The excitement and the alarm in the city of London were so
great that when the Chancellor of the Exchequer hurried up to town on
the 1st of October, he found that the interest of money was at the rate
of 60 per cent. per annum. The Bank Charter produced the same injurious
effect as it had done in April; it aggravated the evil by forcing men
to hoard. In vain the commercial world deplored the refusal of the
government to comply with the suggestion made by Lord George Bentinck
and Mr. Thomas Baring in the spring; in vain they entreated them at
least now to adopt it, and to authorize the Bank of England to enlarge
the amount of their discounts and advances on approved security, without
reference to the stringent clause of the charter. The government,
acting, it is believed, with the encouragement and sanction of Sir
Robert Peel, were obstinate, and three weeks then occurred during
which the commercial credit of this country was threatened with total
destruction. Nine more considerable mercantile houses stopped payment
in the metropolis, the disasters in the provinces were still more
extensive. The Royal Bank of Liverpool failed; among several principal
establishments in that town, one alone stopped payment for upwards of a
million sterling. The havoc at Manchester was also great. The Newcastle
bank and the North and South Wales bank stopped. Consols fell to 79 1/4,
and exchequer bills were at last at 35 per cent, discount. The ordinary
rate of discount at the Bank of England was between 8 and 9 per cent.,
but out of doors accommodation was not to be obtained. In such a state
of affairs, the small houses of course gave way. From their rising in
the morning until their hour of retirement at night, the First Lord of
the Treasury and the Chancellor of the Exchequer were employed in
seeing persons of all descriptions, who entreated them to interfere and
preserve the community from universal bankruptcy. 'Perish the world,
sooner than violate a principle,' was the philosophical exclamation of
her Majesty's ministers, sustained by the sympathy and the sanction of
Sir Robert Peel. At last, the governor and the deputy-governor of the
Bank of England waited on Downing Street, and said it could go on no
more. The Scotch banks had applied to them for assistance. The
whole demand for discount was thrown upon the Bank of England. Two
bill-brokers had stopped; two others were paralyzed. The Bank of England
could discount no longer. Thanks t