became frequent, and some of the banks began to accumulate gold against the evil day. The building societies and financial institutions in receipt of deposits, or so many of them as were on an unsound footing, failed at an early period of the depression, so also did the weaker banks. There was distrust in the minds of the depositors, especially those whose holdings were small, and most of the banks were, at a very early period, subjected to the strain of repaying a large proportion of their deposits as they fell due. For a time the money so withdrawn was hoarded, but after a while it found its way back again into the banks. The crisis was by no means a sudden crash, and even when the failures began to take place they were spread over a period of sixteen weeks.
The first noticeable effect of the crisis was a great scarcity of employment. Much capital was locked up in the failed banks, and was therefore not available for distribution amongst wage-earners. Wages fell precipitately, as also did rents. There was an almost entire cessation of building, and a large number of houses in the chief cities remained untenanted, the occupants moving to lodgings and more than one family living in a single house. Credit became greatly restricted, and all descriptions of speculative enterprise came to an end. The consuming power of the population was greatly diminished, and in the year following the crisis the imports into Australia from abroad diminished by four and three-quarter millions. In fact, everywhere the demand for goods, especially of those for domestic consumption, fell away; and there was a reduction in the average number of persons employed in the manufacturing industries to the extent of more than 20%. The lack of employment in factories naturally affected the coal mining industry, and indeed every industry in the states, except those connected with the export trade, was severely affected. During the crisis banks having a paid-up capital and reserves of £5,000,000 and deposits of £53,000,000 closed their doors. Most of these, however, reopened for business before many weeks. The crisis was felt in the large cities more keenly than in the country districts, and in Melbourne more severely than in any other capital. The change of fortune proved disastrous to many families, previously to all appearances in opulent circumstances, but by all classes alike their reverses were borne with the greatest bravery. In its ultimate effects the crisis was by no means evil. Its true meaning was not lost upon a business community that had had twenty years of almost unchecked prosperity. It required the chastening of adversity to teach it a salutary lesson, and a few years after, when the first effects of the crisis had passed away, business was on a much sounder footing than had been the case for very many years. One of the first results was to put trade on a sound basis and to abolish most of the abuses of the credit system, but the most striking effect of the crisis was the attention which was almost immediately directed to productive pursuits. Agriculture everywhere expanded, the mining industry revived, and, if it had not been for the low prices of staple products, the visible effects of the crisis would have passed away within a very few years.
Another matter which deserves attention was the great drought which culminated in the year 1902. For some years previously the pastoral industry had been declining and the number of sheep and cattle in Australia had greatly diminished, but the year 1902 was one of Drought
of 1902.veritable drought. The failure of the crops was almost universal and large numbers of sheep and cattle perished for want of food. The truth is, pastoralists for the most part carried on their industry trusting very greatly to luck, not making any special provisions against the vicissitudes of the seasons. Enormous quantities of natural hay were allowed every year to rot or be destroyed by bush fires, and the bountiful provision made by nature to carry them over the seasons of dry weather absolutely neglected; so that when the destructive season of 1902 fell upon them, over a large area of territory there was no food for the stock. The year 1903 proved most bountiful, and in a few years all trace of the disastrous drought of 1902 passed away. But beyond this the pastoralist learnt most effectually the lesson that, in a country like Australia, provision must be made for the occasional season when the rainfall is entirely inadequate to the wants of the farmer and the pastoralist.
The question of federation was not lost sight of by the framers of the original constitution which was bestowed upon New South Wales. In the report of the committee of the legislative council appointed in 1852 to prepare a constitution for that colony, the following passage occurs:—“One Federation.of the most prominent legislative measures required by the colony, and the colonies of the Australian group generally, is the establishment at once of a general assembly, to make laws in relation to those intercolonial questions that have arisen or may hereafter arise among them. The questions which would claim the exercise of such a jurisdiction appear to be (1) intercolonial tariffs and the coasting trade; (2) railways, roads, canals, and other such works running through any two of the colonies; (3) beacons and lighthouses on the coast; (4) intercolonial gold regulations; (5) postage between the said colonies; (6) a general court of appeal from the courts of such colonies; (7) a power to legislate on all other subjects which may be submitted to them by addresses from the legislative councils and assemblies of the colonies, and to appropriate to any of the above-mentioned objects the necessary sums of money, to be raised by a percentage on the revenues of all the colonies interested.” This wise recommendation received very scant attention, and it was not until the necessities of the colonies forced them to it that an attempt was made to do what the framers of the original constitution suggested. Federation at no time actually dropped out of sight, but it was not until thirty-five years later that any practical steps were taken towards its accomplishment. Meanwhile a sort of makeshift was devised, and the Imperial parliament passed a measure permitting the formation of a federal council, to which any colony that felt inclined to join could send delegates. Of the seven colonies New South Wales and New Zealand stood aloof from the council, and from the beginning it was therefore shorn of a large share of the prestige that would have attached to a body speaking and acting on behalf of a united Australia. The council had also a fatal defect in its constitution. It was merely a deliberative body, having no executive functions and possessing no control of funds or other means to put its legislation in force. Its existence was well-nigh forgotten by the people of Australia until the occurrence of its biennial meetings, and even then but slight interest was taken in its proceedings. The council held eight meetings, at which many matters of intercolonial interest were discussed. The last occasion of its being called together was in 1899, when the council met in Melbourne. In 1889 an important step towards federation was taken by Sir Henry Parkes. The occasion was the report of Major-General Edwards on the defences of Australia, and Sir Henry addressed the other premiers on the desirability of a federal union for purposes of defence. The immediate result was a conference at Parliament House, Melbourne, of representatives from each of the seven colonies. This conference adopted an address to the queen expressing its loyalty and attachment, and submitting certain resolutions which affirmed the desirability of an early union, under the crown, of the Australasian colonies, on principles just to all, and provided that the remoter Australasian colonies should be entitled to admission upon terms to be afterwards agreed upon, and that steps should be taken for the appointment of delegates to a national Australasian convention, to consider and report upon an adequate scheme for a federal convention. In accordance with the understanding arrived at, the various Australasian parliaments appointed delegates to attend a national convention to be held in Sydney, and on the 2nd March 1891 the convention held its first meeting. Sir Henry Parkes was elected president, and he moved a series of resolutions embodying the principles necessary to establish, on an enduring foundation, the structure of a federal government. These resolutions were slightly altered by the conference, and were adopted in the following form:—
