Outback Investment Scandal
The Outback Investment Scandal also known as the Outback Land Fraud was a land investment fraud that caused major economic upheaval in 1867 and caused widespread financial panic within the capital territory of the Midlonian Empire.
The resulting attempts to stabilize national finances would be one of the major causes of the First Moonstone War.
Background
The Midlonian Empire had from 1849 enjoyed continuous and unprecedented economic growth. Numerous factors had made this possible;
- Expansion of the Empire's Goods to foreign markets and the lowering of tariffs to those markets and the lowering of transit tariffs via major trading ports such as Navarre, Adamsea and Bernabour.
- The refinement of stock ownership laws permitted joint stock companies to be easily established.
- The Maturation of the Mainland Dominion and its development of heavy industry and resource extraction thanks to economic clustering.
- An easing of the access to credit for the wider markets led to an explosion of middle class businesses.
- A long series of stable governments under the leadership of Sir George Elliot.
- No external wars of note or scale, which allowed for taxation levels to remain low, or the diversion of consumer goods for war purposes.
This unprecedented period of economic growth led to the Roaring Fifties and major advances in civic patronage and cultural expansion.
The continuous economic expansion led to the exploration of new market opportunities and the prolonged period of success led to the mistaken belief that a new business term, the economic cycle, was already obsolete.
The Mainland Dominion was still very much a frontier area and the extraction of minerals and other raw materials from this vast continent proved highly lucrative.
The Laissez-faire attitude of the central Midlonian Government towards new land trading in the vast Mainland continent would prove to be its undoing. Land claims were already being traded cheaply on the open market, often these areas were more designed for cheap settlement or use for ranching territory and were not particularly valuable, but economically useful.
Swathes of vast desert territory, economically useless, were going for as cheaply as a few pence for hundreds of acres.
Between 1860-1863 vast swathes of desert territory were purchased cheaply by unscrupulous financiers intending to make a quick turnaround by expanding the value of the land claims by consolidating them and then selling them on. Some of these areas had claims of ranching grounds but did not specify how much, often the vast claims had a tiny acreage of useful land buried within hundreds of thousands of acres of useless desert, because the documents still met legal requirements no prosecution could be brought against the original deed holders.
This created harsh economic conditions for the people tricked into buying the useless land. This changed when one individual, Dylan Pemberton, discovered a vast oil claim on his lands and became fabulously wealthy as a result, with investment money pouring in to Pemberton's land other "duped" land owners began to explore their own land claims. This led to the Prospector Fever of 1864 as the value of desert land shot up in price, creating an economic bubble.
This frenzied trading of land claims was exploited by an unknown individual or group of individuals who sold vast land claims during 1865 and 1866 to the Outback Mineral Exploration and Extraction Company under the trading name of the Pebble Land Claims & Prospecting Company, the prospecting claims were for large deposits of Moonstone, ores and oil, and a pair of trial claims saw large returns on their initial investments.
The reported success resulted in millions being subsequently invested into the scheme because the Chairman, Austin Tolbert was a respected financier and businessman, the Outback Mineral Exploration and Extraction Company received government backing and funding as the Pebble Land Claims & Prospecting Company continued to feed back remarkable prospecting reports.
The government and numerous banking institutions invested into the scheme as returns were made regularly. At Tolbert's request, investments were even extended and encouraged to the working and middle classes and was the first experiment of the "Citizen Shareholder". It was advertised as a chance to buy a slice of the Empire as it grew and was eagerly invested in by thousands of aspiring workers and white-collar members of the middle class.
In 1866 a delegation from the board of directors was sent to one of the land claims owned by the company due to a letter received from the site claiming there was a supply issue and that the dividend would not be forthcoming. The delegation arrived to find that, far from finding a thriving mining concern, they were faced with miles of empty, undeveloped land. Alarmed by this, the delegation hastily arranged transport to several other sites where they discovered similar situations.
They returned to Swadlincote in 1867 and their revelations triggered a collapse of the company.
Bank Riots of 1867
Many investors had been middle class professionals and aspiring workers, and the scheme had been actively promoted by the Midlonian Government as a vehicle to enrich the less well off.
The scandal effectively wiped out many savings. The immediately applied rules on withdrawals limited what deposits could be removed. Worried investors hoping to regain what was for many their life savings lead to a run on banks which, unable to pay out more than the imposed limits, effectively had to shut their doors.
Unable to regain their money, crowds rioted within Swadlincote targeting financial institutions and any individual who worked for the banks.
This came as a shock especially to the Swadlincote City Police who were almost immediately overwhelmed by the sudden arrival of many aspiring middle and working class individuals. Unable to cope the City Police fell back to defend government instutions (Primarily the Bank of Midlonia) only, effectively leaving the other banks within the financial district to their fate.
The Urban were called in but were only able to contain the main area of rioting as they too were unprepared for such an unprecedented act of civil disobedience, with bank branches being targeted across the entire capital the Urbans were stretched to the limit in containing and stopping other incidents
Nearly five square miles of the economic heart of the Empire became a no-go zone for much of the Empire's Gentry, with people desperately trying to break into financial institutions headquarters and demanding their money back.
The lynching of Austin Tolbert one of the primary promoters of the scheme on Tolbert Road (at the time known as Hangman's Lane) caused outrage and revulsion within Parliament.
The Elliot Ministry, under increasing pressure, collapsed and Godred I intervened to install Lord Felix Abram as First Lord of the Treasury. Due to the Abram familiy being a cadet branch of the Zouch Family, it is considered the first of the Crony Governments.
Lord Abram's first declaration to the house was on the Tolbert Murder and stated:
Lord Felix Abram, First Lord of the Treasury
The Abram Ministry ordered in several regiments barracked outside the capital to assist the police in the restoration of order authorizing "any force deemed necessary to protect the lives and livelihoods of the innocent."
This was deemed a controversial act as historically Troops had only ever needed, and been permitted, to use several specific routes within the Capital in order to protect various Royal Residences. The use of troops inside the city to quell a civil dispute hadn't been needed since the 16th Century. Dissenting voices within the cabinet soon found themselves swiftly replaced by people more amicable to Abram's needs. This included members of several banking families who were eager to regain control of their institutions.
The army retook The City after a day's brutal fighting which saw numerous cavalry charges across Martison Square. Order was restored, but at a terrible price. It is estimated around 2,000 people died as a result of the troops being sent in with a further 4,000 injured.
Aftermath
The Abram Ministry became one of the first of a series of Crony Governments which dominated Midlonian Politics for the next 50 years. In order to stabilize the Empire's finances, and avoid a sovereign debt crisis new duties and taxes were imposed on various colonies and became one of the catalysts of The First Moonstone War.