The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1847-12-27
NEW YORK. MONDAY MORNING, DECEMBER a. 1S47.

better proof of it than by mentioning that notice was
published early in April by the chairman OF ono OF the
best railroad companies In England the North Western
announcing that the company were prepared TO pay
per cent LOT All me ~1nsy ansy @ % hont the
same time the Bank Of England though too late, be-
lsve, raised their rate to per cent. IHear hear
stated ut the time from what causes that occurred
stated and have seen no reason since to change the
opinion then formed, that II was msinly may say
entirely caused by the imprudepce Of the Bank who
having been warned of the demand there would be- I'm
prudenty let the money they had provided for pay
msnt Of dividends over the period when those dividends
became payable so that they were not In funds when
funds required they let out the money not to be
repaid till May and consequently found their reserve
Inadequate to pay the dividends. (Hear, hear) The
statement of the bank accounts that published one
Saturday early in April 1t is notorious spread consd-
BILE alarm in the commercial world The bank then
took severe step they restricted the amount OF dis
wisely let out their reserve before and hs oonss-
quence was the alarm which We all remember. The
alarm was increased at the time by the state Of
took measures which they deemed calculated to
meet the emergency. and 1t will be in the recol
lection Of the house that after considerable appre
hension the state of monetary affairs generally resumed
its ordinary But well remember that In June
saw in more than newspaper, not only in the Lon
don but the country press warnings against the
latve tendency which was again developing itself not
referring to the accounts in the Gazette Of the state of
the Bank find that the notes In the hands OF the pub
Ito at that time In the early part Of June were about
The dividends paid in July, when the state
things prevailed On the sOth of July the amount Of
ELS 600, the bank still discouuting at per cent
do not know how is possible to say that there
deficiency Of circulation to meet the wants of the
try at that period, far the Bank concerned
There was no extra demand upon the Bank for dis
notes In circulation infinitely larger than that in
the corresponding period Of the previous year On the
th OF August the Bank their rate OF discount
TO on per cent and be observed that the first great
failure which took place the 10th Of that month";
when the house of Messrs Leslie, Alexander and Co.
mott Of the early failures were with house. engaged in
the corn trade With the exception Of the firm OF
Me.srs Reid Irving and Co nearly the whole failures
In the first instance of houses engaged in that
trade Was 1t possible that these houses should fail
without involving others or less closely connected
with them see no reason however to justify its being
said that these failures by the operation
Of the act Of ls44 believ has uniformly happened
that when considerable fall has taken place in the
price any article of general demand failures have oc
Cured with those engaged trading in that particular
article Hon gentleman will remember that between
the month OF May and the month OF September the
price Of fell less than so per cent In May
was 1928 quarter and in September 1t ASS Those
therefore who purchased In May aud sold In the autumn
at such dsproportonate rate Of prices could not but
experience very severe losses. remember receiving in
May accounts Of the great prosperity OF trade and
ports of the importations being exceedingly large Al
though 1t was no part Of my duty to warn those who
were engaged 10 the trade and Of the country
yet certainly did omit the opportunity Of stating
In this house the extraordinary amount oimportation
Of that going on, in order that the country
its possibly ultimately resulting to the disadvantage Of
those engaged in euch extensive transactions. The
those whose interests imm~ datey
Whatever calculations may have made they calculated
otherwise and now, that the catastrophe is known,
only that they have paid the penalty Of their
misoalculaton Under other circumstances the parties
engaged in these transactions might have proved great
bensfactors to the country; far be 1t from there
fore to impute to them any intentional m'soonduct 1t
Is sufcsnt to know that thy made
which could not By possibility have influenced
them. When these early failures took place found the
General impression to be- that they entirely owing
to the state OF the trade There was belief at
that time that the failures would be inly confined to
houlss that trade; and it was on that ocoa
sion when addressing the house used an expression
Which has since been good deal commented that
believed the worst had passed That was not my i'm
preston alone An honorable friend has put into my
hand circular issued by we'll known firm in Liverpool
that of Messrs Lttledale & Co, in which they state
that, in their bmonthy circular of the list ut (Sep
tember they expressed their hope that the worst
passed. but they regretted to say that far from thst
being the case every day had brought forward
disaster From such statement this it may be pre-
sumed, that even was wrong In the confidence eX
pressed tnas croumsanoes wereaoout 70 improve mad
Mt lsast some ground to justify my anticipaons sp
pears that the correspondents Of these parties led them
to the conclusion to which had bsen led by the
information placed before me-namey that the failures
would be confined to those engaged in the trade
am sorry however, to say, that anticpatons
erroneous and that failures OF far extensive ma
ture very occurred. Throughout the month Of
failures Of houses various
of trade took place in rapid and
But these failures TO be attributed to deficiency
In the amount of bank notes then In circulation l
think not 1t was impossible to make that tho test
Early in September took place to which
think exaggerated Importance has been given
mean the fact OF the bank making advances nearly up
to the time when the dividends became payable Early
in September the Bank Of England that they
would make advances to the 4th OF October ut per
cent exceedingly unfortunate that they adopted
that low rate hear, hear bscauas parties in the city
do much attend to the published accounts Of the
bank they do to the acts Of the bank and the rate Of
interest actually charged on advances. do not think
determination
duced any great practical effect on the amount Of the
advances actually made but do believe that IL did
produce very considerable effect In other respects
inducing an undue confidence In the money market IL
therefore, in Its result an unfortunate and miscbev
proceeding But although the advances were not
increased, yet what was really done this 1t Is
torous that previous to the payment OF the dividends
every quarter government balances allowed to
cumulate In the bank and 1t lie equally notorious to
with these matters that the
ce OF the bank IL not to allow these distances to lie In
their tis unemployed thereby deprivng the public Of
the extent Of the accommodation which they
titled to expect but to lend them for short periods in
to be repaid previous to the time when the dvi
dsnds become due. This the course adopted by
the bank In September and October last. They made
adysnces out of the Government balances repayabe be-
the dividends became due in the month Of October
1t Is also equally true, that upon all former occasions
the practice Of the bank has been that when they made
loan 10 bs repaid within limited period they charged
a different rate OF discount The loans this occasion
were made at6k per cent What. then, was the effect
these proceedings OF the bank in regard to the
of bank notes In the hands Of the public? In the
early part Of June the amount Of notes In circulation
was Els 100000. On the s0th Of July the amount was
els 800 600. Now 1t Ia notorious that just before and
during the period Of the payment Of the dividends the
Of in circulation decreases and after that
period increases again. Accordingly, the 18th Of
September the amount Of In the hands of the pub
lie had gone down to Ell sac 000 but on the I'd Of Oc
tober when the advances OF which have just spoken
had been made the amount Of notes In circulation
Eis7i2O00 Therefore, the amount of notes In crcu
laton at the time when all this pressure existed and
which has been attributed to deficiency Of the bank
circulation, actually more by the sum OF f3oOoOO,
than 1t In the early part of the month June when
everything going prosperously and the importa
tions upon most extensive soslei Will now refer
the accommodation afforded by the bank upon what
In called other seeurities" On the oath Of July the
advanced on private securities amounted to El6,
325 OOO while the amount OF accommodation afforded
at the time of the pressure not less than dou
bic VIII TIT in 's4i being no less than QUO
September the Of the bank TO the pub
lie on private securities was Increased upwards OF
fe 600 600 The amount advanced on other securi-
| uesp in former years stood thus -:
On the 5th Of October 1874. .,El0,5l0 900