The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1866-05-30
THE PANIC IN ENGLAND.
subsIdence Of the PanIc...Its Sudden
RIse.--InterestIng lIistOry OF the
Whole Affair.

day the wonted feeling of security had
almost returned, and suspicion was no
longer master of the situation. Com
merce has had its crisis before, but II
must be confessed that none has eUeT
come upon as so sharply and so suddenly
as that from Which are are noD escaping.
The week before last-nay, as late as
ednesday-nothing had happened to
excite unusual alarm. The bank rate
of discount was not SO high as it has
been again and again in the last three
wears, and though the glories of the
Finance Companies had begun to pale,
and it was known that the Imperial
Mercantile Credit Association was tot
tering, there was no reason to appre-
hend any panic in consequence of n
collapse which was distinctly foreseen.
1t was the suspension lot OVerend,
Gurney 81 Co., on Thursday, which
awoke the terror of creditors. The
name of the firm was historical, and
the magnitude of its liabilities showed
that the mass of depositors thought as
highly of the public company with linn
tied liability as of the private partner
ship. 1t was notorious that the spar
money of town and country bankers
had often been deposited with Overend, /,
Gurney & Co., or, at all events had
been EMPLOYED through their agency,
and all Well-iuformed men dreaded the
effect of the suspension OF such house
upon the popular imagination. Friday
showed that their apprehensions were
we'll founded. Depositors ran to the
banks 10 get back their deposits, and
the banks, unprePared for such sud,
den rush, run 10 the Bank of England
to draw out their reserve and to beg for
further assistance. -Four millions OF
money 1oere lent By the Bank Of England
during the day in addition to deposits re-
paid, and, though considerable part
of the money thus Withdrawn found
its way back, the cash in hand fell from
.95, ,727,OOO to something under ES, COO, QGo.
This reserve was amply sufficient to
meet all the liabilities of the Bank of
England, but it is evident that the as
sistnnce it had rendered on Friday to
bankers in distress could not be re-
peated. The situation IVaS full Of dan
gers and amply justified the Interference
Of the Executive Government. Symp-
toms, indeed, were not wanting on Fri
day night that the bitterness OF the cri-
sis was past; but it was quite possible
that things might yet take an unfavor-
able turn, and the suspension of the
Bank Charter Act, under the CirCum-
stances, was a proper act of caution.
We are disposed to make every proper
allowance for the conduct OF the Lon
don bankers. A banker makes his
profit by reinvesting the money left in
his hands, and it is quite Impossible
that such Il trader should be prepared
at all times, at II moments notice. to re-
pny all his creditors. 1t is, however,
plain that on this occasion many OF the
London bankers were wholly unpre-
pared; their cash reserves were not
merely inadequate to meet the de-
mands upon them-they were almost
altogether wanting. The competition
between the banks for custom, and the
endeavor on the part of the joint stock
banks to outdo one another in the mag
nitude of their dividends, had induced
them to trade upon cash balances dam
gerously limited. When the rush came,
Ihey hud nothing to do but to betake
themselves to the Bank of England and
beseech the directors to re-discount the
bills they procured from their bill
boxes. An attempt was thus made to
convert the reserve of the Bank OF Eng
land into the reserve of all the banks IN
London. The Bank of England had
about six millions in money in its coli
ers TO meet liabilities of about twelve
millions, and under no circumstances
| conceivable as practicallyurisingW would
| this proportion be found deficient. But
| if private and joint stock banks keep
cash balances amounting to little more
than 5 per cent OF their liabilities, they
have no right to expect that they can
escape the consequences of their reck-
lessness and improvidence by resorting
to the Bank of England with bills to be
re-iiscounted. In any case If they do
| rely upon such assistance, they ought to
be prepared to pay the famine prices con-
sequent upon such general compeu-
\ tion for what is after all a limited supply.
1 The Bank of England is as much a
trading company as any other banking
observation-disclosures or joint t-stock-in
| Lothbury or Lombard street; the Di-
rectors of the Bank of England owe the
4 same duty to their stockholders that
the directors of any other bank do to
their tockholders; they are bound in
the first place to keep money enough
in hand TO be ready for any contin'
| pency, and in the next to invest the
| surplus on the best terms consistent
with safety. The deputations, COM
posed, we are told, "of persons of the
greatest weight and influence, and rep
| resenting alike the private und joint
stock banks of London" which pre-
| sented ii emselves in quick succession
| in Downing street on Friday had neg
lecled these considerations, and the one
thing they sought was to compel the
Bank of England to surrender the ad-
vantage it had gained by the superior
prudence of its directors. The thrifty
were mulcted for the benefit of the un-
! thrifty; the foolish virgins made such
clamor that they compelled the wise
virgins TO share their oil with them,
whatever might be the consequence.
The suspension of Overend, Gurney d.
| Co. was the first cause of the panic; the
| too scanty reserves of London bankers
aggravated it; and the credit of the
Bank of England was called upon to
allay it. We do not disapprove the ac-
| tion of the Government; on the con-
| trary, we believe what they did was
| inevitable under the circumstances; but
| it is right that the blame of having con-
| duced to the crisis of Friday night
should be borne by those who are prop
| erIy answerable for it-that the bank
/ ers. bill brokers and merchants who
4 discounted bills ut the Bank of Eng
land to the extent of four millions on
| that day should not escape the conden-
| nation which their willful carelessness
as to their own stability deserves.
| Permission was given to the Bank OF
/ England on Friday night TO override
the provisions of the Bank Charter
Act. and the panic abated on Saturday
morning. 1t is an easy conclusion that
the Bank Charter Act was the cause ol
the panic, and the conclusion is appar.
4 emily strengthened when it is remem.
! bered that the panics Of 1S4T and of 1851
were saved by similar infractiOns o.
the law. 1t may be plausibly argued
/ that as the liberty to disregard the aci
dissipates the fear of universal insol'
yency, the restrictions imposed by the
act are the circumstances which make
universal insolvency probable. Itmust
however, be remembered that there
were panics before the Act was passed
as there have been since; but before
1874 the solvency of the Bank of Eng
land itself was jeopardized whenever q
panic arose, and, in fact, suspension
of payments by il was more than once
found necessary, 1tmust also be borne
I 70 nf n