During the discussions on these measures, Sir Robert Peel’s Bank Restriction Act of 1844 was continually attacked by the Protectionists as the cause of the prevailing financial distress. The object of that Act was to insure the convertibility of paper currency into gold, so that the holder of a bank-note might always be certain that he could get an equivalent in coin for it on demand. The country was suffering from a scarcity of money to trade with, and this scarcity was traced to the restriction of the Bank’s paper issues. On the contrary, it was really due (1) to failure of the food crops, which involved a loss of £16,000,000 sterling of capital; (2) to the rise in the price of cattle, due to a failure of crops; (3) to a loss of £16,000,000 in gambling speculations during the railway mania of 1845-46.
This mania, which produced such monstrous schemes during the close of 1845, began to bear evil fruits when holders of scrip, in face of falling markets, were haunted with visions of bankruptcy. A return was issued, by order of the House of Commons, containing the names of the unhappy individuals who, during the Session of 1845, had subscribed towards railways in England, Scotland, and Ireland, for sums of less than £2,000. It is a huge catalogue, extending over 540 folio pages, and forms the oddest jumble of “all sorts and conditions of men.” Vicars and vice-admirals elbow each other in the reckless race after easy-gotten gain. Peers struggle with printers, and barristers with butchers, for the favours of Mr. Hudson, “the Railway King,” who was the presiding genius of this greedy rabble. Cotton-spinners and cooks, Queen’s Counsel and attorneys, college scouts and Catholic priests, editors and flunkeys, dairymen and dyers, beer-sellers and ministers of the Gospel, bankers and their butlers, engineers and excisemen, relieving officers and waiters at Lloyd’s, domestic servants and policemen, engineers and mail-guards, with a troop of others whose callings are not describable, figured in the motley mob of small gamblers. Lord
Beaconsfield’s brilliant and satirical sketch of Mr. Vigo’s fortunes in “Endymion” is based on the mania with which Mr. Hudson infected England, and which exhausted the floating capital of the country in a time of famine. In the beginning of 1846, when in obedience to the Standing Order of the House the deposit of 10 per cent. on railway capital had to be lodged with the Accountant-General, the Money Market was greatly alarmed. It
THE BANK OF ENGLAND.
was estimated that £10,000,000 would have to be lodged in compliance with the law on the 29th of January, and on the 10th the Times, in a memorable article, declared that to lock up half that sum for a week in the circumstances would produce “the greatest inconvenience and pressure.”[69]
It was in vain that the officers of the Crown and the Government were implored by the trading community, who dreaded a Gold Famine, to sanction a deviation from the rigid rule of the Standing Order in face of the exceptional outbreak of an epidemic of speculation. This reached its height, it seems to us, just a month before the Governor of the Bank of England could be persuaded that the potato-rot was rendering famine inevitable. In the quarter ending September, 1845, there were in the market for sale £500,000,000 of stock, scrip, or letters of allotment. The shocking waste of resources that this covered is proved by two sets of figures. According to the Chancellor of the Exchequer, in the years 1842-46, the capital authorised to be raised was in each year respectively £6,000,000, £4,500,000, £18,000,000, £59,000,000, and for the last of these years £126,000,000! In 1842-45 the amounts
