The Express.
London, England, 1866-05-22 00:00:00

THE RECENT COMMERCIAL PANIC.

The following circular has been transmitted by
the Foreign-office to the British embassies and legations
throughout Europe :

" Foreign-office, May 12.
"Sir,—The monetary crisis through which this country
is now passing will naturally attract great attention in
other countries, and it is therefore desirable that a clear
conception should be formed, both of its nature and pro-
bable extent, but more particularly of the measures which
her Majesty's government have adopted to enable the mer-
cantile community to meet the difficulties of the present
situation.
" Long-continued prosperity in commercial affairs, and
the general wealth consequent on it, have produced their
ordinary results in encouraging speculation, especially of a
monetary or a financial character, anal fostering hopes of
acquiring wealth by more speedy means than are presented
by the ordinary methods of commercial industry. Again,
the events which are taking place on the Continent have
tended not only to produce immediate derangement in com-
mercial transactions, but also to shake that confidence in
the future without which a return to a sound state in
monetary matters was not to be looked for.
" The immediate cause, however, of the crisis lay in the
stoppage of the great discount house of Overend, Gurney,
and Co., in whose hands were lodged many millions
sterling, which, in other times, would in great part have
formed, and which, perhaps, ought to have formed, the
reserves of the various private and joint-stock banks of
the country. This failure directed the action of the
panic against the banks in London, and it was to be
apprehended that the movement in the capital would be
followed by a similar agitation in the rest of the kingdom,
where, in addition to the large deposits in the hands of
the bankers, there are many million, of paper circulation
resting only on the commercial credit of the issuers.
" In this state of things it could not he surprising that
the reserve of the Bank of England was heavily affected
yesterday, and it was the combined consideration of what
had then actually happened and of what might follow on
subsequent days which induced her Majesty's government
to adopt the measure on which, in the course of the even-
ing, they decided. For the money drawn from the banks,
having been withdrawn from circulation under the influence
of panic, the Bank of England might, without some new
resource, have been unable to continue its accustomed assist-
ance. Thus, the crisis, which had been anxiously appre-
hended from this combination of circumstances, has come
at last, butte th a severity and suddenness in regard to
its immedia consequences which could not have been
anticipated.
" The Bank of England is prepared to extend relief, to
the utmost of its means, to all cases which are justly de-
serving of its support ; while her Majesty's government, in
fell reliance on the eventual sanction of parliament, if it
should be necessary to go beyond the law as it now stands,
have signified to the Bank of England their permission to
hold itself free from the observance of the ordinary limita-
tions on its issues, if the exigencies of the time require
such an extraordinary measure. Her Majesty's govern-
ment trust that by this timely assistance all commercial
establishments which are based on sound prin-
ciples, and have been conducted with proper
prudence, will be enabled to withstand the shock
to which the panic occasioned by the recent great failure
in the City will have exposed them. Her Majesty's
government have no reason to apprehend that there is any
general want of soundness in the ordinary trade of this
country which can give reasonable ground for anxiety or
alarm either in this country or abroad ; they are satisfied,
on the contrary, that the present crisis, peculiar and un-
precedented as it is, is one of a character essentially more
favourable than others which have been successfully passed
through ; and that all that is required is that all classes
should co-operate with the government in endeavouring to
allay needless alarm, and in acting with prudence and for-
bearance while so much agitation prevails.
" It appears to her Majesty's government to be of great
importance that the commercial interests abroad should be
measured in regard to what is passing in this country, and
I have, therefore, lost ao time in authorising you to make
known to the government to which you are accredited, and
generally to those who have a direct interest in such mat-
ters, the view taken by her Majesty's government of the
present state of affairs, the active measures which have
been adopted to avert any evil consequences, and the con-
fidence which her Majesty's government feel that those
mamma will be attended with snows&
" The abatement of the panic in the City this n2l
is, her Malsety's government trust, an earnest of t 11.4%
result Wady to attend the measures which they ve
authorised the Bank of England to adopt.
I " I am, with great truth, your most obedient humble
servant, " CbAastrnOlt."

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