History of Victoria - Depression of 1893

Depression of 1893

A period of prosperity in the 1880s led to a wild speculation in land and buildings, and money was poured in from England. Land companies, mortgage societies, municipal bodies, building societies, and a host of other organisations all clamoured for a share in the good things that were on offer, and probably £40,000,000 flowed into Victoria during a period of six years. With so much easy money In circulation, a fictitious prosperity of a feverish sort resulted. The banks issued notes to the value of millions, and trade and Industry flourished as never before. The reaction came quickly. Public confidence subsided like a pricked balloon. A run commenced on the banks, and the bursting of the boom brought with lt widespread disaster.

In 1893, 14 banks failed, twelve of those, with 905 branches throughout Australia, had liabilities assessed at £166,000,000, and thousands of people lost the whole of their possessions. Bank notes in many cases were worthless, and Victoria reached the farthest depth of a financial depression. Unemployment became widespread, wages and prices dropped and bankruptcies followed one another In disturbing sequence. The most drastic retrenchments were made by the Government and public bodies.