DAYS OF TRIAL 311 



which started with the failure of the Mercantile, swelled into a tor- 

 rent, which swept an uncounted sum of gold coin into private safes, 

 and other less dignified hiding-places. There were no means of 

 combating the widespread distrust. It was known that most of the 

 local banks had depositors in Great Britain. It was firmly believed 

 that the losses the English creditors had sustained by the two failed 

 banks would ensure the withdrawal of their deposits as they matured. 

 Could the banks call up advances in the Colonies and remit in time 

 to meet these liabilities, while subject to exceptional local demands ? 

 It seemed doubtful, but even if they could, such an extensive calling 

 up, with its attendant forced realisation, must bring about serious 

 business troubles, and in that case it was as well to have one's re- 

 sources literally in hand. So reasoned the depositor, and this frame 

 of mind, widely existing, produced disastrous action during the first 

 quarter of the year. When the banks closed for the four days of 

 the Easter holidays there were many to declare that some of them 

 would not reopen. 



Unhappily these anticipations were realised. The Commercial 

 Bank of Australia, with over a hundred branches throughout the con- 

 tinent, with 35,000 customers on its books, and with liabilities in its 

 last balance-sheet exceeding 12,500,000, was sore beset. More than 

 1,500,000 sterling had been withdrawn from its deposits in nine 

 months. It had admittedly strained its resources by injudiciously 

 assisting some of the financial companies banking with it, to meet 

 the demands of their panic-stricken depositors. Viewed apart from 

 the exciting surroundings, this policy from a bank's standpoint was 

 indefensible ; but, like the rest of the community, prior to the re- 

 velations of liquidators, the Directors of the bank believed in the 

 temporary nature of the assistance required by their customers, and 

 placed too optimistic a valuation on the large uncalled capital of the 

 companies to whose aid they came. 



Now that their own time of trial was upon them, they recalled 

 the fact that within the previous month a panic "run" on the 

 Savings Bank had been effectually stopped by a Government an- 

 nouncement that the State would be responsible for the payment of 

 all depositors. It was confidence, not coin, that was wanted ; the 

 run immediately ceased and a reflow of deposits set in. The Com- 



