The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-05-03
AUSTRALIAN LAND BOOMS.
Rev. Henry Varley Explains
the Harm That Has Been
Done to Trade.
RuINoUs BANKING PROFITS.
Rusiness Men Whose Very Furni-
tnre Is Owned by the
Banks.

The Rev. Henry Marley, the well-known
English evangelist who arrived from sgd
ney few weeks ago. gave CONSIDERABLE
thought and attention to investigating the
cause of the financial depression which he
met on every hand in Australia. Inc 1oi-
lowing is what he gives as the result OF MS
Investigations:
The conditions as I have seen them IN Mel
bourne are very depressing, nor do see any
thing indicative of coming revival. Inc ner l-
tages of bankruptcy, insolvency ana total loss
OF property in the experience OF a.
simply deplorable. never knew community
so completely given up to believe a huge nnan :
cial lie as during the accursed lana Doom oI
1888. Never in my career did 1eel II Hec
essary to denounce anything In sucn WoTus ;, VI
burning Indignation as that latest "Soutn oea
bubble,' as an illustration OF the madness III
vogue. ~
There is near Princes Bridge, in Mel
bourne, piece of ground, and the Els
tates Bank in 1888 bought this lana at
a cost of 965 900. Within two months syndill,,
cate was formed and the same land was sou
to them for s1O5 900. Six weeks later another
company purchased the land at f135, 600, ana
two months later another syndicate bought IL
at S160 ,000 Six months covered the time OF
the four purchases. The Estates Bank and any
number of the spectators are now utterly
ruined. / believe that to-day the same lana Is
unstable and 100000 would be regarded as a
high price for the same. 1t seems hardly posi-
BILE to realize that number OF shrewd, leVel-
headed men should have bolstered up TINS
Gland boom mania" In eighteen months
ground was sold for building purposes IN ana
around Melbourne to accommodate city OF
100000 of inhabitants.
How well l remember the now defunct Daily
Telegraph issuing supplement showing the
enormous increase of ''marvellous" Mel
bournes finances. "For one single month the
clearing houses of the city showed grand total
of $50 600, 600" Such was the towering height
of the great house of cards which soon toppled
over, involving as it has done tens OF thou
sands OF Melbourne's citizens in hopeless rum.
In my Judgment whilst some twenty-five
prominent commercial men in Melbourne de-
serve the severest censure for their part In TINS
huge fraud, the banks OF Melbourne were and
continue to be the chief sinners in this LAND
gambling mania" AS this is serious state
ment to make will seek to substantlate my
view, and if my criticism should lead to q
timely discussion and to a drastic and radical
change of bank policy in the colonies my state
ment will not have been made in vain.
There can be no question that when banking
institutions were rst formed they were not de-
money-making centers. They were intended
to be centers for the custody of representative
values, as also houses of safety for deposited
capital and mediums OF commercial exchange,
necessary and common to the whole trading
community.
The banks were not established to be trading
institutions They do not deal in commodity
or articles of manufacture. They were instl-
tuted for the holding OF representative values
in order to facilitate easy circulation. Money
making profits save in mere minimum de-
gree formed no part of the fundamental prin-
ciples of the normal banking institution.
The English funds yielding 3 to 31a per cent
and the small percentages which have perta1ned
to the Bank of England fairly represent the
outSetting intention of legitimate baking bust
ness. This soundness of policy has been de-
parted from and money has been and is traded
with for mere profit until 1t is not too much 70
say that legitimate commerce has been hand1-
capped and crippled by the large profits which
have been made out of money, that is out of
mere REPRESENTATIVE values. Directly that you
put high price on money you are bound to
cripple legitimate commerce. Now, to get
high price for money represents what has been
joint stock bank policy throughout the world
during the past thirty years, and especially
has this been the case in the Australian
colonies.
The inflated balance sheets issued every six
and twelve months by the group OF joint stock
banks in Melbourne have been notorious for
unjust profits. Not content with per cent
per annum profit file OF the Argus news
paper could show profits ranging anywhere
from Is TO 80 per cent per annum. This may
be called prosperity, but is the very opposite.
1t represents the oppression of commerce.
These inflated balance sheets mean, and have
always meant, excessive rates for discounted
bills, overdrafts, and moneys loaned by the
banks upon every description of property.
1t is common thing to hear these joint
stock banks spoken of as "first-class pawn
brokers'" In order to make money outrival
lent on growing crops, on the coming wool
clips, the rising buildings, the land mutations
or, indeed, upon anything which gave promise
of these unjust gains. Oyerdrafts have been
anywhere from s to II and even ID per cent.
call all these unjust and oppressive rates,
joint stock bank extortion, possible to the
banking institutions simply and only because
they were the custodians of representative or
money values.
The land boom in Melbourne could not have
lasted one-third the time it did but for the
md oil CHI nf fhn Mt ha re
AT that time t1877-S) they held enormous sums
of money, largely received from Eng
land and Scotland. There was no Legitimate
outlet for the use of the capital then in their
possession. Unless some market was either
found or fashioned the inflated, not to say
false, balance sheets of the years just preceding
could not be maintained.
So scandalous was the departure from legiti-
mate banking business that large sums of
money were actually pressed upon numbers of
men in good position in Melbourne. 1t was
thus that thousands were induced to speculate
and enter into the vortex of the destructive
land boom. The banks promised to honor the
checks thus expended and give or increase the
necessary overdraftS. Enormous sums were
thus furnished by the banks and the boom
ragged and burned like prairie fire. Ofcourse
the senseless gambling in land could not last.
Toward the end of1878 hasty conference was
called on the part OF the joint stock bank
managers and directors Supplies were in
stantly stopped and all available securities de-
manded and obtained. The Joint stock bank
screw was ruthlessly applied and beneath the
modern juggernaut OF Responsibility to the
Melbourne banks" thousands of victims were
mercilessly inviolated and crushed
This is no overdrawn picture. In large num-
bers of cases the mansions and houses in Mel
bourne and the suburbs are now to be found
among the assets of the joint stock banks. The
furniture in the houses, the very beds the resi-
dents lie on are the property of the banks.
Large numbers of the people are permitted by
the sufferance of the banks to indwell their
own houses, and they could be turned. out or
sold up at fortnight's notice; so also large
proportion of the business now carried on in
Melbourne. This represents joint stock bank
nomineeism. The banks representatives NAV
be seen again and again, as a new specimen, in
Melbourne's business houses, viz, the Joint
stock bank shopwalker. Into the huge mael-
strom of the proprietor's Indebtedness, to the
bank profits, business, home, furniture, time
all has gone and keeps on going.
more pitiable commercial spectacle was
never witnessed. Yes, sir, the Joint stock
banks of Melbourne by their unjust money
making policy in the past have, for the present
decade, practically ruined Melbourne. 1t is
not the reconstruction of the banks which is
needed, but the disgorging of their extortion-
ate gains and the closing of at least one-half
OF the splendid institutions which have handi-
capped legitimate commerce by making an
ayaricious profit out of the representative val
ues in their custody, but which values by right
belong to the people who have unwisely SUI
Tered this huge bank money-making business
to sap the very life of legitimate commerce