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