The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1847-06-20
The Financial Trouble In Great BrltaiI


In 1928 tho drain entirely OF the former descrip
ton. The exchanges favorable; there was de-
not to partial DRAIN but to being completely exhausted
and run dry and AZ was that occasion called ia to
counsel with the late Lord Liverpool, Mr.. Husksson,
and the Governor OF the bank the symptoms aud their
treatment very distinctly in my recollection. Tho
this: adventures Of the most wild and hazard
Gus description, assisted, though hardly be said
that they created by facilities given by the bank
followed by entire prostraton OF the credit of
all parties with the single exception of the Bank of
England. Private bankers in and country fell in
numbers and the panic naturally consequent such
and wealthy establishments by all who had claims upon
Them either by holding their notes depositors and
always the most formidable. They called for their
hundreds, while the holders of notes, though
merous came for single pounds. This sudden alarm,
stopping In the first instance all circulation of credit
obliged every country banker to draw from London all
the soveregns out of the bank and the extent OF their
demand will be best explained by the statement Of
of the most wealthy and respectable OF those bankers to
that he could not sleep till he had gold in his house
this not accomplished without great sacrfces but
to banker noprice too dear for the maintenance Of
will know the individual losses occasioned by the
these secrets which few able to
make public with mpunity.
The gold Of the bank was drained to within q very
few thousand pounds for, although the public returns
showed result rather less scandalous certain saur-
day night closed with nothing worth mentioning remain
ing. The application made to Lord Liverpool for
order in council to do that which necessity seemed
about to Accomplishing suspension OF cash payments
and this rise to the conference have mentioned be-
tween Lord Liverpool, Mr.. Husksson, the Governor Of
the Bank, and myself We recognised at the fol-
lowing facts in this for has been already OBJ
served the position Of things in of alarm and
seldom mover exactly similar The credit of
the bank all domestic purposes perfect There was
no man in the country who not ready to take its
paper as means of circulation and to give even his
gold for it, the he assured that his neghbor
would take 1T from him again The gold not wanted
to send abroad the state of the foreign exchanges for
babe there was therefore, tear OF depreciation of
paper. The necessity and pressure purely domes
tic what was wanted something which every body
LrA,
dstrusted and the paper of tho Bank Of England
swered in such state OF things the purpose as well
gold may be said to have done even better being
more transmissble and reaching readily and
| pidly the points where IL wanted
In this state of things the remedy for the difficulty
was obvious, and unanimously agreed to by u.s. Al
though the Bank had specie left, largo additional
Of IT, which accidentally found to be- in existence
circulated the relief immediate, the country
received circulating currency in which every body had
entire confidence and the useless gold was returned to
the Bank The by this proceeding increased
from l97ls00Oi in December, 1929 to 24479Oost, in
March, 1926 and having served to relieve the pressure
they gradually subsidized before the end Of that year to
their ordinary amount again of l0,96l 0OOl, while the
bullion in the bank was successfully increased by this
increase Of paper in opposition to the theory of s44
which presumes from such cause necessary diminu-
| ton.
being supposed to maintain that increased issue Of
paper Is nvariable remedy aganst drain Of specie
but what do maintain is that 1t was the fit remedy for
that particular case and that 1t undenaby proved
to be so by the result while contrary treatment might
the act Of is4a says that all Of drain shall be
treated in the manner that there shall be dis
erection judgment allowed as to the causes and
for dwelling long the Of 1906 is to
substitute for speculative reasoning clear proof that
the Of lS4 not only would not have suited that
case but would have aggravated all the dHcuties that
consequently is not Of universal application, and
therefore cannot without danger, be suffered to
| Unfortunately our circulation.
Having thus considered the OF 1925 lot shortly
examine the unfortunate symptoms which We now wit
when with sound state Of trade and flOO00 600
|
than when in 1926 the Golfers OF the bank empty,
and large portion Of merchants ruined by mad specu
ation The treasure OF the bank had stood for long
| time at about Gl5,000,O0O in round numbers, the
amount OF this treasure considered burthen to
them, imposing u useless waste OF interest IL was a
subject of complaint and for long time the directors
would have been much obliged to any body who would
have taken four five millions of their hands The
want Of food then occurred and combined with the in
creased price Of cotton the amount Of
exports, and required part payment in bullion. The
natural question: then to be asked was to what extent
this likely to go. The continental exchanges af
forded ground for alarm Russia ut FIRST took some
| for Amerca-a country with which We have always
extensive reciprocal trade. 1t might fairly be pre-
sumed that four five millions would satisfy this de-
mand, which would reduce the treasure Of the bank
from fifteen to ten millions. This, which might hav
been the practical estimate Of practical men, turns out
in its Golfers need have disturbed interests, dis
turbed them slightly But the directors had power
| to exercise any opinion the rigid parliamentary ma
chine to think and act for them the whole country
disordered and 10 would be difficult to form any
innate Of the immense losses both to the exchequer and
to individuals, which cnsued.