The British commercial revulsion seems to have worn through- 
out its immense development the three distinct forms of a 
pressure on the money and produce markets of London and 
Liverpool, a bank panic in Scotland, and an industrial breakdown 
in the manufacturing districts. The facts were stated at length in 
our pages on Friday,? in the form of copious extracts from the 
British journals, but their importance and prospective consequ- 
ences require a still further exposition. 

Though, as we anticipated in a former article,” the Government 
was finally compelled to suspend the Bank Act of 1844, this was 
not done till after the Bank had bravely swamped a host of its 
customers in the endeavor to save itself. But finally, on the 
evening of Nov. 11, the chiefs of the Bank held a war council, 
which resulted in an appeal to the Government for help, which 
was answered by the suspension of the provisions of the Act. This 
ordinance of the Ministry will at once be submitted to Parliament 
for approval, that body having been convoked to meet at the close 
of the month. The effect of the suspension must be one of 
comparative relief, as we have previously shown. It does away with 
an artificial stringency, which the Act adds to the natural 
stringency of the money market in times of commercial revul- 
sion.*”° | 

In the progress of the present crisis the Bank had five times 
raised its rate of discount, in the vain hope of checking the rush of 
the current which was sweeping all away. On the 8th ult. the rate 

2 November 27, 1857.—.Ed. 

was advanced to 6 per cent; on the 12th to 7; on the 22d to 8; on 
the 5th inst. to 9; and on the 9th to 10.* The rapidity of this 
movement offers a remarkable contrast to that which attended the 
crisis of 1847. Then the minimum rate of discount was raised to 5 
per cent in April; to 5'/, in July; and to 8, its highest point, on the ~ 
23d of October. Thence it sank to 7 per cent on Nov. 20; to 6 on 
Dec. 4; and to 5 on Dec. 25. The five years next following form an 
epoch of continual decline in the rate, as regular, indeed, as if 
guided by a sliding scale. Thus, on June 26, 1852, it had reached 
its lowest point—being 2 per cent. The next five years, from 1852 
to 1857, exhibit an opposite movement. On January 8, 1853, the 
rate stood at 2'/, per cent; on October 1, 1853, it was 5 per cent, 
whence, through many successive variations, at last it has attained 
its present elevation. So far, the oscillations of the rate of interest 
during the period of ten years now concluded have exhibited only 
the phenomena usual to the recurring phases of modern 
commerce. These phases are, briefly, an utter contraction of credit 
in the year of panic, followed by a gradual expansion, which 
reaches its maximum when the rate of interest sinks to its lowest 
point; then again a movement in the opposite direction, that of 
gradual contraction, which reaches its highest point when the 
interest has risen to its maximum, and the year of panic has again 
set in. Yet, on a closer examination, there will be discovered in the 
second part of the present period some phenomena which broadly 
distinguish it from all its predecessors. During the years of 
prosperity from 1844 till 1847, the rate of interest in London 
fluctuated between 3 and 4 per cent, so that the whole period was 
one of comparatively cheap credit. When the rate of interest 
reached 5 per cent, on April 10, 1847, the crisis had already set in 
and its universal explosion was, by a series of stratagems, put off 
for a few months only. On the other hand, the rate of interest 
which on May 6, 1854, had already mounted to 5'/, per cent, went 
down again successively to 5 per cent, 4'/» per cent, 4 per cent, 
and 3'/y per cent at which latter figure it continued to stand from 
June 16, 1855, to September 8, 1855. Then it ran again through 
the identical variations in the opposite direction, increasing to 4 
per cent, 4'/) per cent, 5 per cent, until, in October, 1855, it had 
reached the very point from which it had started in May, 1854, 
namely, 5'/. per cent. Two weeks later, on October 20, 1855, it 

November 7, 1857,.— Ed. 

rose to 6 per cent for short bills, and to 7 per cent for long ones. 
But again a reaction set in. During the course of 1856 it went 
down and up until in October, 1856, it had anew reached 6 and 7 
per cent, the points from which it had started in the October of 
the previous year. On November 15, 1856, it rose to 7 per cent, 
but with irregular and often interrupted fluctuations of decline, 
which brought it for three months as low as 5'/) per cent. It did 
not recover the original hight of 7 per cent till October 12 of the 
present year, when the American crisis had begun to bear upon 
England. From that moment its movement of increase was rapid 
and constant, resulting at last in an almost complete stoppage of 
discount. 

In other words, during the second half of the period from 1848 
to 1857, the vicissitudes in the rate of interest were intensified at 
more frequently recurring intervals, and from October, 1855 to 
October, 1857, two years of dear money elapsed, when its 
fluctuations were circumscribed between the limits of 5'/, to 7 per 
cent. At the same time, in the face of this high rate of interest, 
production and exchange went on unabated at a pace never 
before thought of. On the one hand these exceptional phenomena 
may be traced back to the opportune arrivals of gold from 
Australia and the United States, which allowed the Bank of 
England to relax its grip at intervals; while on the other hand it is 
evident that the crisis was already due in October, 1855, that it was 
shifted off through a series of temporary convulsions, and that, 
consequently, its final explosion, as to the intensity of symptoms as 
well as the extent of contagion, will exceed every crisis ever before 
witnessed. The curious fact of the recurrence of the rate of 7 per 
cent on Oct. 20, 1855, on Oct. 4, 1856, and on Oct. 12, 1857, 
would go far to prove the latter proposition, if we did not know 
besides that, in 1854, a premonitory collapse had already taken 
place in this country, and that on the continent of Europe all the 
symptoms of panic had already repeated themselves in October, 
1855 and 1856. On the whole, however, leaving these aggravating 
circumstances out of view, the period of 1848 to 1857 bears a 
striking resemblance to those of 1826 to 1836, and of 1837 to 
1847. 

It is true we were told that British Free Trade would change all 
this, but if nothing else is proved it is at least clear that the 
Free-Trade doctors are nothing but quacks. As in former periods, 
a series of good harvests has been followed by a series of bad ones. 
In spite of the Free-Trade panacea in England the average price 
of wheat and all other raw produce has ruled even higher from 

1853 to 1857 than from 1820 to 1853; and, what is still more 
remarkable, while industry took an unprecedented start in the face 
of the high prices of corn, now, as if to cut off every possible 
subterfuge, it has suffered an unprecedented collapse in the face 
of a plentiful harvest. 

Our readers will of course understand that this Bank of 
England rate of 10 per cent is merely nominal, and that the 
interest really paid by first-class paper in London, greatly exceeds 
that figure. 

“The rates charged in the open market,” says The Daily News, “are considerably 
above those of the Bank.” 

“The Bank of England itself,” says The Morning Chronicle, “does not discount at 
the rate of 10 per cent, except in a very few cases—the exception, not the rule; 
while out of doors charges are notoriously disproportionate to the alleged 
quotation.” 

“The inability of second and third-class paper to obtain accommodation on any 
terms,” says The Morning Herald, “is already producing immense mischief.” 

“In consequence of this,” as says The Globe, “affairs are being brought to a 
deadlock; firms are falling whose assets exceed their liabilities; and there seems to 
be a general mercantile revolution.” 

What with this pressure on the money market, and with the 
influx of American products, all articles in the produce market 
have gone down. In the course of a few weeks cotton has fallen at 
Liverpool 20 to 25 per cent, sugar 25 per cent, corn 25 per cent, 
and coffee, saltpeter, tallow, leather, and the like, have followed in 
the wake. . 

“Discounts and advances upon produce,’ 
unattainable.” @ 

“In Mincing Lane,*#3” says The Standard, “business has been turned inside out. 
It is no longer possible to sell any goods except in the shape of barter, money being 
out of the’ question.” 

says The Morning Post, “are almost 

All this distress, however, would not have so soon brought the 
Bank of England to her knees if the Bank panic in Scotland had 
not occurred. At Glasgow, the fall of the Western Bank was 
followed by that of the City of Glasgow Bank, producing in its 
turn a general run of depositors among the middle class and of 
noteholders among the working classes, and finally resulting in 
riotous disturbances which induced the Lord Provost of Glasgow 
to obtain the aid of bayonets. The City of Glasgow Bank, which 

No. 26168, November 12, 1857.— Ed. 

had the honor of being governed by no less a personage than the 
Duke of Argyll, had a paid-up capital of one million sterling, a 
reserved fund of £90,595, and ninety-six branches spread through 
the country. Its authorized issues amounted to £72,921, while 
those of the Western Bank of Scotland were £225,292, making 
together £298,213 sterling, or nearly one-tenth of the entire 
authorized circulating medium of Scotland. The capital of these 
Banks was to a great extent furnished in small sums by the 
agricultural population. 

The Scotch panic naturally recoiled on the Bank of England; 
and £300,000 were taken from its vaults on Nov. 11, and 
£600,000 to £700,000 on the 12th, for transmission to Scotland. 
Other sums were also withdrawn on behalf of the Irish Banks, 
while large deposits were called in by the Provincial English 
Banks; so that the Banking Department of the Bank of England 
found itself driven to the very verge of bankruptcy. It is probable 
that for the two Scotch Banks above named the general crisis 
merely afforded a pretext for effecting a decent exit, they having 
long been rotten to the core. Still, the fact remains that the 
celebrated Scotch Banking system which in 1825-26, 1836-37, and 
in 1847 weathered the hurricanes that swept away the English and: 
Irish Banks, for the first time, under the auspices of Peel’s Bank 
Act, which was forced upon Scotland in 1845, has met with a 
general run; that for the first time the cry of “gold against paper” 
has been heard there; and that at Edinburgh, for the first time, 
even Bank of England notes have been refused. The idea of the 
defenders of Peel’s Act, that if it was unable to ward off monetary 
crises in general, it would at least secure the convertibility of the 
notes in circulation, has now been exploded, the noteholders 
sharing the fate of the depositors. 

The general state of the British manufacturing districts cannot 
be better described than by two extracts, the one from a 
Manchester trade circular, printed in The Economist, the latter 
from a private letter from Macclesfield in the The London Free 
Press. The Manchester circular, after giving a comparative 
statement of the cotton trade for the last five years, proceeds as 
follows: 

“Prices have this week been falling with, day by day, more summary 
acceleration. For numerous descriptions, no prices can be given, because none 
could find a buyer, and generally where prices are given, they depend more on the 
position or apprehensions of the holder than on demand. No current demand exists. 
The home trade have laid in more stock than Winter prospects now give hope of 
clearing ” 

That foreign markets have been overstocked, the circular does, 
of course, not say. 

“Short time has now been currently adopted as a necessity; the amount of its 
adoption is computed at present to exceed one-fifth of the whole production. The 
exceptions to extending its adoption are daily becoming less, and the expediency 1s 
now debated of rather closing the mills for a time wholly.” * 

The Macclesfield writer tells us: 

“At least 5,000 persons, consisting of skilled artisans and their families, who get 
up each morning and know not where to get food to break their fast, have applied 
for relief to the Union, and as they come under the class of able-bodied paupers, 
the alternative is of either going to break stones at about four pence per day, or 
going into the House, where they are treated like prisoners, and where unhealthy 
and scanty food is given to them through a hole in the wall; and as to the breaking 
of stones, to men that have hands only capable of handling the finest of materials, 
viz: silk, [that] is a complete refusal.”’> 

What..English writers consider an advantage of their present 
"crisis, as compared with that of 1847—that there is no paramount 
channel of speculation, like the railways, for instance, absorbing 
their capital—is by no means a fact. The truth is the English have 
very largely participated in speculations abroad, both on the 
Continent of Europe and in America, while at home their surplus 
capital has been mainly invested in factories, so that, more than 
ever before, the present convulsion bears the character of an 
industrial crisis, and therefore strikes at the very roots of the 
national prosperity. 

On the Continent of Europe the contagion has spread from 
Sweden to Italy in one direction, and from Madrid to Pesth in the 
other. Hamburg, forming the great commercial center of the 
exports and imports of the Zollverein,*** and the general money 
market of Northern Germany, has had, of course, to bear the first 
shock. As to France, the Bank of France has screwed up its rate of 
discount to the English-standard; the decrees for the prohibition 
of the export of corn have been revoked *”’; all the Paris papers 
have received confidential warnings to beware of gloomy views; 
the bullion dealers are being frightened by gens d’armes, and 

Nov. 5”, The Economist, No. 741, November 7, 1857.— Ed. 

Louis Bonaparte himself, in a rather coxcombical letter,* condes- 
cends to inform his subjects that he does not feel himself prepared 
for a financial coup d’état, and that, consequently, “the evil only 
exists in the imagination.” **° 

Written on November 13, 1857 - Reproduced from the newspaper