Story: Stock market
Page 2 – Financing the gold-dredging boom
Otago dredging boom
Companies dredging for gold in Otago rivers from the 1880s led to the first boom in New Zealand stock exchanges. By 1890, 28 dredging companies were floated in Dunedin, leading the Dunedin Brokers’ Association to increase its numbers, raise seat prices to £100 and run two call-overs each day. The association became the Dunedin Stock Exchange in 1893.
The high point of the dredging stock market boom was sparked by the Hartley and Reilly gold dredging company’s dredge in the Clutha River. The dredge recovered 786 ounces 10 pennyweights of gold in seven days in August 1899. The company’s share price rose from £1 to £26 in a week.
In 1899, at the height of the boom, the Dunedin Stock Exchange had quadrupled in size to 48 members and held six call-overs each day (and into the night). It cost £600 to buy a seat. Two further exchanges emerged just to deal in gold-dredging shares. Hundreds of people became part-time brokers.
However, the boom did not last. In late 1900 production fell, stock prices dropped, dredging companies collapsed and shareholders deserted the market. The Equitable Exchange folded in 1901, and the next year the smaller Otago Exchange merged with the even-smaller Dunedin Stock Exchange.
West Coast dredging boom
As the Otago boom busted, a smaller dredging boom began on the West Coast. A handful of big finds was enough to establish two stock exchanges in Christchurch in 1900: the Christchurch Stock Exchange and the Stock Exchange of Canterbury. After the boom was over in 1903, the two organisations merged.
The dredging booms increased trade on the two Wellington exchanges by more than 200%. The first exchange, the Wellington Sharebrokers’ Association, had been formed in 1882. In 1896 it became the Wellington Stock and Sharebrokers’ Association. In 1900 the flood of dredging shares raised seat prices to £350, and the exchange held three call-overs each day.
The second exchange, the New Zealand Stock Exchange, lasted for several years before collapsing with the end of the dredging boom in 1903.