The Sun.
London, England, 1848-08-03 00:00:00

or 1847.

" An unprece:lented large importation of food caused
by a deficient harvest, required in payment the
export of a large amount of bullion to the extent
of 7,500,0001. from the coffers of the Bank, and
probably not less than 1,500,0001. from other
sources—together 9,000,0001. From this great re-
duction in the available capital of the country,
in addition to the still larger amount invested in
railway expenditure, acting suddenly upon a previous
high state of credit and excessive speculation,
arose the pressure in the money market. There
was an abstraction of 7,500,0001. from the bul-
lion held by the Bank, and consequently a dimi-
nution in the notes to that extent. I assume that
1,500,000/. may have gone out from the gold in circula-
tion; that may be more or less, but I assume that about
9,000,000/. went out in the purchase of food in the course
of the year 1847. Then I make a distinction between
the panic and the pressure. The panic began by the
failures in the corn trade. The price of wheat had
risen to about 120 s. Large arrivals of grain from the
continent of Europe and from America, coupled with the
prospect of' an early and an abundant harvest, caused a
sudden fall in price to about 605., with a corresponding de-
cline in Indian corn, The failure of most of the corn specu-
lators followed this great reduction in price, and their
failure caused the stoppage of an eminent discount broker,
having a large country connexion. Ellis latter failure, by
closing one of the principal channels of discount between
the country and London, caused distrust to extend into
the country. Credit became affected by these failures,
and several London firms of a high standing also failed.
Then followed in rapid succession the failure of the
Royal Bank of Liverpool, the Liverpool Banking Come
pany, the North and South Wales Banking Company,
some private country banks, and the Union Bank
of Newcastle, followed by a tremendous run upon
the Northumberland and Durham District Bank.
To these disasters succeeded alarm, and an almost
total prostration of credit. The London bankers
and discount brokers refused to grant the usual
accommodation to their customers, and necessarily
obliged every one requiring assistance to resort to the
Bank of England. Money was hoarded to a consider-
able extent, so much so that notwithstanding the notes
and coin issued to the public in October exceeded by
actarcityo f
houses
4,000,0001. or 5,000,0001., the amount with the public in
August, still the general
yoedf aths
money. Credit was so
on th air
busin
trading to distant countries carrying
newal of their ass
ac-
through the means of credit, y
were no lo
ecnotmirepllysindtes wastro
meet their engagements, and were forced stop pay-
ment. This was the state of things previous to the
aner able
ceptances as they became due, to
Wawa[
to g
issuing of the Government letter in October.
speaking ''T e aa
large
ge
ea bout
houses, th r twy
hthey failed to the amount of 8,129,0001. The first seven
title
hr e eh
ahvoeu
failecomparatively;
are expected to pay in full ; of the other houses there
is one expected to pay ss. 6d., another ss. 6d., another
6s. 6d., another 95., another 125., another Bs., another
35., another 55., &c. The result is, that with respect to
alargehemeanjorainfityfcoiefntthotsne
carryhouthem houses
through thoseno assistance would
have
difficulties."
" Is the average above 12s.?—With the exception of
the first seven, which are expected to pay in full, it is
believed that the average will not be more than 6s. Bd.
in the pound."
Mr. Horsley Palmer, who had received a signal mark of
confidence from the Bank of England, in his re-election to
the office of governor, in order to facilitate his negotiation
of
renderedn:
d4t
7h
hteo renewalhnaevcee
failures s oa f the charter in 1833, has given the fol-
lowing testimony:—" I consider the distress of the year
arisenrnyf
a t
hfvereorpmy n thetal
atnr deficientgnernimpof
por
thattaharvesttiony eoa offr,
foreignl whichB46,
grain. Consequent upon the arrangements made for
that import, the exchanges with the continent and
mAiamldleieornicrsuaeidpn upon
npetted December
declined, and between the months
of
December, 1846, and
atnokin
eth April,re
their
Banking Depart-
ment
millionslB4
a 7 , hn
Ae p
rdi
le;m at nh
de
etehme Bthe reserve from nine and a half
m
last two and a half millions of whn which ruction.aend the
1i theeq 27th of
u e nce o f that March
sudden redu-
ctlo7otkh
nf place
Apr i between
In nn n s
lion the Bank was compelled under the Act of 1844,
forcibly to contract, in order to regain its position,
which forced proceedings caused a very severe p
for the time up m the money market. Shortly after
that period it transpired that speculations for the import
of grain had been carried far beyond the power of the
houses engaged in them to support, added to which
the quantities imported in the months of May,
June, and July, occasioned a fall in the price of
wheat from 1103. per qtterter to 60s , and even
below that value. This fall in the price of grain occa-
sioned failures to a considerable extent in the corn
which engendered a material discredit in that and
tradeother'branches of commerce. Subsequently to those events
came the suspension of almost all the firms engaged in the
trade with the Mauritius, which was followed by a general
discredit, principally affecting the houses connected with
India, particularly those most largely engaged in the
export of British manufactures. These extensive sus-
of bank notes and coin from circulation to a very pensions caused a general discredit, and an abstraction
mate-
rial amount, thereby creating a largely increased de-
' mand upon the reserve of the Bank, which, under the
Act of 1844, it was found most difficult and indeed im-

possible to sustain, the amount of the reserve having
been reduced, on the 23d, of October, to two
millions, including London and the branch banks.
Thus situated, notwithstanding the Bank had ad-
vanced the rate of interest, in August, Septem-
ber, and October, to five-and.a-half, six, seven,
and even nine per cent. per annum, the demand con-
tinued to increase until the 25th of October, when relief
was afforded by withdrawing the restrictive clause of the
Act of 1844, and by which the
pressure was immediately
relieved, and credit has since been gradually restored.
During the whole period, from the middle of April to the
day of withdrawing the restrictive clause in the Act of
1844, the foreign exchanges were in favour of this
country,"

Mr. Sansuel Gurney, the
head of the house of Over-
end and Co., bill brokers, whose experience in money
affairs is universally known and acknowledged, gives the
following description of the events of 1847:
" The crisis in April, 1847, arose from several causes.
The failure of the potato crop and harvest of IB4G, read-
ing to an enormous importation of food coming upon
an excited state of price and transaction, aided by the
Bank canvassing for discount, and fomenting trans-
actions, under the new principle that in the bank-
ing department they are to act on the same principle
as private bankers, may be considered as the causes
of that crisis. These led to an extent of de-
mand upon the Bank for discount and otherwise,
the yielding to which led them beyond the bounds
of prudence, seeing the early payment of the dividends
was at hand. Under the Currency Act they found
themselves uncler the necessity suddenly of not only
withdrawing their usual accommodation by way of
discount, but of calling in with a severe and unre-
lenting hand the loans they had made upon the security
of bills, Exchequer-bills, &c.
The suddenness and
severity of this change was forced upon the Bank by
the Currency Act. had It not
been for that, they
would have spread over months what they felt them-
selvesa few days, to the serious de-
rangement markets and to much alarming
co mp:il.ltehdat o
money do i n
disaster. Is it queried, was this snail owing to the Cur-
rency Act ? I think it cannot be fairly laid to the Act
only, but to the causes before specified. It may, how-
ever, with truth be asserted, that the force of it and the
evils of it were much aggravated by the effect of this
banker ,
and and
as
Act, in the course of action it forced upon the Bank."
London
Ms
such
hG.
havingC G
any dn ne,zbtle.nr.
ad country
, a leading
correspondence
connexion, was also examined by the Committee. This
witness had been frequently examined before both
Houses of Parliament on similar subjects, and his expe-
rience as a practical banker gives peculiar weight to his
opinions. His evidence was as follows:--
" I consider that the pressure which occurred in April,
1847, arose principally from the large importation of
corn and other necessary articles of foMI, and I consider
also that the foreign exchanges having been affected by
the operation of those causes, the pressure in point of
fact was necessary, and was carried only to the extent
which was required for the proper re-adjustment of the
foreign exchanges. The foreign exchanges were re-ad-
justed, and in the course of the autumn set strongly in
favour of this country. The harvest turning out very
good, in the months of August and September large fail-
ures occurred amongst the speculators in corn. Those
were the first occurrences of that description that took
place in this country; subsequently they were followed
by large failures of other mercantile houses. That went
on down to the end of September, the pressure gradually
increasing, but not to the degree which it arrived at in
the course of the following month, when there was su-
peradded to all those causes which had been operating
before, a great degree of discredit and want of confidence
throughout the country, which was very much increased
by the failure of banks in Liverpool and other parts of
the country, and during the week ending the 23d of
October by a general distrust that seemed to operate
amongst nearly all mercantile classes, and was rapidly
extending itself to the banking establishments through-
out the country, very much resembling, in point of fact
at that time, what occurred in the year 1825. The
other symptoms of 1847 had been entirely dissimilar up
to the middle of October 1847; but in the last week be-
fore the issue of the Government Letter the symptoms of
want of confidence that presented themselves were very
much like those which occurred at the end of 1825. There
appeared a want of confidence in the country generally,
which caused country bankers to look for the assistance
of their London correspondents, and which apparently,
if it had not been for the letter of the Government, would
have gone to a very great extent. In point of fact, the
difference between the two periods of April and of Octo-
ber was extremely striking. The pressure of April was
very soon over, and the bank did every thing within its
rower for the mercantile body at the time. Although
they had been obliged to restrict their operations very
much, yet they attended to the applications made to
them, particularly those from Liverpool and some other
places. But the pressure that occurred in October last
arose apparently from entirely different causes. It pro-
ceeded from an apprehension on the part of all mercan-
tile men that the want of confidence was becoming so
great, t hat at last the reserves of the Bank would be so
very low, that, in point of fact, persons who were pos-
sessed of property would not- be able to convert that pro-
perty into Batik of England notes."
The committee also examined Mr. George VT. Nor-
man, a director of the Bank of England, a witness
friendly to the Act of 1844, and one who is unwilling
that any alteration should take place in its provisions.
He was asked (2,C80) what were the causes of the pres-
sure on commerce in the spring and autumn of 1847?
and his reply was to the following effect:—
" I consider that the causes which produced the pres-
sure upon commerce in the spring of last year andin the
autumn were the potato disease' and the failure of other
crops, the vast absorption of capital arising from the
railways, and considerable over-trading in some branches
of commerce."

Mr. Norman added, that he believed that the value of
foreign corn imported amounted to 30,000,0001., for
which payment must necessarily be provided. Mr.
Cotton, who, as well as Mr. Horsley Palmer, had twice
been elected Governor of the Bank, and from the same
motive, whilst he considers the distress to have been
" greatly exaggerated" (8,192), and nothing equal to
what had existed in 1825 and 1839," fewer banks and
solvent houses having in his judgment suspended pay.
ment, adds:—

My impression is that there never was a time when
many parties had engaged in operations so much be-
yond what they ought to have done with reference
to their capital as in the year 1847. Considering
what occurred in 1847—the very large payments for
food, the failures in • the corn trade, the amount of
calls for capital for railways, and also the failure
of the India and other houses, and the exposure of the
very small amount of real capital, and in many cases
minus capital, under which they carried on a large
amount of business—l think we might have expected
many more solvent houses to have failed. There
was a very large, and, I think, indiscreet, exten-
sion of trade beyond the capital the parties had
to carry it on, in the corn trade, in consequence
of the profits which had resulted from the first im-
portation of corn. In the India trade there was a
larger extent of trade carried on than was justified by the
amount of capital, and which had been supplied by re-
newing bills. There was also a very large amount, far
beyond what the parties were justified in appropriating
on fixed securities in the Mauritius trade. After the
failure of one or two houses it appeared that credit had
been stretched to [a moat unreasonable ,extent, larger
than I ever recollect."

The great majority of the witnesses do7not concur in
Mr. Cotton's opinion, but unite in representing the in-
tensity of the pressure as more severe than the distress
of 1837 and 1839 ; many even consider it to have been
greater than that of the year of panic, 1825. The com.
mittee extract the following evidence to this effect :
" Has the distress and pressure upon the public been
greater or less during the-list year than in any preced-
ing cases to which you halve alluded?—l think it was
greater during part of the' year 1847 than I ever re=
member.
" With greater damage to commercial credit and for-
tunes
than on any other occasion?—l should say cer-
tainly."
Do you apply that observation to the country gene-
rally, or to London T—l apply it to the whole country,
especially to all the commercial parts of the country,"
Mr. Gurney's opinion on this subject is equally dis.
tinct and decided : _ _

parallel in
" Are there, in the history of the money transactions
of this or of any other country, circumstances that can
be at all compared to those that have taken place in this
country in the last twenty months ?—I think that the
Mr. Tooke,
astlaBt3es9,
catastrophes of last autumn were beyond all
our monetary history, as far as I know."
Mr. George Norman conchides that in 1837 a
the causes of pressure were much less extreme than in
the year 1847. In 1339 there was but little insolvency
of any kind. In 1837 there was, as well as the witness
recollected, no considerable insolvency except in
the
American trade. In 1847, on the contrary, he
stated
(2,702) that " every ose seemed afraid of his
gopwinhioenn
,o,fnobod
the time was . Lister, Y would
ppirnoacthhien
,body
pay an) • the country " There was a panie through •
, people
thought they Anotlier witness, Mr.
were in an iron cage, and could not get
neighbour ;" and,
out of it; that iron cage was the Act of 1844."
On the other hand, it is right to observe, that some
witnesses represent the pressure in 1847 to have been
less severe than at several former periods.
•
The Governor and Deputy Governor of the Bank, in
the following questions' state their impressions to this
effect, and as regards the comparative consequences of
the commercial distress in different years:—
" You said that you thought that the Act of 1844 had
worked extremely well to secure the convertibility of the
notes; do you apprehend that tbera would have been any
danger of the notes of the Bank of England not being
convertible if it had not passed?--I think they would
have been in danger. On one or two previous occasions
I think they were in danger—in 1825 and 1839.
" And you think that they would have been in danger
now but for this Act?—They might have been.
" Mr. Prescott—l agree with the Governor. I think
that the pressure was not so great in 1839 as it was in
1847, and therefore that the danger in 1847 would have
been greater but for this Act.
" Was not the pressure greater this year than you
have ever witnessed?—My own Axperionee soaroely
carries me back to 1125, but I should COIICeiTO tket the

pressure in one or two weeks in 1825 was greater than
I in 1847.
" Mr. Morris—l believe that the pressure probably
has been greater in London and in Lancashire, and pro-
bably in other places, but I doubt whether the pressure
generally throughout the country has been so great as it
was at the former periods.
" 1)o you consider that circumstance at all attributable
to the action of the Act of 1844 upon the private bankers
in the cJatitry ?—I consider that the action of the Act of
1844 upon the private bankers in the country must have
been of the greatest possible benefit.
"And to hare preserved the country from the failures
of country backs which tuck place in 1825 ?—To have
preserved the country from the misfortunes fallen into
in 1825.
"Assuming that the pressure in 1847 has been more
severe upon the commercial world in London than upon
precious occasions within your knowledge, should you
say, considering the distance at which we have now ar-
rived from the period of pressure itself, that the reco-
very from it has been more rapid, and that there has
been less subsequent pressure than upon former occa-
sions ? I think the recovery from it has been much
mere rapid, but it is difficult to say when the recovery
has taken place.
" Without assuming at the present moment that we
have actually recovered from it, but looking at the course
of affairs since October, should you say that there has
been less severe distress consequent upon the panic than
there has been upon previous occasions?—l think that
the reaction has taken place sooner than it otherwise
would have done.
" The question is, not as to what would have hap-
pened if the Act of 1844 had not passed, but merely as
to the matter of fact, whether the distress and the
sacrifice of capital, and the general damage, both to
the commercial character as well as the credit of this
country, has not exceeded in the last year any-
thing that in your experience you ever witnessed?—
, I think in the failure of large houses it has exceeded,
but whether it has as far as the whole country is con-
cerned, I am not prepared to say. My impression is.
that the damage to the country from the panic of 1825
was greater and more general then than any which has
taken place in 1847.
" Mr. Prescott—l think as many as sixty or seventy
country banks failed in the end of 1825, and now there
has not been a dozen.
And Mr. Jones Loyd will be found, in his evidence, as
follows, to express his opinion more strongly as to the
greater intensity of the pressure on several former occa-
sions than in 1847.
" Within your experience do you know any time in
which there was a greater disturbance of credit, so as to
necessitate an increase of the reserves, than there was
in that month of October, 1847?-1 believe that the dis-
turbance of credit was greater and more widely spread in
182.5 than it was in 1847.
"Do you suppose that any evil can occur to a great
commercial city greater than that which happened
during the year 1847 in the city of London, or that
there ever were instances in which so complete a sacri-
fice of property and so complete an impoverishment of
commercial capital, has taken place in any country ?—I
have no doubt that there existed much greater pressure
and that the evils alluded to in the question, occurred in a
severer form in this country in 1783, in 1793, and in 1825.
We are always apt to form an exaggerated estimate of the
present evil. This is the account given by Mr. Tooke of
what took place in 1783:—' This contraction of the cur-
rency was attended with a great rise in the rate of inte-
rest; Consols fell from 68 to 54; omnium from a premium
of 8 per cent. to below par. Every one (says Chalmers)
must remember bow impossible it was to borrow money
on any security for any premium.' Then again, take
1793. ' Many houses of the most established credit
failed. Houses of undoubted solidity, possessing
ample funds, which actually did in a short time enable
them to pay every shilling of their debts,
were obliged to stop , payment. Some bankers
who almost immediately on recovering from the
first panic resumed the regularity of their payments
were obliged to make a pause. Many whom the tem-
porary assistance of even a moderate sum would have
enabled to surmount their difficulties could not ob-
tain any accommodation. Those who had any
money, not knowing where they could place it with
safety, kept it unemployed and locked up in their coffers.'
Such is the account given in " Macpherson's Annals
of Commerce" of the pressure in 1793. It would be a
most incorrect and exaggerated account of the state of
things in 1847. Then again, as regards 1825, we have
Lord Ashburton's account of 1825, as given in Sir Rubert
Peel's speech, which taken as a description of 1847 would
be a great exaggeration."
Such is the description of the commercial world in
1847, given by well-informed witnesses; and the Com-
mittee consider that a more alarming picture of the
consequences of panic and discre.lit could not well
be given. It must also be recollected that in
some respects the conjuncture was favourable.
Had there been at this time any domestic political
altirm, Lind thcro Levu any foreign n ar, ur any
speculation in foreign loans, or had the State
of the balances in the Exchequer.' been such
as to render necessary large advances from the
Bank on deficiency bills, and the extent and intensity
of suffering, great as they actually were, would have
been rendered still more formidable. But from these
sources of danger the country was happily exempted.
Still it is clear to your Committee that the difficulties and
dangers of the case were such as to require a remedy,
prompt, decisive, and effectual.
Rear. IL—TREASURY LETTER, 25Th OF OCTOBER, AND
ITS EFFECTS.
That remedy was sought and found in a departure
from the restrictive principles of the Act of 1844, autho-
rised by the following letter of the First Lord of the '
Treasury, and of the Chancellor of the Exchequer,
dated the 25th of October:—
" Downing-street, Oct. 25, 1847.
" Gentlemen,—Her Majesty's Government have;seen
with the deepest regret the pressure which has existed
for some weeks upon the commercial interests of the
country, and that this pressure has been aggravated by
a want of that confidence which is necessary for carry-
ing on the ordinary dealings of trade.
" They have been in hopes that the check given to
transactions of a speculative character, the transfer of
capital from other countries, the influx of bullion, and
the feeling which a knowledge of these circumstances
might have been expected to produce, would have re-
move the prevailing distrust.
" They wore encouraged in this expectation by the
speedy cessation of a similar state of feeling in the month
of April last.
"These hopes have, however, been disappointed, and
her Majesty's Government have come to the conclusion
that the time has arrived when they ought to attempt,
by some extraordinary and temporary measure, to restore
confidence to the mercantile
and manufacturing com-
munity.
" For this purpose they recommend to the Directors
of the Bank of England, inthe
present emergency, to
enlarge the amount of theirdiscountsan dadvanees upon
approved security, but that, in order to retain this ope-
ration within reasonable limits, a high rate of interest
should be charged.
" In present circumstances they would suggest that
the rate of interest should not be less than 8 per cent.
" If this course should lead to any infringement of the
existing law, her Majesty's Government will be prepared
to propose to Parliament, on its meeting, a Bill of In-
demnity. They will rely upon the discretion of the
directors to reduce as soon as possible the amount of
their notes, if any extraordinary issue should take place,
within the limits prescribed by law.
"Her Majesty's Government are of opinion that any
extra profit derived from this measure should be carried
to the account of the public, but the precise mode of
doing so must be left to future arrangement.
"her Majesty's Government are not insensible of the
evil of any departure from the law which has placed the
currency of the country upon a sound basis; but they
feel confident that, in the present circumstances, the
measure which they have proposed may be safely
adopted, and at the same time the main provisions of
that law, and the vital principle of preserving the con-
vertibility of the bank note, may be firmly maintained.
" We have the honour to be, Gentlemen,
"Your obedient humble servants,
(Signed) "J. RUSSELL,
"C. WOOD.
" The Governor and the Deputy-Governor
of the Bank of England."
It should be remembered that the insertion of a
clause in the Bill of 1844, investing the Government
with such a relaxing power, had been discussed, and re•
jected. The committee consider that the step so taken
by her Majesty's Government, in the exercise of such
authority, was wise and successful.
The House of Commons have resolved, during the
present session, " That in the peculiar circumstances of
the period the Government were justified in this extra-
ordinary exercise of power." But, in assuming the re-
sponsibility of authorising the relaxation of the Act, the
Government, in fact, " dispensed with the express pro-
visions of an Act of Parliament." The interposition of
the Treasury has been thus understood, and explained
by many of the witnesses. The Governor of the Bank
considered that when once the Government letter issued,
the Bank was no longer responsible; he considered that
he had authority to " break through the Act." The
" Responsibility of the Bank to provide for the security
of the banking department ceased after the 22d of Oc-
tober." On the 23.1 it was intimated that the Govern-
ment letter was to be issued on the 25th; and it was un-
derstood that the Bank was to act on that day (the 23d)
according to the spirit of the Government letter. Con-
aequently the accommodation given on the 23d, was
" given on that understanding," Mr. Glyn observes, "the
letter of the Government stopped the crisis, and abro•
gated the Act." Mr. Browne (2,359) considers the letter
to have " virtually condemned and annulled the Act of
1844." Another witness apprehends " that the Bank
would have hal to shut its doors in a week unless the
law had been violated."
On the other hand, Mr. Samuel Jones Loyd states his
opinion, that " although the letter was a departure from
the positive provisions of the Act, it was not depar-
turea.
from the principles of the Act." This
i"h
force
distinc-
tion which the Committee cannot recognise.
of the enactment was clear and intelligible. TThee. Trea-
sury_ letter authorised a departure from that
and even recognised the possible necessity of applying
to Parliament for indemnity. A sanction was thus given

to a course unwarranted by law. No issue, it is true,
was made beyond the powers of the Act of 1844, but
that issue, if it had been made, was authorised by the
letter of. the Government ; and, practically, the conse-
quences were precisely the same as if the Bank had
made such issue. Mr. Loyd states (1.500) that the
"Bank did nothing under the letter; the amount of notes
with the public was not increased ; that power was not
exercised." The letter was nevertheless actively and
powerfully operative. "The issue of the letter to a consi-
derable degreo relieved the money market," observes Mr.
Norman "by holding out to persons the certainty that
they might get accommodation, whereas befure they
feared that they should not." The amount of notes
hoarded by bankers and commercial men was at once
released. These notes have been estimated by Mr. S.
Gurney at about 4,000,0001; and this acted as effectu-
ally as if an additional issue on securities had been made
by the Bank. _

This effect is well described in the following extract
from the evidence of Mr. Glyn:—
" It produced the same effect as if the Bank of Eng land
had made an issue; because it brought out the hoards of
notes, and they went into circulation. It thereby added
to the circulation of the country, and it removed the cause
of the panic, which is stated to have arisen from the Act
of 1844.

" Looking at the state of the reserve after the letter of
the Government came on the 23d of October, through
October, November, and December, and seeing that the
reserve constantly rose, and that at the same time the
bullion rose with it, did not that favourable turn in the
affairs of the Bank, and in the facility of the circulation
of the country arise from the Act of 1844 being set aside
by the letter of the Government? I consider that the
letter of the Government of the 25th of October having
in effect got rid of the clause in the Act of 1844 which
limits the amount of the circulation to 14,000,0001., pro •
dated the effect alluded to,"

The salutary consequences of this step were' recog-
nized gratefully by almost every witness, even by those
most favourable to the Act of 1844. " All alarm ap-
peared to have ceased on the issue of the letter," ob-
serves the Governor of the Bank; and subsequently he
adds, " what restored confidence was the letter of the
Government, allowing the Bank to make any advances
without reference to the Act, at a given rate of interest.
We did not so much want the money, but we wanted a
certainty that if we did want it we should get it." The
opinion of Mr. Horsley Palmer is equally decisive. "In
autumn of 1847 the demand for assistance was so much
increased as to place the_Bank in imminent danger by
granting it, and which nothing could have relieved short
of the relaxation of the law which took place." Mr.
Samuel Gurney illustrates this statement by his own
case. He observes:

" We required about 200,0001., and had it at 9 per
cent. On the Monday morning we had again a very
heavy demand upon us; and we applied to the Governor,
and said that to supply Lombard-street with what was
wanted we should require 200,0001. more. It was a case
of difficulty for the Bank under its reduced reserve, and
under the limitation of the Act. The Governor post-
poned a decision on the application to two o'clock. At
one o'clock, however, the letter from the Government,
authorising relaxation, was announced. The effect was
immediate. Those who had sent notice for their money
in the morning sent us word they did not want it, that
they only ordered payment by way of precaution. And
after the notice we only required about 100,000/., instead
of 200,0001. From that day we had a market of com-
parative ease. The alarm lessened; and by the end of
the week we had to ask as a favour of the Bank to be
allowed to repay the money which we had borrowed of
them."

Nor was this immediate and effectual relief confined
to the metropolis. As the pressure had been general,
so likewise was the relief. The Committee have bad a
letter given in evidence, from which the following extract
will strikingly exemplify the effects of the Government
interference as felt in the great commercial town of Li-
verpool:—
_

"The state of things immediately previous to the pro-
mulgation of the Government letter of the 25th of Octo-
ber was perfectly fearful, and, I believe, without prece-
dent in the commercial history of this country. Bills of
exchange of the first quality in themselves, and to which
this and other banks were willing to add their endorse-
ments, were absolutely inconvertible into cash; and it is
my firm belief that many houses, who were not merely
solvent but able to pay 40s. and 60s. in the pound, must
have stopped had the Government letter not been issued.
Immediately on the issue of that letter the whole diffi-
culty was removed. Not only were our bills available at
the Bank of England, but with all the discount brokers;
they were, I may say, eagerly sought for by the country
banks, and by private moneyed parties seeking for in-
vestments, at even lower rates than the Branch Bank of
England here were willing to discount at. This showed,
beyond dispute, I think, that the scarcity of money
was artificial, not real, and that the panic was a
moral one, caused by the mischievous and whimsical
provisions of the Bank. Act of 1844, and not by
nnut of conficknoe in the ecenrities (the hulk of AX.•
chango themselves, for the securities remained of course
precisely the same after the 25th October as before that
date. I have no hesitation in stating that in my opinion
the letter of the 25th of October virtually annulled the
Bill of 1844, and saved the country from an almost
universal stoppage of payments, in which the banking
department of the Bank of England would have been in-
cluded."

It should not be forgotten that the recommendation of
the Treasury, though imposing the condition of a mini
mum rate of interest of 8 per cent., was wholly unre-
stricted as to the amount of advances authorised. Unless
it had been so unrestricted in amount it would probably
have failed. It placed the Bank, so far as the authority
of the Government could do so, in the position in which
it would have stood if the restrictions of the Act of
1844 had never been enacted, or had been repealed.
The remedial character of the measure," observes Mr.
Loyd, " was not the discounting at 8 per cent., but the
declaration to the public that at 8 per cent. interest
there was an unlimited supply of Bank notes at their
command. The Bank could not possibly make that offer
without the sanction of the Government." It was
knowledge on the part of the public, that there was ac-
tually the " power given to the Bank to advance any
quantity of notes without limit, that produced the effect.
Without the authority of the Government the Bank
could not have produced that confidence."
It is true that the Governor and Deputy-Governor of
the Bank are inclined to think that the letter of the 25th
of October might have been dispensed with, so far as
they were concerned, and that the Bank of England
might have been placed in a position of safety by pre-
cautionary measures; and a resolution was entered into,
on the 25th of October, by the Court of Directors, ex-
pressing an opinion " that no deviation from the provi-
sions of the Act of 1844 regulating the currency was
required in consequence of any difficulties on the part of
' the Bank;' but that they consented to the measure re-
commended by her Majesty's Government on the
grounds of public necessity urged by the First Lord of
the Treasury and the Chancellor of the Exchequer." It
becomes, therefore, essential to consider the actual state
of the Bank of England at that time, to ascertain whe-
ther that was a state of safety or not, and whether any
remedial or precautionary measures have been suggested
which, by rendering the Bank secure, would have made
the suspension of the law by the authority of the Go-
vernment unnecessary, for unless a step involving such
extraordinary responsibility and so undisguised a de-
parture from the law were indispensable, it could not be
justifiable. Its absolute necessity was its sole justification.
The state of the Bank reserve on the 23d October is
shown to have been as follows :
Date. Reserve. London. _ Country•.

1847.
Oct. 23. N,

X
981,615

Not
Coln