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Swan River Colony 1829-1850

Pamela Statham

From Tom Stannage 1981, A New History of Western Australia, UWAP: 181-210.

The author wishes to express her gratitude to Professor Douglas Vickers for assistance in the preparation of this article.

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Established in June 1829, Swan River was the first British colony in Australia founded exclusively for private settlement, and the only one to be founded on the basis of a land grant system, where grants were apportioned according to the value of assets and labour introduced by settlers. Despite an explicit foundation condition that no convicts would be introduced, this first private enterprise colony ironically became the last officially constituted penal settlement in Australia with the arrival of the first consignment of British felons in June 1850, exactly twenty-one years after foundation.

By the end of 1830 the generous terms of Swan River’s initial settlement conditions had attracted almost 2000 men, women and children to Western Australia. By 1850, however, the colony’s total population had only reached 5254, while South Australia, which was not founded until 1836, had a population of 52904. In 1850 Swan River’s levels of economic activity were still low in absolute terms, the colony was heavily dependent on continued crown financial support and had a deficit balance of trade. Nevertheless, by the time the first convicts arrived, considerable economic progress had been made. Wool, timber and sandalwood, whale products and livestock were being exported to England and elsewhere, an elementary road network had been forged linking settlements as far apart as Albany and York with the port of Fremantle, and the basic institutions necessary to facilitate economic growth had already been established. As the achievements of this limited population, despite the variety of significant obstacles encountered, set the basic pattern for the colony’s future development, the first twenty-one years of private enterprise settlement are worthy of special consideration.

1

A peculiar feature of the Swan River Colony’s history was the almost accidental and largely unplanned nature of its foundation. It is true that in

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December 1826 a small convict outpost under New South Wales administration had been set up at King George Sound, due mainly to fears of French acquisitional interest in unclaimed western New Holland, but this had in no way signified the British government’s intention to colonize the western third. [1] Strategic considerations had led Darling, the governor of New South Wales, to approve a proposal submitted late in 1826 by young Captain James Stirling to explore the Swan River region on the west coast before undertaking an assigned mission to Northern Australia. [2] In this proposal Stirling had suggested to Darling that Swan River would be an advantageous alternative site to King George Sound for an outpost to defend British interests in the Indian Ocean area. [3] But after spending a fortnight in March 1827 examining the territory with Charles Fraser, the New South Wales government botanist, Stirling went further and in an enthusiastic report strongly recommended actual colonization on the grounds that the region had all the necessary attributes of a successful agricultural colony. [4] Although Darling warmly endorsed this suggestion, the British government’s response in January 1828 was uncomprisingly negative. Existent penal arrangemements were deemed ‘quite adequate for existing needs’ while Britain’s stringent financial circumstances after the Napoleonic Wars rendered the formation of a third Australian colony ‘quite out of the question on grounds of expense’. [5]

Within twelve months, however, this negative official attitude was completely reversed. By the end of 1828 orders had been given for the despatch of a ship of war to annex the territory and initial conditions of settlement had been drafted. [6] In this sudden change of attitude the role played by Stirling was of paramount importance. He besieged the Colonial Office with various plans to effect immediate settlement of the Swan River region, successfully interested several wealthy capitalists in its potential and actively re-kindled government suspicions of French interest in settling the area. [7] Stirling’s efforts were assisted during 1828 by a fortuitous change in government leadership, which brought to senior positions in the Colonial Office men who were personal acquaintances and sympathetic to his ideas, and also by official receipt of fresh reports of French interest in settling the region, [8] which gave the matter of its acquisition a new urgency. These circumstances led to the decision early in November formally to annex western New Holland but, given the financial constraints of the period, the question of founding a separate colony with its own governor and administration still remained undetermined.

At this stage an ambitious investment proposal was submitted to the Colonial Office by the Peel Association, a group of four wealthy investors led by Thomas Peel, cousin to the then home secretary. The group planned to invest a considerable sum in the transportation of goods, equipment, livestock and labour to Swan River simply in return for grants of land in the proportion of 1 acre (.4 ha) for every ls6d expended. Since this would have placed at the disposal of four men the enormous extent of some 4 million acres (1620000ha), the proposal as submitted was rejected. [9] Nevertheless, the confidence this group had displayed in the potential profitability of their scheme

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appears to have persuaded the British government that existing land grant policies, used as an incentive for private settlement in established colonies, could be adapted to form a feasible and inexpensive basis for the foundation of a purely private-enterprise-based colony at Swan River.

The ‘Conditions of Settlement’, first drafted in December 1828 and issued in final form early in 1829, [10] were designed to accomplish three objectives: (1) minimize government expenditure; (2) attract private investors; and (3) ensure that land granted was productively utilized, so avoiding the problems of speculation and absenteeism previously experienced in other colonies.

First, the conditions stressed that the government would ‘incur no expense in conveying settlers or labourers to or from the colony or in defraying the costs of supplying it with necessities after foundation’. The government did, however, undertake to provide and maintain a small military guard and a limited civil establishment to deal with all administrative and social needs. [11]

Secondly, in order to attract private settlers the conditions stipulated that 40 acres (16.2 ha) would be granted for each £3 invested in the type of physical assets that local authorities considered applicable to land use. Money was not to be admitted as a basis for land-grant applications but former government servants (civil and defence) were permitted to exchange their present and future pension entitlements for a grant of land at the rate of 1 acre for every 1s 6d due. As no convicts were to be introduced to the new colony and costs of passage would deter the independent emigration of labourers, colonists were to be given an incentive to introduce their own labour by the condition that 200 acres would be granted for every adult introduced at the settler’s expense and smaller acreages, assessed on a sliding scale according to age, for children.

Thirdly, to ensure that assets and labour admitted for land entitlement were actually applied in productive land use, settlers were at first given only occupation rights to their grants. Title, and hence ownership and transfer rights, was to be withheld until grantees had ‘improved’ every acre initially granted to the value of at least ls 6d, through such means as cultivation, the erection of fences etc. Fines were to be imposed on settlers who failed to improve at least a quarter of their grant within three years of initial occupation and grants not wholly improved within ten years were to be resumed by the crown.

Although these conditions of settlement virtually left responsibility for colonization in the hands of private individuals, they also contained a number of features which were seriously to hinder the colony’s early development.

One inherent shortcoming was that the nature of assets that would be admitted as a basis for land grants and the value criteria to be applied were not clearly specified. Such decisions were left to the discretion of colonial authorities, which resulted in a liberal interpretation of the value of assets submitted for land entitlement and the alienation of more land than was warranted on the strict principle of assigning land in direct proportion to the productive assets and labour introduced for land improvements Even a couple of rabbits entitled one of the early immigrants to 200 acres.' [12] The admission of pension entitlements as a claim against land further accentuated this distortion, as also

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did Stirling’s initiative at a later stage in granting land to military and civil officers for services rendered. [13]

Another problem stemmed from the regulation that every acre granted had to be improved prior to receipt of title, as settlers were thereby effectively prevented from averaging over their whole grant the value of intensive investment on any specific portion. This highlights the inefficient use of capital induced by the design of the land-grant scheme. Early activities would naturally be concentrated on a relatively small homestead section of initial grants, yet the requirement that every acre be improved to minimum value meant a dissipation of available resources if the penalties for non-improvement within the specified time-periods were to be avoided.

Again, by providing a land inducement for settlers to introduce their own labour, the regulations implicitly endorsed the system of indenture. Under this system labourers contracted to provide their services free of money wages (but with keep provided in the interim) until settler outlays in transporting them and their families to Swan River had been repaid. This had two effects: first, it virtually immobilized the early workforce, and secondly, it clearly reduced the size of the future domestic market for goods and services.

The most significant implication of the conditions of settlement, however, was that they created a framework in which the need for money capital was overlooked. This deficiency arose primarily from the fact that money alone did not entitle settlers to land. Future colonists were encouraged to spend most of their funds in acquiring and arranging transportation for the physical goods and labour that did constitute valid land claims. Moreover, as the indenture system obviated the need for wage payments, and goods transported were expended to meet all forseeable requirements, settlers retained very limited reserves of the liquid funds that would be necessary to sustain a functioning exchange economy.

Clearly all that the conditions really offered intending colonists was the promise of eventual land ownership. This incentive was a very powerful one since in Britain land ownership represented status, security, wealth and political influence, privileges that belonged to only a very small minority. The strong appeal of Swan River’s settlement conditions to young middle-class Englishmen is thus readily understandable, as is also the haste with which some made the actual decision to emigrate.

The administrative party left England early in February 1829, only thirty-seven days after the publication of the conditions of settlement which gave official blessing to Swan River’s foundation. At this time other ships were preparing to take first settlers to the new colony even though the actual contents of the official report submitted by Stirling and Fraser were not made public until April, when a version edited by John Barrow of the Admiralty was published in the Quarterly Review. This initial report was subsequently republished in an exaggerated and distorted form by various newspapers and journals throughout the country and elicited what one writer has termed a 184 period of ‘Swan River mania’. [14] From mid to late 1829 the words ‘Swan River’

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definitely conjured visions of a land of milk and honey. As the year progressed, nedia testimonies to the superiority of the soil, availability of fresh water and lack of clearance difficulties appealed not only to the adventurous but also to more solid farmers.

The pioneer group that actually reached Swan River during the first seven months, [15] were young—three-quarters were less than thirty years of age and a third were children under fourteen; they were predominantly male—only one-fifth were females; and they were mainly of urban origins, three-quarters coming from major urban centres in the south-east of England and a quarter of these from London itself. The occupations and skills of this group were diverse but largely reflected their urban origins. Many came from civil and defence service backgrounds as redundancy made them more mobile than the tenant farmers who followed. Few of those hired specifically for agricultural work had ever had relevant experience in agriculture; some in fact came from parish poorhouses and appear to have lacked any skills whatever. [16]

Despite available information concerning the profitability of sheep raising in New South Wales the majority of initial settlers chose arable farming, with an emphasis on wheat cultivation, as their future income-producing activity. [17] This decision appears to have resulted partly from exaggerated reports that land at Swan River was extremely fertile and partly from the fact that at that time arable farming was the predominant type of rural land use in England. In consequence, most settlers imported the same type of specific assets which allowed little scope for specialization or exchange, while the lack of money to import different assets precluded early diversification.

In sum, Swan River’s chances for successful development were significantly affected by the nature of its hurried inception. Problems inherent in the conditions of settlement were intensified by the lack of appropriate skills and rural experience of the pioneer group, by the relatively homogeneous choice of future activity, and not least by the impression given by information sources in England that land at Swan River was uniformly rich and fertile.

The Parmelia, with Stirling and his official party on board, reached its destination on 2 June 1829, the territory having been formally annexed a month earlier by Captain Charles Fremantle, who had been despatched for that purpose on H.M.S. Challenger. Early exploration soon revealed that Stirling and Fraser’s widely publicized impression of general soil fertility had been mistaken. The coastal region was actually typified by sands and swampy leached soils covered by low, deep-rooted vegetation, and the narrow strips of rich alluvial soils along the river banks and in the valley at the foot of the Darling Range were exceptions to the general soil characteristics of the area. It was quite clear that the most productive future agricultural activities would be centred on the more fertile soils at the edge of the plain, some 32 km from the sea. As a result, Stirling took the unusual action of founding two initial town-sites: a port town at the river mouth which he named Fremantle in honour of the captain of the Challenger, and a capital, mid-way between the port and the fertile lands in the foothills of the ranges, which he officially named Perth on

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12 August 1829 in honour of the colonial secretary, Sir George Murray, who was the member for Perth in Scotland. [18]

The unexpectedly early arrival of the first forty-seven private settlers on the Calista seven days before Perth’s foundation ceremony and a further seventy-three on the Marquis of Anglesea later in August generated temporary chaos in the new colony. Recalled from his uncompleted survey of Cockburn Sound, John Septimus Roe, the surveyor-general, speedily surveyed and mapped the sites of both Fremantle and Perth. Meanwhile, lack of weather protection and the inadequacy of initially imported supplies quickly led to food shortages and settlers living in makeshift accommodation at Fremantle suffered hardships while they awaited the allocation of grants. Lack of fresh food, problems of acclimatization, sand fleas and impure drinking water caused outbreaks of scurvy, ophthalmia and dysentery. Discontent was rife and drunkenness and lawlessness among idle servants became a problem. On 3 September a violent storm further exacerbated existing conditions by damaging stores and temporary shelters. All seven ships at anchor offshore suffered some damage and the Marquis of Anglesea was completely wrecked.

Not surprisingly, reports disseminated to the outside world by the first three ships to leave the colony in September were extremely unfavourable. [19] When the first report was published in London in January 1830 it caused a sharp revision of attitudes to the colony and emigration from the London area almost ceased. Lags in information dissemination, however, meant that emigration from other English ports and from Ireland continued until mid-1831 and the four to six months it took vessels to reach the colony delayed the cessation of immigration until early 1832. Thus initial adverse publicity, together with the Colonial Office announcement early in 1830 of a change in the conditions of settlement (halving the terms on which land was to be granted), effectively ended the brief wave of British emigration to Swan River.

On 29 September 1829 the first rural grants were assigned to seventeen individuals in accordance with the Colonial Office directive that in order to maximize access to water transportation, the river frontage of each allotment was to account for no more than one-quarter of its total boundary. But these grants, which involved the allocation of 69771 acres, [20] practically exhausted the supply of fertile land in the Upper Swan valley region. To meet the needs of the increasing number of settlers waiting at Fremantle, Stirling was therefore forced to take several expeditious measures which had been totally unanticipated by Colonial Office planners and which increased the difficulties of successful establishment. First, he decided to restrict further the allowable river frontage to half a mile, an action which resulted in a pattern of long thin grants and meant, given the lack of uniform soil fertility, that at best only a quarter of any particular allotment was in any way suited to arable farming. This virtually meant that the scale of a settler’s future production was restricted irrespective of the quantity of physical assets and labour he had introduced, as land transfers were illegal prior to receipt of title. Secondly, Stirling placed a limit on the amount of land that any settler could claim in the

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Perth, 1829, C. D. Wittenoom artist

Perthshire region. The result was that many initial grants were fragmented into partial lots at two or more locations, often on either side of the Darling Range.

Total grants 1829-30 111
(Perthshire)
Fragmented 73
Unfragmented 38 [21]

This in turn created two problems. First, given the restrictions on averaging improvements that have already been mentioned, grant fragmentation increased the difficulty of meeting the improvement requirements necessary to gain title to any portion of lands granted. Secondly, it meant that an elementary transport system would have to be provided before inland grants could be effectively utilized and this had unanticipated implications for government expenditure. This last problem was accentuated when Stirling influenced certain settlers arriving early in 1830 to take up lands a considerable distance south of Perth.

Because of administrative delays in the allocation of land only seventy-three settlers had occupied their grants by the end of 1830. Few of these had managed to clear land ready for cultivation and none had more than 4 acres planted. Moreover the land that was under cultivation during 1830 suffered from several natural mishaps which partially destroyed first crops. Even a year later only 200 acres of the 1 178 297 acres alienated were actually under cultivation (160 in wheat) and the resultant harvest was totally insufficient to meet the

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food needs of a population which had grown to over 1700. [22] As the government had originally been assigned very limited cash reserves to meet contingent needs and settlers had brought out very little money, the purchase of imported supplies could provide only temporary relief to the increasing problem of food scarcity. The initial shortage of liquid funds had in fact been aggravated by the activities of a small group of immigrants, largely from the eastern colonies, who had arrived late in 1829. Disillusioned with the quality of land at Swan River, these immigrants had used imported assets to establish a number of small service-oriented and trading enterprises. But when the rate of immigration began to decline thus reducing opportunities for speculative profits they left the colony in increasing numbers, taking with them a significant proportion of the colony’s limited supply of liquid funds.

By late 1830 the twin problems of inadequate food supplies and shortage of liquidity required urgent attention. Since provisions could not be readily obtained from nearby Indian Ocean markets, where payment had to be made in cash, Stirling took remedial action by importing supplies of food, livestock and farm equipment from Van Diemen’s Land where they could be paid for by bills drawn on the British Treasury. Most of these government stores were distributed on a non-money basis involving principally exchange for direct labour services on public works and agreements by settlers to make future repayments in wheat at a fixed price of fifteen shillings per bushel. [23] There was nevertheless a limit to which such schemes could be used, as continued financing of imports by drafts on the British Treasury clearly contravened the standing instructions to keep crown expenses to a minimum. Moreover the distribution of supplies in exchange for repayment in wheat meant that agriculturalists were not able to acquire the money incomes necessary to enable them to diversify away from arable production and adopt other types of activities that could generate an export income. Virtually the only cash incomes available to colonists by late 1831 were derived from the limited contracts for surplus wheat purchased by the Commissariat at the lowest tendered price, mainly to meet the requirements of the small military guard.

Early in 1832 alarm was caused by the news that existing British expenditure was to be cut and that the land grant system, which settlers felt provided the only inducement for a renewal of immigration, was to be replaced by the so-called Ripon regulations requiring land to be sold at auction at a minimum price of five shillings per acre. In recognition of the severity of their situation, colonists appealed to Stirling to return to England to plead for special concessions and particularly for increased financial support. [24] The success of his mission was limited. The British government was adamant that apart from a slightly enlarged parliamentary grant-in-aid covering the salaries of crown appointments, local public expenditures had to be met from colonial funds raised internally by such means as import duties and the sale of crown land. Nevertheless, in response to previous advice from Stirling regarding the killing of a number of colonists by Aborigines, it did decide almost to double the size 188 of the military guard stationed at Swan River. This was an important concession as it meant a significant injection of new expenditure through the crown-supported military Commissariat.

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Table 5.1 Foundation and consolidation 1829-1837

Sources: Agricultural Society Records, British Parliamentary Papers, Government Despatches, passenger lists and family reconstructions and C.S.R. volumes.

Economic conditions were also improved by a limited revival of immigration in 1833, including the establishment of an enlarged settlement at King George Sound, where Sir Richard Spencer was appointed government resident of the territory, transferred in 1831 to Western Australia from the New South Wales authorities. Though some emigration of disenchanted settlers continued, the population gradually began to rise and during 1833 there were discernable signs of an increase in confidence that the colony would prove viable. This confidence was reflected in the improvement of river transportation by the cutting of a channel through the flats in the river above Perth, the institution of a postal system, and the commencement of a semi-official weekly newspaper, the Perth Gazette.

2

The period from early 1834 to the onset of more rapid growth in 1837 can be viewed as one of economic consolidation. During this period agricultural production increased so as to make the colony self-sufficient in basic foodstuffs and pastoralism emerged as a profitable export industry.

As already noted, very few of the original English migrants had planned to adopt pastoral pursuits. Most had invested in assets suited to arable farming, and sheep and other livestock had been introduced mainly to supply future meat requirements. Moreover those who had thought on arrival that pastoralism

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might prove more profitable had been quickly disillusioned when imported flocks suffered disease and high mortality rates. Thus despite the first successful export of a few pounds of wool in 1832, increased incomes available from the sale of wheat to the enlarged military Commissariat from September 1833 were used initially to expand the scale of arable activities. Wheat acreage was extended from 320 in 1833 to 1156 in 1835, to 1275 in 1837, while cultivation of other crops and market gardens also increased. [25] Nevertheless, land clearance and cultivation proved difficult and expensive, requiring the seasonal hire of additional labour. Net profits were slender as increased production and good seasons in 1834-35 resulted in a grain surplus which initiated a price decline that lasted till the 1840s. Thus the attainment of self-sufficiency in grain foodstuffs was accompanied by considerable disquiet among producers.

In this situation revived interest in sheep-raising for wool was understandable. Wool was a non-perishable product that could be successfully exported, overcoming the limitations of the domestic market. Moreover its production did not appear to involve the high costs associated with grain growing since land would not have to be cleared, less labour would be required and total dependence on favourable rains would be removed. This change in attitude was reinforced by reports early in 1834 that sheep taken into the inland Avon valley region, discovered by Dale in 1831, were free from disease and multiplying rapidly. Although the nature of initial assets and shortages of liquid capital prevented many settlers from diversifying at that stage, there was a gradual movement from 1834 of existing flocks to portions of grants held over the hills, a movement that escalated during 1835 with the increasing scarcity of good pasture on the coastal plain and summer drought conditions. News that other attempts at wool export had proved profitable further encouraged settlers to devote more resources to sheep raising. G. F. Moore recorded in 1836 that ‘the wool which sold for £100 in London has cost me just £51 to make it ready and sell it’, [26] while Stirling, who had returned to the colony in 1834, confirmed in his 1837 report that net returns on wool production in the colony were of the order of 50 per cent.

It should be noted, however, that the consolidation era was marked more for the increase in sheep numbers and change in attitude than for actual wool export. While sheep numbers increased from around 3000 in 1834 to 10800 in 1837, and their principal location changed from the coastal plain to the fertile Avon valley, actual wool exports in 1837 only amounted to some 31 1201b (14128.5 kg), realizing a gross income of £1684. A primary factor inhibiting a more rapid growth in wool exports during this period was the lack of adequate transport facilities. Shipping was still infrequent and irregular, while the costs of internal transport-given the almost total lack of vehicular roads— inhibited rapid inland settlement. It was often recorded, for instance, that the cost of transporting goods from York, the principal town in the Avon valley, to Fremantle was greater than the freight costs from Fremantle to London. [27]

Reflecting the increased activity in agriculture and pastoralism in this period was the gradual rise in the value of untitled, privately held lands. Although

Fig. 5.2 Perth, late 1830s, C. D. Wittenoom artist

large amounts of land had been alienated under the grant scheme a significant proportion had been unproductive, but in 1833-34 there had still been no shortage of grazing and agricultural land, as emigrating settlers (and those grantees following alternative pursuits) had sold or leased their lands to others. By 1837, however, the increased scale of arable activities and increasing sheep numbers meant that available and accessible productive land had largely been taken up. As a result, prices of the few allotments offered for private sale rose (even though improvements usually still had to be carried out), while sales of well-located crown land gradually increased despite the five shillings minimum price. The proceeds of such sales, including rural and urban lots, amounted to some £710 in 1837, exceeding the total £645 realized in the preceding three years. A major factor restraining further land sales at this stage was uncertainty. Settlers were agitating for Colonial Office approval of the right to average improvements and hence gain the title to grants, and to exchange unproductive lands on an acre for acre basis for newly selected crown land. Until the outcome of such requests was known few settlers were prepared to purchase new rural crown lands or sell untitled allotments. Various types of leasehold agreements—most of them on a non-money basis—characterized land dealings in the period and the greatest proportion of crown land revenue stemmed from the sale at auction of urban allotments.

Underlying the economic consolidation that took place during this 1834-37 period was the slow growth of the non-rural sector. In this, as in the development of arable activities, the role of the military cannot be underestimated. Military contracts for transport, accommodation and food needs constituted a source of ‘quasi' export earnings and in fact the injection of external funds

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introduced to maintain the military guard far exceeded actual export earnings for the majority of the colony’s first twenty-one years. [28] Military contracts provided a market for fresh meat, grain and other produce whilst also stimulating the development of cart and boat building, milling and urban building etc. Again, a number of personnel chose to remain in the colony when their regiment was replaced, as in 1834 when the original 63rd regiment was replaced by the 21st; and these men contributed directly to the colony’s development by using past savings and discharge pay to buy land or establish small service enterprises such as a blacksmithy and a hotel. [29] Government public works expenditure further stimulated the growth of the non-rural sector, especially private building enterprises which undertook various contracts, including that for the court-house erected in 1836 at a cost of £700. (This expenditure, as a special case, was partly met by the British government.) Construction of new roads created employment, especially in off-season periods, and several were completed in this period, for instance, the York to Guildford road, which was important for the continued development of the Avon valley region. Overall, however, the scale of non-rural activities remained limited due to the relative shortage of capital funds, a deficiency which continued to be the most serious constraint on the colony’s progress. Road construction, for example, was financed mainly from the meagre crown land sale revenue, import duties on spirits, and other such minimal revenue sources as licences levied for innkeeping.

In the early 1830s the small number of local merchants, the Samsons, Leakes, Habgoods, Anthony Curtis, and the partners Dempster & Pratt, had mainly confined their activities to purchasing high-priced commodities from incoming vessels. Their turnover was limited and profit margins were slender but they did gradually accumulate investable funds, enabling two of them, Samson and Curtis, to invest in foreign-built ocean-going vessels, the Elizabeth and the Fanny respectively. This, plus reports of better navigational facilities at Fremantle, gradually relieved the problem of erratic price movements and periodic shortages of certain imported supplies caused by the infrequency and irregularity of shipping, but due to the colony’s isolation the total value of imports continued directly to reflect shipping frequencies throughout the period. Given the colony’s limited money supply, the merchants played a very significant role in this period by providing credit for the purchase of imported supplies and permitting payment to be made in the form of domestic produce, which they in turn sold for cash to incoming ships, to meet re-victualling requirements, to the government Commissariat and on the open market to the non-rural sector. They also began to take an active part in the export of wool by granting immediate credit to producers, in anticipation of the receipt of revenues from London sales which they then used towards the purchase of imported cargoes. [30] While the merchants definitely contributed to consolidation in this period their activities also resulted in a steady increase in the volume of imports, which was reflected in a heavy balance of payments deficit 192 and continued drain of scarce liquid funds.

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The increasing level of economic activity between 1834 and 1837 encouraged the development of a labour market with wages paid in money as well as in kind. Although a considerable number of the colony’s workforce (a total 750 male adults in 1837) were still indentured during the consolidation period, increased demand for labour enabled free labourers to command relatively high wage rates, especially in contract seasonal hire. The growing pressure on the supply of unskilled labour was reflected in the introduction of a small number of Indian and Chinese labourers, and even an unsuccessful request for convicts in 1834 from the settlers of King George Sound. Nevertheless the relatively simple capital equipment and techniques available meant that certain kinds of skilled labour remained under-employed and in fact in 1835 the Sydney merchants Wright and Long successfully recruited seventeen artisans from Swan River. [31]

Table 5.2 Expansion 1837-1843

Sources: Blue Books, Government Gazettes, Agricultural Society and newspaper reports and C.S.O. volumes.

In sum, doubts as to the colony’s continued viability had largely been removed by 1837, and between this date and 1843 a new phase of economic expansion occurred, marked by a generally upward trend in most economic indicators. Unfortunately a complete statistical series is unavailable as some of the records that were kept were suspended in the 1840-42 period, and this gap partly reflects the difference in the nature of expansion in the years before and after 1840.

3

Although there was little change in the size of the total population between 1837 and 1840 a broader based development during this period was facilitated

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by the establishment of the colony’s first bank, and two whaling companies, and by an important change in the conditions relating to land tenure brought about by the promulgation in 1837 of the Glenelg regulations.

These new regulations were issued by the secretary of state for the colonies, Lord Glenelg, and stated that any settler who had been granted land prior to July 1831 could surrender the whole or a portion of his original grant in exchange for remission certificates to the value of 1s 6d for each acre surrendered. Such certificates could then be used to purchase crown lands with title, at the rate of 1 acre of new crown land for each 3 acres surrendered—a proportion that was maintained through successive changes in the crown land price by corresponding adjustments to the value of remission certificates issued for land surrendered.

In response to the opportunity offered by these regulations one-fifth of the 1.5 million acres of land initially granted were surrendered between 1837 and 1841, when the end of the ten-year improvement period terminated the issue of new remission certificates. [32] As the Glenelg regulations enabled settlers to surrender unproductive and undesirable locations and acquire new crown land without monetary outlay, the sales of rural crown lands temporarily ceased and for two years the only source of crown land revenue was the sale of suburban and town allotments. This situation changed after the arrival of John Hutt, who replaced Stirling as governor of the colony in January 1839. Hutt had not only been instructed to enforce the penalty clauses in the original conditions of settlement strictly by resuming lands unimproved after ten years occupation, so ending the surrender facility, but also to implement the new twelve shillings per acre minimum price for crown lands immediately. In announcing this higher price for rural crown lands late in 1839 Hutt also foreshadowed the Colonial Office’s intent to increase it further in the near future to £1 per acre. In consequence there was a rush to obtain favourably situated new crown land, resulting in a sharp increase in both remission-based and outright purchases. Crown land sale revenue thus escalated rapidly in 1840 enabling the institution of a fund for the introduction of labour, but contributions to the fund were limited as this source of revenue collapsed when the £1 per acre price was introduced in mid-1842. But that is jumping ahead.

Although the principal effect of the Glenelg regulations was that of facilitating further pastoral expansion, the regulations also influenced agricultural activities in the 1837-40 period. As remission certificates were fully transferable those settlers who for various reasons did not use all certificates gained from land surrendered in the acquisition of new crown land were able to raise funds through selling them on the open market. These funds, together with those realized from the market sale of produce and military grain contracts, made possible increased investment in a broad range of mainly arable activities. Wheat acreage increased by about one-third between 1837 and 1840 and the total area under cultivation increased by a similar proportion, while the adoption of improved cultivation techniques, such as seeding rows and the 194 application of manures, offset gradual soil exhaustion. [33]

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The most dramatic feature of the period, however, was the rapid rise in sheep numbers. This can be attributed in part to the availability of new pasture land as a result of the Glenelg scheme which, incidentally, was thus responsible for delaying the emergence of the squatting movement in Western Australia.

The natural increase of flocks on new grazing land was reflected in an increase in wool export revenue from £1684 to £2500 during the period. The incomes this provided for the relatively few large flock-owners provided an incentive for the importation of stock but orders took some time to fill and high losses occurred in transit, the Coromandel, for example, losing 600 of its shipment of 1000 sheep from Van Diemen’s Land in 1841. [34] The development of pastoral activities in this period also focussed attention on a growing shortage of labour as many original indenture contracts had ended and free labourers, who were demanding high wage rates, were reluctant to leave the main settlements to work as shepherds in inland regions.

Increased activity levels during this period benefited considerably from the establishment in 1837 of the Bank of Western Australia. Settlers had agitated unsuccessfully from the foundation years for the inauguration of banking facilities, but the colony was too small to interest overseas bankers and insufficient funds had been available to support a local bank. It therefore testifies to the progress made by 1837 that the capital funds necessary for the purchase of shares in the new bank were wholly raised from accumulated past savings in the colony—although bank directors only initially called for one-quarter of the authorized capital of £10000. The bank enjoyed immediate success and declared a 14.5% dividend after the first year of operation. This was partly due to its cautious lending policy which was confined to short-term loans generally arranged through the discount of three-month bills at a fixed rate of 12.5%. In spite of community pressure the bank refused to lend against export bills of lading or mortgages on the security of land. [35] This policy left the merchants with considerable financial influence, as they continued to advance credit against wool exports as well as domestic arable production. The rise in imports increased the demand for such merchant credit, while the rising level of exports increased the merchants’ own need for improved facilities. In response to this one of the leading merchants, Lionel Samson, opened new storerooms, built at a cost of £300, in 1839. [36] The profits earned by the merchants during the period attracted new entrants to this field, but apart from Moulton at Guildford, most operated as retailers or general agents for the major merchant houses concentrated at Fremantle.

The year 1837 was marked not only by the establishment of the bank but also by that of two whaling companies, whose capital was similarly subscribed from the accumulation of savings in the colony. The Fremantle Whaling Company initially issued thirty £2 shares at a par value of £20 per share while the Perth Whaling Company floated sixty £2 10s shares at a par value of £10 each. [37] Expectations of profit were high as a result of contact with successful foreign whalers, particularly the Americans who fished the south-western coastal waters, [38] but these expectations were not fulfilled. Although the Fremantle

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company continued to operate until 1840, when it discontinued operations until 1843, the Perth Whaling Company was forced to cease activities completely in February 1838, due principally to the inexperience of crews and company mismanagement. [39]

Both whaling companies restricted their activities to bay-whaling from a fixed shore base, as this required relatively small amounts of capital for the provision of four to six boats, try-pots for boiling down the catch, rough huts for cooperage and boiling, and the payment of wages, partly in the form of provisions and rum, for sixteen to twenty men. As the more valuable sperm-whales frequented the deeper waters further off-shore, the whaling catch was confined mainly to the slower moving right-back whales, which were less valued for their oil, but had large palates with bones that were used as the basis of corsetry, umbrella and millinery industries in England.

In the first year of whaling operations the two companies combined realized an export revenue of £1780 from 71 tons of oil and 4.5 tons of bone. This actually exceeded by £200 the colony’s export revenue from wool, a trend which continued when the export of whale products returned £3380 in 1838 and £3170 in 1839. The funds generated by initial operations in 1837 were used in part to finance the construction of a tunnel under Arthur Head to provide access from the beach to the town of Fremantle, the project being facilitated by the government’s provision of prison labourers. [40] Thereafter the high costs of operation due to rising wages and the difficulty of acquiring replacement supplies, made unexpectedly necessary by a number of accidents in Cockburn Sound, strained the company’s profit margins and no dividends were paid on initial capital stock. Thus when overseas oil and bone prices declined drastically in 1840 from the peak levels prevailing at the time operations began, [41] the Fremantle company ceased operations and deployed its major assets, the whale-boats, in other activities such as ferry services on the Swan River.

4

Despite the generally improved level of activity in the first expansion period, the available labour force had declined slightly due to emigration to other Australian colonies, especially the new colony of South Australia. By 1839 the labour force, measured by the number of adult males between fifteen and sixty-five, had fallen to 622. Wage rates rose as a result of increasing pressure on the labour situation and settlers began to agitate for the introduction of additional labourers. A renewal of immigration in 1840, which continued strongly through 1842, soon relieved this labour shortage and also differentiated the 1840-43 phase of expansion from that immediately preceding it.

From a total non-military population of 2436 in 1840 natural increase and immigration, which reached a high level of 562 in 1842, increased the population by 62 per cent to 3939 before migration virtually ceased in the latter half of 1843, These statistics probably underestimate the growth in population as

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the shipping data and other original sources on which they are based are incomplete. [42] The military guard was also changed in 1840 with the replacement of the 21st regiment by the even larger 51st regiment and, as had happened previously, a number of members of the departing guard requested discharges in the colony, thus adding to the total workforce. Civilian immigration during this period fell into three categories, each of which contributed roughly a third to the total inflow.

First, in 1840 a new settlement was established at Australind well to the south of Perth by the Western Australian Company, which had been formed in England to promote an independent land development scheme for English migrants, and had purchased lands for this purpose from Stirling and Colonel Lautour. Unfortunately the inadequacy of capital introduced by settlers, the financial insecurity of the company that sponsored the scheme, and the unsuitability of soils in the region for intended small-scale arable activities, ‘all spelled the disaster of this experiment in colonization’. [43] Although the venture proved unsuccessful and migration ceased at the end of 1842, it was responsible for the arrival of some 442 immigrants or 32 per cent of the total inflow in this period.

Secondly, there were those migrants introduced under various sponsorship schemes. Earlier labour shortages and rising wages had led private settlers to contribute funds to the Perth Agricultural Society to sponsor the selection and transportation of a supply of indentured labourers. [44] Sixty-two men, many of whom were shepherds and experienced in agriculture, and their families arrived in 1841 under this private sponsorship scheme. In the following two years some 400 persons were also introduced under official assisted immigration schemes. [45] A large proportion of these had been selected by the Emigration Commission in London and their transportation per Simon Taylor (1843) and Success (1843) paid for by funds raised in the colony from the sale of crown lands. Included among them, however, were a few orphans sent out under the auspices of the English Children’s Friend Society and a number of juveniles brought from the Parkhurst penitentiary at the British government’s expense to serve three to seven year sentences in the colony as indentured apprentices. This was the first of seven consignments of Parkhurst boys sent to the colony before 1850, [46] and their ready absorption into the economy did much to reduce antipathy towards eventual suggestions for the introduction of ticket-of-leave convicts. In all, sponsored immigration during this 1840-43 period accounted for a further one-third of the total inflow.

The remaining third comprised the 447 persons who arrived independently of either the Australind or the various sponsorship schemes. Many of the settlers in this group were friends or relatives of existing colonists and unlike the Australinders were informed about colonial conditions and planned to embark immediately on pastoral ventures. They also added to the existing workforce by introducing indentured labourers for themselves and their acquaintances. This larger scale immigration clearly benefited the colony by enlarging the domestic market and injecting new capital funds, but it also introduced a

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new element of speculative activity. In response to the rapid inflow of immigrants there was a marked increase in public works from late 1840 including, for example, the building of a reception depot for immigrants at Fremantle and a government warehouse for dutiable goods, the completion of the Perth to Guildford road, the construction of the first Perth jetties, and the completion of a new bridge across the Heirisson Island flats in 1842 at a cost of £450. [47] New gaols were also erected at Guildford and at Rottnest Island, the latter having been set aside as a native prison in 1839. [48] These public works were financed mainly from higher duties on the rising level of imports of tobacco, wines and spirits, from pilotages dues on incoming ships and from a variety of licences such as those for innkeeping and the keeping of dogs. This resultant increase in government employment, as well as the fact that many of the labourers introduced were indentured, meant that the increase in the total workforce did not lead to a reduction of existing high wages—a fact that fostered the growth of the speculative activities that characterized this period.

Following the increase in the price of crown land to £1 an acre in mid-1841 sales of even well-located crown land had fallen sharply. As a result new settlers purchased land in the private land market, so adding upward pressure to free market prices. In fact the Inquirer, the colony’s second newspaper, which had begun publication in mid-1840, commented in April 1841 that ‘the price of pasture lands now range from 4/- to 7/6 per acre according to the quality and local advantages . . . [while] lands in the agricultural districts of the Swan and the vicinity of Perth are become so extremely valuable in price that no correct standard can be made’. [49]

This increased activity in the private property market was sufficiently marked for Governor Hutt to introduce a 1% transfer duty on all private land transactions late in 1841 to offset the decline in crown land sales. Private rural land transactions in the period were paralleled by a boom in town lot sales and residential building. With the inflow of immigrants, rents increased, ranging from £20 to £70 per annum for a town house with a well and garden, and newspaper advertisements appeared for the sale of residential lots in a proposed new ‘City of Albert’ near Perth, [50] a speculative development which, like that of a proposed steam-boat company, did not eventuate. Shops, inns and other specialized private buildings were also constructed as the number of small retail and service enterprises such as barbers, tailors and dressmakers increased. New private schools were opened in this period, a first coffee house was advertised and a Wesleyan church was constructed.

The increased variety of economic activity during this second expansion phase was both stimulated and facilitated by the merchants who continued to provide credit to settlers on the basis of produce received so enabling a continued increase in imports, especially of stock and new farming equipment. Imports of luxuries also rose rapidly during this period and were sold at a profit by both merchants and new retailers and even by settlers themselves who received goods in private consignments. Further stimulus was provided by developments in banking operations at this time. When the London-based

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Bank of Australasia had established a branch in Perth in 1840 it had merged with the local Bank of Western Australia. Objections by some of the colonists to the remittance of dividends to overseas shareholders, however, resulted in the formation of a new, locally financed Western Australian Bank in 1841, and lively competition between these two banks resulted in a decline in interest rates, despite an increase in the overall demand for loans.

Throughout this period the most significant inflow of funds continued to stem from the British government military expenditures in the colony and the parliamentary grant-in-aid for civil expenditures. Private funds were introduced through the revictualling of foreign ships and the cash reserves brought in by new immigrants but the principal injection occurred through the export of wool. English wool prices had fallen to between 1s and 1s 3d per lb in 1839 but despite this the colony’s export returns rose from £2500 in 1840 to £6124 in 1843 mainly as a result of sharply rising export volumes. Sheep numbers had expanded by 40 per cent from 1840 to reach a total 76 191 in 1843. This rapid increase was principally due to a high rate of natural increase made possible by a number of improvements in pasturing techniques. In 1841 the unpaid colonial botanist, James Drummond, had proved that certain poison plants had been the principal cause of high sheep mortality rates in the past [51] and shepherds thereafter were able to keep flocks away from contaminated areas. New supplies of indentured and assisted labour, together with the willingness of a number of young intending pastoralists to accept pastoral employment in exchange for a share of annual flock increase, led to an overall improvement in sheep husbandry. Flocks were better protected from the ravages of wild dogs, they could be moved frequently to new and desirable pasture, and more efficiency was attained in the treatment of sheep diseases such as scab. [52]

During this period settlers also profited from the relatively high prices for live sheep resulting from both new settlers’ demand for stock and the time lags involved in meeting these requirements from import orders. In late 1840 the price of fine-woolled sheep had reached a high level of £5 15s per head and remained at approximately £3 through 1841. This additional source of revenue meant that normal culling for the slaughter yards was suspended in 1840-41 and the consequent shortage of mutton led to a sharp rise in fresh meat prices. As a result the Commissariat actually refused to let contracts for the supply of meat in 1841 and placed the troops temporarily on salt rations. [53]

The secondary incomes earned by established landowners from the sale of livestock, land and imported goods to new immigrant settlers enabled them increasingly to participate in various non-rural investment activities such as the purchase of land and urban allotments, orders for new town houses, and investment in new enterprises such as milling, and unfortunately led to some overcommitment in these directions towards the end of the period. Essentially, the continuation of levels of activity reached in all sectors by the beginning of 1843 had become dependent on the maintenance of immigration levels, and when the latter actually declined, and reinforced other tendencies to recession, 200 the economy’s forward momentum was arrested.

The depression of 1843-1844

Sources: Agricultural Society reports. Blue Books, Government Gazettes, newspaper reports.

5

Immigration, which had reached a peak in 1842, declined by almost 60 per cent to 246 in 1843, only sixty-one persons arriving in the second half of that year. This fall in the level of immigration can be viewed as the major cause of the ensuing depression, although its impact can be attributed to the instabilities that had emerged during the preceding boom. Other events that contributed to and accentuated the decline include, first, the realization of very low livestock prices at the February 1843 sales; second, the importation of cheap South Australian grain; and third, reductions in government expenditure announced in the budgets of 1843 and 1844.

The decline in livestock prices diminished the total incomes of the pastoralists and it was this fact even more than the effect of lower English wool prices that was mainly responsible for flock-owners’ initial difficulties.

The halving of sheep prices at the February 1843 sales, which shook confidence in a continuation of prosperous conditions, was due not only to the fall in demand for fine-woolled sheep from newcomers and an increased supply of fine- and coarse-woolled stock, but also to a reduction in the market demand for fresh meat. [54] This largely resulted from the absorption of immigrant labourers in rural employment where keep was provided from farm estate production, which clearly limited the effective market demand for meat and other arable produce.

The income of domestic producers was further threatened by the importation of grain from the depressed colony of South Australia, where larger scale and lower cost production was possible on more fertile soils. [55] Market competition

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Advertisements for City of Albert, Perth, early 1840s

from this lower priced grain diminished the revenues of local growers, who in consequence agitated unsuccessfully for a form of corn law protection. [56] This grain importation had a further serious effect in that it added to the leakage of funds already caused by high import expenditures and hence worsened the already serious liquidity shortage. Drake, the commissariat-general, reported to the Legislative Council in July 1844 that ‘in the preceding 18 months, the colony’s coin had fallen from £25,000 to £9,000 of which £12,500 had been lost [through heavy import payments] in 1843’. [57] In these conditions the banks played an important role as they continued to lend competitively at even lower interest rates despite the fact that their average weekly deposits had declined in the second half of 1843. The process of credit tightening was therefore a gradual one, and the increasing use of barter in domestic transactions counteracted to some extent the effect of the declining money supply.

The higher level of government expenditures during 1842-43 had resulted in a budget deficit which led the government to institute expenditure cuts in June 1843, including a 28% reduction in public works. Commitments for ongoing projects, such as the Canning Bridge, made further cuts in capital expenditures impossible at this time but plans for new works were severely curtailed. As a means of raising additional revenue an ad valorem duty of 2.5% on

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all imports was also introduced. [58] These budgetary measures were followed by further heavy expenditure cuts in May 1844, including a reduction in the salaries of government employees. [59] As these actions coincided with a decline in privately financed building and construction, unemployment in the non-rural sector rose and so reinforced the reduction in effective market demand for local produce.

In a despatch to the Colonial Office in March 1845 Governor Hutt gave his version of the cause of the depression: ‘during the last two years... no settlers with capital have arrived . . . who, in the formation of fresh establishments might relieve the farmer from his extra stock and produce, and ... the inevitable results ensued in a country where everybody is engaged either directly or indirectly in agriculture . . . the supply of the necessaries of life being much more than the home consumption . . . prices rapidly fell’. [60] The Inquirer noted in May 1844 that prices had fallen in general by 50 per cent since 1838, and that wages and rents had fallen by at least 25 per cent. [61]

Underlying the depressed conditions in the colony was the unfavourable balance of trade. In recognition of this fact the Legislative Council, strongly supported by the press, initiated a moral suasion campaign which called on colonists to refrain from the purchase of all non-essential imports and to export ‘every article of colonial produce which could either be produced, collected or manufactured’. [62] Merchants were requested to purchase any exportable items for cash, and to make up total cargoes for shipment by exporting from storage. The campaign was remarkably successful. By the end of 1844 the worst of the recession had passed and a number of new activities were being undertaken, while some older industries, including whaling, had again become more active. The forces of expansion which emerged during the second half of 1844 gradually gathered momentum and by the end of the following year recovery was under way.

In 1845 Hutt resigned and was replaced by Andrew Clarke, who served only until his death in February 1847. The hiatus in government leadership between the effective administration of Hutt and the arrival of Clarke’s successor was filled by the permanent military commander, Major Irwin. By the time Governor Fitzgerald arrived in August 1848 the colony had fully recovered from the depression and once again pressures on available resources had emerged.

6

The returning optimism which accompanied the beginnings of economic recovery was evidenced by the fact that the closure of the Swan River branch of the Bank of Australasia in 1845 did not cause any real financial panic. [63] The situation was eased by the continued low-interest state policy of the remaining Bank of Western Australia, and by the fact that merchants continued to sell on credit and to function in part as non-bank financiers. The recovery process continued from 1845 to the end of the period under review although faltering

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SWAN RIVER COLONY

slightly in 1849. Wool production, whaling, timber, grain cultivation and the emergence of a number of import-substitute industries and minor manufactures along with the development of the new export commodity, sandalwood, all played an important part in the economic recovery of the next five years.

The continued expansion in wool production was reflected in the fact that export proceeds increased by 100 per cent between 1845 and 1850 to £15 500, but wool production alone was unable to provide the necessary impetus for a broadly based recovery. Fixed costs in the industry had declined by the middle of the 1840s as settlers had acquired full title to their lands and the construction of buildings and other facilities had been completed during the preceding boom. Transport costs, however, remained very high and as recovery progressed labour costs increased. [64] Money wages had to be paid to indentured labourers when their 1841-42 contracts expired, and free labourers had to be induced by monetary incentives to work on isolated sheep properties as alternative employment opportunities widened. Again, many of those who had previously worked in exchange for keep plus a share of flock increase had by this time established their own pastoral runs, in some cases by squatting on crown lands. By competing for labour with existing producers they caused further upward pressure on wage rates. As London wool prices varied at a fairly low level throughout this period, profit margins on wool production were narrowed thus inhibiting the extent of the contribution that pastoral activities could make to the recovery process.

Whaling, which had been recommenced in 1843 to take advantage of higher overseas prices for oil and whalebone, had become firmly re-established as a source of export earnings in 1844. The export revenue of £5300 in that year was not reached again before 1850, although between 1845 and 1848 earnings were of the order of £4000 per annum. Nevertheless several features of this industry also limited its contribution to economic recovery.

The Fremantle Whaling Company was joined in the mid-1840s by a number of smaller enterprises at the outer ports, such as Cheyne’s Whaling Station at Albany, Child’s at Bunbury, and sporadic activities at Vasse and Augusta, all financed mainly by single individuals. The small scale of these enterprises limited their contribution to total export earnings and their total revenues were far exceeded by that of the Fremantle Company. The location of the latter, given its similar concentration on bay-whaling, limited its revenue growth since relatively few potential catches entered Cockburn Sound. The Fremantle Company also faced a very high cost structure. This largely resulted from the fact that merchant shareholders in this larger enterprise held exclusive rights of supply of most items required for maintenance and replacement. Only a very small proportion of the non-labour input needs of the industry—such as harpoons, barrels, rope, try-pots and boats—could be supplied locally, and with the imposition of port dues in 1841 few foreign whalers called at Fremantle to barter whaling needs. Most of the revenue generated was thus absorbed again in high import expenditures. Moreover the number of labourers employed by the company during the season rarely exceeded twenty, so despite the favourable

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export returns, the whaling industry provided few significant linkages or income benefits to other sectors of the economy.

In response to the government’s moral suasion campaign, interest intensified during the first two years of recovery in the production of commodities that could provide substitutes for high-priced imports. Small-scale salting and tanning establishments were commenced, providing both substitutes for imports such as leather for shoe-making as well as facilities to enable the export of salt fish and hides. The cultivation of tobacco was begun, and although the resultant output was inferior to the imported produce it was effective in providing the nicotine solution used for the treatment of scab in sheep. Significant expansion in most fields of import substitution was limited by a lack of appropriate skills and the necessary funds to supply capital equipment. This was particularly true of wine production. Viticulture had commenced with the planting of the first vineyard at the foot of Mt Eliza near Perth in 1830 and had expanded after the formation of the Vineyard Society in 1842. Production difficulties, however, led to a very slow growth of good quality wine output and although a number of suggestions were made for improvement in 1845, including the formation of a vineyard cooperative to pool available resources, [65] it was not really until the late 1840s that sufficient capital became available to allow viable commercial production.

Agricultural production continued to expand during the recovery period, despite the lack of corn protection, and wheat acreages increased by 33 per cent between 1845 and 1850. Wheat output, however, was affected by severe flooding in 1847 and after a slow recovery in the next two years, during which grain importation was very high, the area under wheat cultivation reached some 4400 acres by 1850. At the same time the total area under cultivation reached 7800 acres, a 60 per cent increase over 1845, which reflected a diversification of arable activities and the increased production of other grains, tobacco, potatoes and onions, green vegetables, fruits and vines. Potatoes, onions and salt fish were exported mainly to Mauritius and realized modest incomes, especially in 1846, but perishability and the uncertainties of demand in nearby markets, owing to seasonal self-sufficiency and competition from other sources, inhibited continued development. [66] Moreover local shipping, used in such trade, became involved in the export of higher value sandalwood after this time.

Interest also developed during the recovery period in mining activity, and in 1846 the discovery of coal deposits in the Murray district led to the formation of the Western Australian Mining Company. Further coal deposits were discovered north of Perth on the Irwin River, and small finds of lead, iron and zinc kept hopes of mineral success alive until the end of 1846. Confidence was quickly dampened, however, when a South Australian mining expert, Dr Van Sommer, reported that the accessible Murray coal was of low quality due to its high water content, [67] and Western Australia’s first mini-mining boom subsided.

Overall it can be seen that in the initial years of recovery a temporary reduction

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of imports, together with an increase in the exports of commodities already mentioned as well as livestock, hides and skins, bark, gum and natural curiosities, had almost closed the balance of trade deficit. A major part in continued economic recovery, however, was played by the colony’s hitherto unexploited timber resources. The quality of the colony’s hard jarrah timber had already been recognized abroad and the development of the industry in the early 1840s had benefited from the increased domestic demand for housing and related construction. The small export of some 40 tons of logs in 1844 realized an average price of just over £4 per ton but this did not provide sufficient revenue to cover the costs of producing and transporting this very heavy wood. Exporters, moreover, were informed that market trends had changed towards pit-sawn and machine-milled timber planks and wood. [68] Exports ceased in 1845 as the necessary capital for the expansion of production and the change in techniques (as well as the provision of adequate transport facilities) was not immediately available. While there was a sharp revival in export revenues in 1847, due mainly to an Admiralty contract, they did not assume significant proportions again before the end of the decade.

The capital constraints that inhibited the development of jarrah production did not apply to the colony’s other abundant timber resource, sandalwood. Unlike jarrah, sandalwood was light, softer and hence easily cut with simple tools, and it could be sold abroad at considerably higher unit prices. In 1845 a small experimental cargo was exported to Bombay on the government schooner Champion and realized a price of £10 per ton. It appeared at that time that the product could command prices of £8-£12 per ton in Bombay and Mauritius, but if exported directly to the principal market areas in China it could realize £22-£35 per ton. [69] This encouraged landowners with wood on their properties—and sandalwood grew in a broad belt behind the Darling Range, extending well inland—to begin cutting and stacking sandalwood in off-season periods and by the end of 1845 large spindly stacks ‘were appearing on several locations’ awaiting cartage to Fremantle. [70]

As sandalwood exploitation required only a very low capital investment, the industry could expand rapidly and return high per unit profits. It provided a means by which colonial incomes could be raised, employment stimulated, and investment induced in other activities both directly and indirectly related to the sandalwood trade. Export returns rose rapidly from the initial £40 in 1845, to £4444 in 1847 and a maximum of £13 353 in the following year. Although the capital investment required in sandalwood cutting was minimal, profit expectations generated by high overseas prices gave rise to considerable investment activity in other areas indirectly linked to actual sandalwood exploitation. A prime example was the construction of three new ocean-going vessels to carry wood in 1846, [71] and the launching of a further four vessels the following year.

The finance for these particular activities was supplied largely by the merchants who also played a significant direct role in the development of the sandalwood trade. They made spot cash payments for quantities of wood received at prices per ton previously prevailing in overseas markets, or at their

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estimates of future price trends, minus profit, storage and lighterage charges, and they thereby bore the financial burden and risk in the delay of the receipt of revenue. As export of the wood became profitable other settlers with available capital reserves purchased for speculative purposes and either exported it by direct agreements with shipping agents or through similar arrangements with the merchants. [72]

The scattered distribution of the wood, its collection during off seasons in pastoral and arable activity, and the difficulties in overland transportation of collected stacks during winter months meant that changes in activity levels preceded by varying intervals the actual export of the wood and changes in total revenues. The build-up of activity in 1846, for example, was reflected in the sharply higher export earnings of 1847, and as the advertised- profitability of sandalwood exploitation attracted free labourers at a time when employment opportunities in other areas were increasing, there emerged a definite scarcity of labour by 1846. The resultant rise in money wage payments to labourers throughout the colony increased costs of production but also had the decidedly beneficial result of increasing the general level of effective domestic demand.

The additional strain that sandalwood carrying placed on available transport facilities increased agitation for road construction, and when an appeal to England for funds to accomplish this was refused, the Legislative Council decided to introduce a system of licence fees for permission to cut sandalwood and to divert the proceeds to road construction. [73] Resultant public works further increased employment and incomes and so reinforced the development of processing industries and import-substitute activities. Inevitably, the more prosperous conditions led to a rise in the level of imports. By 1850 the value of total imports had risen by more than 120 per cent above the low point they had reached in 1845, leading once again to a heavy balance of trade deficit.

By 1848 the level of sandalwood exploitation began to decline as a result of the combined effects of a fall in overseas prices and rising transport costs as closer stands of sandalwood became exhausted. The labour released when this occurred was fairly readily reabsorbed in other parts of the economy, for sandalwood activity had not only generated new secondary employment opportunities but had also caused a backlog in the transportation and production of other commodities, as evidenced by increased press advertisements for labour and agitation from some areas of the economy for the importation of additional labour.

7

Before the introduction of convicts in 1850 the colony had recovered from the 1843-44 recession and had developed a diversified range of activities. The basic problem which remained, however, was one that had plagued the colony since its foundation: namely a continual shortage of money capital. This in turn had been primarily responsible for the chronic deficit in the overseas

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balance of trade, as it had limited the colony’s ability to develop its potential for increased export incomes. This situation, together with the consequent inability to sustain a stable rate of immigration, had contributed to variations in the level of effective domestic demand and thereby prevented what might otherwise have been a more rapid development.

A final question remains. Why was it that the colony, established twenty-one years previously as a free enterprise settlement with the express stipulation that no convicts be introduced, became in 1850 an officially constituted penal settlement? It has been generally argued that the answer to this question is that a widespread shortage of labour had emerged by the end of the 1840s. This is difficult to sustain, however, in the light of the slight fall in money wages between 1848-49 and the increase in labour emigration to other Australian colonies. What is true is that a redistribution of labour occurred towards the end of this period and different labour supply conditions developed in different sectors of the colony. When sandalwood production declined in 1848 the labourers who had been employed as cutters were in many cases unwilling to take similar isolated employment in the pastoral sector, which consequently experienced severe shortages of labour. With the migration of labour from this sector and the beginnings of the adoption of labour-saving devices in agriculture there was no overall problem of labour shortages in other areas. It was therefore from pastoral interests that initial requests for the importation of convict labour came. In May 1847 a memorial was presented to the Legislative Council, signed by twenty-two pastoralists, which argued not only that convicts would ease the labour shortage they were confronting but also that the colony as a whole would benefit from the injection of money capital associated with the British government’s payment of costs of convict maintenance. [74]

This proposal, however, did not have the support of the bulk of the community nor, indeed, of all the pastoralists. But when changes occurred in the membership of the Legislative Council which gave the pastoral interest a stronger voice, [75] a request for convicts was transmitted to the British government. At first it was requested that a limited number of Pentonville men serving the last stages of their sentences be introduced and removed at the end of a specific period, leaving Western Australia essentially a free colony. To achieve the objective of increasing the supply of capital, and easing the colony’s financial constraints, it was also requested that the British government meet all the costs of transporting and maintaining the men and their overseers. Although the British government was willing to send out a limited number of ticket-of-leave men, it refused to undertake financial responsibility for their maintenance or return, a proposal that was totally unacceptable to colonists who, at a public meeting, openly declared their need for capital rather than just a labour supply. [76] Negotiations continued and it appears that colonists in general did not in fact know or concur in the final arrangements adopted. [77] The ordinance making Western Australia a place to which convicts be sent was actually passed in May 1849 well before issues concerning the type of felon and financial responsibility had been resolved. [78]

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In the event it was finally agreed that the British government would defray all expenses but that no limit would be placed on the number or type of convicts sent, except that they would all be male. On these conditions the government also agreed to set aside an annual sum for promoting free emigration to ensure no imbalance between the male convicts and the free population. In this way Swan River Colony was constituted an official penal settlement several years after convict transportation to New South Wales had ceased. The resulting inflow of convict labour and British capital so altered the resource base of the colony that the trend of its economic development was abruptly changed. A new era had begun.

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