Colony bankrupt by 1840s; land speculation crash dashes Dissenters' settlement ideal
Charles Hill's version of "The proclamation of South Australia" at Glenelg in December 1836.
The first of 19th Century South Australia’s boom-and-bust phases ended in the early 1840s when the colony was bankrupt.
The idealism behind Edward Gibbon Wakefield’s controlled land sale system was warped from the start by wealthy individuals who bought large parcels of land in the city centre and beyond. Of the top 25 largest landholders in the city at the end of the century, 10 of them were original purchasers of town acres. These included Joseph Montefiore, W. H. Gray, J. White and the South Australian Company, headed by George Fife Angas.
The market for land, especially in the city, collapsed. Bankruptcy forced merchants, retailers and land speculators to offload assets, including a huge amount of property, to honour their debts.
Meanwhile, the whole financial base of the colony broke. Because the Dissenter capitalists behind the South Australian Company were wary of the establishment behind the crown, the colony was founded with little money from the British government.
The Resident Commissioner, basically representing the Dissenter founders' land settlement scheme, had equal power with the first governor John Hindmarsh, leading to early friction and disputes.
The next governor, George Gawler, tried to kickstart the colony with a raft of infrastructure, including roads and bridges, as well as the government treasury building, government house and the gaol.
But this spending brought on the colony’s bankruptcy when added to the colony’s debt because of the poor land sales.
The result was that the colonization commissioners in London lost their control to the British Treasury. South Australia's governors began dealing directly with the Secretary of State for the Colonies.
In 1842, through a British parliament act to provide for the Better Government of South Australia, the South Australian Legislative Council was set up, comprising the governor and seven other persons that he appointed.
