Palace and Hovel; Or, Phases of London Life

by Daniel Joseph Kirwan

"Oh yes Sir," said the old man, "the biggest forgery of all was Fauntleroy's, in 1816, that was a great deal bigger than Astlett's, for it was for £360,000, and the way of it was this: You see Mr. Fauntleroy was the head partner of a bank in Berners street that had dealing with the Bank of England, and the bank that he belonged to was in a bad state, so what does Fauntleroy do to keep up its credit, but he goes to work quite cooly and forges powers of attorney of a lot of nobs and he sells out their funds, and all the time he was a-working in the dark this way, he wos a payin' of the divydends to them. Then the crash came at last, and before he was caught, when the police broke into his house, they found a note and on the note was written:—

"The Bank first began to refuse to discount our acceptances, and to destroy the credit of our house; and by G—d the Bank shall smart for it."

"So, that's the way he did it, but he was hanged for it, and I saw him swing. I never saw so many people in my life as was at that hanging. All London was there, Sir, and when he got off the cart you would have thought he was going to a party, he was so blessed cool."

THE GREAT PANIC OF 1825.

There was a "Great Panic" in the Bank of England in December, 1825, caused by the redemption of interest on £215,000,000 of stock held by the public. The Bank of England was acting as banker for the Nation, and offered to advance money to holders of stock to pay off their principal investment. This was an era of mad speculation, and no less than £372,000,000 was invested in all kinds of bogus stock projects. In some of these schemes shares of £100 on which only £5 had been paid, rose to a premium of £40, yielding a profit of eight times the amount of money paid. Everything went merry as a marriage bell for a time, and large sums had been withdrawn from the Bank of England, reducing the gold in its vaults from £8,750,000, in October, 1824, to £3,624,320 in February, 1825.

The panic began on the 5th of December, 1825, when a London bank failed, at which the agency of above forty country banks was transacted, and such a re-action was the necessary result of the previous madness of speculation. Lombard street, and the vicinity of the Bank, were filled with excited men and women, who were waiting eagerly to withdraw their investments. Next day, a number of other banks failed. The rush on the Bank of England was terrific, but the clerks kept paying away gold in bags of twenty-five sovereigns each. From nine until five, each day, twenty-five clerks were engaged, counting out gold, and as it would take that number of clerks to count out £50,000 in sovereigns, if counted by hand, a plan was made by which the tellers counted 25 sovereigns into one scale and 25 into another, and if the scales balanced, they continued until there were 200 sovereigns in each scale. In this way £1,000 were paid out in a few minutes, the weight of one thousand sovereigns being 21 pounds, while 512 bank notes only weigh one pound. In this way £307,000, in gold, was paid out in nine hours to the clamorous people.

THE PANIC CEASES.

Instead of contracting their issues the Directors of the Bank boldly extended them. In one day they discounted 4,200 bills. December 8th, the discounts at the Bank amounted to £7,500,000; on the 15th, they were £11,500,000, and on the 29th, £15,000,000. December 3d, the circulation of the Bank was £17,500,000, and the day before Christmas, December 24th, it was £25,500,000, or, $127,500,000. Any kind of paper that was not absolutely worthless, was discounted. Tremendous advances on deposits of bills of exchange were made by the Bank, stock was entered as security, and exchequer bills were purchased. The gallant old institution weathered the storm, and, on the 26th of December, gold began to come in slowly. During the latter part of the panic week a forgotten box of one-pound notes, containing £700,000, was discovered, and these were immediately issued, and the Directors acknowledged that the forgotten box saved the commercial credit of the Bank and of England. There was only £601,000 in bullion and £426,000 in coin when the rush stopped. In February, 1797, when the Bank suspended cash payments, there was £1,086,170 in coin and bullion remaining in the vaults.