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Share prices on the Stock Exchanges were rising steadily and steeply. Any tyro with a few pounds to spare could buy almost any established shares this week and sell them at a profit the next: brokers, then, charged commission on selling only. Many real-estate speculators were gambling in the blocks of new flats that were going up everywhere in the inner suburbs: a twenty per cent deposit was the usual thing, and the clever thing to do was to sell at a profit before the first instalment became due and the transfer effected. It was certainly a crazy period of easy money and quick profits, and thoughtful people were wondering where the limit was.
Then suddenly the blow fell and caught everyone. On the Sydney Stock Exchange one late-October day in 1929, following the crash on the New York Stock Exchange, the prices of nearly all shares dropped: the pundits predicted that they would recover on the morrow, but they dropped still more, and went on dropping. Investors realised that the great boom was over, and panic selling ensued. the dreadful depression had arrived, and was to get progressively worse and more disastrous in its effects on the economy and the community.
Sir Otto Neimeyer, representing the big financial interests in the City of London, arrived in Sydney and insisted on strict and immediate deflation. Severe restriction of all forms of credit followed almost overnight. In a matter of a few months the value of Bank of New South Wales shares - the market leaders - dropped from their peak of £57 to £25, and the prices of most of the popular equities fell in about the same proportion.
Construction of many planned buildings and factories was shelved, and was suspended on some that were just rising. Contracts, already signed, were cancelled or postponed. In brief, almost all capital expenditure, private or governmental, ceased and the ranks of the unemployed, in all walks of life, increased daily.
The Bank of New South Wales had been the State Government's banker since the foundation of the Colony. Now it had to severe-