_The Great Panic_
THE general election of 1847 did not materially alter the position of
parties in the House of Commons. The high prices of agricultural produce
which then prevailed naturally rendered the agricultural interest
apathetic, and although the rural constituencies, from a feeling of
esteem, again returned those members who had been faithful to the
protective principle, the farmers did not exert themselves to increase
the number of their supporters. The necessity of doing so was earnestly
impressed upon them by Lord George Bentinck, who warned them then that
the pinching hour was inevitable; but the caution was disregarded, and
many of those individuals who are now the loudest in their imprecations
on the memory of Sir Robert Peel, and who are the least content with the
temperate course which is now recommended to them by those who have the
extremely difficult office of upholding their interests in the House of
Commons, entirely kept aloof, or would smile when they were asked for
their support with sarcastic self-complacency, saying, ‘Well, Sir, do
you think after all that free trade has done us so much harm?’ Perhaps
they think now, that if they had taken the advice of Lord George
Bentinck and exerted themselves to return a majority to the House of
Commons, it would have profited them more than useless execrations and
barren discontent. But it is observable, that no individuals now grumble
so much as the farmers who voted for free trader in 1847, unless indeed
it be the shipowners, every one of whom for years, both in and out of
Parliament, supported the repeal of the corn laws.
The Protectionists maintained their numbers, though they did not
increase them, in the new Parliament. Lord George Bentinck however
gained an invaluable coadjutor by the re-appearance of Mr. Herries
in public life, a gentleman whose official as well as parliamentary
experience, fine judgment, and fertile resource, have been of
inestimable service to the Protectionist party. The political connection
which gained most were the Whigs; they were much more numerous and
compact, but it was in a great measure at the expense of the general
liberal element, and partly at the cost of the following of Sir Robert
Peel. The triumphant Conservative majority of 1841 had disappeared;
but the government, with all shades of supporters, had not an absolute
majority.
Had the general election been postponed until the autumn, the results
might have been very different. That storm--which had been long
gathering in the commercial atmosphere--then burst like a typhoon. The
annals of our trade afford no parallel for the widespread disaster and
the terrible calamities. In the month of September, fifteen of the most
considerable houses in the city of London stopped payment for between
five and six millions sterling. The governor of the Bank of England
was himself a partner in one of these firms; a gentleman who had lately
filled that office, was another victim; two other Bank directors were
included in the list. The failures were not limited to the metropolis,
but were accompanied by others of great extent in the provinces. At
Manchester, Liverpool, and Glasgow large firms were obliged to suspend
payments. This shock of credit arrested all the usual accommodation,
and the pressure in the money-market, so terrible in the spring, was
revived. The excitement and the alarm in the city of London were so
great that when the Chancellor of the Exchequer hurried up to town on
the 1st of October, he found that the interest of money was at the rate
of 60 per cent. per annum. The Bank Charter produced the same injurious
effect as it had done in April; it aggravated the evil by forcing men
to hoard. In vain the commercial world deplored the refusal of the
government to comply with the suggestion made by Lord George Bentinck
and Mr. Thomas Baring in the spring; in vain they entreated them at
least now to adopt it, and to authorize the Bank of England to enlarge
the amount of their discounts and advances on approved security, without
reference to the stringent clause of the charter. The government,
acting, it is believed, with the encouragement and sanction of Sir
Robert Peel, were obstinate, and three weeks then occurred during
which the commercial credit of this country was threatened with total
destruction. Nine more considerable mercantile houses stopped payment
in the metropolis, the disasters in the provinces were still more
extensive. The Royal Bank of Liverpool failed; among several principal
establishments in that town, one alone stopped payment for upwards of a
million sterling. The havoc at Manchester was also great. The Newcastle
bank and the North and South Wales bank stopped. Consols fell to 79 1/4,
and exchequer bills were at last at 35 per cent, discount. The ordinary
rate of discount at the Bank of England was between 8 and 9 per cent.,
but out of doors accommodation was not to be obtained. In such a state
of affairs, the small houses of course gave way. From their rising in
the morning until their hour of retirement at night, the First Lord of
the Treasury and the Chancellor of the Exchequer were employed in
seeing persons of all descriptions, who entreated them to interfere and
preserve the community from universal bankruptcy. ‘Perish the world,
sooner than violate a principle,’ was the philosophical exclamation of
her Majesty’s ministers, sustained by the sympathy and the sanction of
Sir Robert Peel. At last, the governor and the deputy-governor of the
Bank of England waited on Downing Street, and said it could go on no
more. The Scotch banks had applied to them for assistance. The
whole demand for discount was thrown upon the Bank of England. Two
bill-brokers had stopped; two others were paralyzed. The Bank of England
could discount no longer. Thanks to the Bank Charter, they were safe and
their treasury full of bullion, but it appeared that everybody else
must fall, for in four-and-twenty hours the machinery of credit would
be entirely stopped. The position was frightful, and the government gave
way. They did that on the 25th of October, after houses had fallen to
the amount of fifteen millions sterling, which they had been counselled
to do by Lord George Bentinck on the 25th of April. It turned out
exactly as Mr. Thomas Baring had foretold. It was not want of capital or
deficiency of circulation which had occasioned these awful consequences.
It was sheer panic, occasioned by an unwisely stringent law. No sooner
had the government freed the Bank of England from that stringency,
than the panic ceased. The very morning the letter of license from
the government to the Bank of England appeared, thousands and tens of
thousands of pounds sterling were taken from the hoards, some from boxes
deposited with bankers, although the depositors would not leave the
notes in their bankers’ hands. Large parcels of notes were returned to
the Bank of England cut into halves, as they had been sent down into the
country, and so small was the real demand for an additional quantity of
currency, that the whole amount taken from the Bank, when the unlimited
power of issue was given, was under £400,000, and the Bank consequently
never availed itself of the privilege which the government had accorded
it. The restoration of confidence produced an ample currency, and
that confidence had solely been withdrawn from the apprehension of the
stringent clauses of the Bank Charter Act of 1844.
These extraordinary events had not occurred unnoticed by Lord George
Bentinck. The two subjects that mostly engaged his attention after the
general election were the action of the Bank Charter and the state of
our sugar colonies. Perhaps it would be best to give some extracts from
his correspondence at this period. He was a good letter-writer, easy and
clear. His characteristic love of details also rendered this style
of communication interesting. It is not possible to give more than
extracts, and it is necessary to omit all those circumstances which
generally in letter-reading are most acceptable. His comments on men and
things were naturally free and full, and he always endeavoured, for the
amusement of his correspondents, to communicate the social gossip of the
hour. But although all this must necessarily be omitted, his letters may
afford some illustrations of his earnestness and energy, the constancy
of his aim, and the untiring vigilance with which he pursued his
object--especially those which are addressed to gentlemen engaged in
commercial pursuits who cooperated with him in his investigations.
TO A FRIEND.
Harcourt House, August 30, 1847.
An answer is come out to my address to my constituents at King’s Lynn,
and to my speech in answer to Peel’s manifesto. Pray read it. At first
I thought I could swear to its being * * * *, I now think I can swear
to its being * * * *; the servility to Peel, and the official red-tape
style would equally do for either; but the no-popery page, I think,
fixes it on * * * *.
I think it wretchedly weak, and have written some notes on the margin,
showing up the principal points. The nine months’ famine of 1846-47, as
contrasted with Peel’s famine, shows a difference of between £6,000,000
and £7,000,000; that is to say, on the balance in the nine months
1845-46, Ireland exported about three millions’ worth of breadstuffs,
and not a soul died of famine. In the nine months 1846-47, she imported
three millions’ sterling worth of bread-stuffs, which insufficed to
prevent one million--or say half a million--of the people from dying of
starvation.
At present I have seen no notice of the pamphlet in any of the
newspapers: if it is either * * * *’s, or * * * *’s, or * * * *’s we
shall see it reviewed in ‘Times,’ ‘Chronicle,’ and ‘Spectator.’
The Bank of England has raised the interest on * * * *’s mortgage
one-third per cent., making an additional annual charge of £1,500 a year
to him. I am very sorry for him, but I know nothing so likely to rouse
the landed aristocracy from their apathy, and to weaken their idolatry
of Peel so much as this warning note of the joint operation of his free
trade and restrictive currency laws.
TO A FRIEND.
Harcourt House, September 2, 1847.
I think it is * * * *. The trickster, I observe, has carefully reduced
the pounds of cotton to cwts., in the hopes of concealing a great fraud
to which he has condescended; taking, in the Whig year of 1841, the home
consumption of cotton, whilst in Peel’s year he gives entire importation
as the home consumption, representing both as home consumption.
In Peel’s year, 1846, officially we have only the gross importation; but
in the Whig year, 1841, the entire importation and the home consumption
are given separately: the importation exceeding the home consumption by
fifty million pounds. Burn’s ‘Glance,’ however, gives the importation
and home consumption for both years; unfortunately, however, not in
lbs. or cwts., but in bags. * * * *’s fraud, however, is not the less
apparent.
He selects a Whig year when the home consumption was 220,-000 bags under
the importation, and a year for Peel when the importation exceeded the
home consumption by 280,000 bags, and claps down the figures as alike
describing the home consumption.
None of the Peel papers have taken up the subject: if they should, the
‘Morning Post’ will answer the pamphlet; but I should like to have mine
back again, in order that I may furnish them with the notes.
* * * * was with me this morning, and called my attention to the
circumstance that the author starts with ‘We,’ but drops into the
singular number; * * * * fancies it is Peel himself, but the page on
endowment fixes it on * * * *.
Lord L * * * * means, I presume, that Peel’s savage hatred is applied
to the Protectionist portion of his old party, not of course to the
janissaries and renegade portion.
The following letter was in reply to one of a friend who had sent him
information, several days before they occurred, of the great failures
that were about to happen in the city of London. The list was
unfortunately quite accurate, with the exception indeed of the
particular house respecting which Lord George quotes the opinion of
Baron Rothschild.
TO A FRIEND.
Welbeck, September 17, 1847.
A thousand thanks for your letter, the intelligence in which created a
great sensation at Doncaster.
As yet none of the houses appear to have failed except S * * * *. Baron
Rothschild was at Doncaster. I talked with him on the subject; he seemed
not to doubt the probable failure of any of the houses you named, except
* * * *. He declared very emphatically ‘that * * * * house was as sound
as any house in London.’
Lord Fitzwilliam declares ‘it is no free trade without free trade in
money.’
Lord Clanricarde is here--laughs at the idea of Parliament meeting in
October; but talks much of the difficulties of Ireland--says he does not
see how the rates are to be paid.
Messrs. Drummond are calling in their mortgages. I expect to hear that
this practice will be general; money dear, corn cheap, incumbrances
enhanced, and rents depressed. What will become of the apathetic country
gentlemen? I judge from * * * * ‘s language, that Lord John Russell
will stand or fall by the Bank Charter Act-but that he feels very
apprehensive of being unable to maintain it.
I agree with Bonham, in thinking that the Protectionist party is
smashed for the present Parliament; but I must say I think Protectionist
principles and policy are likely to come into repute again far sooner
than was expected; and though Peel’s party be a compact body, and
formidable in the House of Commons, I cannot think that there appears
that in the working of his measures to make it likely that he should be
soon again carried into power on the shoulders of the people. I think
his political reputation must ebb further before it can rise again,
if it should ever rise again. * * * * thought him ‘broken and in low
spirits,’ when he met him at Longshaw; but Lord * * * *, who was there
at the same time, came away more Peelite than ever, and told them at
Bretby that Sir Robert said, ‘That he was quite surprised at the number
of letters he got every day from members returned to Parliament, saying
they meant to vote with him.’
You may rely upon it the Peelites are very sanguine that they will be in
power again almost directly. We must keep them out.
TO MR. BURN, EDITOR OF THE ‘COMMERCIAL GLANCE.’
Welbeck, September 38, 1847. To the many courtesies you have already
bestowed upon me, I will sincerely thank you to add that of informing me
what have been the estimated cotton crops in the United States in
each of the last four years. I would also thank you to inform me the
comparative importation, home consumption, re-exportation, and stocks
on hand of cotton of the first seven months of the current and three
preceding years.
TO MR. BURN.
Welbeck, October 4, 1847.
Your statistics have reached me in the very nick of time, and are
invaluable. I care nothing about ‘outsides,’ it is ‘insides’ I look to;
give me a good ‘heart,’ and I don’t care how rough the ‘bark’ is.
Anything so good I fear to spoil by suggesting the most trivial
addition, else I should say it would be an interesting feature to
classify the exports of cotton goods, etc., etc., under three heads:--
1st. To the British colonies and British possessions abroad.
2nd. To the northern states of Europe, France, Spain, Germany, Italy,
etc., etc., the United States of America, and other countries having
high tariffs.
3rd. To China, Turkey, Africa, and the Southern States of America, and
countries with low tariffs.
I fear these failures of East and West India houses must entail great
distress upon Manchester, and the manufacturing interests generally. You
have given an account of the bankruptcies in the cotton trade during a
long series of years till last year inclusive; are you able to say how
the first nine months of the current year stands in comparison with its
predecessors?
I so highly prize your new work, that I must ask for a dozen copies to
distribute among my friends.
P. S. I have already parted with the copy you sent me; may I, therefore,
beg another without waiting for any other binding?
TO A FRIEND.
Welbeck, October 5, 1847.
I shall go up to town on Friday evening, in my way to Newmarket,
and shall be at Harcourt House all Saturday and Sunday, and shall be
delighted to see you, and have a thorough good talk with you. Free trade
seems working mischief faster than the most fearful of us predicted,
and Manchester houses, as I am told, ‘failing in rows,’ ashamed to
do penance in public, are secretly weeping in sackcloth and ashes, and
heartily praying that Peel and Cobden had been hanged before they were
allowed to ruin the country.
Money at Manchester is quoted one and a quarter per cent, for ten days:
£45 12s. 6d. per cent. per annum!
TO A FRIEND.
Harcourt House, October 22, 1847. I have this moment got a note from
Stuart, telling me that ‘the Chancellor has this afternoon sent out his
notice of the business to be taken in his own court during Michaelmas
term, that is, from the 2nd of November till the 26th, and below it
there is this notice--_except those days on which the Lord Chancellor
may sit in the House of Lords_!!!’
Surely this must portend a November session.
TO A FRIEND.
Harcourt House, October 23, 1847. The fat banker’s gossip is all stuff.
Peel goes to Windsor today, I believe on an invitation of some standing.
* * * * who had been dining at Palmerston’s last night, tells me that he
does not think that ministers mean calling Parliament together, and is
confident they mean to maintain the Bank Charter Act. There have been
some first-rate articles and letters in the ‘Morning Chronicle’ lately
on this subject.
TO A FRIEND.
Harcourt House, November 6, 1847.
I will stay over Tuesday, that I may have the pleasure of a thorough
talk with you.
I am told things are gradually getting better. I expect, however, a
fresh reverse about six weeks or two months hence, when the returned
lists of the stoppages in the East and West Indies, consequent upon the
late failures here, come home. The Western Bank of Scotland is whispered
about. If that were to fail, it might bring the canny Scots to their
senses; but they are a headstrong race.
A committee on commercial distress having been appointed, the principal
reason for the summoning of the new Parliament in the autumn had been
satisfied, and an adjournment until a month after Christmas was in
prospect. Before, however, this took place, a new and interesting
question arose, which led to considerable discussion, and which
ultimately influenced in no immaterial manner the parliamentary position
of Lord George Bentinck.
The city of London at the general election had sent to the House of
Commons, as a colleague of the first minister, a member who found a
difficulty in taking one of the oaths appointed by the House to be
sworn preliminarily to any member exercising his right of voting. The
difficulty arose from this member being not only of the Jewish race, but
unfortunately believing only in the first part of the Jewish religion.