Click here for a thematic overview of Melbourne’s fascinating history.

Money and Megalomania

Collins Street, Christmas 1892, prosperity’s swan song.

This is the story of how Melburnians became the most prosperous people on the planet. Melburnians lived a life of abundance that stunned the world and between the 1860s and 1893 drew hundreds of thousands of immigrants eager to share in their good fortune.

The causes of this prosperity were well known and widely celebrated at the time. But as Melburnians settled into their new lives of plenty, many forgot just how flimsy were its foundations.

And fascinatingly, by various means and for a range of reasons this story has been suppressed.

One day, shockingly, Melbourne’s brittle opulence came crashing down, but not before these risk takers had built Marvellous Melbourne.

What role did Williamstown play in this amazing story?

Flimsy Money

The Melbourne Mint

The Melbourne Mint, in Melbourne, Australia, was a branch of the British Royal Mint. Until 1916 it minted only gold sovereigns…


The Science of “Mugology”

Robbers unintentionally give us an insight into what their victims were actually carrying when they were mugged. In the above incident the victim was carrying an assortment of money.

This incident occurred in 1888. In 1893 when the crisis arrived, more than 60% of that paper money suddenly became worthless.

How Victoria’s currency system operated

Note that Victorian banks that issued the banknotes reproduced below promised that they would pay their bearers the equivalent sum in Sterling, in other words, British currency.

Victoria’s banks borrowed this Sterling from Europe’s finance houses by selling debentures, bonds sold by auction and by negotiation. These European finance houses assumed that Victorian banks would redeem the debentures they issued, and pay interest. Victorian banks could meet their obligations only if their borrowers repaid their loans. And in turn many borrowers’ business models relied on continued increases in already booming property prices.

How did this debt trap develop?

What were its major consequences?

For example

Remember George Plant?

This Northcote hotelier failed to service his debts. His bank foreclosed. But the sale of his assets failed to cover his loans.

George Plant’s story was repeated thousands of times in Victoria in 1893. The banks discovered they could not service their own borrowings. In turn, their creditors foreclosed. The banking system and the monetary system they had evolved also collapsed. People who were depositors discovered their paper currency and bank savings were worthless.

When the crash came in 1893, suddenly 61% of the money in Melburnians’ pockets wasn’t worth the paper it was printed on.

History of bank failures

Williamstown provides the key for understanding the politics interests and policies that drove the growth of Melbourne to a major metropolis.

Burying the evidence 

The precise circumstances of the crash remain mysterious. Historian Patsy Adam Smith explains why:

It is interesting to conjecture why prominent Australians and Australians in general have been so careless of the need to document and cherish their and their forbears’ achievements. There may be particular local reasons. Fear of disclosure of convict links has not been as important as elsewhere. Perhaps Victoria’s scarifying experience of the land boom of the 1880’s and the subsequent collapse, when there was a general conspiracy to forgive and forget iniquitous business behaviour, may be relevant. Papers are often destroyed by old men or women —– either the leading figures themselves or their children —– because they fear the occasional item which might be discreditable either to themselves or other people and cannot face the task of sorting and censoring. (We may be sure, by the way, that nearly all the great collections which survive have been weeded out.) How else can we explain the deliberate decision of the banker and historian of Victoria, Henry Gyles Turner, to destroy thousands of the letters he had kept? The scandal of the land-boom period lingered in many families for half a century and may have resulted in the destruction of many private papers.

The Role of Williamstown in Boomtime Melbourne

From the 1830s land rush onwards, pirates and visionaries worked relentlessly to make their dreams come true. Their apparent success enticed millions to seek their own prosperity. Many succeeded, many died trying.

Transport, trade and communication are the keys to understanding Williamstown’s role in the rise of Melbourne.

And behind all this commercial activity is the resource information. Information played a vital role in channeling a torrent of capital. By these means ruthless men sought their fortunes. In the process they evolved a prototype for a model of society that was widely adopted in the 20th century.

Tristram Hunt, Ten Cities that made an Empire

The lure of gold was a magnet for men who dreamed big.

Melbourne attracted adventurers of many sorts.

A dynamic environment.

The practical joke that created Victoria

Melburnians’ protest against political subservience to the colony of New South Wales took the form of an elaborate practical joke.

The Sydney Morning Herald was furious!

Big plans and incompetence.
Government to the rescue.

The Roaring Forties blew the world’s commerce to Melbourne.

Synergy: rail and sail meet at the Williamstown Railway Pier, c. 1885. This photograph was taken from atop the Timeball Tower.

Map of the Colony of Victoria: shewing the counties, settled districts, electoral districts & boroughs, townships, gold fields, coal fields, tin mines, railways, roads, rivers &c. &c. &c. / designed, lithographed, & printed by Cyrus Mason.

Author / Creator: Cyrus Mason 1829-1915. Contributor(s): Age (Melbourne, Vic.) Publisher: Melbourne, Vic. : The Age

Date: 1854

A watery world:

The Great Circle Route to riches.

A chronometer:

Accurate time saves ships.

In March 1854 the first telegraph message in the Southern Hemisphere was sent from Melbourne to Williamstown.

Consider the career of Thomas McGowan.

March 1854, Sydney takes note of Melbourne’s coup.

Williamstown Telegraph Office, c. 1862.

The Alfred Graving Dock

A massive government funded and owned project.

James McCulloch, Victoria’s Bismarck.

Henry Parkes was furious!

Conservative Victorians were horrified by the determination of McCulloch and his party to use the power of government to engineer social and political change. Here, Melbourne Punch hopes that Treasurer George Verdon will suffer humiliation raising government loans in London in 1866.

Sadly for Punch, and its conservative readership, its hopes of Verdon’s failure were disappointed.

When George Verdon returned with news of his loan-raising triumph, Melburnians partied for a month.

James McCulloch’s London Chartered Bank, Collins Street Branch (at left).

The Alfred Graving Dock.

Visible from space.

A white elephant?

It performed its function …

Last used in 1985.

Melbourne: the world’s emporium.

The opium trade

Among many other commodities, Melbourne was a major entrepôt in the opium trade.

The importation of opium was perfectly legal.

James McCulloch transformed a product banned in Britain into a source of government revenue and instituted the policy of protectionism that remained the central plank of federal government policy until the 1980s. Australia adopted Victoria’s model for development and repudiated NSW’s model.

There was a brisk trade in opium. Melbourne’s newspapers carried thousands of advertisements for public auctions for opium.

Criminals steal a large quantity of export opium, 1864

Inevitably, not all opium was re-exported, much to the delight of these Melbourne ladies.

Several ladies’ opium smoking clubs flourished in Melbourne

Only in 1905 was opium declared an illegal substance in Victoria.

McCulloch’s dream fuelled Boomtime Melbourne and British money funded it.

James McCulloch’s Money Box

The Williamstown Customs House was one of several whose function was to raise revenue on imported goods, including opium.
Victorian governments used this revenue to build an unprecedented public-owned and -operated social services. A new model of civil society was born.

This building was the second customs house erected on this site, indicating the importance of customs revenue.

Williamstown Customs House

The Williamstown Customs House was just one of many.

This modest shed was the Customs office in far-flung Mallacoota.

The Role of Williamstown

McCulloch’s plan was expensive and ruthless. Victoria’s possessing classes would pay for expensive government projects. Williamstown was the site of McCulloch’s bold bid for Melbourne’s leading role in world of communication, trade and finance.

Consequences for Williamstown

The community of Williamstwon boomed. Males exercised their suffrage to elect radical democrats. Foremost among them was Alfred Thomas Clark.

Alfred Thomas Clark MLA

Even more radical than James McCulloch.

Alfred Thomas Clark’s Williamstown Advertiser building.

Clark was 29 years old in 1874 when this building was erected.

The Williamstown Advertiser described Queen Victoria as ‘an obese, not overburdened with brain, old woman dubbed “Empress”.’

Australian Dictionary of Biography

Note the frieze on Clark’s Williamstown Advertiser office. Clark went to considerable expense to make his point.

Alfred Thomas Clark memorial, Williamstown Botanical Gardens. Respect of a grateful and mourning municipality.


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