IN RELATION TO PUBLIC BORROWING 177
which took place during the war years as well as the tension
which developed after the crisis is indicated in the following
table:

June 30
of year

914 .
[919 . 2
1920 . .
1921 .
19029

Deposits in Australian Banks!

TABLE XL

Percentage
reserves to
current
deposits.

Percentage
reserves to
total
deposits.

Deposits.

Join, bullion,
and notes.
£m.

£m.

159-209
231-270
247-647
248-231
240.200)

41-447 58
57-894 19
56-940 | 42
56-120 44
55-200 45

26
25
23
23
9%

The lower margin of safety as expressed by the ratio between
reserves and deposits before and after the war is here clearly
expressed. Even after the very strenuous efforts made by the
banks to strengthen their position by means of a drastic reduction
 of credit, the percentage of reserves to total deposits
was no higher than 19-5 in September 1921, as compared with
about 25 per cent., which was regarded as normal in the pre-war
period.
It will now be of interest to gather together the several factors
combining to produce this recession phase in Australian business.
Copland indicates the following as the chief causes of the crisis,
and they form an interesting comparison with factors which
were operative in producing the boom.? They are as follows:
(1) The deflation in England and America, and the heavy fall
in domestic prices.
(2) The over-issue of credit beyond the limits allowed by
reserves.
(3) The stringency of the money market, and the action of
the banks in respects of credits.
(4) The heavy fall in prices of agricultural products and
meat, and later on of dairy products, i.e. a general fall in
the export price-level.
1 Commonwealth Finance Bulletin, No. 13.
? Copland, A.A.A.S. paper cited above.
An