilities, and the dates of their scheduled meetings with creditors.  Real estate advertisements spruiked  “we’re at the bottom of the market- so buy now!!” . Occasionally there would be a high-profile insolvency case that demonized a particular individual, surely read  and gossiped about with a sense of schadenfreude by the subscribers to the newspaper.

And all of this occurred within the bullishness and heightened expectations of people who thought they were coming to “Australia Felix” to make their fortunes!