XLIII. 1847. £8,000,000 would, to all appearance, be required. No CHAP. taxation, no increase of the property-tax, could provide so large a sum, and therefore it was indispensable to go into the money market; and it was deemed advisable to supply the deficiency at once in the form of a loan rather than disturb the Bank by requiring farther advances from its coffers. The large balance in the Exchequer at the beginning of the year would be all drained away by the advances to Ireland, and to England and Scotland, under the Drainage Acts, which were beginning to tell seriously. Nothing remained, therefore, but a loan, and it was at once agreed to. The terms on which it was contracted were, considering the circumstances of the times, more favourable than could have been expected. They were, £89, 10s. for £100 stock-the interest to be at 3 per cent. In the course of his speech on this subject, the Chancellor of the Exchequer stated the extraordinary fact, that while Great Britain was making such efforts for relief of Irish distress, "Ireland has hitherto, whatever she may hereafter do, paid nothing 1 Parl. Deb. except the poor-rate, which was £390,000 last year" 327; Aun. (1846), being not 5d. in the pound on the rental of the 90, 92. country, while in England the average was 1s. 8d! 1* 1 xc. 323, Reg. 1847, which led But whatever pains Government might take to con- 71. vince the house and the country that all was safe; that Causes the nation had learned wisdom by experience; and under a wise system of currency-laws, no danger of a monetary crisis was hereafter to be apprehended, they crisis. that, to the ap *The Chancellor of the Exchequer gave some interesting details on the increased importation of some of the chief articles of consumption between 1843 and 1846, under the combined influence of reduced duties and the railway expenditure:— 1846. proach of a monetary 36,781,391 XLIII. 1847. СНАР. were soon taught by woeful experience that these hopes were altogether fallacious, and that a commercial storm of the most violent kind was not only rapidly approaching, but was already on them. The causes of this were twofold, and what is very singular, they arose partly from the prosperity on which Ministers justly prided themselves, and partly from the disaster against which they were making such extensive provision. The great increase of imports, which had advanced from £64,000,000 in 1841 to £93,500,000 in 1848, had not been attended by any proportional augmentation of exports, which had only increased, during the same period, from £51,000,000 in the former year to £52,849,000 in the latter.* Thus the foreign commerce of the nation had run into a heavy balance of imports over exports, which had latterly come to be from £30,000,000 to £40,000,000 a-year. This balance, of course, required to be paid in cash; and though the drain might for a time be averted, or rather postponed, by bill transactions, yet in the end it inevitably fell upon its metallic treasures, and produced a serious chasm in the bullion of the Bank of England,† * EXPORTS AND IMPORTS FROM 1841 TO 1849. BULLION IN THE BANK OF ENGLAND IN BOTH DEPARTMENTS. XLIII. which had sunk from £16,500,000 in June 1845, to CHAP. £14,800,000 in the beginning of 1847, and £9,200,000 on the 24th April of that year, and in the October following it fell to £8,300,000. 1847. 72. of the Irish This immense balance of imports over exports always must, in a great commercial country, arise under a Free- Great effect trade system, after a few years of more than ordinary famine. activity and prosperity, for this plain reason, that the rich and old State can consume much more of the rude produce of the poorer one, from whom it is derived, than they, from their poverty, can take off of its manufactured productions. But, without doubt, this natural tendency was much aggravated in this particular case by the Irish famine, which occasioned so prodigious an importation of foreign grain, both in the years when it occurred, and those which immediately followed. The imports of foreign grain into Great Britain and Ireland, which in 1843 had been only 1,370,000 quarters, rose in 1847 to the enormous amount of 11,900,000 quarters, of which no less than 4,460,000 was of wheat and wheat-flour, and this high rate has not yet been diminished in any material degree. The cost of the importations from June 30, 1846, to November 30, 1847, was £33,000,000; and as the greater part of this large sum required to be paid in specie,1 because it came from nations which would xc. 274. take nothing else, it is easy to see to what cause this *IMPORTS OF WHEAT, WHEAT-FLOUR, AND OTHER GRAINS, INTO THE UNITED KINGDOM FROM 1843 TO 1850. Wheat and 1 Parl. Deb. Years. CHAP. extraordinary drain upon the Bank of England, and the XLIII. severity of the monetary crisis during the last panic months of 1847, is to be ascribed. 1847. 73. This drain first became serious in the beginning of Progress of April 1847, being the time when the bills drawn to the panic. pay for the great importation of grain and flour, in the November and December preceding, became pay able; in consequence of which the Bank raised the rate April 8. of its discounts to 5 per cent, it having been at 31 in the beginning of the year. In the course of the year that establishment changed the rate of its discounts thirteen times; and on the 5th August it was advanced to 5, at which rate it continued till 25th October. At this time there was no undue speculation in any department of commerce or manufacture; the drain arose entirely from the immense balance of imports over exports which the Irish famine had so fearfully augmented. The crisis, especially in the end of April, was, however, dreadfully severe; it was afterwards stated in Parliament that the 27th of that month was the most fearful day ever known in the city. Mr Baring mentioned the case of a gentleman who was possessed of £60,000 in silver bullion, who was unable to obtain the slightest advances upon it. The Bank directors, true to the principle of the Act of 1844, resolutely threw out the paper even of the richest and most respectable houses; and every other bank in the country immediately did the same. Mr Langley mentioned in the House of Commons, that in the north of England 25 per cent was given for money. The effects 1 Ann. Reg. were immediate and decisive. Consols, which had lately Disraeli, been at 93, fell to 85; Exchequer bills, recently at 14 Pari. Deb. premium, were at 4 discount; mercantile paper even of the very highest class could nowhere be discounted. The panic was universal and unprecedented.1 1847, 97; 397, 398; xcii. 629, 636. The crisis was unlike any other that had ever occurred, and well illustrated the working of the new law on the subject. There was no over-trading; there was no com XLIII. 1847. between former mercial embarrassment irrespective of the monetary pressure; the credit of the Bank of England was above suspicion; there was no run upon the other banks; 74. capital was abundant, and more than equal, as the events Difference of the following years demonstrated, to all the undertak- this and ings which were in hand or in contemplation. There was crises. simply and only a want of currency to make the advances with, because the Bank, restrained by the Act of 1844, could not lend money with a few hundred thousand pounds only in the banking department, though in the other end they had above £8,000,000 in the issue de- 1 MrBaring; partment! But nevertheless the pressure was such, from xcii. 634, this cause, that all undertakings of every kind were Reg. 1847, brought to a stand, the first houses were on the verge of 97,10 bankruptcy, and society, like a vast machine in which Bentinck, the moving power of steam is suddenly withdrawn, was and Newall at once stopped, and every wheel dependent on its 330, 333. expansion ceased to revolve.1 Parl. Deb. 637; Ann. Disraeli's 398; Tooke marsh, iv. Bentinck's ing's argu subject of 1847. This deplorable state of things excited, as well it might, 75. the utmost solicitude, both in Parliament and among Lord G. the public, and a very interesting and important debate and Mr Bartook place on the subject in the House of Commons on ment on the the 10th May. On that occasion it was observed by the crisis. Lord G. Bentinck and Mr Baring: "The usual rate of May 10, discount in London and Liverpool for the best paper, which had only sixty days to run, is 8 per cent; a state of things altogether unprecedented in this country, and which calls for very different plans of relief from the temporary expedients proposed by Government. Wheat had risen that day to 120s. the quarter; the stocks of all kinds of produce, both at home and abroad, are unusually low; the imports of last year were £10,000,000 below those of the preceding; while the export of gold was to an unprecedented extent. The only remedy which Ministers could propose for this long catalogue of disasters, was to put on the bank screw, and thereby force back the gold. But supposing that method of getting back VOL. VII. U |