XLIII. 1847. CHAP. 1847.* On the other hand the committee of the Commons, by a majority of 12 to 10, came to the decision, "that, after a lawful review of all the evidence, your committee are of opinion that it is not expedient to make any alteration on the Bank Act of 1844." But this result arose from the accidental circumstance of two determined opponents of the report (Mr Herries and Mr Thomas Baring) having been absent on the final division, whose presence would have rendered the numbers 12 to 12, and brought the issue to the casting-vote of the chairman, Sir Francis Baring. And from the opinion expressed by him in the debate on the question, as to the difference between the result of the Act on the Bank circulation and the anticipations of the authors of the xcv. 615. Act, there is reason to believe he would, to a certain extent at least, have voted for a modification of the Act. And thus the Bank Charter Act would have stood con487, 491. demned by the committees of both houses of Parliament, nominated by Ministers themselves.2 1 Parl. Deb. 2 Tooke, v. 113. on this debate. Sir R. Peel's pleading on this occasion, on behalf of Reflections the Bank Charter Act, is a model of that species of rhetorical skill in which he so much excelled, and which consisted in eluding difficulties instead of meeting them, and giving his speech an air of candour, while in fact he was throwing the whole blame of the catastrophe which had occurred off his own shoulders upon those of others. Thus "The committee are of opinion that the recent panic was materially aggravated by the operation of the Bank Charter Act, and by the proceedings of the Bank itself. This effect may be traced directly to the Act of 1844, in the legislative restriction imposed on the means of accommodation while a large amount of bullion was held in the coffers of the Bank, and during a time of favourable exchanges; and it may be traced to the same cause indirectly, as a consequence of great fluctuations in the rate of discount, and of capital previously advanced at an unusually low rate of interest. This course the Bank would hardly have felt itself justified in taking, had not the impression existed, that by the separation of the issue and the banking departments, one inflexible rule for regulating the Bank issue had been substituted by law, instead of the discretion formerly vested in the Bank. The banking department was thus considered to be absolved from all obligation but that connected with the pecuniary interests of the proprietors."-Lords' Report on Commercial Distress, p. 4. XLIII. 1847. he took credit to himself for the candid admission that CHAP. the Bank Act had not answered his first object, which was, during prosperity, to check imprudent speculation; nay, he went so far as to quote the graphic description given by Mr Alexander Baring (now Lord Ashburton) of the mania of 1825, as peculiarly applicable to that which had immediately followed the passing of his own Bank Charter Act.* By so doing, under the air of candour he in effect laid the responsibility of all that had occurred upon the Bank Directors for not having earlier taken precautions to check the mania. He said, with truth, that a low rate of interest has for long been the invariable precursor of imprudent speculation and commercial distress in the British empire; but he forgot to mention that it was his own Act which at once flung down interest from 4 to 21 per cent, and gave rise in a great measure to all the extravagant manias which followed. He blamed the Bank Directors for the extent of their issues of notes, forgetting that the Act compelled them to issue them in exchange for all gold brought to their doors, and that when it came in abundance, as it did in 1845 and 1846, then notes necessarily issued in equal numbers; and that they had no means of defraying the cost of the immense treasure accumulated in their vaults but by lowering discounts and pushing their business to the utter "The Bank of England, by the facilities which they afforded, had been the authors of that dangerous redundancy of money that gave rise to the wild speculations which abounded in every part of the country in 1825. It seemed as if bedlam had broken loose on the Royal Exchange. The same frantic spirit overran the country. The bankers in London, and their agents in the country, and the customers of both, were actuated by the same universal desire to put out their money in any way they could. Then, all of a sudden, the very reverse of this system came into practice. A panic seized the public. Men would not part with their money on any terms. Men of undoubted wealth and real capital were seen walking about the streets of London not knowing whether they would be able to meet their engagements next day. All confidence was lost, and scarcely one man could be found to trust his neighbour. Men were known to seek for assistance-and that too without effect-who were known to be worth £200,000." Thus far Lord Ashburton. "These words," said Sir R. Peel," with almost equal fidelity, describe the state of affairs in 1846."-SIR R. PEEL's Speech, Dec. 3, 1847; Parl. Deb. xc. 663. XLIII. 1847. CHAP. most. He blamed them for not having sooner taken the alarm, and contracted their issues the moment exchanges became adverse, forgetting that this was impossible without general ruin when so large a capital was involved by his own acts in railway undertakings, which required several years of constant outlay for their completion; and that the only effect of an earlier contraction of the currency would have been an earlier commencement of the catastrophe. He boasted that, at least in the general crash, the convertibility of the Bank of England notes had been preserved, insensible to the fact that that convertibility had been maintained by a nation's ruin, and that to peril commercial existence on the retention of gold, the most difficult of earthly things to be retained, is the same thing as to render the national subsistence entirely dependent, as in Ireland, on one, and that the most precarious, species of food. Parliament was prorogued on the 20th December till 3d February 1848, and Ministers flattered themselves that the worst was over, and that, as the Bank interest had now been lowered to 4 per cent, commercial enterprise would revive, and manufacturing industry resume its wonted activity. They were never more completely mistaken. It is as easy to bring on a monetary crisis as it is to cut down a tree; but long years of growth and suffering are required to obviate its effects. The four years, from 1848 to 1851, barely sufficed to restore the credit and enterprise of the nation; and in fact it never was completely restored till the gold discoveries came into operation, which in 1852 changed the face of the world. The bankruptcies in the United Kingdom, which in 1845 had been 1263, rose in 1846 to 1729, and in 1847 to 2136. In 1848 the number reached the unparalleled amount of 2370, being nearly double of what they had been three years before. It was computed that in the three last months of 1847, before the interference of Government, the failures in Manchester and the surrounding manufacturing districts of Lancashire amounted to £15,900,000.* In Glasgow, Liverpool, and Birmingham, things were not less disastrous; and not even in the worst period of the crisis of 1826 and 1839 had the pressure in the metropolis been so widespread and severe. XLIII. 1847. 115. the railway But these figures, great as they are, give but a faint idea of the disasters of this melancholy period. It is computed Details of by the best-informed writers on the subject on the Liberal and mercanside, that, up to October 1848, £200,000,000 had been tile losses. called for to pay up the calls on railway shares, for which the holders had given up £250,000,000, and that, at that date, the whole was not worth more than £150,000,000; so that £100,000,000 had, in a year after the crash of October 1847, been lost on these investments alone. Consols had fallen from 93 to 791, at which last figure very large sales had been made to meet the demands consequent on the crisis, involving a loss of at least £100,000,000; and as stock of every description, whether of other shares or goods, had fallen within the same period on an average 30 per cent also, it is not unreasonable to estimate the entire loss of that commercial crisis at the enormous sum of £300,000,000-" a tolerably high price to pay," as was well observed by one of the ablest members of the House of Commons, and the best informed and enlightened on the subject of the 234; Econocurrency," for the convertibility of the Bank of England's 21, 1845. note." 1 * "In July two houses became insolvent, the joint amount of whose liabili ties was £100,000; in August sixteen gave way for a total amounting to £2,639,000; in September twenty-six broke down for £6,520,000; and in October thirty-five went for a total of £6,840,000-in all, from July to the period when her Majesty's Ministers interfered, £15,969,000."-LORD STANLEY, Dec. 2, 1847; Parl. Deb. xcv. 495. 66 + Edward Stillingfleet Cayley, Esq., M.P. for the North Riding of Yorkshire. Such," said he, "had been the results of a system which was called sound and stable, and which, to secure the convertibility of about £10,000,000 1 Tooke on Prices, v. mist, Oct. CHAP. 1847. 116. 1839 in America. 1 Ante, c. xxxvii. § 7, 32. Three circumstances conspired to augment the distress of this disastrous period, which were in a great measure independent of the monetary crisis in Great Britain, though Rise in cot- both the indirect effect of similar measures in other counton, from the crash of tries. The first of these was the great rise in the price of cotton, which took place at the very time when the crisis was at its height, in consequence of the diminished supply of that article in the United States of America, from the effects of the crash, produced there, by the insane crusade of General Jackson against the banks of that country, the details of which have already been given.1 The effect of this had been to produce such ruin among the cottonmerchants of the Southern States, that cotton fell from 6d. to 3d. a pound; and for several years cultivation of that great article of produce could scarcely be carried on at a profit, and the greater part of those engaged in it were rendered insolvent. The effect of this great reduction of the supply, of course, was ere long attended by a corresponding rise in its price; and accordingly, Georgia cotton, which in 1845 was 31d. the pound, had risen, in 1847, to 6d. and 8d. This great enhancement of the price of the raw material must have proved a great clog upon manufacturing enterprise and success, if occurring at any time; but it became doubly severe from its occurring at the very time when accommodation bank-notes into gold, had sacrificed about £300,000,000 of property."-MR CAYLEY, Dec. 2, 1847; Parl. Deb. xcv. 477. TABLE OF PRICES OF THE PRINCIPAL ARTICLES OF COMMERCE, 1845-51. -TOOKE On Prices, iv. 415, 427, 435; v. 265, 266; and Statistical Abstract, No. VI. p. 30. |