GREAT COMMERCIAL PANIC.
The golden prospects unfolded in the speech of the chancellor of the exchequer when making his financial statements, and reiterated in that of his majesty at the close of the session, soon vanished away. The causes of this reverse were manifold. The abundance of capital, and the consequent low rate of profit, during the last three years, had greatly increased export manufactures. As the system of country banks continued in operation, this apparent prosperity of manufactures attracted much capital to them; and a system of credit was generated which caused a still further extension. Speculation added its impulse to this system; until, in the course of this year, paper money thrown into circulation, increased the currency beyond what the causes determining the supply of gold could sustain. The exchanges now turned against us; the currency became depreciated; and gold, the sinews of a nation’s prosperity, began to flow out of the country. The Bank of England finding that the demand for gold diminished its stock of coin, contracted its issue of notes and its discounts. In this way, if the state of trade had been good, the currency might have been reduced so as to restore the exchanges to par; but the reduction in quantity took place first among those who had pushed their credit to the utmost; and these persons being unable to meet their engagements became bankrupts. The distress soon reached the bankers themselves. Some of the country banks stopped payment; and apprehensions springing up from thence with respect to the stability of the London banks, caused such a run upon them, that many failed. In the month of December all the usual channels of credit were stopped, and the circulation of the country completely deranged. In this state of affairs several cabinet deliberations took place; and it was at length determined that one and two pound bank notes should be issued for country circulation. This measure was carried into effect on the 16th of December; and an order was also issued to the officers of the Mint to expedite an extraordinary coinage of sovereigns. For one week one hundred and fifty thousand were coined daily. In the meantime meetings were held in London and the great trading towns, in which resolutions were adopted for the support of commercial credit and these had the effect of restoring mutual confidence to a considerable extent. Such was the contrast between the commencement and the close of the present year: it began in visions of prosperity, it closed with a certainty of adversity. The derangement of commercial affairs doubtless arose from the dangerous mania of speculation, aided by a vicious system of making paper money, which increased the currency, drove gold out of the country, and then caused a demand for it in exchange for paper, which it was impossible to meet. The natural consequence was an almost general breaking up of those who depended on paper money, and an approach to its utter annihilation.