'Gold Comes on Us Like a Thunderclap'

Sean Brodrick
April 7, 2006

Looking back in time, rarely have I encountered a story with more heroes and villains, stunning disconnects or staggering riches than in the saga of the Australian Gold Rush.

When Britain's Lieutenant Cook discovered Australia in 1770, he raised his flag on Possession Island off the coast of Queensland.

Ironically, though, it wasn't until the next century that prospectors digging on the same island - since renamed Tuined - found a fortune in gold. Just imagine how Australia's history might have unfolded differently if Cook had dug a little deeper to plant his flag!

In fact, Australians actually went to some lengths to avoid finding gold. The continent was settled by farmers and ranchers seeking a bucolic paradise (although the convicts sent there in chains might have had a different opinion). So, discoveries of gold were quashed time and again for fear of being overrun by scum and riffraff. But by 1851, that changed drastically.

Delusional and Darned Lucky

One Australian in particular, Edward Hargraves, had sought his fortune in the California gold rush and didn't find it.

Not a tall man, he was 258 pounds of roly-poly adventurer.

To read his diaries is to read delusions of grandeur. But one thing he had right was the similarity between the geology of the California goldfields and his homeland. So, back in Australia, he went prospecting in Lewes Pond Creek near Bathhurst, New South Wales.

Somehow, he said, "he felt surrounded by gold." So he panned vigorously for the yellow metal. And sure enough, he found it.

Leaving his partners to continue mucking about in the creek, he rushed off to Sydney to break the news to the authorities. "If this is gold country," said the astonished Colonial Secretary, "it comes on us like a clap of thunder, and we are scarcely prepared to credit it."

In grand gold miner tradition, Hargraves cheated his business partners out of their share. He then glory-hogged his way into being appointed Crown Commissioner of the Goldfields, and the Australian gold rush was on!

Within a few days, 100 miners (or "diggers" as they are called in Australia) were frantically digging for instant wealth in the new gold field, called Ophir. Within a couple months, there were 500. And they kept coming. It seemed as if the entire population of Australia was on the move.

From Sheep Pen to Gold Miners' Bonanza

New South Wales' neighboring state, Victoria, was hit particularly hard by gold fever. Melbourne, the capital, emptied out. Schools were deserted; businesses, shuttered. All but two members of the police force quit.

Even the city's most senior officials abandoned their offices and dashed for the gold fields.

In the California gold rush, crews deserted their ships and headed for the gold fields, leaving the ships to rot in the harbor. They did the same in Australia.

Whole families traipsed off for the mining camps. And as hard as conditions were for women and children, they were the lucky ones. In many other Victoria families, fathers deserted when the gold bug bit.

Finally, desperate to avoid seeing his state turn into a ghost town, Charles J. La Trobe, the Governor of Victoria, offered a £200 reward to anyone who found payable gold within 200 miles of Melbourne.

Well, remember how I told you that the bucolic-loving ranchers of Australia had been keeping gold quiet? A bunch of them showed up to say, "sure, we have gold out at our place." The rush shifted into higher gear!

In 1851, goldfields were discovered in Victoria in Ballarat, Buninyong and Bendigo, some of the richest goldfields in the world.

Bendigo was a sheep pen until gold was discovered. Then it became a tent city. Next it was a row of wooden false-fronted buildings that sprung up overnight. And soon it was a goldfield 11 miles wide with 20,000 miners digging in a wild frenzy.

A 148-POUND Gold Nugget

Enormous nuggets were discovered - more than 1,200 weighing over 20 troy ounces each!

In 1858, a gold nugget weighing 138.6 pounds - that's POUNDS, not ounces - was discovered in Ballarat.

Then, in 1869, the biggest nugget of them all, tipping the scales at 148.75 pounds, christened "The Welcome Stranger Nugget," was discovered near Moliagul. That's 2,284 ounces of gold in one piece! [Read].

Wealth from the gold fields poured into Melbourne. Saloons and less reputable establishments lined the muddy streets, while drunken diggers lurched from one party to the next, scattering gold dust in their wake and fending off "Biddies" - unattached young women looking for miners to marry.

Merchants of all kinds flourished in the boom town, especially the kind that specialized in fleecing the unsuspecting.

Death, Taxes and Bushrangers

Instant wealth eluded most on the New South Wales and Victoria gold fields. The work was backbreaking, and crime was common.

The outlaws of Australia, "Bushrangers," were originally escaped criminals. But the forced transport of criminals to Australia ended in about 1853. That's when gentlemen started paying their life savings for the same voyage - just to buy a chance in Australia's gold fields.

The bushrangers went by colorful names like Captain Moonlight and Captain Thunderbolt.

One, Owen Suffolk, robbed his victims smartly dressed in a "black suit of fashionable cut and black kid gloves." But while some of these men were proud of their gallantry, the rest were by and large among the most desperate and cruel scumbags ever to walk the earth.

"Sometimes they tie their victim to a tree and leave him to the ants, mosquitoes and hunger," goes one account, "Very rarely is the unfortunate found in time. More often one finds a skeleton tied to a tree."

Brutality aside, one thing they were very good at was robbing the "gold escorts," teams of horses and armed men that made the way from the far-flung fields to the banks.

Sometimes their own greed did the bushrangers in. "One-Eyed Tom" Wilson robbed several thousand ounces of gold at Mt Alexander. He bought a pub in Hobart and began robbing diggers who were his guests, and eventually landed back in the stir.

Hang 'em, Drown 'em, Shoot 'em or Flog 'em

Claim jumpers were rampant, and ownership of claims was settled by brawls or a pick-axe in the back. Vigilante committees were organized to decide what to do with the more wretched lawbreakers - hang 'em, drown 'em, shoot 'em or flog 'em.

Yet despite toil and mayhem, immigrants with gold in their eyes continued to flood into Australia, many making the 2-1/2-month journey by clipper ship from Britain. They weren't complaining. Before the "ultra fast" clippers came along, the journey could take up to seven months!

The impact on Australia's population and economy were far-reaching:

• At the beginning of 1851, the population of Victoria stood at around 80,000. By Christmas, new arrivals with gold fever had swelled it to over 97,000. By Christmas the next year, over 168,000 people packed the city. A decade later the town's population had risen to over 500,000.
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• In 1852 alone, 370,000 immigrants arrived in Australia.
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• The total population of Australia increased from 430,000 in 1851 to 1.7 million in 1871 - a THREEFOLD increase in 20 years.

In short, Australia's gold rush shaped the country.

The First Chinese in Australia

One large group of immigrants came from China - a shocking turn of events for a country that had "Whites Only" immigration laws until 1973.

The vast majority were men who came to work, not to stay.

And their reception was as jagged as the rocks of the Victoria coastline: They were treated with all the graciousness one expects of a Victorian-era colony - racism, poll taxes, muggings and mob action.

The Chinese were resented because they seemed to be very good at finding gold ("A Chinaman's Chance"), and used innovative techniques to get it.

For instance, the gold region of Western Australia is a bone-dry desert - it rains only seasonally, meaning there isn't enough water to separate the gold from the dirt. So the Chinese would dig up ancient, gold-rich creek beds and pile the sod up vertically. Then they'd wait for the seasonal flooding rains to come and do their work for them.

But even more resented than the Chinese was the "Miner's License" which was required to work a claim. The monthly fee of 30 shillings for each claim was tough to pay in hard times and the claims were only 12-foot square on the surface, which made them difficult to work. The licenses were strictly enforced, and had to be on the digger's person at all times. Violators were chained to a log until their cases were decided.

The miners actually resented this so much it led to rebellion. An Irish engineer named Peter Lalor and some companions organized 120 miners at Bellarat and built the Eureka Stockade.

The government promptly marched in troops and shot the place up. Over two dozen died or were seriously wounded, and the survivors were hauled off, their leaders charged with treason.

But in a stunning display of democracy in action, the jury refused to convict, and popular sentiment forced the government to agree to all the miners' terms.

Within a year, Peter Lalor was elected to the Victorian parliament - minus an arm he'd lost at the battle of the Eureka Stockade. The shots fired at Eureka echoed throughout the Australian government, sparking a move toward less taxation and more freedom from government control. In this sense, gold even shaped the Australian democracy.

And that same gold also helped pay for the industrialization of England and Europe: During its gold rush heyday, Victoria produced 25 million ounces of gold, representing 87% of the total Australian production and a whopping 35% of world production.

But Victoria wasn't the end of Australia's gold rush. One Australian state after another had its own gold rush. And the gold rush in Western Australia didn't start until June 1893 - 42 years after Hargraves found the first glimmers in a pan in New South Wales.

The Energizer Bunny Of Gold Rushes

This, to me, is the big lesson of the Australian gold rush - under the right circumstances, a bull run can go on and on and on. Like the Energizer Bunny.

From Victoria, the gold fever spread to other parts of Australia. Many Australian gold discoveries were worked well into the 20th Century.

Since then, new finds have continually been made. Australian gold miners and engineers spread out into silver, copper, zinc and uranium. And in recent years, they've been exporting their expertise - leading the hunt for gold in Asia and even Africa.

But what's really got me pumped up is not the distant or recent past. It's the immediate future: My strong hunch is that Australia's next rush for riches is starting right now, and that you can make a fortune on it.

The more I look at Australia and the rest of Asia, the more excited I get. We are in a commodity supercycle, and the companies that are going to feed it for the next decade - or more - are like diamonds in the dust bin, waiting to be picked up for pennies on the dollar.

Sean Brodrick
email: SBrodrick@weissinc.com

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Sean Brodrick is a contributing editor to Money and Markets and editor of Red Hot Canadian Small-Caps, an electronic trading service focusing on natural resources and other hot Canadian sectors, and Red-Hot Asian Tigers, which focuses on Asia and Australia.

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