ebb of human life passing before us as we move from station to station. And do not the railways subserve many a purpose of love and mercy? How speedily may an absent member of a family proceed to perform the last act of affection to a dying relative! How prompt may be the relief in case of disaster! How much are the bonds of friendship and relationship cemented by the visits of friends whom business and fate keep distant from one another! For thousands of benefits-economical, social, and political-we are indebted to the railways. But for them no British Association, and no Social Science Congresses, would ever have been held. But for them no international exhibitions of art and industry could have been celebrated. Civilisation owes to them one of its main incentives, and by them knowledge and science are making enormous conquests.

CHAPTER VI.

THE COMMERCIAL CRISIS OF 1847.

Regularity of Crises. Supposed Influence of the Bank of England.-Rise in the Rate of Interest.-State of the Cotton and Iron Trades.-Tightness of the Money Market.-Alarm in the City.-Suspension of the Bank Charter. -Inquiries on the Operation of the Bank Charter Acts.

COMMERCIAL crises and panics seem to follow a given law. Trade seems to run in cycles of seven or ten years. We had panics as near as possible in 1797, 1807, 1817, 1826, 1837, 1847, 1857, 1866, the number seven, the golden number, being a fatal year apparently. But we need not be surprised. Times of prosperity are often succeeded by times of adversity. Under the influence of steady success, years glide on, and we are flushed with prosperity. A crisis comes, and we must retrace our steps. Experience, then, teaches caution, and under its wise guidance courage revives, but we speedily return to a state of indiscretion, and a fall is certain to succeed. But what is the cause of this alternation of ups and downs? Many are the theories that have been suggested regarding them. According to some, the Bank of England is the cause of all mischief. Whoever follows the majority of the speeches and opinions expressed with reference to currency, cannot fail to see that the directors of the Bank of England were generally supposed to enjoy the great privilege of acting as conservators of the currency and regulators of the money market. In their opinion it is the Bank that capriciously regulates the rate of interest; the Bank that makes money scarce or abundant; the Bank that applies the screw; the Bank that loosens it. Yet such a notion is absolutely erroneous. Very limited, indeed, is the power of the Bank. It is not the Bank that makes money scarce or abundant. It is not in the power of the Bank to keep any amount of notes in circulation for any time. It is not the Bank that creates speculation; it is not the Bank that can arrest it. The economic laws which regulate the issue of notes are more powerful than any caprice of Bank directors, and prove in reality of much more salutary control than any legislative restriction.

Nothing could have been more carefully devised than the Bank Charter Acts of 1844 and 1845. It was clearly the intention

of Sir Robert Peel that they should prevent the panics and pressures which so often spread alarm and confusion in the mercantile world. And yet how fruitless have they proved, at least for that purpose. Scarcely two years elapsed after the passing of the acts when another panic took place, exceeding in intensity and duration any yet experienced. When the Bank Charter Act passed in 1844 capital was abundant, so much so that in September 1844 the rate of interest fell from 4 per cent. to 2 per cent. for bills at short, and 3 per cent. for bills at long, dates, and in 1845 the rate fell to 2 per cent. for bills and notes. Consequently there was considerable speculation in railway and much animation in every branch of business. Still the amount of bullion in the Bank was on the increase, and in the week ending August 29, 1846, it reached the enormous sum of 16,000,000l. By that time, however, the failure of the potato crop, and the consequent need of a large importation of corn, manifested themselves, whilst an extraordinary excitement prevailed in the railway share market, and the Bank raised the rate of interest to 3 per cent. It would have been better had the Bank at once raised the rate of discount still higher. But it did not do so till January 1847, when, bullion and reserve having considerably diminished, the rate was raised first to 3 per cent., and soon after to 4 per cent. Considerable alarm then commenced to be felt, and on April 8 the Bank increased the rate of discount to 5 per cent., without naming that it would be charged only on bills having no more than 60 days to run, and that much higher rates would be charged for long-dated paper. The state of the circulation, and the reserve at this critical time, will best be seen in the annexed diagram.

What was the effect of this increased tightness of the money market on speculation may well be imagined. As it became more and more difficult to provide funds to meet the heavy calls for railway purposes, the value of shares fell fearfully, causing heavy losses to all who held them. Gradually the alarm and anxiety spread to the various branches of trade. The cotton trade, which had been for a year or two in a feverish condition, owing to the shortness of the American crop, suffered immensely. Up to 1845 cotton was at a low price, fair Uplands ranging at between 44d. and 43d. per lb., and closing in December at 44d. In 1846 prices remained low till the end of March, but with gradually declining stocks, with bad accounts of the crop from the United States, and an improving condition of trade, the price rose to 74d. in December. Towards the close of January 1877, however, a fall in the price of yarns and goods began, and raw cotton receded in April to 6d. From this point cotton rallied, and in July it reached 73d. But soon after, as the money market became tight and the rate of interest rose to 8 per cent., a panic set in, and by gradual falls the price fell at the end of the year to 4ğd. per lb. The American cotton crop in 1846-47

was 1,778,000 bales against 2,100,000 bales in 1845-46. The in ports of cotton were, 1845, 6,446,250 cwts.; 1846, 4,177,288 cwt 1847, 4,238,261 cwts. Considerable speculation had taken pla in pig-iron, makers selling large quantities of pig-iron for futu delivery, and prices went down from 5l. to 31. per ton. The pri of railway iron in Wales (Cardiff and Newport) was, 184Ę 6l. 98. 4d.; 1844, 67. 148. 3d.; 1845, 10l. 158. 10d.; 184 10l. 68. 8d.; 1847, 9l. Os. 4d.; and 1848, 6l. 28. 10d. The pri of bar iron began to rise in April 1844, at which period it rose i 5l. 108. in Liverpool. In January 1845 it was 67. 108.; in Marc} 10l.; in April, 91.; and it averaged for the remainder of the yea 8l. 108. In 1846 and 1847 it averaged 91. 28. 6d. per ton. I. 1848 it commenced at 81., and gradually fell to 5l. 58., making th average for the year 6l. 11s. 8d.

The price of corn was very high in 1847, the average in May being 928. 10d. per quarter, but the imports rose in proportion. In the three years from 1845 to 1847 they were as follows:

The corn merchants, who for some time had great difficulty in obtaining advances upon cargoes in consequence of the high rate of discount, lost immense sums from the great fall in prices which took place, owing to the prospect of an abundant harvest. And the result was the failure of many houses in the corn trade, which became the signal for other heavy bankruptcies. Several banks succumbed, and credit was severely shaken. It being impossible for the London bankers and discount brokers to meet the demand of their customers, they were obliged to resort to the Bank of England. Money was hoarded to a considerable extent. Consols fell to 85, and everything seemed to indicate an approaching national bankruptcy.'

In July 1847 the merchants and bankers of the City of London petitioned for an immediate remedy. They complained that they were suffering under a monetary pressure without precedent, that there was a complete suspension of the ordinary facilities for busi

In the evidence given before the Committee on the Bank Acts in 1858 it was stated that in 1847 the majority of the houses that failed were of old standing, originally most legitimate and respectable, but that at a later period of their existence they got into a vicious system of credit.