ENGLISH MONETARY AND COMMERCIAL INTELLIGENCE.

West Coast Times, Issue 261, 25 July 1866, Page 3

ENGLISH MONETARY AND COMMERCIAL INTELLIGENCE.

London, May 26. THE FINANCIAL PANIC.

The erash — long foreseen and inevitable — has come at length, but the final crisis was marked by a suddenness and an intensity never before witnessed in similar cataBtrophes. For months past I have apprised my Australian readers of the utter unsoundness of our monetary position. The host of finance and credit companies which had sprung up during tho past two years, had so stimulated the speculative propensities of the public, that fictitious or hazardous securities, to the extent of millions sterling, had been manufactured and forced upon the market. The collapse of most of these ambitious and reckless organisations, it was evident to all thoughtful men, was only a question of time. It was impossible for them all to prosper and perform their extravagant promises to their dupes. Each month's mail accordingly, for sometime past, has informed you of the disastrous failure of some and the hopeless embarrassments of others. As was natural, deep distrust took the place of the previous credulous confidence; every concern, sound and unsound alike, fell under suspicion ; shares and securities of all kinds sunk in market value from day to day, and were parted with at serious sacrifices by alarmed holders ; deposits wero drawn out of discount and credit companies surmised to be shuky ; and thus every preparation had been gradually made for the panic which swept liko a storm through the city and the provinces a fortnight since.

Tho sign and signal of the criiis was the stoppage of Overend, Gurney, & Co. (Limited), which took place on Thursday tho 10th inst. The announcement of tliis calamity spread the wildest consternation in all directions. Owing to tho historical reputation of the firm, an almost boundless confidence was reposed in the solidity and wealth of its resources, and honce tho closing of their doors seemed to be tho herald of a universal financial chaos. Both London and country banks have been accustomed to lodge largo deposits with Overend, Guroey, & Co. ; and it appears to have been the sudden withdrawal of these deposits which immediately led to the suspension. There shares had for some time been falling lower and lower on tho stock market. When the pressure becamo alarming, they applied to tho Bank of England for assistance ; but the prospects being so serious, the directors deemed it imprudent to afford any aid, since other establishments would be sure to prefer similar appeals. Under these circumstances, there was no alternative but to suspend payment, Tho

news sp'l-ekd liko wild'fira through town arid couitry, and tho morrow was looked for war I to with harrowing suspends ffnd dread. The giartyof this event may.be imagined from the fact, that the direct liabilities of this g'fcWt establishment, irrespective of a large amount of bills under discount, represent no less a Sti'n than about L 12,000,000. Of this v"a-it umoUni', six millions , belong to depositors who hold bills as security, while thfee milllo'ns.,anda,JiaJf,helqng to uncovered depositors. The nominal capital ,of the Limited Company is L5,000,(50'0, Ht which' only-Lr,500,000 is paid up. At the time of tho transfer, L 500.000 was paid to the old firm io'r the goodwill, which of course is irretrievably lost. In the investigations which will speedily take place into the company's affairs some startling fac ts will probably transpire in reference to its recent antecedents. Well-informed persons have long been aware that tho fame of Overend, Gfurney, & Co., of late years, has not been justified by facts. Previous to the manufacture of the company the old firm had, by reckless mismanagement, redu'eed a onco prosperous business to one of the nlost Jo'sirig concorns in England. Their losses did hot full fall far short of two millions, and it was at the time generally understood that tho formation of the company was mainly with a view to rehabilitate the faded fortunes of the partners, and enable them to retire from the concern. It was mentioned the other day, as a matter .of gfotulution, that Mr G-urney will suffer no loss, a» he-Betfe.ded from tho concern on the inauguration of the company. A few months ago, the company sustained some rafher Serious losses through the frauds of Pinto, Perez, & Co. ; but in spite of this drawback, the managers belfi-ve that a month ago they lield sufficient profits to justify their paying a dividend. Mos3ra Gkirney's ttdrik at Norwich will not be affected by this failure.

FAH.UBES.

Besides the companies and firms which succumbed during the severity of the panic, others have been going by ones and twos almost every day since. On the 19th some little stir was created by the stoppage of the European Bank and the New Zealand Banking Corporation. The former institution was was ps'ablishcd in 1863, by the amalgamation pf the' Union Bank of England and France, the English, Belgian, and jfetherlands Bank, and tho English and lijish Bank, with, branches at Paris, Marseilles, Amsterdam, Eotterdam, and Dublin. The capital is four pillions, with L 644.490 paid up. The liabilities are estimated at LBOO.OOO. The New Zealand Banking Corporation was established in 1863, with a capital of L 600.000, only one-tenth of which is paid up ; the last dividend was at the rate of ten per cent. A meeting of the t-hareholders took placo on the 22nd, when it was stated by the accountant that tho liabilities were L 136.000, and that the assets show enough to meet these and to cover the paid-up capital of L 60.000 leaving a surplus of L4OOO, but that this result would, of course, in a great degree depend" upon the claims of the bank in New Zealand being realised without undue pressure, The meeting concurred in the propriety of taking all steps to avoid a compulsory winding-up, and an adjournment for a fortnight was agreed to, in order that the requisite negotiations may be carried out;

The Commercial Bank Corporation of India and the East have had their draft refused. Tho report issued in April last announced very large losses through the mismanagement of some agents in India, and was not adopted by the shareholders, but was referred back for additional information. The capital is one million, all paid up ; the company, however, being incorporated by royal charter, the 600 fib. iroholders are responsible for a further million.

The Imperial Mercantile Credit Association stopped payment on the 12th.

On the 15th, the failuro of Messrs Hallett, Ommauney, and Co., the private bankers and navy agents of Great Q-eorgo street, Westminster, was announced. The liabilities range from L 250.000 to L 300.000. Arrangements have since been made with the London Joint Stock Bank to carry on the concern as a branch of their business.

The Financial Corporation, projected early in 1864, with a nominal Capital of 1/3,000 ,000, but with only L 125,170 paid up, is in difficulties. The debts amount to L 106.105, covered by securities at present unconvertible.

Among the private firms which have succumbed during the month are Messrs Wakefield, Na«h, and Co., of Liverpool, for L 1.000,000, and it is feared there will be a deficiency of about L 250,000, through losses on cotton ; Messrs Henry Birt and Co., wholesale tea-dealers, of Mincing lane, one of the partners having forged acceptances to the extent ofL5000; Messrs Fernie Brothers, and Co., merchants and shippers, of Liverpool, whose "liabilities are large, but thoir surplus larger ; Messrs Penny and Co., East India merchants, of Liverpool, with liabilities amounting to L 104.000, against L 20.000 of assets; Mr Charles Bedell, wine merchant, of Slarklaue, with about LIOO.OOO liabilities ; Messrs GKbbs B -others, of Deepfields, and Bull'ebridge Ironworks, liabilities about L 25,00 0; Messrs Luckie Brothers, of Fenchurch street, for L 70.00 0; Messre S. P. Frarajee and Co., a Bombay firm, liabilities, L 400.00 0; Messrs Maccullock, John, and Co., of Liverpool, in the cotton trade, engagements over L 700.000 ; Messrs W. K. Conbrough and Co., merchauts of Liverpool, for L 150.00 0; Messrs Kynaston, Sutherland, and Co., of Mincing-lane, for LIOO.OOO ; Messrs iSobin^on, Corryton, and, Co., private bankers an-i bill-brokers, .of Manchester ; and Messrs G-ellatiy, Hunkey, and Sewell, a shipping firm, have resolved to liquidate under inspection. A more serious matter is the failuro of the 'Bank of London (unlimited), established eltfven years ago, with a paid-up capital of L 400,000, and a voaerve fund of L 302,324. The disaster has been caused by imprudent advances, locking up too largo a portion of its funds. This establishment is one of tho victims of an organised body of speculators who have lately, by secrot and persistent attacks, attempted to mlii everything right and left. Arrangements hwe boon made with tho Consolidated Bank for the transfer of the deposit and current accounts.

"BLACK FRIDAY."

For genovations to come will the 11th of May, 1866, sfcmd out in gloomy prominence in the chronicles of English financial history. The day has acquired, what it will probably ever retain, the bad epithet of " Black Friday." It was the day of disaster, loss, or ruin to thousands. A wild, insano, unreasoning panic wns anticipated, and the reality did not fall short of the dread expectation. A <• run" on banks, discount houses, and finance companies was inevitable ; and most of the establishments wisely opened their doors before the usual hour, and kept them open longer than customary. Ono of the first announcements was that the Bank of England — which, on the 3rd inst., raised its rate from 6 to 7 per cent, and on tho Bth from 7 to 8 per cent — had carried its minimum still higher to 9, and the charge for special advances to 10 per cent. The pressure even at these terms was enormous ; it was only on unexceptionable bills that accommodation could be obtained, and oven Government securities wero in many instances refused. During that day of appn'liig excitement and terror, tho Bank reduced it j reserve — the only natioual foundation of credit and conOdence — from sc -i to three millions. Another such day, and a . .irersal suspension of cash payments throughout England was inevitable. Meanwhile, additional disasters wero hourly announced, which fomented and aggravated

I tho public agitation. And not keeping to acts — which were bad and plentiful enough — rumor wns bnsy *ith the highest names and staunchest reputations. Each person imbibeJ and exaggeAtle'd 1 the su^pifions of his neighbors', nmf swelled the torrent of excitement. Happily, du'Wng the afternoon a report, which proved to bo premaiuro, gained currency, to the effect that the Government Ilttd authorised the Bank directors to issue notes to tho extent of five millions heyond the limit imposed by tho 1 Bank Charter Act. Though (lie statement was, Unwarranted it served to check the headlong fury of tlw piraic, which at one time threatened to sweep away every vestige of confidence, and gave reason an opportunity to resume' llg sNvdy. Abdut tett 6 clock the English Joint Stock Bank closed it» doors ; Mr W. Shrimpton, a railttdy contractor", with liabilities for L 200.000, announced his failure; the drafts of the Consolidated Discount Company were returned unpaid in tho afternoon ; two failures on the Stock Exchange were reported. But the crowning disaster of the duy was the stoppage of Messrs Peto and Betts, with liabilities amounting to about L 4.000,000. This created a great Bensation both of ourpriee and regret. Tho assets of the firm are estimated, oven at greatly depre-ciati-d prices, fo be nearly L 5,000,000 ; and as all the works for which f.her aro under contract abroad are in a vwy forward state'; while those with v\ hi.-Ii they are connected in England havo been undertaken jointly with other powerful contractors, who aye in a position to insure their steady completion, it is believed all claims will be shortly adjusted. Everybody will rejoice in tho reinstatement of £lir Morton Peto. ' The securities held by the firm are excellent, but temporarily unavailable, owing to the presaur? of the times. Tlfe English Joiut Stock Bank, referred to above,, was established in March, 1864, to take over the business of* a number of small banks in the south of England. Their liabilities are about LBOO,OOO, and it is thought that their assets will yield enough to cover thfllt amount. There are thirty-one bianch establishments, most, if not all, of-which have suspended payment, so that the effects of this crisis are felt far and wide. The, Consolidated Discount Company was established in January, 1864, to take over the business of Messrs Sandeman and Co. The nominal capital is L 1,000,000.

EXCITEMENT IN THE CITT. All accounts concur in representing that the scene witnessed . in the city ou the llth is without parallel in the memory of business men. The monetary e'risis of 18*7 and 1857 came on and passed aWay more gradually. The anxiety and alarm wero nloYe diffused. There was not the sharp paroxysm — tide sudden terror which distinguished the present panic. Lombard-street, Birchin-lane, and other thoroughfares in the monetary centres, were in a stato of complete congestion. Many among the excited crowds had, no doubt, been drawn thither by curiosity ; but not a few Were frightened depositors struggling to secure their cash before the bank door » should be slammed in their faces, and others were persons who had rushed up from the country, on the first tidings of tho calamity. Several persons, after drawing out their hoards front the banks, wandered about without knowing how to dispose of them, and were ultimately relieved of all responsibility by the deft fingers of pickpockets. The telegraph offices were crowded all day to an unprecedented" extent for the despatch of messages. So dense were f he throngs of persons at the doors of the banks, that tho police, though reinforced for tho occasion, found it difficult to restrain the impatient mass of peoplo who were crowding into those already chocked establishments. The premises of Overend, G-umey and Co., at the corner, were an especial object of curiosity, while the perspective of Lombard-street was resolved into a moving mas 3of black coats and hats. Instead of shouting out and chaffing, as in an ordinary English mob, there was a most ominous and painful silence, the only sound distinctly recognisable being the imperative order of the policeman, to prevent a complete blockade, "Now, gentlemen, move on if you please." There wero certain spots where the crowd had a tendency to gather into an impenetrable knot. A portion sought to enter a bank, a portion wero desirous to get out, and the greater proportion wero lookerson who strove to securo a good position to watch what was going forward. There was an intense gazing at the doorway, as if they expected every minute to sco the huge doors 6lammed in tho face of the panting multitude. Happily, they wore not to be gratified by any such sensational incident ; but it really was exciting, by reason of a sort of sympathy, to witness tho wild and feverish hasto with which folks wero pushing into establishments whose credit had never been questioned, evon in whispers. As a rule, the banks and discount companies met tho run upon them with tho utmost promptitude. Scarcely an establishment escaped tho genoral attack, but some Buttered moro than others. Several of the private, as well as the joint-stock banks had balances withdrawn, but tho arrangements mado wero so admirable that no difficulty was experienced in meetiug all demands. What tho condition of the banks would have been at the close of a second day's " run," it is fearful to contemplate. By What has since transpired, some of the bpst of them were near tho end of their available resources. The Times, writing a few days lays later, remarks: — '-Now that the panic is over, we approach tho faots of tho case ; and if they are no longer alarming, they are most extraordinary — passing, wo should thiuk, tho largest anticipations of the alarmist. We abstain from names and particulars, blit tho disclosures made to the Bank of England aud tho Chancellor of the Exchequer on Friday," simply show that even our largest banks — those in the beat repute and with the largest business — havo been going on, no one can say how long, upon tho supposition that there never could bo a run upon them, that they might hold any amount of deposits with only a very small proportion of reserve to meet them in time of need, and that they simply relied on the aid to be obtained from the Bank, if necessary, by a suspension of the Act."

A well known gallant and imaginative officer was relating at a mess table in Indix an incident which occurred on his voyage out, in command of troops. One day, it seems, a kind of raft, a curious superstructure, was observed from Tho ship, drifting to leeward. On nearing the strange object, it was found to support a hen-coop, and in the hen-coop was a man. Ho was half sleepy, half ex"haustcd, but not in tho least excitod, and coolly addressed his visitora with " Ha, gentlemen, I'm glad to soo you, I began to despair. Pray where do you hail from, and whither aro bound?" "From London to Calcutta," was the reply. " Calcutta ! Oh, I'vo been there, aud would rather not go a<»ain. I prefer my hen-coop. G-ood-by." "'And as we left him," continued the narrator, "he quietly turned himself again to eleop." The story met with 6ome success, when another officer present, equally gallant and veracious, interposed tho question—" And do you know who the man was?" "No; stupidly enough, wo forgot to ascertain." " Thou I'll toll you,' ho eaid. "It was I ! Yes, gentlemen, I was the man in tho hen-coop ; and, if it were not for your good company I could wish myself there again."