66 THE COURSE OF THE CRISIS OF 1893 
almost at once in the poor support given to Australian govern- 
ment loans. The ‘considerable creditor’ had concluded ‘that 
the present earning capacity of the debtor no longer warranted 
the capital upon which his collateral was appraised’, and the 
liquidation was not long in beginning. 
The Baring episode calls for some further application to 
Australian conditions. The ‘banking hierarchy’, as Powell 
calls them, had, by carrying out an agreed course of action in 
England, saved a great house from collapse and had given a 
demonstration of the virtues of unified financial control such 
as the world had never seen.2 But its value was not appreciated 
by Australian bankers. The wonderful lesson, that, under the 
threat of a great financial collapse, the banks must act together 
instantly and with concentrated energy was not assimilated. 
The failure of the banks to support one another and the mer- 
cantile community, until half Australia had been plunged in 
nancial ruin, is paralleled by the inability of the government 
»f the colony chiefly concerned to rise to the emergency. 
The criticism voiced in England with reference to Australian 
finance met with immediate response in Victoria. On all sides 
the cry for a full and immediate examination of financial affairs 
was raised. In anticipation of such a development institutions 
of all kinds undertook feverish preparations to stave off disaster. 
But both government and private credit were now thoroughly 
andermined, the public finances were in a hopeless condition, 
and the exchange position was so full of menace that large 
shipments of gold to Britain became necessary, thus propor- 
tionately weakening the domestic situation. 
With the stream of British deposits already dry and every 
Australian depositor anxious to withdraw, the position of the 
land and building companies was thoroughly desperate. After 
the middle of the year a procession of failures, affecting twenty 
companies with 13} millions of liabilities, took place. Business 
of all kinds was soon in the depths of depression3 Building 
! The bank clearances indicate the inflated nature of business and the lack of 
restraint even yet in bank advances. These totalled £310,000,000 for the year. 
[£ normal clearances are taken at £200,000,000 a fairly correct idea of the extent 
of the inflation will be obtained. 
? Powell, Evolution of the Money Market, p. 639. 
3 Bank clearances were £129,000,000 for the first six months, a decline of 
£35,000,000 on the corresponding period for 1890.