THE FINANCIAL CRISIS IN ENGLAND

New Zealand Spectator and Cook's Strait Guardian, Volume IV, Issue 278, 29 March 1848, Page 2

THE FINANCIAL CRISIS IN ENGLAND

A faint light is gradually dawning upon the financial crisis and commercial chaos which now desolate the City of London, and, vie may add, England in general. But even this light is not cheering, for it shows that even if the failures may be pretty nearly at an end, the effects thereof must still be felt for a considerable time. It is now sufficiently shown that the scarcity of money, caused principally by the immense importations of provisions, and also by the failures in the corn trade, has occasioned the eruption of an old sore. This is the way in which great houses, like Reid, Irving & Co., Gower & Co., carried on their business. Solely in order to be enabled to import much produce into England, large advances were made to the planters in the West Indies and the Mauritius, as well as in India itself — advances which, in the sequel, led to this consequence, that immense properties came factitiously, or even nominally, into the hands of the houses in question. Thus the defunct house of Reid, Irving & Co., had more than £600,000 locked up in Mauritius plantations exclusively ; A. A. Gower & Co., upwards of £200,500 in the same island ; and Cockerell, Larpent & Co. equally significant sums in indigo plantations in the Indian empire. The natural consequence was, that these houses, which had thus foolishly locked up their own capital in such (immediately) unrealisable property, carried on their general business rather by means of their credit, than by means of their own money, and were not prepared to meet great convulsions in the money market, or individual losses in trade. The fall of these houses naturally pulled down others. Perkins, Schlusser & Mullins chiefly suspended their payments because they had received by the last India mail bills of exchange upon Reid, Irving, and other fallen houses, to the amount of £25,000, and the same with Fry, Griffiths & Co. The whole fact of the matter — the exclusive cause of these dreadful disasters — is an exaggerated and unnatural trade. Asia was deluged with immense

masses of English manufactures, and an attempt was made, in order to procure payment for the same, to increase the production of Asiatic goods by large advances, these ill-ad-vised sacrificers to what Sluikspeare calls the " dirty gods" of gain, never once reflecting that this immoderate production would, in the sequel, no longer find an outlet in Europe. Thus there are now lying in England above 36,000 chests of indigo — one year and a half's full crop — or, if what goe,s to France and America be deducted, two year's crops ; and that of the present year is extraordinarily high, being estimated at about 27,000 chests ; and at' the same time, it is to be considered, that the yearly demand in England itself and on the continent, does not exceed 22,000 or 23,000 chests. If the fall of such houses as Reid, Irving & Co., Cockerell, Larpent & Co., and Gower, Nephews & Co., is thus explained, the evils which arise therefrom are not on this account che less real, for the shipment of manufactures to Asia must necessarily fall off for the next few years. The prospects in this respect are worse, because not only the Asiatic markets are overstocked, but the solvency of the Asiatics is declining, as the last news from Canton sufficiently shows. Lyall, Brothers & Co., chiefly suspended payment as a preventive measure, and only partially on account of large acceptances upon fallen houses. On this side, therefore, there is little hope of a speedy improvement, and on the American not much more. It is true that at least £5,000,000 has been sent this year to America in payment of provisions, and the freights paid in North America are estimated at scarcely less than £2,000,000 ; but this money has gone to foster the flames of the Mexican war, and the American banks have scarcely a supply of ready money corresponding with this vast influx. Accordingly, a rise in the value of money is contemplated, beyond the Atlantic, although some specie must necessarily come thence. 1,500,000 francs have already been sent fiom New York to France. It is lucky that the in.mense exportation of provisions from North America has enriched the purses of the natives, and the purchase of European, especially English, manufactures will take a profitable turn. In conjunction with these financial matters, the construction of railroads continues to claim attention. The, error that was committed with respect to Asia by a few large houses on a small scale, viz., locking up capital in*unrealisable property, has been repeated by the nation as regards the construction of railroads on a -large one.; and there is still no" prospect that the directors will suspend their calls — in many cases they cannot. The scramble for ready money between the commercial world and the directors of railroads must therefore continue. All these circumstances — and many other's, which we have no space to enumerate — taken together, render some step on the part of the Government imperatively necessary, were it only to restore the confidence so deeply shaken ; for the worst feature of the present state of things is less the evil that has actually occurred — which, when all is disentangled, may prove less serious than is now supposed — than the general leeling of distrust, which can only be lessened by an energetic step on the part of the Government. — Ailgemeine Zeitung.