DAYS OF TRIAL 313 



It meant the closing of factories, forced realisation of stocks, and 

 the eviction of hundreds of farmers, unable to transfer their mort- 

 gages. Important corporations and municipalities would have been 

 compelled to suspend operations, and there would have been created 

 a vast crowd of workless, hungry and angry men, thrown out of 

 employment in all directions. 



If the end can have been held to justify the means, the actual 

 result that followed was certainly not anticipated. The prompt 

 acquiescence of the creditors of the suspended bank enabled it to 

 resume business after a very brief interval, and the freedom which 

 it attained under reconstruction from those immediate demands, 

 which were still grievously trying other institutions, gave it an un- 

 locked for preference, and certainly added to the difficulties of its 

 competitors. The public continued to manifest distrust of the 

 surviving banks, and believing that reconstruction in some form 

 would be necessary all round persisted in weakening them by steady 

 withdrawals. By such action they brought about the realisation of 

 their predictions. 



Within a fortnight of the first suspension the downfall com- 

 menced, and by the 17th of May the doors had been temporarily 

 closed of four more Victorian Banks, two English Banks whose 

 colonial headquarters were in Melbourne, two leading banks in 

 New South Wales and three in Queensland. Inclusive of the 

 Commercial, there were thus twelve institutions suspended, having 

 965 branch establishments all over Australia, and aggregate lia- 

 bilities exceeding 100,000,000. They all passed through the stage 

 of reconstruction successfully, some of the schemes slightly varying, 

 either in inception, or by modifications ordered by the Courts. In 

 all, however, the main principle was a postponement of current obli- 

 gations, accompanied generally by the conversion of a portion of 

 the liabilities into fixed capital in the form of preferent shares or 

 stock. One only, the City of Melbourne Bank, was unable to survive 

 the shock, though its scheme was approved by its creditors and 

 sanctioned by the Court. The revelation of some grave irregularities 

 on the part of the management led to some proceedings in the 

 Criminal Court, resulting in disclosures which necessitated its offi- 

 cial liquidation. It was the smallest of the associated banks, with 



