THE COURSE OF THE CRISIS OF 1893 63 
The first warnings that the tide was near the turn were plainly 
evident in the exchange difficulties of the banks. Embarrass- 
ment in the matter of securing sufficient deposits to keep the 
flood moving had, in fact, made the lot of the banker a continu- 
ous nightmare ; and the lull half-way through 1888 was the first 
sign that the crest had passed. The land companies, too, had 
to face growing demands on their deposits, and their reserves 
were so inadequate that they had no option but to seek the help 
of the banks. This assistance the banks could not deny their 
foster-children ; but the companies were belatedly warned con- 
cerning ‘the reckless methods that bad led them to such an 
impasse’. By the end of the September quarter the banking 
structure was showing those surface cracks which were to 
develop later into great fissures and bring down the whole 
fabric in ruins. For some time deposits had been almost 
stationary ; and, although the increase in advances for the twelve 
months amounted to nine millions, it was mostly to be accounted 
for by overdrafts to speculators upon the security of land pur- 
chased. 
The banks now commenced to play for safety. Credits were 
contracted in every direction, and the volume of land sales 
immediately declined. The first effect of this policy was a 
startling fall in the shares of the land companies, followed by a 
frantic search for funds to bolster the tottering structure. The 
collapse of the land boom definitely began at the moment that 
the banks started to discriminate between mercantile bills and 
the paper backed by land and finance companies. Notwith- 
standing this reversal of bank policy the companies were enabled 
to hold out for some time longer by the aid of the large sums 
still being obtained in England as deposits, and from the sale 
of shares. 
The rapid decline in speculation that followed immediately 
is sufficient indication that the financial community understood 
the precarious nature of the situation. Owing mainly to over- 
drafts secured on pastoral or city estate the bankers were saddled 
with the huge total of £113,000,000! in advances. While the 
companies, on the one hand, were clawing for foothold on the 
brink of the precipice, the sheep-farmers, on the other, were 
overburdened with properties acquired at inflated prices. 
! Summary of Australian Finance Statistics, Bulletin No. 13.