THE BANKING PANIC IN MELBOURNE.

Globe, Volume XXI, Issue 1661, 17 June 1879, Page 3

THE BANKING PANIC IN MELBOURNE.

[Yia Bluff.] MELBOURNE, Juno 10. Considerable excitement was caused last Thursday morning by the announcement posted on the doors of the Australian and European Bank that the Bank had closed, but hoped soon to re-opcn, but in the mean* time that its notes would be paid by the Associated Banks. A crowd quickly gathered round the Bank premises. The news speedily spread, and then a run occurred on the City of Melbourne Bank, in Collins street, and something like a panic set in. Various institutions and private firms were freely mentioned, and matters began to wear a most serious aspect. It soon transpired, however, that the affairs of the Australian and European were not in so bad a state as was at first supposed, althcu»h the directors felt themselves compelled to adopt such an extreme step as shutting the doors of the Bank. The assets were reported to be good, and there was no doubt whatever but 1 hat all the depositors would be paid in full. The run on the City of Melbourne Bank continued for the greater part of the day, but the associated Banks came to the rescue and offered any assistance required. This had a reassuring effect, and when about £30,000 had been paid over the counter the run was stopped. The bank was kept open till eight at night in order to afford every facility for customers obtaining their money. Next day, however, much of the money drawn out was deposited. The Australian and European continues closed, but will be re opened in the course of a few days, as shareholders and depositors in meetings assembled have expressed their full confidence in the directors, A call is to be made on shareholders which will bring in £60,000 and raise the paid up capital to £IBO,OOO and more. The amount of the call is £3 10s per share. The fact is that the directors have been doing too much or too little. The branches are now to bo much diminished, and the business of the Bank greatly restricted. At a meeting of depositors yesterday, 150, representing £96,000, agreed to continue their deposits, and, at both meetings of shareholders and depositors, a good deal of enthusiasm was manifested. It transpired that the Australian and European had applied to the Union Bank for an advance of £50,000, and this had been all but promised; but at the last moment, after a discussion amongst the Associated Banks, it was refused, and the Australian and European had no other course open but to close its doors. The panic on Thursday was followed by a perfect calm on Friday 5 and so far no disastrous results have folio wed >!( One failure only is announced, that of Isaac Lyons, auctioneer, for £17,000, but he had been guaranteeing insolvent firms. The Provincial and Suburban Bank is to be wound up voluntarily, and liquidators have been appointed. The directors informed the shareholders that the assets will realise from from £15,000 to £20,000 more than was at first stated, and that a call realising £IO,OOO, together with previous assets, would be sufficient to pay off all the liabilities. The whole system of banking has now been brought under review. There is no doubt that the measures taken by the Associated Banks on Thursday had the effect of stopping the panic. In the first place they paid the notes of the Australian and European, and proffered uninvited aid to the City of Melbourne Bank, but the latter was able to meet all demands from their own resources.