[Footnote 53:] The financial crisis had originated in numerous stoppages of banks in the United States, where premature schemes of railway extension had involved countless investors in ruin; in consequence, the pressure on firms and financial houses became even more acute than in 1847; see ante, vol. ii. pp. [130], [131]. The bank rate now rose to 10 per cent. as against 9 per cent. in that year, and the bank reserve of bullion was alarmingly depleted.
Footnote 54: Parliament accordingly met on the 3rd of December, and the Session was opened by the Queen in person. The Act of Indemnity was passed without serious opposition, and a select committee re-appointed to enquire into the operation of the Bank Charter Act.
Queen Victoria to Lord Panmure.
ARMY ESTABLISHMENT
Osborne, 18th December 1857.
The Queen has had some correspondence with Lord Panmure upon the Establishment of the Army for the next financial year.55 She wishes now to lay down the principle which she thinks ought to guide our decision, and asks Lord Palmerston to consider it with his colleagues in Cabinet. Last year we reduced our Army suddenly to a low peace establishment to meet the demand for reduction of taxation raised in the House of Commons. With this peace establishment we had to meet the extraordinary demands of India, we have sent almost every available regiment, battalion, and battery, and are forced to contemplate the certainty of a large increase of our force in India as a permanent necessity. What the Queen requires is, that a well-considered and digested estimate should be made of the additional regiments, etc., etc., so required, and that after deducting this number from our establishment of 1857-1858, that for the next year should be brought up again to the same condition as if the Indian demand, which is foreign to our ordinary consideration, had not arisen. If this be done it will still leave us militarily weaker than we were at the beginning of the year, for the larger English Army maintained in India will require proportionally more reliefs and larger depôts.
As the Indian finances pay for the troops employed in India, the Force at home and in the colonies will, when raised to its old strength, not cost a shilling more than the peace establishment of 1857 settled under a pressure of financial reduction.
Anything less than this will not leave this country in a safe condition. The Queen does not ask only for the same number of men as in 1857-1858, but particularly for Regiments of Cavalry, Battalions of Infantry and Batteries of Artillery, which alone would enable us in case of a war to effect the increase to a war establishment.
The Queen encloses her answer to Lord Panmure's last letter.
Footnote 55: On the 14th of December, the Queen had pressed the immediate formation of two new Cavalry Regiments.