DAYS OF TRIAL 299 



basis, the nature of their business changed into that of a land 

 mortgage bank. They competed for deposits at high rates and 

 promptly invested the money obtained under tables quite out of 

 harmony with the term of the deposits. In 1885 there were sixty- 

 two such societies, nearly all in Melbourne, holding amongst them 

 2,500,000 of deposits on which they were paying 7 per cent, in- 

 terest. In 1889 the number had decreased to fifty-four, but the 

 deposits had increased to close upon 5,000,000. Two years later 

 (Oct., 1891) the number was further reduced to fifty, several having 

 gone into liquidation in consequence of "runs" upon them, but 

 those that kept their doors open at this date still held 4,730,000 

 of deposits. This steady growth of borrowed resources had deflected 

 the business from its legitimate channels. Borrowers were not 

 forthcoming in sufficient number, so the societies started a fatuous 

 competition with each other by buying land and erecting houses in 

 dense groups, hoping to sell them under their extended tables. By 

 the beginning of 1891 upwards of 3,000 houses in Melbourne and 

 suburbs stood gaping for tenants, and the building societies, in 

 addition to owning the larger portion of them, found themselves 

 in possession of sufficient vacant allotments for the erection of 

 10,000 more of these cottage homes which no one wanted, while 

 the bare land in its minute subdivisions was practically valueless. 

 And while no man came to buy their wares, the depositors began 

 to demand their money back. There was reasonable ground for 

 the distrust they evinced. The first shock which the thrifty re- 

 ceived was the suspension of the Premier Permanent Building 

 Society, which had added to its title the words " Savings Bank," 

 and under that attractive name had gathered in over 600,000 of 

 deposits. As a result of an official investigation it was announced 

 that all its paid capital was lost, and that the prospect of a dividend 

 for the depositors was both small and remote. A score of kindred 

 societies began immediately to feel the effects of the public distrust 

 which these revelations evoked. For the business of the failed 

 institution had been managed by a member of Parliament, who 

 had by his much speaking in the House on fiscal questions been 

 regarded as a special financial authority. Furthermore, two of his 

 fellow-committeemen were members of the Ministry of the day, a 



