The Sun.
London, England, 1847-12-01 00:00:00

took all those bills which at any period they had re-
ceived, and they had continued to do so up to the
present time. Up to October there was no great
inadequacy of notes. The Government believed that
the pressure was caused by a drain upon the avail-
able capital of the country. The first great
drain to which he would refer was corn.
The net cost of the corn imported as corrected by Mr.
Porter was—from June, 1846, to January, 1847,
5,139,0001.—fr0m January to July, 14,184,0001., and in
the three months from July to,October the cost for corn
had been greater than during the preceding six months,
namely, 14,240,000L—(Hear.) He had stated the other
night that the capital expended in railways had been
4,500,000/. a year on the average from 1841
to 1843, making in 1841 and 1842 from 1,500,000/. to
2,000,000/. This was incorrect ; it should stand thus :
In 1841, 1342, and 1843, 4,500,000/. each year; in 1844,
6,000,000/. ; and in 1845, 14,000,0001. The first half
of 1846, 9,800,000/. ; the last half, 26,600,000/. ; the
first of 1847, 25,770,000/. ; and if the works had pro-
seeded at the same time, the expenditure in the
last half of 1847 would have been 38,000,000/
He was not indisposed to agree with his Right Hon.
Friend the Lord Mayor of York (Mr. Hudson) that per-
haps it would have been as well if a little check had
been placed upon the amount of the bill transactions of
the year, but stilt he thought that the detention
of about 50,000,0001 of floating capital and conversion
of the same into fixed capital. It was painful to allude
to the cases of insolvency which had recently takenplace ;
hut he thought it was clear that a large number of those
houses which had failed had for a number of years been
destitute of the requisite capital to carry on their
business. And in other eases business was forced not
so much with a view to the profits to be made as with
a view of promoting the extension of bill transactions.
There was no doubt but that credit was essential to car-
rying on the extended business of this great country,
but still there were some bounds to the system of credit,
there ought to be some proportion maintained between
the money and the credit.—(Hear, hear.) The failure
of a number of houses was attributable to the circumstance
of the produce-brokers not being able to discount their
bills, in consequence of the large number of acceptances
which they had in hand.—(Hear,) When he found that
more than one-half of the means of carrying on the
business of some parties had failed through this cause,
he was not at a loss to account for the various failures
which had recently taken place. The conduct of the
Royal Bank of Liverpool was such as fully to justify
him in the view he had taken. In that case nearly the
whole of their capital was advanced upon discounts.
The party obtaining this large advance was not able
to get his bills discounted; hence the difficulties of that
concern. He had conversed with many of his friends
who were practically acquainted with the mode of con•
ducting business, and they expressed themselves per-
fectly appalled at the reckless manner in which the
business of some of the larger houses was conducted.
It would be improper in him to do more than allude to
this in general words, and he hoped the House would
believe that he did not state it without a knowledge
which justified him in doing so. He thought after this
statement, the House would be in a condition to judge
to which of the two causes the failures of September and
October were to be attributed. It had been said, on one
hand, that it was owing to the stringent operation of the
Act of 1844 which prevented the issue of notes by the
Bank; while, on the other hand, he maintained it was
caused principally by the undue extension of credit., and
the want of adequate capital. He had shown that there
had been no want of circulation, and also what amount
of capital had been withdrawn from trade, and he would
appeal to every impartial and reflecting man to say to
which of those causes the failures were attributable?
In October an occurrence took place which changed the
feeling of persons in the City. Early in September the
Bank had been accustomed to make advances for a
limited time out of the Government balances in their
hands—of course it could only be for a limited time, for
the advances were made out of the public money which
had accumulated for the payment of the dividends.
(Hear, hear.) The Bank gave a notice that they
would grant loans till the 14th October. They soon ad-
vanced such a sum as they thought they could with
safety, and the demand for advances had nearly ceased.
But on the two last days of September there was en
extraordinary increase of demand for these loans, and
instead of a sum of about 70,000/. on 29th September it
amounted to lio,ooo/., and on 30te to 360,000/. The
sum from which they could make these advances was
limited, and on the 2d of October they issued a notice
that it was found impossible to increase the amount of
advances, and that they should expect by the time the
dividends were due that the loans would be repaid.
The whole commercial world was in a state of surprise
at this, as if it was as unusual and as un-
justifiable a step as was ever taken. Gentle-
men in the City would, he hoped, forgive him
if he said that he was astonished how any man could
be surprised at it. The loans were advanced from
the Government money accumulated for the payment
of the dividends, and last spring he had stated that the
Government balances would be high. It was said
that if there was any deficiency cf accommodation,
it would be caused by his deficiency bills. Ile stated
that it would not be so, for whether ho borrowed or not
there would bo a large amount there, and the 'effect
would be the same, for the accommodation must be
withdrawn at a given time. He said also that if the
Bank had large Government balances on their hands
they would lend to parties, and the leans would be pay-
able when the dividends were due, and at that time, and
whether there wore deficiency bills or not, the effect
would be the same. Precisely what he said in April
came to pass iu October, and it ought to have taken no
one by surprise. There was a general impression that
the amount of the loan would be rapidly withdrawn. Oa
Sept. 25, the aggregate was 4,928,000/., and on Oct. 9, it
was 4,544,0001., and the only thing the Bank was bound
to do was to see the loan repaid. When he (the Chan-
cellor of the Exchequer) came to town on October 22,
he found the City in a state of panic. He saw person'
of all classes and descriptions, from the time he was up
until he went to bed, and he never passed so painful a
week. The interest of money rose to an exorbitant
rate, and sixty per cant. per annum was charged
for what were called continuations for one day. It was
thought impossible that the loans could be repaid, and if
reliance for the payment of the dividends was placed on
the return of those loans, that there woald be a disap-
pointment, and that it would be impossible for the public
creditors to be paid. The next week came, and the
dividends being due the loans were repaid. The Go-
vernor and Deputy-Governor of the Bank acted with ex-
treme prudence and discretion, and received the payment
of the loans, and, on the whole, they were punctually
paid. The notes which were paid in were issued in pay-
ment of the dividends, and the result was, that in this
extraordinary period of demand for notes there was
taken out of the Bank in the four days for payment but
300,000/. more than in the corresponding days of last
year. When the parties had a right to demand
7,000,000/. extra, they only drew 300,000/. more than in
1846. The gloomy anticipations of the week before the
payment of the dividends were not realised, and in spite
of the failure of the Royal Bank of Liverpool on the
Monday following there was in London a better feel-
ing in the early part of the week, and one of the
papers, in its money article, stated that matters were
steadier, although they had been affected by the failure
of the Newcastle Joint Stock Bank. There was a de-
cided change iu the accounts on Thursday, Friday, and
Saturday. The payment of the dividends did not indi-
cate any improved feeling. By this time, too, accounts
were received of the state of the country, and from
various parts they were very alarming. On Monday the
Royal Bank of Liverpool failed—a failure which was
only caused by gross neglect, for, with a paid• up capital
of only 600,000 L, 500,000/. had been advanced to one
house. At the same time apprehensions were enter-
tained with regard to a broker whose name he had
mentioned. lie applied to the Bank for assistance, and
they gave it. Another bank stopped at Liverpool, and
apprehensions were entertained for the safety of other
country banks, especially in the commercial districts,
for in the agricultural parts of the country they had
been comparatively at ease. There was an alarm as
to the banks in the west of England, one of which
had since failed, and was reported to be likely to pay a
very small dividend. News came of the stoppage
of the Newcastle Union Bank on Thursday, and later in
the day there were accounts of severe runs on several
district banks. Allusion had been made to the assist-
ance given to that bank. The tact was that Mr.
Richardson, the manager, came to London to get assist-
ance from the Bank of England, and left without obtain-
ing it. So far was it from being true that there was any
recommendation from the Government on the subject.
It was true that that bank was saved by the interference
of the branch bank of the Bank of England, and Mr.
Grote took on himself a fearful responsibility, for seeing
the danger that would arise even to the peace of the
country, unless that bank was saved, he furnished it
with the means of standing the run which was made on
it on Friday and half of Saturday ; and parties who
had withdrawn gold and notes in the morning tendered
them as re-deposits in the evening. It did not appear
that there was a run for bank notes, but a steady run
for deposits on the banks of Liverpool and Manchester
in the course of a few days preceding the Thursday
and Friday. Then came a fearful aggravation of the
supposed danger. It was a matter of notoriety now
that application for assistance had been made by the
banks of Scotlaud. It was generally considered that
those banks were on so safe a footing that they were
able to take care of themselves, and that they would
not find it necessary to apply to the Bank of Eng-
land ; but applications were made, and occasioned mach
alarm. For when it was considered how enormous the
deposits are—(Hear, hear)—in the Scotch banks which
may be readily withdrawn—(Hear)—and most of which
are made on security which, though solid, is not easily
realised, there was just cause for alarm.—(Hear.) The
demands on the Bank of England for assistance, and on
the London banks, to assist these correspondents, were
extensive. Two bill brokers stopped, and others were
paralysed, and the whole discount business was thrown
on the Bank of England,
and they refused to discount
no bills which came within their rules, but a large
mass of paper, which was usually done by bill brokers,
were refused. The Right Honourable Gentleman, the
Lord Mayor of York, bad referred to the prioe of
Exchequer bills, but in 1345 they were at a lower
discount than in October last. Compare them with what

they were in 1847. In Mr. Took.e's History of Prices
it
was stated that in June, 1347, the period of the panic,
they were at 335. discount (as we understood), while in
October last they were at 30s. discount. This was the
state of things which was represented to the Government
from all parts of the country, and a feeling arose in
commercial quarters, the least likely to be biassed, who
came to them, and whose opinions they took, that mat-
tera were growing serious unless some measure was
adopted by the Government to restore confidence. He
did not deny that the statements which had been laid
before him were alarming. He took pains to examine
their accuracy, and he could not deny that most unwil-
lingly and most reluctantly he came to the coneluston
thee it was necessary to interfere, and having come to