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

of 1847.

" An unprecedented large importation of food caused
by a deficient harvest, required in payment the
export of a large amount of bullion to the extent
of 7,500,000/. from the coffers of the Bank, and
probably not less - than 1,500,000/. from other
sources—together 9,000,000/. 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
9,000,0001. went out in the purchase of food in the course
of the year 1847. Then I wake 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 Os., 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. ,This 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 Com
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
4,000,0001 or 5,000,0001., the amount with the public in
entirely destroyed that houses
moue; '• scarily
dietli e
vgiaensesroal complaint was of a scarcity of
countries carrying on their business
rleovnigoeurs atbolethtoe
credit, by a renewal of their Etc..
through the means o
d ere forced to stop pay-
meet their engagements, an w . . .
tArandgiuitisg't, to distant
f
ment. This was
ceptances as. they betchaemsetadtuse,
" There are about thirty-three houses,comparatively
watch have failed in London ;
speaking large houses,
00/. The first seven
issuing of the Government letter in October.
they failed to the amount of 8,129,0
of wtherinegsnop
6d., another
is one expected to pay ss. 6d., another 53.
th
6s. 6d., another 9s. , another 123., another 85., ano her
are expected to pay in full ; of the other
.houses there
35., another 55., 84e. The result is, that with respect to
a lare ajrity of those houses no assistance would
have been o sufficient to carry them through those
difficulties."
With the exception of
" Is the average above 125.?
ay in full, it is
the first seven, which are expected to p
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 the renewal of the charter in 1833,
has given the fol-
lowing testimony:—" I consider the distress of the year whi
ch
and to have arisen from the deficient harvest 0f46,
and the failure of the potato crop of that year,
rendered necessary a very large importation of foreign
grain. Consequent upon the arrangements made for
that import, the exchanges with the continent and
America rapidly declined, and between the months
made
ruedpooncedthetheßarnekserivrei
from
mir Blifannekina
of December, 1846, and April, 1847, the demand
Banking
millions in December to three millions in .
April; the
last two and a halfmillions of Depart-
ment
half
of which reduction
took place between the 27th of March
and the
17th of April. In
consequence of that sudden reduc-
tion 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 pressure
' for the time up m. the money market. Short!y after
th st period it transpired that speculations for the imp ort
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 110 s, per quarter to 605., and even
below that value. This fall in the price of grain occa-
sioned failures to a considerable extent in the corn
trade, which engendered a material discredit in that and
other 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-
pensions cause • d a general di:credit, and an abstraction
of hank notes and coin from circulation to a very mate:.
rial amount, thereby creating a largely increased de-
m Ind upon the reserve of the Bank, which, under the
Act of 1844, it was found most difficult and indeed im-