308 A HISTORY OF THE COLONY OF VICTORIA 



finance companies were extensive and complicated. Week by week 

 cases were brought to light of embezzlement, fraud and grave 

 breaches of trust, some of the latter compromising men of hitherto 

 unblemished reputation. Shareholders had been anxious for some 

 time, but the failure of the Premier Building Society was the first 

 indication that depositors were likely to suffer. When it was followed 

 early in 1891 by the collapse of nearly a dozen kindred institutions 

 hi Sydney, the panic assumed serious proportions and soon spread 

 to Melbourne. In August the British Bank of Australia, the Anglo- 

 Australian Bank and the Imperial Banking Company passed into 

 the hands of receivers, and the disclosures of fraud in connection 

 with their flotation and brief career intensified the prevailing distrust. 

 At the same time the New Oriental Bank closed its doors, one of 

 the reasons assigned by the chairman in London being "injudicious 

 advances made in Melbourne ". Then came the discovery of frauds 

 to the extent of 250,000 sterling by the officers of the Land 

 Credit Bank and South Melbourne Building Society which involved 

 their destruction. During the last quarter of the year six building 

 societies and four so-called banks joined the ranks of the defeated, 

 and put out of circulation over 4,000,000 of deposits. So far the 

 most serious of these suspensions was the Eeal Estate Bank, which 

 had liabilities in London of over 500,000. Mr. James Munro, the 

 Premier of the colony, was its foster parent, and his appointment of 

 himself as Agent-General at this juncture was supposed to be in- 

 fluenced by a belief that he would be better able to pacify the 

 English depositors by appearing amongst them in so dignified a 

 position. A more gloomy year than 1891 had not been experienced 

 in Melbourne, but there were worse in store. 



In February, 1892, the suspension was announced of the Free- 

 hold Investment and Banking Company, the English and Australian 

 Mortgage Bank, and the Victorian Mortgage and Deposit Bank, 

 with deposit liabilities of 2,100,000, more than half of it owing in 

 Great Britain. A month later the Mercantile Bank of Australia 

 closed its doors. This was a serious blow to Australian credit, be- 

 cause through its London office it held over 1,000,000 on deposit, 

 and had placed 4,500 shares on a London register. These four 

 institutions had much inter-relation iu the matter of financial support 



