DAYS OP TRIAL 307 



the company, which stood high in public estimation on account of 

 the respectable character of its directorate, and the moderation with 

 which it dealt with its apparent profits. When it suspended in 

 1892 it transpired that 42,000 shares out of the total were held by 

 three of the promoters, whose joint liability for calls was 850,000, 

 a responsibility so far beyond their power to entertain that they 

 denuded themselves of it through the Court. Over 16,000 more of 

 the shares were in the names of companies in liquidation or in- 

 solvent nominees, and the final outcome of the winding up was that 

 about thirty persons, holding some 5,000 shares, had to bear the full 

 levy of 22 10s. per share. Had the shareholders all stood on an 

 equal footing, about 3 or 4 per share would have discharged the 

 company's liabilities. As it was, a number of small men were ruined, 

 and the depositors had to face a heavy loss. In dozens of instances 

 this principle worked, and while creditors saw their supposed se- 

 curity of uncalled capital melting away, those who had honestly 

 invested their savings under delusive prospectuses found themselves 

 crushed by the magnitude of the liability which their reckless co- 

 partners left them to carry. 



The subject is a painful one to dwell on, and the scars which it 

 inflicted are not yet healed. A brief resumd of the acute stage of 

 the crisis will, in the light of this elucidation of the methods, be 

 better understood. In the beginning of 1891 there were, exclusive 

 of the building societies already dealt with, eighteen Land Banks, 

 Mortgage Institutions and Property Investment Companies in Mel- 

 bourne carrying deposits exceeding 8,000,000. They had also 

 liabilities to their bankers and otherwise of 2,500,000, and their 

 paid up capital was stated at over 4,000,000. The action of the 

 associated banks in October, 1888, had resulted in a fall of quite 50 

 per cent, in the market quotations for the shares hi these companies. 

 During the two following years there were many turbulent meetings 

 of shareholders, loud demands for investigation, much disclaiming 

 of responsibility, and numerous exposures of deceptive financing. 

 The Law Courts were kept busy with actions for false representations 

 or for specific performance of contracts. Promoters were mean- 

 while fiercely denouncing the banks for harshly calling up advances 

 and precipitating a crisis. The involvements of individuals and 



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