, 1873-09-23
tho water on tho animals, ho would earn tho
gratitude Of tho wholo country.
THE LONDON PANIC OF 1900.

THE LONDON PANIC OF 1900.
In 1866. there occurred violent financial panic
in London, which originated from tho natno Feu-
eral ca,,seH that produced the recent dorango
n,ent III this country. To uudcrssana the bis
tory Of that panic moro c1oarly, It SHOULD be borno
in mind that tho Bunk Of England alone. OF tho
London ba,al.s is authorized to issue notos,
aud TINT, by tho net Ut 1874, tho aggregate IT,
suo Of such notes Tin 1S0o) WAS limitod to E2o,-
100000, or about s19o,00o,ooo. Tho other c''r-
rency Is furnished by tho country bants, and tue
banks of ireland and Scotland. In 1860, tho
Bank Of England hold E19,o0o,ooo sterling
in gold. Tho 1ogalzod maximum issuo OF notes
by tho country banlts in England waH then about
G7,000,000, making the total currency about
.ES2, ,00o. 900.
The monetary buH[ness Of London wasof throa
kinds. !. Banking That is, whom tho bank re-
oeivcs tho deposits OF tho public, aud lends tho
eamo out, aud docs nothing elao. As these de-
posits aro on cali, tho money Is loaned only On
commercial bills, OF other securities rendiy con-
vortib1o into mousy.-a rcBcrve Of money being
kept to moot cursont demands Of doposltora.
Long loans, or speculative loans. aro excluded
from good banking. q. THO Discount businoss
II the discount-house deals with its own money
only, 1t needs no resorve, i. caunot suspend pay
mont, aud has no liabilities to tho public. 8.
Financial businesB: The undertaking OF
now enterprises. A company Of this kind,
trading with liz oWn capftal, noeda no
reBorve. A company Of this kind may
also receive deposits on long timn and
deal with thom ~ with its own money. In 1866,
these several classes of institutions. instead Of
confning themselves to their own Limos OF bs1si-
ness, had engaged in all these kinds Of opera
tions. Diacount aud financial houses had sought
and received deposits on ca1l and the banks had
branched out into the larger intorost~bearing
eocuritioH Of the other companies, invested their
money in long loans, and in many instances on
precarious or speculative stocks and bonds. In
March, 1865, ono of these conoorns-tho joint
Stock Discount Company-failod. Though a
purely discount concern, with no liabilities to
tho public its failure was followed by general
doclino in tho valuo Of shares In MI tho other
financial companies Of London. This decline in
the yaluo OF the shares naturally produced
diBtruet in the minds OF tho creditors Of tho
institutions as to their management, and thus
began tho demand for deposits. This demand
fret attacked tho groat house Of overend, Cur
noy Il Co. This firm had oyor E2,000,0oo
loaned upon long time the va1ue Of Its sharea
foil in tho market to suoh an extont TINT tho
customers tock an alarm, and run for deposits
WAS made. 1t applied for aid to tho Bank Of
England, and, failing to receive 1t, tho doors
wore closed. That house had held as high rs
E18,o00,000 OF deposits, and when 1t closed Its
liabilities were equal to s90,o0o,ooo. The run
was then extended to other institutions. Tho
English Joint-sto Bank had a portion Of It's
fupds with Ovetend, Gurney d Co., md, OF
course, had to close Its doors. ALI tho othor
banks and financial housosin London wero now
aHaatled. There WAS general rush for deposits,
and there was no currency with which to pay
thom and no currency into which the banks could
convert thoir securities. Consols could not be
sold, the Bank of England refusing to loan their
notes upon Government stock. The most SOL
yont banks woro unable to meet tic demands
upon them for tho want OF cash. Tho aaaota
wero confessolly adequate, but those assotH
wore inconyertible.
Tho aggregate bank-note circulation Of tho
Kingdom hardly exceeded the amounto of deposits
In tho London j. Westminster Dank and tho
Union Bank. Tho Bank Of England, whon ap.
pealod to for notes In exchange TOR securities,
refused to part with them. Tint bank itself had
not enough notes and coin to moot q run npou
1t by its own depositors. In fact, Ind the Other
| banks withdrawn their rosoryo balances, tho5
could hnvo forced it to suspend. Tho aggregate
deposits wero cAO0,0oo QUO, aud tho aggregate
| OF currency In tho Kingdom WIS FAC, 100000
How to pay tho larger aum with tho smaller
was tho rorrtoxing problem. and yet the uobs o
impatient depositoEs woro roaring in the Rtroots
becuuso 1t was not dono. On friday, May "a
tho panic was at its height. At o'clock, thE
papers announced that the Bank act Ind boet
and the run slackonod. Tic announcement va,
| premature, becaueo it Was not until midnight o
that day TINT tho Government suspended th
act. This suBponsiou Of tho act was an authorit,
to tho Bank Of England 10 incroaso its issue
Of notos beyoud tho usual gold reserve. Th
official announcement had the effect OF quiotint
tho market, aud when business cluaod on Hatur
day 1t was assumed TINT tho panic WEB over. Til
Bank Of England, when thus allowed to increas
ita Issue, is by law required to charge 10 pc
cent on oil loans it makes, and divide til
profit with Tie Government. But tho Dan1
Of England rofuaed to iucraaso its is
sues, lost they should bo returned i'm
mediatoly for foreign exchange, or some
thing that people could pay debta with Il
other countries. The other banks which ha
been drained of their currency by tho partia