ank, and the Savings
Bank, which had all been long established, were compelled to suspend
payment. A widespread panic followed, and all business was paralysed.
Workmen were dismissed wholesale, no money being available for the
payment of their wages. To make the crisis graver still, the Union
Bank was to have provided the interest on the Public Debt, which was
payable in London on January 1st. The population feared that the crash
would bring about riots and other dread occurrences. In aggravation of
the risk the rumour spread that Newfoundland was about to be
incorporated into the Dominion of Canada as a mere province. The
Government telegraphed to the authorities in London for an immediate
loan of L200,000, and requested that a warship should be despatched in
view of imminent disturbances. The causes which led immediately to the
failure were well stated in a Dalziel telegram to _The Times_:[47]

"The immediate cause of the financial crisis which has overwhelmed
Newfoundland was the death of Mr Hall, a partner in the firm of Messrs
Prowse, Hall & Morris, the London agents of the firms exporting fish
to European markets. On his death the firm declined to meet further
exchanges until an investigation of their affairs had been made. Their
bills were protested, and the banks made demands on the Commercial
Bank of St. John's, which was the drawer of the bills, and which,
being unable to meet the demands made upon it, fell back upon its
mercantile customers. These could not respond, and the bank had to
suspend operations. The customers were compelled to make assignments,
and nearly every business house in the colony was crippled, so
interwoven are the affairs of one establishment with those of another.

"The situation was only possible under the peculiar business customs
of the colony. The fishing industry here is pursued under a system of
advances for vessels and equipments made by the merchants to the
fishermen, who gave the catch at the end of the season in exchange.
The merchants receive large advances from the only two banks doing
business here, the Union Bank of Newfoundland and the Commercial Bank.
By backing each other's bills the banks are enabled to carry on
operations, and then at the close of the year, when the produce of the
fisheries is realized, they are able to settle their overdrafts.

"The disaster happened at a most unfortunate time. If it had been
postponed for another month the merchants would have real