While on this side of the ocean we were indulging in our little
prelude to that great symphonious crash of bankruptcy which has
since burst upon the world, our eccentric cotemporary The London
Times was playing triumphant rhetorical variations, with the
“soundness” of British commerce as its theme. Now, however, it
tunes another and a sadder chord. In one of its latest impressions,
that of Nov. 26, brought to these happy shores by the Europa
yesterday, that journal declares “the trading classes of England to.
be unsound to the core.” Then proceeding to work itself up to the
highest pitch of moral indignation, it exclaims:

“It is the demoralizing career pursued through eight or ten years of prosperity,
before the consummation arrives, that works the deepest ruin. It is in calling into
existence gangs of reckless speculators and fictitious bill drawers, and elevating
them as examples of successful British enterprise, so as to discourage reliance upon
the slow profits of honest industry, that the poison is infused. [...] Each point of
corruption thus created forms an ever-extending circle.”

We shall not now inquire whether the English journalists who,
for a decade, propagated the doctrine that the era of commercial
convulsions was finally closed with the introduction of Free Trade,
are now warranted in turning all at once from sycophantic
encomiasts into Roman censors of modern money-making. The
following statements submitted to recent meetings of creditors in
Scotland, may serve, however, as matter-of-fact comment on the
“soundness” of British commerce.

4 The Times, No. 22848, November 26, 1857, ‘“Money-Market and City
Intelligence”’.— Ed.

John Monteith & Co., liabilities in excess of the

ASSETS hse eieecee bet Ba aeeteeasee a es ees £430,000
De-8F Macdonald vciese cscs cecsavsnbescctedvavciete echoes 334,000
Godfrey, Pattison & Co w....ecceccccccccceeesesesnsssnreneees 240,000
William Sith £6 CG ie ascot dan tkinanad ea hieacs 104,000
T. Trehes, Robinson 8 Co ..........ccccccccennseeeeeeeeeeeee 75,000

LOtall vouch ccdsalattecsseasvosshesegebtecstnes £1,183,000

“It appears from this statement”, as The North British Mail says, “that on the
bankrupts’ own showing, £1,183,000 have been lost to the creditors of five houses.”

Still the very recurrence of crises despite all the warnings of the
past, in regular intervals, forbids the idea of seeking their final
causes in the recklessness of single individuals. If speculation
toward the close of a given’ commercial period appears as the
immediate forerunner of the crash, it should not be forgotten that
speculation itself was engendered in the previous phases of the
period, and is therefore, itself a result and an accident, instead of
the final cause and the substance. The political economists who
pretend to explain the regular spasms of industry and commerce
by speculation, resemble the now extinct school of natural
philosophers who considered fever as the true cause of all
maladies.

The European crisis has so far maintained its center in England,
and in England herself, as we anticipated,* it has changed aspects.
If the first reaction on Great Britain of our American collapse
manifested itself in a monetary panic, attended by a general
depression in the produce market, and followed more remotely by
manufacturing distress, the industrial crisis now stands at the top
and the monetary difficulty at the bottom. If London was for a
moment the focus of the conflagration, Manchester is so now. The
most serious convulsion which English industry ever sustained,
and the only one which produced great social changes, the
industrial distress from 1838 to 1843, was, for a short period
during 1839, accompanied by a contraction of the money market,
while during the greater part of the same epoch the rate of
interest ruled low, and even sunk down to 2'/, and 2 per cent. We
make this remark, not because we consider the relative improvement of the London money market as a symptom of its final

recovery, but only to note the fact, that in a manufacturing
country like England, the fluctuations of the money market are far

4 See this volume, p. 390.— Ed.

from indicating either the intensity or the extent of a commercial
crisis. Compare, for instance, the London and the Manchester
papers of the same date. The former, watching but the efflux and
influx of bullion, are all brightness when the Bank of England, by
a new purchase of gold, has “strengthened its position.” The latter
are all gloom, feeling that strength has been bought at their
expense, by a rise in the rate of interest and‘a fall in the price of
their products. Hence, even Mr. Tooke, the writer of the History
of Prices, well as he handles the phenomena of the London
money and colonial markets, has proved unable not only to
delineate, but even to comprehend, the contractions in the heart
of English production.

As to the English money market, its history during the week
ending Nov. 27 shows, on the one hand, a continuous alternation
between a day of failures and a day marked by the absence of
failures; on the other hand, the recovery of the Bank of England
and the downfall of the Northumberland and Durham District
Bank. The latter bank, founded 21 years ago, numbering 408
shareholders, and disposing of a paid-up capital of £562,891, had
its head office at Newcastle and its branch establishments at
Alnwick, Berwick, Hexham, Morpeth, North and South Shields,
Sunderland and Durham. Its liabilities are stated to amount to
three millions sterling, and the weekly wages alone, paid through
its instrumentality, to £35,000. The stoppage of the great collieries
and iron-works carried on by the advances of this bank will, of
course, be the first consequence of its collapse. Many thousand
workingmen will thus be thrown out of employment.

The Bank of England is stated to have increased her metallic
reserve by about £700,000, an influx of bullion to be accounted
for partly by the cessation of the drain to Scotland, partly by
shipments from this country* and from Russia, and lastly by the
arrival of Australian gold. There is nothing remarkable in this
movement, since it is perfectly understood that the Bank of
England, by screwing up the rate of interest, will curtail imports,
force exports, draw back a portion of the British capital invested
abroad, and consequently turn the balance of trade and effect an
influx of bullion to a certain amount. It is no less sure that on the
least relaxation of the terms of discount gold will again begin to
flow abroad. The only question is how long the Bank will be able
to maintain these terms.

4 The United States of America.— Ed.

The official reports of the Board of Trade for October,* a
month during which the minimum rate of discount was successively advanced to 6, 7, and 8 per cent, prove evidently that the first

effect of that operation was not to stop manufactures, but to force
their products into foreign markets and to curtail the importation
of foreign produce.

In spite of the American crisis, the exports for October, 1857,
exhibit a surplus of £318,838, as compared with October, 1856,
while the considerable decrease in the consumption of all articles
of food and luxuries exhibited by the same returns proves that
this surplus manufacture was far from being remunerative, or the
natural consequence of thriving industry. The recoil of the crisis
on English industry will become apparent in the next Board of
Trade returns. A comparison of the returns for the single months
from January, 1857, to October, 1857, will show that English
production attained its maximum in the month of May, when the
surplus export over that of May, 1856, amounted to £2,648,904. In
June, consequent upon the first news of the Indian mutinies, the
total production sank down beneath that of the corresponding
month in 1856, and exhibited a relative decrease in the exports of
£30,247. In July, despite the contraction of the Indian market, the
production had not only recovered the standard of the corresponding month in 1856, but exceeded it by no less a sum than

£2,233,306. It is, therefore, clear that in that month the other
markets had to absorb beyond their ordinary consumption not
only the portion usually sent to India, but a great surplus over the
usual English production. In that month, therefore, the foreign
markets seem to have been so far overstocked that the increase in
the exports was successively forced down from about two and one
third millions to £885,513 in August, £852,203 in September, and
£318,838 in October. The study of the English trade reports
affords the only trustworthy clue to the mystery of the present
convulsion in that country.