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The Ashburton Guardian. Magna est Veritas et Prævalebit. TUESDAY JULY 9, 1889. AFTER THE BOOM.

Twelve months ago the marvellous development of the city of Melbourne was the most engrossing topic of the day. Everybody who could by any means find his way thither set out with the fnll confidence that his fortune was as good as made. Mail after mail brought accounts of rise upon rise m the value of city and suburban property, until the prioeß paid for land m the principal streets almost equalled those for whioh sites m the heart of the city of London could be obtained, Buildings of the most magnificent proportions were erected, and every available room that could be made to do service as an offioe was ocoupied, r-mts rising to a fabulous height. Backs and finance companies were floated almost daily, and their shares immediately quoted at a premium. Mercantile and manufacturing firms turned their businesses into limited liability companies, shares m which also were rußhed after aud forced to extravagant premiums, Suburban estates, Borne of them m very out-of-the-way localities were sold for building sites at prices which almost made an observer ask if there were no more land m the world. Fortunes were made m a day, and for a few months, it seemed as if the tide of prosperity would never cease flowing. But the ebb tide set m at last. Suddenly the alluring prospectuses of projected companies fell flat ; banks and finance companies looked coldly upon securities that were considered good as gold the day before ; the eloquence of the auctioneer failed to elicit a bid for the eligible properties Trtltfch he offered, and his glowing advertisements attracted few beyond the never-failing free luncbers ; offices and warehouses began to display the ominous sign "To Let ;" buildings ceased to rise ; and, m a word, the bubble had burst. Employment which was offered to hundreds m each morning's papers because so scarce that nowthereßr<3thousandsunemployed. 6 tes of suburban townships that were bought with an eagerness that approached mad ness are now marked only by the dilapidated boardings of the auctioneers. Many prominent men who had amassed fortunes by long years of patient industry, and more of those who had leapt into fortune m an hour, were reduced to bankruptcy. Money lending institutions counted their losses m millions. One company alone, of four years' standing, whose half-yearly report has just been published, may be taken as an example. A year ago a dividend of 50 per cent was paid to its shareholders, and a large sum oarried to the reserve account. Its history for the last eighteen months is probably unique, and is summarised as follows :— (1) An issue of 100,000 shares m December, 1887, at a premium amounting % ) £25,000 ; (2) an issue of 200,000 Bbares m June, 1888, at a premium amovnting to £625,000 ; (8) a writing op m December, 1888, of the share capital by £225,000, largely at the expense of premium on the last issue; and (4) a writing down m June, 1889, of the reserve fund by £350,000 to meet possible losses} The startling character of the writing down will be Understood when it is stated that the profits (exclusive of 4235,0,00 written up on properties) nominally made by the Company during the four years it has been m existence, have amounted to £889,486, or £10,514 less than the amount of the loss as now anticipated. Public opinion calls for an elucidation of the causes of this state of affairs. How the business of an institution of such importance could have been so con ducted as to squander or lose the control of a sum exceeding the whole of the profits earned during such a period passes comprehension. The light which should be thrown upon the transactions of suoh institutions as this would go far to show the hollowness of the recent boom. Many m New Zealand read with feelings of envy the reports of the pro gres& of Marvellous Melbourne, who now are thankful that the mania of reckless speculation did not reach our shores. All New Zealanders are anxious that real estate may return to something like its real value, but most are agreed that the real value jis exceeded, when more is paid for land , or any other despriptjon of property, when the purchaser pays more than a price at which he can make a remunerative use of it. Our monetary institutions too are of a character not to encourage rash dealings by their clients, and we see !>o fear of the present steady transactions m land developing into that worst of speculative maladies, a land fever. Let those who are ineliued to be venturesome take warning from the last phase ojhbe Melbourne Boom.

Auckland seems to have had its fair share of relief works during the past year. While the Bum of £5000 wag spent m Auokland district on the unemployed, only aome £3000 pi ppepfc m the nit of tilt North U\^\

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Permanent link to this item

http://paperspast.natlib.govt.nz/newspapers/AG18890709.2.6

Bibliographic details

The Ashburton Guardian. Magna est Veritas et Prævalebit. TUESDAY JULY 9, 1889. AFTER THE BOOM., Ashburton Guardian, Volume VII, Issue 2168, 9 July 1889

Word Count
831

The Ashburton Guardian. Magna est Veritas et Prævalebit. TUESDAY JULY 9, 1889. AFTER THE BOOM. Ashburton Guardian, Volume VII, Issue 2168, 9 July 1889

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