70 THE COURSE OF THE CRISIS OF 1893 
value of the declaration concerning the advantage to be gained 
from mutual support was now tested. The failure of the Federal 
Building Society had seriously endangered the stability of the 
parent Federal Bank, and an appeal for assistance was made 
to the ‘associated’ banks. As this appeal coincided with a 
Further spasm of withdrawals and at a time, moreover, when the 
clash between British and Australian interests was at its most 
bitter phase, the banks could not do otherwise than refuse to 
shoulder the liabilities of a bank which was conspicuously 
under the ban of popular disapproval for its connexion with the 
defaulting building society. The Federal, therefore, was forced 
bo suspend at the end of January, 1893. This susperision marks 
a further phase in the crisis. 
As far as the older banks were concerned their position was 
now most precarious. Security had depreciated everywhere. 
Advances had been made on a capital value that was established 
on returns which there never had been the remotest hope of 
realizing. A continuous run on all the banks now set in. In 
a belated attempt to secure some measure of concerted action 
the Premier now conferred with the bankers; but their nerve- 
less condition and mutual suspicion made the attempt quite 
futile. The motive underlying this move on the part of the 
government, and well understood by the associated banks, was 
the desire to save the most important bank of the colony, the 
Commercial of Australia which, as a counsel of desperation, had 
made an appeal for help to the government. Following the 
refusal of the associated banks to lend their aid the Commercial 
suspended in April. The credit of every bank in Australia was 
shaken by this crash ;! and, if the blow staggered Victorian finan- 
aial interests, it incensed to the point of frenzy those in London. 
The Commercial Bank of Australia reconstruction scheme 
was so successful that the conviction grew among the other 
banks that they must seek salvation along the same road. An 
1 See Commonwealth Parliamentary Paper, Banks Trading in the Commonwealth, 
1885-191 1, for the effect of the collapse upon the rate of dividends paid by the 
1885 
1886 
1887 
(888 
{889 
Per cent. 
13-71 
13-51 
12-91 
12-11 
12:02 
1890 
1891 
1892 
1893 
1900 
Per cent. 
12-37 
12-75 
12:09 
7-20 
4:05