and by the 24th, what with the £1 notes that had gone out and other things, people began to be satisfied, and then it was for the first time in a fortnight, that those who had been busied in that terrible scene could recollect that they had families who had some claim on their attention."

30. As the crisis was evidently approaching at the end of November, the papers discussed the probable policy of the Bank, and it was generally anticipated that it would continue to contract its issues, and let the evil work its own cure by the fall of those houses which had been imprudent in their speculations, and this was the course adopted by the Bank, and to which they adhered as matters grew worse, and they were supported in it by public opinion. On the day after Pole and Co. fell another house of equal magnitude fell, Williams, Burgess, and Co. The panic then became universal, and, as the directors thought that they would certainly have to stop payment, they sounded the Government as to a Restriction Act, but the Government absolutely declined it, and it was resolved that the Bank should pay away its last sovereign. The Mint was kept constantly at work day and night, but it could not supply coin with sufficient rapidity, so that it kept constantly diminishing. On the Saturday the coin in the Bank vaults scarcely exceeded one million, but, by a happy circumstance, when the Saturday evening came the tide receded, and the directors were able to assure the Ministry that all danger was over.

31. The great pressure had produced the effect which necessarily results from such circumstances. The great increase in the value of money here, had turned the exchanges in favour of the country, the directors expected remittances from Paris, and they fortunately came sooner than was expected. On the Monday following the 19th, about £400,000 came from France, and the demand having sensibly abated, the supplies from the Mint fully equalled the sums drawn out of the Bank-or rather exceeded them.

32. Mr. Huskisson said afterwards, in the House of Commons, that, during forty-eight hours (Monday and Tuesday, December 12 and 13), it was impossible to convert into money to any ex

tent the best securities of the Government. Persons could not sell Exchequer bills, nor Bank stock, nor East India stock, nor the public funds. Mr. Baring said that men would not part with their money on any terms, nor for any security. The extent to which the distress had reached was melancholy to the last degree. Persons of undoubted wealth and real capital, were seen walking about the streets of London, not knowing whether they should be able to meet their engagements for the next day. By this time, however, the exchange had decidedly turned in favour of the country, and on Weduesday, the 14th, the Bank totally changed their policy, and discounted with the utmost profuseness. They made enormous advances on Exchequer bills and securities of all sorts. Mr. Harman said—

"We lent it by every possible means, and in modes we had never adopted before; we took in stock as security, we purchased Exchequer bills, we made advances on Exchequer bills, we not only discounted outright, but we made advances on deposit of bills of exchange to an immense amount; in short, by every possible means, consistent with the safety of the Bank, and we were not, on some occasions, over nice; seeing the dreadful state in which the public were, we rendered every assistance in our power."

This audacious policy was crowned with the most complete success, the panic was stayed almost immediately. On Friday evening, the 16th, the Courier said "We are happy to think that the worst is over, though there are still great demands upon the Bank, particularly from the country." The same paper, on the next day, the 17th, said "Although public confidence is on the return in the metropolis, and things are resuming their usual course, yet, as might be expected, this has not yet communicated itself to the country." In fact, the London panic was completely allayed in this week by the profuse issue of Bank notes. Between the Wednesday, the 14th, and the Saturday, the 17th, the Bank issued upwards of £5,000,000 of notes.

33. The waves of discredit, however, were propagated through the country, and throughout the following week the demand still continued great from the London bankers for their country correspondents. During the course of it, it came to the remembrance of some of the directors that there was a chest

of their £1 notes which had never been used. As soon as this was discovered, it occurred to them that they might be used to stay the panic in the country districts, and the discredit of the country bank notes. Upon communicating this idea to the London bankers, it was eagerly approved of, and the sanction of the Government was asked for the experiment. The Government consented, and the notes were sent off to the country bankers without delay, and produced instantaneous relief. At Norwich, when the Gurneys shewed upon their counter so many feet of Bank notes of such a thickness, it stopped the run in that part of the country. By the 24th December the panic was completely allayed all over the country, and the amount of the £1 notes the Bank issued was under £500,000, and by the beginning of 1826 the credit of the banking world was completely restored.

34. The circumstances of this famous crisis are the most complete and triumphant examples of the unquestionable truth of the principles of the Bullion Report, and of Sir Francis Baring, already quoted in Chapter VIII. When the drain of treasure from the Bank was severe and unceasing, and notoriously for exportation, on account of foreign loans, the Bank, with infatuated obstinacy, had increased their issues instead of contracting them, in defiance of the clearest warnings of the Bullion Report. When, after six months' continuance in this fatal policy, they at last reversed their course, and contracted their issues. In the course of the autumn the drain for the exportation ceased, but continued for internal purposes; the demand for gold was entirely to support the tottering credit of the country bank notes. Now, as the country bankers were only too glad to withdraw their own notes, and substitute gold for them, there was not the slightest danger of an increase of Bank of England notes adding to the general amount of paper currency in the country, but just the reverse; consequently, it was just the precise case in which Sir Francis Baring and the Bullion Committee said that it was the duty of the Bank of England to extend its issues to support general credit. There was not the smallest danger that an extension of issues would, under such circumstances, turn the foreign exchanges against the country. The character of the demand was declared in the

most unmistakeable manner. On Thursday, the 15th, a meeting of merchants and others took place at the Mansion House, when it was stated that Sir P. Pole and Co. had a surplus of £170,000 after payment of all claims against them, besides large landed property belonging to Sir Peter Pole, and about £100,000, the private property of other members of the firm. Williams and Burgess had enough to pay 40s. in the pound. Now, if the course which was adopted on the Wednesday had been adopted on the Monday, the whole of that terrific crisis would have been saved. Mr. Vincent Stuckey, one of the most eminent country bankers in the kingdom, says—

"My opinion was that the crisis at that time was brought on by excessive issues; but, when the panic came, country bank paper was brought in for Bank of England, and, therefore, all that was immediately wanted was an EXCHANGE OF PAPER. I stated, in a letter I wrote upon the subject to the Bank on the 14th of December, 1825, that they would not have to increase the sum total of circulation, but that all they would have to do was to exchange A for B; and in my letter I recommended them to issue a million a day, which they did; for, otherwise most of the Banks in London, as well as the country, must have stopped."

And, accordingly, they did issue, and all contemporary evidence proves that it was this profuse issue £5,000,000 of paper in a few days that stayed the panic. If they had persevered in the restrictive policy for three days longer, the total and entire destruction of commercial credit would infallibly have ensued. In short, if they had followed the precedents of 1793 and 1797, so strongly condemned by the Bullion Report, all credit would have been destroyed; they followed the principles laid down in the Bullion Report, and the country was saved.

35. When the causes of this terrible calamity came to be discussed, there were not wanting many who laid the whole blame to the excessive issues of the Bank, as well as the excessive issues of the country banks. But though it is indisputable that the Bank acted on the most unsound principles, in not contracting its issues when the great drain of bullion for exportation was going on, it is a mere delusion for men to attribute the consequences of their own wild and extravagant mania to the Bank

of England, or to any bank. The errors of all the banks put together were trivial compared to the outbreaks of speculative insanity which seized upon all classes. It was not the issues of some Bank notes more or less which originated the calamity, but the insatiable thirst for growing suddenly rich, that seized upon so many persons, and led them to embark in the maddest schemes totally out of their line of business. Was it the issue of Bank notes that led a respectable bookselling firm to risk £100,000 on a speculation in hops?

36. The Bank had committed many errors before, as serious as those of 1825, without leading to any such disaster. In fact, it was the nature of the speculations which men had rushed headlong into that must inevitably have brought about a most terrible calamity if there had not been a Bank note in existence. The speculative mania of 1694 took place before the Bank was in existence; the great South Sea bubble mania took place when there were no country banks at all, and no one accused the Bank of England, or the London bankers, of having made too profuse issues of notes then; and the great railway mania of 1845-6 took place after it was supposed that the Act of 1844 had effectually secured the country against the recurrence of similar calamities.

37. The bold policy of the Bank of England in that terrible week, in entire accordance with the principles laid down by Sir Francis Baring and the Bullion Report, not only saved a multitude of commercial houses, both banking and trading, but certainly preserved itself from bankruptcy. Though several banks did succumb, the distress was slight, compared to what it would have been if the Bank had persevered in adhering to the policy of 1797. Many houses, it is true, that were aided by the Bank, were only enabled to stagger on for a short time longer, and subsequently failed when their obligations became due; but delaying their fall even for a short time, till the panic had subsided, was of considerable service.

38. The worthless character of a great portion of the country paper had greatly aggravated the intensity of the calamity; in fact, it began with them, and the great commercial failures did