Wakefield's LETTER FROM SYDNEY - His theory of colonization - The Colonial Office and Wakefield's Principle - Act to establish South Australia - Colonists at Kangaroo Island - Colonel Light selects site of Adelaide - Recall of Governor Hindmarsh - Gawler's governorship - Grey appointed Governor - His reforms.

The failure of Thomas Peel's Swan River experiment occurred at a time when much interest was being taken in England in systematic colonization. The Revolutionary and Napoleonic wars had thrown Europe into disorder for a quarter of a century, and parallel with them went the creation of the great change in conditions of manufacture which is known as the industrial revolution. The new system, while it made employers rich, plunged the mass of the working classes into deep poverty. Pauperism was 'breaking down the country,' though the total wealth of England was increasing enormously. Wages were miserably low, food was dear, and there was not sufficient employment to absorb the thousands who saw their old hand-industries rapidly disappearing in consequence of the application of steam-driven machinery to production. Emigration was advocated as a remedy for these painfully manifest ills. England was believed to be over-populated. But she had vast empty possessions oversea. These could be used to relieve the pressure at home. But there was a desire to use them in a systematic, scientific manner. The time was ripe for some one to show how this was to be done.

The man who came forward with the most convincing plan was Edward Gibbon Wakefield. This ingenious and persuasive writer (who had spent some time in Newgate prison, whither he had been consigned for marrying a ward in chancery), published in 1829 a little book called A LETTER FROM SYDNEY, which immediately captivated the minds of many politicians and officials who were searching about for a rational theory of colonization. It was. written in so attractive and vivid a style that not only contemporaries, but some later historians also, thought that it proceeded hot from the personal experience of one who had studied Australian conditions on the spot. Thus, Sir Spencer Walpole, in his HISTORY OF ENGLAND (vol. vi., p. 360), stated that 'the letter was written from Sydney.' But, in fact, Wakefield had never been to Sydney, nor to any other colony. He wrote his little book in London; but he was so plausible, and he put into it so many cunning and racy little. touches, that he made people believe that he was describing what he had observed.

Wakefield followed up his success by writing numerous articles and letters in public journals, and by discussing his ideas with prominent men, until quite a large party was formed which believed in him as the genius who had at last given to the world the true and only plan of founding and working a colony on sound lines. The Wakefield Principle was always mentioned by some journals with the reverential homage of a capital letter, and there were advocates of it who, as a distinguished critic said, regarded it as 'the one thing needful to make mankind rich, virtuous, and happy for the rest of their time on earth, a specific for all the disorders of the world.'

Now, the Wakefield Principle was the very opposite of the plan which Thomas Peel had endeavoured to carry out in his Western Australian colony; and, as the news of that failure was being much discussed in the very year when the LETTER FROM SYDNEY was published, Wakefield and his supporters were able to stress the virtues of their own theory by reference to the obvious defects of others. Peel had sought to attract settlers by the offer of an abundance of cheap land. The very essence of Wakefield's system was that land in a new colony should never be sold cheaply, but always at a 'sufficient price.'

Wakefield developed his ideas in a number of books and minor publications, but they may be explained in simple terms as follows. A colony depends upon three main elements for success land upon which to settle, capital to apply to the land, and labour to work it. If land in a new colony is obtainable very cheaply, he argued, labourers will not continue to work for settlers; for they will soon save enough money to buy land of their own. Consequently, there will be no dependable supply of labour. But a colony cannot prosper unless there is an abundance of labour. Settlers with capital will not come out unless they can get labour to work their properties. Therefore you require two things: first, a fund by means of which you can bring to your colony labour from the mother-country, where there is an excess of it; and, secondly, a means of keeping them in the position of labourers when you get them to the colony. If, then, you sell your colonial lands, not very cheaply, as was done at the Swan River, but at a 'sufficient price' to enable you with the proceeds of the sales to bring out all the labour which the colonists require, and if you devote the entire proceeds of your land sales to this purpose, you will maintain an exact balance between the land you desire to have occupied, the capital necessary to develop it, and the labour required to work it. Your labourers will have to remain labourers for two or three years, because the savings from their wages will not be sufficient to enable them to buy land of their own until they get enough to pay the 'sufficient price '; and the 'sufficient price' obtained for the land will enable you to maintain a constant supply of fresh labour from the overflowing reservoir of Europe provided (and this was an essential feature of Wakefield's system) that you do not use the proceeds of land sales for any other purpose than paying for immigration.

In 1830 Wakefield formed a Colonization Society to carry out his ideas; and, by a coincidence fortunate for him, it happened that in that year news arrived of Charles Sturt's great boat journey down the Murray and his discovery of great areas of fertile land in the basin of that river. Here, then, were (1) a man with a theory; (2) an organization formed to give effect to it; (3) an unoccupied territory where there was scope for an experiment; and (4) a strong public feeling in favour of a scientific immigration policy. South Australia was the result.

But, it must be confessed, the experiment was not carried out under conditions which gave a fair chance to the Wakefield Principle. Politicians and responsible officials are shy of philosophical theorists, and many doubted the wisdom of giving over a great province as a social laboratory wherein an ingenious and pertinacious author might try his ingenious plans. Wakefield, indeed, had made a sufficient impression to convince everybody that old modes of colonization were wrong, but not enough to convince the Government and Parliament that his own mode was inevitably right.

Moreover the Colonial Office was here, as in Western Australia and later at Port Phillip, strongly opposed to expansion in Australia. 'The Secretary of State,' wrote the chief official in 1830, 'does not feel at liberty at the present moment to hold out any encouragement to schemes which have for their object the extension of the number of His Majesty's settlements abroad, and which, whether formed in the outset by individuals or the Government, are always liable to end in becoming in some way or other a source of expense to the revenue of this country.' This antipathy was the first barrier which had to be broken down.

Wakefield desired to proceed by means of a chartered company, and the South Australian Land Company was formed for this purpose (1831). But the Colonial Office objected to 'transfer to the company the sovereignty of a vast unexplored territory,' and the negotiation broke down. In 1833 the South Australian Association took up the problem, still under Wakefield's inspiration, and with the active aid of such influential Englishmen as George Grote, the historian of Greece, Sir William Molesworth, and the Duke of Wellington.

The Government, under pressure of opinion, at length agreed that a new colony should be founded, but would not grant a charter to the company, and insisted that the colony should be placed under a Governor appointed by the Crown. An Act of Parliament was passed in 1834 establishing the colony of South Australia, with a Governor to preside over it, but also with a body of Commissioners who were to finance the concern by raising a loan, and were to control the sale of land, which was not to be disposed of for less than 12s. per acre. The transportation of convicts was expressly barred.

The whole project would have collapsed for lack of financial backing but for the exertions of George Fife Angas, a wealthy and influential merchant who had taken great interest in it and was appointed a member of the Board of Commissioners. A capital of 200,000 pounds was required to float the colony. But how was that money to be raised? The Exchequer set its hard face against Government aid, and rich philanthropists did not open their cheque books with any noticeable eagerness. Wakefield's own band of disciples were not well pleased with the way in which the Colonial Office had handled the Principle. 'Without some association to assist the commissioners,' Angas said, 'I do not see how the Act is to be carried into effect.' He therefore formed a company With a working capital of 200,000 pounds - the South Australian Company, of which Angas himself was the chairman. It was this company, not the Government, not the Commissioners, which really founded South Australia; and of course those who invested their money in it looked for a reward.

Sir Charles Napier, who had written a book on colonization, was offered the governorship; but he foresaw that there would be financial difficulties, and would not accept the post unless he were given some troops and authority to draw on the British Treasury 'in case of necessity.' The Government, however, did not intend to accept any financial obligations, and declined Napier's terms; whereupon he refused office and went to India, as every student of the history of that country is aware. The governorship was then accepted by Captain Hindmarsh, R.N., who had been one of Nelson's officers at the battle of the Nile.

Two ship-loads of colonists left England in 1836, and arrived at Kangaroo Island in July of that year. Nobody had been sent in advance to find out whether Kangaroo Island was a suitable place for settlement. All that the promoters knew about it they had learnt from the description of Flinders in his VOYAGE TO TERRA AUSTRALIS, and from the artist Westall's charming drawings, prepared as illustrations to that work. On the strength of that meagre amount of knowledge they had circulated a little book to attract immigrants, illustrated with an idyllic picture, and an assurance that in this abode of bliss, where kangaroos and emus placidly grazed under palm-trees, 'there would be little more revolting to the feelings of an immigrant than if he had merely shifted his residence from Sussex to Cumberland or Devonshire.' But the first immigrants found Kangaroo Island no more suitable for founding a colony than Peel's people had found Garden Island seven years before.

When Colonel William Light, with his surveying party, arrived in the RAPID in August he saw at once that this would never do. He therefore commenced to search for a better place. Having rejected Port Lincoln owing to its arid environment, and made an examination of St. Vincent's Gulf, he determined that the best available site was that upon which the city of Adelaide was afterwards reared. When Governor Hindmarsh arrived in the BUFFALO in December he was ill pleased with the choice. A muddy creek, sending its trickle of water through a mangrove swamp, afforded no fitting spot for the capital of a colony. There was not a good natural harbour, and Colonel Light's city-area was seven miles from the sea. There was bitter controversy over the site question. Hindmarsh favoured Encounter Bay, others preferred Port Lincoln. But Light persisted that his choice was the right one; and, as the final authority in this matter had been entrusted to him, his view prevailed. Light undoubtedly saw further and clearer into the future than his critics did, and probably nobody nowadays would assert that he was wrong. In fact, Hindmarsh, though he publicly sided with Light's opponents, wrote in quite a different strain to London. The city site, he said, in a letter to Angas, was 'on the bank of a beautiful stream, with thousands of acres of the richest land I ever saw; altogether a more beautiful spot can hardly be imagined.' The city was named Adelaide, after the Queen, at the express wish of William IV.

But the quarrels over this issue developed into others. The Governor and the representative of the Commissioners could not agree; and, as the Commissioners were responsible for the business management of the colony, the Colonial Office recalled Hindmarsh in 1838. He was succeeded by Colonel George Gawler.

To avoid further trouble between the Governor and the resident Commissioner, the functions of both were combined in Gawler. But, even so, he found himself confronted with serious difficulties. The treasury was 'absolutely empty' at one time during Hindmarsh's period the iron safe which held the Government funds had contained only 18. 6d. Debts had been incurred, salaries were overdue, and, as Gawler wrote home within a fortnight of his arrival, 'the credit of the Government is injuriously low.' What was a distracted new Governor to do, with officials and creditors clamouring for payment and no money to meet their claims? 'I must,' wrote Gawler, 'surpass my instructions, and look to England for considerable unauthorised financial assistance.' In other words, he felt compelled to issue bills, which he expected the Commissioners afterwards to honour.

What had happened in South Australia was that, instead of land being cultivated and the produce being sold, thus bringing in a legitimately earned revenue, an orgy of land speculation had been started. Wakefield's perfectly balanced system, which ought to have run automatically like a piece of beautifully designed clockwork - land sold, labourers imported, land cultivated, more land sold, more labourers imported, more land cultivated, and so on AD INFINITUM - had failed to make allowance for that singular human frailty, the desire to get rich quickly and without working hard. 'Nam dives qui fieri vult, et cito vult fieri,' as the poet Juvenal wrote. What actually happened was that land was duly sold, and the money was sent to England to stimulate immigration, and more people came out, and bought more land - but (and here the scheme went awry) instead of cultivating the land, buyers gambled in land values. The first comers, who had selected the most desirable pieces of land, found that they could make more money by selling their land to new-comers than by growing wheat or wool. So they sold, and bought more land, and sold that, and the second comers did the same; and the third comers joined in. The South Australia Company itself became no longer a promoter of colonization but an organization for speculation.

Meanwhile the labourers had no work to do; so they crowded into the town and clamoured at the doors of the Government offices for food. For a while things 'boomed,' because Gawler, with his bills - which were believed to be as good as cash - promoted public works. Money, the proceeds of land sales, went to England, and the Commissioners sent out some thousands of immigrants. In 1838 nearly 40,000 acres were sold at one pound per acre, and 2,000 persons arrived. In 1839 nearly 60,000 acres were sold, and 6,000 immigrants arrived. By 1841 299,000 acres had been sold. But only 2,500 acres were under cultivation. Speculation had plenty to play with, and the scramble for town allotments was exciting while it lasted; but the plough rusted for lack of a furrow.

Meanwhile there was no legitimate field of employment for the immigrants. If Gawler had been a resolute statesman, with a clear understanding of what was happening, he would have realized that the young colony was simply bouncing down the read to ruin. But, though an excellent, well-meaning man, and a brave soldier - he had fought nobly in the Peninsular War - he had no sense of the kind of desperate remedy which the situation required. He set the unemployed labourers to work erecting expensive public buildings. Roads and bridges were built. Harbour works were commenced. Everything was done on a scale of substantial completeness that might have caused an ill-informed stranger to draw the inference that the Governor had a flourishing revenue at his disposal. But, in fact, Gawler was paying for his elaborate buildings with bills. Adelaide was a spreading I.O.U. in stones and mortar. He had actually spent in excess of revenue to the amount of 291,000 pounds.

When the bills rolled in upon the English Commissioners, and they reported to the Exchequer, there was a sensation. News drifted through to Adelaide that the bills had been dishonoured in London. Gawler could not believe it. The Commissioners had not stopped him while the expenditure was in progress, and he protested that he considered that he was pursuing a proper policy in building up the colony and giving employment to the labourers. But the dishonouring of the bills pricked the speculation bubble. When those who had purchased the documents for paying their London creditors found that the paper was worthless because the Commissioners could not honour it and the Exchequer would not, there was a total collapse of credit, and thousands who had fancied themselves rich staggered on the brink of ruin.

On May 10, 1841, a slim, bronzed young officer of twenty-eight, with piercing blue eyes and a confident, masterful manner, stepped off the ship LORD GLENELG at Port Adelaide and made his way to Government House. The same ship carried an important despatch for Gawler. The officer was Captain George Grey, and the despatch informed the Governor that, as he had drawn bills in excess of the authority given to him, he had been relieved of his office, and that Grey had been appointed to succeed him.

A committee of the House of Commons afterwards inquired into Gawler's administration, and admitted that the condition of the colony on his arrival made it necessary for him to exceed his instructions. They blamed the Act under which the colony was founded, and thought that the Commissioners had not shown 'any clear foresight of the necessities of such a community placed in such circumstances.' Gawler's failure ended the control of the Commissioners, and the Act 'for the better Government of the Province of South Australia,' passed in 1842, placed the administration on the footing of a Crown Colony.

Few men have had a more thankless task to perform than George Grey had when he took up his post. The colony was bankrupt. Many men who came out with money to invest were penniless. It was the task of this remarkable imperial statesman, whose connection with Australia extended from these early days of distress and failure down to the beginnings of the federation movement, to rescue South Australia, to place it firmly on its feet, to make production take the place of speculation. Grey acted with firmness, and occasionally with audacity but he performed his task. The British Exchequer at first absolutely refused to accept financial responsibility for the debts incurred during Gawler's administration. But Grey saw that he could not make the colony a success if the colonists who had taken up the dishonoured bills were not paid. He therefore persisted in his demand that the Government should wipe out the obligations, amounting now to a total of 405,000 pounds, in order that South Australia might make a fresh start. It was a pill which the Exchequer did not like to swallow, but Grey's stubbornness won. The British Government, though it had previously refused to comply, was now inclined to relax its attitude and make the concession, as Grey was ruling with such rigorous economy and such reforming energy that the colony promised soon to be self-supporting and prosperous. By the end of 1842 he had 'stopped the leak,' and the financial crisis was at an end.

Naturally, the cessation of lavish expenditure made Grey unpopular with those who had profited from it. Even the aboriginals, it is reported, were wont to say, 'No good Gubner Grey, berry good Gubner Gawler - plenty tuck out.' But 'plenty tuck out' based on fictitious credit was what Grey had set himself to end; and he knew that the progress of agriculture, which he had the satisfaction to witness, would make for sound and enduring prosperity. He not only did not refute the attacks upon him, he never read them. But his firm judicious, and wise rule amply earned the handsome tribute paid by the Prime Minister of Great Britain, who said in the House of Commons, 'I must say that in four or five years of his administration he has solved the problem with a degree of energy and success which could hardly have been expected from any one. He has extricated the colony and gained the good-will of both settlers and aboriginals.' Grey's very memorable governorship of South Australia ended when he was appointed Governor of New Zealand in 1845.