from Monday, the 18th, to Saturday, the 23rd, was the great crisis. On that Monday the Royal Bank of Liverpool, with a paid up capital of £800,000, stopped payment, which caused the funds to fall 2 per cent. This was followed by the stoppage of the North and South Wales Bank, also of Liverpool, the Liverpool Banking Company, the Union Bank of Newcastle, heavy runs on the other banks of the district, and other bank failures at Manchester, and in the West of England. As the whole of the commercial world knew that the resources of the Banking department were being rapidly exhausted, a complete panic seized them. A complete cessation of private discounts followed. No one would part with the money or notes in his possession. The most exorbitant sums were offered to and refused by merchants for their acceptances 27. The continued and ever-increasing severity of the crisis. caused deputation after deputation to be sent to the Government, to obtain a relaxation of the Act, and on Saturday, the 23rd of October, the final determination of the Ministry to authorise the Bank to issue notes beyond the limits prescribed by the Act was taken and communicated to the Bank, who immediately acted upon it, and discounted freely at 9 per cent. The letter itself was not actually sent till Monday, the 25th. It stated that the Government had expected that the pressure which had existed for some weeks would have passed away like the one in April had done, by the operation of natural causes; that, being disappointed in this hope, they had come to the conclusion that the time had come when they ought to attempt, by some extraordinary and temporary measure, to restore confidence to the mercantile community. That for this purpose they recommended the directors of the Bank of England, in the emergency, to enlarge the amount of their discounts and advances upon approved security; but that, in order to restrain this operation within reasonable limits, a high rate of interest should be charged, which, under the circumstances, should not, they thought, be less than 8 per cent. That if such a course should lead to any infringement of the law, they would be prepared to propose to Parliament, on its meeting, a Bill of Indemnity. This letter was made public about 1 o'clock on Monday, the 25th, and no sooner was it done so than the panic vanished like a dream! Mr. Gurney stated that it produced its effect in ten minutes! No sooner was it known that notes might be had, than the want of them ceased! Not only did no infringement of the Act take place, but the whole issue of notes, in consequence of this letter, was only 400,000; so that, while at one moment the whole credit of Great Britain was in imminent danger of total destruction, within one hour it was saved by the issue of £400,000 28. The extraordinary and disastrous state of public credit at this period may be judged of by the aid afforded by the Bank of England to different establishments, from the 15th of September to the 15th of November, as follows 1. It advanced £150,000 to a large firm in London, who were under liabilities to the extent of several millions, on the security of debentures of the Governor and Company of the Copper Miners of England, which prevented them stopping payment 2. It advanced £50,000 to a country banker, on the security of real property 3. It advanced £120,000 to the Governor and Company of the Copper Miners, which prevented them stopping payment 4. It advanced £300,000 to the Royal Bank of Liverpool, on the security of bills of exchange, over and above their usual discounts; but this was inadequate, and the bank, having no further security to offer, stopped payment 5. It advanced £100,000 to another joint stock bank in the country 6. It advanced £130,000 on real property, to a large mercantile house in London 7. It advanced £50,000 to another mercantile house, on the security of approved names 8. It advanced £50,000, on bills of exchange, to a joint stock bank of issue, which soon after stopped payment 9. It advanced £15,000, on real property, to another mercantile house in London 10. It saved a large establishment in Liverpool from failing, by forbearing to enforce payment of £100,000 of their acceptances falling due 11. It assisted another very large joint stock bank in the country, by an advance of £800,000 beyond its usual discount limit 12. It advanced £100,000 to a country banker, on real security 13. It advanced to a Scotch bank £200,000, on the security of local bills, and £60,000 on London bills 14. It assisted another Scotch bank, by discounting £100,000 of local and London bills 15. It advanced £100,000 to a large mercantile house in London, on approved personal security 16. It assisted a large house in Manchester to resume payment, by an advance of £40,000 on approved personal security 17. It advanced £30,000 to a country bank on real property 18. It assisted many other houses, both in town and country, by advances of smaller sums on securities not usually admitted; and it did not reject, in London, any one bill offered for discount, except on the ground of insufficient security The far larger portion of this assistance was given before the 23rd of October 29. A general election had taken place in the autumn of 1847, and the Ministry, having taken upon themselves the responsibility of authorising the Bank of England to violate the Act of 1844, lost no time in calling a meeting of the new Parliament. It met on the 18th of November, and, after a few preliminary days were occupied in swearing in the members, the speech from the throne was delivered on the 23rd. The first paragraphs stated, as a reason for calling them together, that the embarrassments of trade were so alarming that the Queen had authorised the Ministry to recommend to the Bank of England a course which might have led to an infringement of the law. Happily, however, the power given to infringe the law, if necessary, had allayed the panic 30. On the 30th of November, the Chancellor of the Exchequer moved for a Committee to inquire into the causes of the recent commercial distress, and how far it had been affected by the Act of 1844. He spoke of the panic in the spring. He said that he had seen no reason to change the opinion he had then expressed, that it was mainly owing to the imprudence of the Bank, which, having full warning of the various demands it would have upon it, was too tardy in raising the rate of discount, and had lent out, over the period when the dividends became payable, the money they had provided for that purpose; so that they were not in possession of adequate funds when they were required. The low state of their reserve then excited consternation. The Bank then took the severe step of reducing the amount of discounts; they pulled up as suddenly as they had unwisely let out their reserve before. With respect to the panic of October, he said that the severe pressure in the Money Market had abated when the bank failures in Liverpool and the North of England took place, which renewed the alarm. After describing the great pressure on the banks in the country he said— "The Bank of England were pressed directly for assistance from all parts of the country, and indirectly through the London bankers, who were called upon to support their country correspondents. The country banks required a large amount of notes, to render them secure against possible demands; not so much for payment of their notes as of their deposits. Houses in London were applying constantly to the Bank for aid. Two bill brokers had stopped and the operations of two others were nearly paralysed. The whole demand for discount was thrown upon the hands of the Bank of England. Notwithstanding this, as I before said, the Bank never refused a bill, which it would have discounted at another time, but still the large mass of bills which, under ordinary circumstances, are discounted by bill brokers, could not be negociated. During this period, we were daily, I may say hourly, in possession of the state of the Bank. The Governor and Deputy-Governor at last said they could no longer continue their advances, to support the various parties who applied to them; that they could save themselves, that is, they could comply with the law; but that they could not do so without pressing more stringently on the commercial world. At this crisis, a feeling as to the necessity of the interposition of Government appeared to be generally entertained; and those conversant with commercial affairs, and least likely to decide in favour of the course we ultimately adopted, unanimously expressed an opinion, that if some measure were not taken by the Government to arrest the evil, the most disastrous consequences must inevitably ensue. Evidence was laid before the Government, which proved not only the existence of severe pressure from the causes I have stated, but also that it was aggravated in a very great degree by the hoarding on the part of many persons, of gold and Bank notes, to a very large extent, in consequence of which an amount of circulation, which under ordinary circumstances, would have been adequate, became insufficient for the wants of the community. It was difficult to establish this beforehand, but the best proof of the fact is in what occurred after we interfered. As soon as the letter of the 25th October appeared, and the panic ceased, thousands and tens of thousands of pounds were taken from the hoards, some from boxes deposited with bankers, although the parties would not leave the notes in their bankers' hands. Large parcels of notes were returned to the Bank of England cut into halves, as they had been sent down into the country; and so small was the real demand for an additional quantity of notes, that the whole amount taken from the Bank, when the unlimited power of issue was given was under £400,000. The restoration of confidence released notes from their hoards, and no more was wanted, for this trifling quantity of additional notes is hardly worth notice. Parties of every description made application to us, with the observation, 'We do not want notes, but give us confidence.' They said 'We have notes enough, but we have not confidence to use them; say you will stand by us, and we shall have all we want; do anything in short that will give us confidence. If we think that we can get Bank notes, we shall not want them. Charge any rate of interest you please, ask what you like-(Mr. Spooner, No! no!) I beg pardon of the honourable gentleman, but I may be permitted to know what was actually said to me. I say, that what I have stated, was the tenor of the applications made to me. Parties said to me, 'Let us have notes, charge 10-12 per cent. for them; we don't care what the rate of interest is. We don't mean, indeed, to take the notes, because we shall not want them; only tell us that we can get them, and this will at once restore confidence.' We have been asked what was the change of circumstances which induced us to act on Saturdary when we declined acting a day or |