Wednesday, 8 May 2013

Gold in Victoria

Victoria soon overtook NSW as a gold producer and between 1855 and 1865 annual production exceeded 2 million ounces and gold was being mined at Ballarat, Bendigo, Stawell, Castlemaine and Clunes. In 1856, the nation’s output peaked at some 3 million ounces with 95% coming from Victoria. This brought enormous wealth to the colony and financed the construction of many fine nineteenth century buildings in Melbourne, Geelong, Ballarat and Bendigo. As in Ballarat, gold mining at Bendigo started by working near-surface alluvial deposits but there were no deep leads so many diggers left for other fields when the alluvial gold was exhausted. There was, however, gold contained in hard quartz veins and Cornish miners from South Australia who had tended to avoid the soft, dangerous deep leads were in their element drilling and blasting quartz. Some hard rock pioneers, such as the ‘father of quartz mining in Bendigo’, the German Theodore Ballerstedt, had learnt their trade in California, others learnt by trial and error.[1]

The Bendigo field consisted of a series of rich ‘saddle reefs’, quartz veins ‘sandwiched’ between country rocks in anticline folds.[2] At each mine, similar reefs were found as the workings extended downwards.[3] Quartz had to be crushed to liberate the fine particles of gold and this required steam powered ‘stamp mills’. The steam engines were also operated pumps to drain the mines. These machines and the sinking of shafts through hard rock required large capital investment so that mining syndicates, share issuing companies and local ‘stock exchanges’ were formed to raise the necessary capital. By 1871, more than a thousand companies were being traded on the Bendigo stock exchange. Many companies failed, largely because they paid out all profits as shareholder dividends instead of retaining cash for mine development, maintenance and mechanisation. The companies that planned their mine development ahead of production prospered. Speculation in gold shares during the 1860s caused significant problems. A common practice was for companies to spend all available shareholder funds and then borrow from banks. As debts mounted, the company operators and other persons in on the deception would pass their shares to ‘dummies’, people of no realisable wealth, leaving honest shareholders to meet all the debts when the company failed. In 1871, Victoria enacted the No Liability Act for mining companies, whereby an investor lost only the value of their own investment.

By the close of the nineteenth century, mining activity had expanded across Australia, from NSW and South Australia to Victoria, into Queensland and the Northern Territory, across to the coast of Western Australia, then inland to Kalgoorlie and Broken Hill. Great bodies of ore were yet to be discovered and vast tracts of territory were largely unexplored. During the first half of the twentieth century, new mines continued to be established but the mining companies also expanded their scope and influence and the period saw the emergence of Australia as a world leader in new minerals engineering technologies.

[1] Fahey, Charles, ‘The Ballestedts and the Bendigo quartz reefs’, La Trobe Journal, Vol. 30, (1982), pp. 29-32.

[2] Palmer, A.V., The Gold Mines of Bendigo, (Craftsman Press), 1976.

[3] By 1990, the Bendigo mines were amongst the deepest in the world.

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