The Scots Abroad by Cage R. A.;

Author:Cage, R. A.;
Language: eng
Format: epub
Publisher: Taylor & Francis Group
Published: 1985-06-15T00:00:00+00:00

VIII

Much of the Scottish story in Australia in the half century up to the First World War was related to the expansion of the Scottish interest in the Australian capital market. By 1850 Scotland had become a large participant in the now fully articulated system of economic relations associated with the Pax Britannica. In this system there were simultaneous flows of capital, labour and expertise to the new world; capital called up in Glasgow and Edinburgh offered serious alternatives to London within the general framework of the British capital market. And, as A.R. Hall observes, ‘it is wrong to discuss the story of British capital inflows simply in terms of the initiative of Australian borrowers and conversely to regard the activity of Australian borrowers as passive.’77 There appears to have been equal vigour and enthusiasm at both ends of the chain of capital: Scotland was particularly well equipped to supply capital, and Australia was fully geared to attract capital through a wide range of commercial links and institutions. It became an alliance of economic interests, and one freely entered into: on both sides there was sharp practice (especially in advertising and in funding arrangements) but it was essentially a reciprocal connection formed between participants in the international world of capital.

Australian economic development was by no means exclusively limited to pastoral or primary industry development, and indeed, in the 1870s and 1880s, some of the largest capital outlays were in the heady expansion of Melbourne and the other cities. Nevertheless it was the great pastoral boom which achieved most prominence in the investor’s mind; millions of pounds of British investment were directed to the grazier through the wool merchants and banks. Some capital was channelled through direct investment in Australian companies, but a large part of the story is contained in the operations of specialised pastoral companies which were notably successful in attracting Scottish funds. As J.D. Bailey points out, these institutions were ‘a significant feature of the financial web of British imperialism. The pastoral finance companies were … the instrument through which British capital helped develop the farflung empire.’78 In this the Scots not only provided a surprisingly large part of the capital, but also the expertise in management and, as well, part of the banking structure. By 1852 there were reports that Scottish stock exchanges (especially Aberdeen) had become obsessed with Australian gold speculation and, by extension and more lastingly, by Australian investment companies. Despite recurrent setbacks (for example, the collapse of the Glasgow financial boom in 1857) the land company emerged as the favoured Scots investment, and it provided opportunities for all sorts of investors, including those of a speculative turn of mind. The great success of the Scottish Australian Company had a continuing demonstration effect.79 So did other spectacular successes — Charles Tennant, principal founder of the multinational Tharsis enterprise, graduated from speculations in the British railway mania of the 1840s, to a series of Australian land ventures in which he scored a cool reward of £80,000,

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