AND THE CRISIS OF 1878 43 
purpose of being wound up’. It was, for banks and other in- 
stitutions, a period of isolated, incoherent, and chaotic finance 
that very quickly brought about its own remedy by eliminating 
the unfit in drastic fashion. 
Warnings of a coming storm had already been noticed, but 
the shock came with dramatic suddenness in the failure of 
Overend, Gurney & Co. for ten millions.! It was a mercantile 
rather than a banking disaster, although bank reserves dimin- 
ished with alarming speed. Failure followed quickly upon 
failure, and only the most soundly based institutions came 
safely through. This catastrophe was in many ways a proto- 
type of that of 1893 in Australia. English bankers learnt in 
1866 the lesson that their Australian confréres failed to agsimi- 
late for another thirty years, i.e. that safe banking depends upon 
a unity of interest among the banks, and on the exclusion of 
excessive and adventurous competition with its mischievous 
industrial reactions. Co-operation, absorption, and amalgama- 
tion was the note of the new period in English banking ; but the 
experience of 1893 was necessary to harmonize the Australian 
financial orchestra. 
The Overend-Gurney crash had an immediate reverberation 
in Australia. Although quite solvent, the Agra and Masterman’s 
Bank was forced to close its doors.2 News of this failure and of 
the disastrous drop of 3d. a pound in the price of wool reached 
Australia on the same day; and a period of the most acute 
distress for Queensland in particular began immediately. It 
will not serve any useful purpose at the moment to trace the 
history of the crisis further, but the impaired government 
credit, following upon the heels of somewhat similar happenings 
in the other colonies, caused an immediate check to the flow of 
capital that landed almost every colonial government in diffi- 
culties: New South Wales was in such urgent need that a 
5 per cent. loan could not be placed at a figure higher than 70, 
redeemable at par, which made the rate of interest equivalent 
to 71 per cent. per annum—=a very distressing figure indeed. So 
1 The firm of Overend, Gurney & Co. were bill brokers handling £60 to £70 
millions of commercial bills per annum; and their failure ended, at least for a time, 
the ‘fatal facility of credit’ which was responsible for the collapse. 
3 Agra and Masterman’s was quite solvent, and in the panic paid £3,000,000 
across the counter. The actual suspension was due to & run on its Indian branches 
caused by false telegrams advising that the bank had closed its doors.