THE COMMONWEALTH, 1900-14 107 
reproduced, almost exactly although on a smaller scale, many 
of the features of the great collapse in 1893. 
But the Australian situation in 1903 has to be examined more 
carefully in the light of world credit. The British financial 
system had for some time been labouring rather heavily under 
the strain imposed by the war in South Africa. In particular 
the non-productive absorption of capital consequent upon that 
unfortunate episode necessitated a pause for reconstruction, 
especially as it was becoming increasingly evident that all was 
not well with the British export trade. In September, as a result 
of the overcharged condition of the stock market, a serious fall 
took place in British consols; and, as the demand for capital 
became more insistent, the Bank rate was raised rather abruptly. 
By all these happenings, Australia, as a borrower in the London 
market, was seriously affected ; and the situation was succinctly 
put by The Times: 
‘It has for some time been evident that the constant succession of 
new colonial and municipal issues was having a very bad effect on 
the market for all investment stocks. This is only another way of 
saying that there have been too many of these demands for money. 
In view of these facts the leading underwriting firms have to-day 
(July 22) decided that they will not for some time to come under- 
write anv colonial or corporation loans.’ 
It is no exaggeration to say that this slamming of the door 
in the faces of importunate state treasurers caused a sensation 
in government and business circles. The sober comment of 
financial writers at a moment when neither the states nor the 
chief cities knew where to turn for money was cold comfort but 
it, nevertheless. stated the position exactly: 
“The recent fall in the market quotations for Australian government 
stocks’, asserted an editorial, ‘should be regarded as a warning not 
merely that British investors are not disposed to take out new 
Australian loans, but that supplies of floating capital are not as 
large as usual. According to some authorities the fixing of floating 
capital has gone on at too rapid a pace throughout the world for 
several years past. However this may be, it is-certain that the fall 
in Australian government stocks is by no means singular’ 
The remarkable feature of this crisis was the onset of the 
depression so hard upon the heels of the decisive action on 
L Tneurance and Banking Record, Sept. 1903.