The Sun.
London, England, 1857-11-14 00:00:00

LONDON, SATURDAY EVENING, NOVEMBER 14, 1857.

riiirtr ilitton

SUN OFFICE, Seven o' Clock.

mail, For London and Liverpool we have little dead
weight offering, but ships have experiec• id no want of
jute and seeds, which have been freely offering at 3/. 2s
ad to 3s 51 for London.

CHINA.
The Overland China Mail of Sept. 25 says :
" In Hong Kong the great event of the fortnight
has been the re-arrival of Lori Elgin, and specula-
tions have been rife as to his intended proceedings.
Whatever course he may deem it proper to pur-
sue ono thing we beg earnestly to protest against
—viz., the partial blockade of the river now en-
forced by Admiral Seymour, and which is driving
away from this colony all the little trade it ever
possessed. The injuries it is doing become more
applr,nt every day, and it would almost seem as if
the Chinese had entered into a combination to have
no business transactions whatever with Hong Kong
while the present state of affairs continues."

THE FINANCIAL CRISIS OF 1847.

The correspondence between the Government
and the Bank directors in 1847 may be interesting
to many of our readers at the present moment. It
was as follows : _ _ _

.
Downing-street, Oct. 25, 1847.
Gentlemen,—Her Majesty's Government have been
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 tur carrying
on the ordinary dealings of trade.
They have been in hopes that the cbeck 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 the,c circumstances
might have been expected to produce, would have
removed the prevailing distrust.
They were 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 recommended to the directors
of the Bank of England, in the present emergency, to
enlarge the amount of their discounts and advances upon
approved security ; but that, in order to retain th.s
operation within reasonable limits, a high rate of inter, st
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 pre=
pared to propose to Parliament, on itr meeting, a Bill of
Indemnity.
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 arrangements.
Her Majesty's Government are not insensible to the
evil of any departure from the law which has placed the
currency of this country upon a sound basis ; but they
feei confidant that, in the present circumstances, the mea-
sure which they have proposed may be safely adopted ;
and that at the same time, the main provisions of that
law and the vital principle of preserving the converti-
bility of the bank-note may be firmly maintained.

JOHN RUSSELL.
CHAS. WOOD.
The Governor and Deputy Governor
of the Bank of England."

(Copy of Reply.)
BAIA of England, October 25, 1847.
Gentlemen,—We have the honour to acknowledge
your letter of this day's date, which we inve subinitted
to the Court of Directors, and we enclose a copy of
the resolutions thereon.

JAMES MORRIS, Governor.
H. J. PRESCOTT, Deputy-Governor.
To the First Lord of the Treasury and
the Chancellor of the Exchequer.
Resolved,—That this Coart do accede to the recom-
mendation contained in the letter from the First Lord
of the Treasury, and the Chancellor of the Exchequer,
dated this day, and addressed to the Governor and _De-
puty-Governor of the Bank of England, which has just
been read.

That the minimum rate of discount on bills not having
more than 95 days to run be 8 per cent.
That advances be made on bills of exchange, on stock,
Exchequer-bills, and other approved eecurittes, in sums
of not less than 2,0001, and f,,r periods to be fixed by
the Governors at the rate of 8 par cent. per annum.

THE BANK FAILURES IN WORLAND.

(From, the North British, Daily Mail.)

The block up in money is extending wider. and
wider. The suspension of the City of Glasgow
Bank aggravates immensely the embarassment and
distrust arising from the stoppage of the Western,
and shows in what lamentable results want of
confidence, when once it breaks loose, may in-
volve this community and the whole kingdom. The
same cause which has compelled the City Bank to
close its doors may force a similar course upon any
bank in Scotland or the world ; and one of the first
duties we have to perform in alluding to this matter
is to point out clearly for the information of the
public in what the suspension of tbo City of Glas-
gow Bank consists. It is not because the bank was
unable to convect its notes into gold that it closed
its doors. Every 11. no'e which the bank had in
circulation could have been exchanged at tbo coun-
ter fur gold. The City of Glasgow Bank, indeed,
is one of the few banks in this country which could
convert its whole paper circulation into gold on
demand immediately from its chest, because it has
grown up chiefly under the Banking Act of 1845,
which requires a deposit in gold equal to every note
above the average issue of that year. It is not be-
cause the bank did not afford in the liability or
means of its proprietary an ample security to its
creditors that it was driven to shut its doors, be-
cause its shareholders are very numerous, many of
them very wealthy, and all of them are liable to the
last penny of their fortune for the obligations of the
bank. Nor is the suspension to be attributed to
bad debts in the books of the b ank, for the assurance
of the directors,—a body of highly honourable men,
—has been published that tins is not the cause,
and no losses sustained by the bank have been
named that could make any impression on the large
paid-up capital (1,000,0001. sterling) and the reserve
of the bank. The City of Glasgow Bank, in short,
has suTended because there was a run upon it for
payment of its deposits in gold—a demand which is
clearly impossible to any bank that pays an inte-
rest on its deposits, and the inability to implement
which at a moment's notice does not in any degree
affect per se the perfect solvency and solidity of the
bank. it seems to us important to point out these
circumstances, for, in addition to the miscon-
ception which they may remove in country
towns where there are branches, they will
show to the admirers of the present banking law on
the other side of the border that there is no secu-
rity whatever in the issue of notes upon an equiva-
lent basis of gold against the most serious catas-
trophe which can befal a commercial community.
No case would illustrate it better than tho City of
Glasgow Bank, because, as we have said, its notes,
under the Act of 1845, are based almost wholly ou
sovereigns.
The present is hardly the time for blame or re-
crimination as to the causes of this additional
catastrophe. Au opportunity will come when the
whole history of these banking difficulties wilt have
to be opened up with unsparing honesty. The
City of Glasgow Bank has been forced temporarily
to suspend in consequence of the distrust created
by the fall of the Western, and the fall of the
Western might have been averted by the timely.co-
operation and assistance of the leading Scotch
banks. The whole community is disgusted at the
pride, selfishness, isolation, and utter want of
head displayed by the directors of our monetary
institutions, and the callousness and stupidity witu
which they sacrifice the honour and interests of
this immense city day after day to a miserable egot=
ism. The present crisis wilt • leave an indelible
lesson on the minds of the citizens of Glasgow as to
the trust to be reposed in certain banks, but the
concern of the moment is simply what is to be
done to lift affairs out of this dead lock. Two of
our banks with the largest circulation are stopped.
Every day until they resumes notes to the amount
of 800,0001. will gradually disappear from the cur-
rency of Scotland—an evil itself of no ordinary
magnitude, and one that will be felt immediately
in the daily transactions of the country. But this
is only a segment of the mischief. A large number
of our merchants and manufacturers are shut out
from their deposit accounts and from the ordinary
facilities of discount. Large establishments
are being closed every day ; ho: is of unemployed
workmen are already gathering in the s'aeets. It
is no longer the American trade or any branch of
foreign commerce that is embarrassed, but our
whole inland business is obstructed and imperilled.
The bills of Glasgow merchants on country towns
with suspended branches must be returned upon
them dishonoured, and, unable to operate on their
own funds or credits in the banks, their solvency
will be at an end. Let no man think that because
the doors of his bank are still open that he is there-
fore safe, or may probably benefit by the embar-
rassment of his neighbour. Let no bank imagine in
its ostrich stupidity that because it burrows its
head in the mud it is secure .from danger. There
is not a firm or a bank in Glasgow that is safe while
the present state of things contillues. The case is
one, therefore, for a public and general effort at
restoration. As regards the vacuum suddenly made
in the supply of circulating medium for our retail
transactions the evils may bo greatly alleviated by
a demand upon the chartered banks for gold in ex-
change of their notes. When a few hundred thou-
sands of sovereigns have thus been liberated from
imprisonment, the want of the withdrawn 1/.-notes
will have been supplied. The old ban ks can very
well do this much for the community, and the only
inconvenience arising from it, indeed, will fall upon
London and the Bank of England ; but, as little
cpmp.assion has, been felt for us in that direction,