LAISSEZ FAIRE
this country by those, no part of whose produce had been
exported to represent their consumption. One of the most
certain symptoms that can be shown of an undue absorption
of capital going forward in internal investments, is when we
see our imports increasing more rapidly than our exports,
or when the former are increasing and the latter are
diminishing.”
The phenomena thus described continued to manifest
themselves for several years; and their effects were in many
ways peculiar; in noné more so than in bringing about large
payments for customs and excise, so that there were prosperous
budgets while trade was generally speaking depressed®. The
irony of the situation seemed complete, when an abundant
harvest induced a crisis, by bringing about a fall in the price
of corn. During the preceding years there had been large
importations of cereals from the United States, which were
partly occasioned by the potato famme in Ireland. The
Liverpool merchants were unable, in the autumn of 1847, to
obtain the prices they anticipated; several firms collapsed,
and more than one of the Liverpool and Manchester banks
stopped payment. The position of the Bank of England
seemed critical, as the reserve was reduced, during the last
fortnight of October, from over £3,000,000 to £1,600,000%
Paper of every sort was so discredited that there was great
difficulty in carrying on monetary transactions, and at last
the Government yielded to the pressure of mercantile opinion
and suspended the Bank Act, so that notes could be issued,
while at the same time the rate was raised to 8°, The
mere knowledge that reliable paper was forthcoming served
to allay the tension, and the Bank did not find it necessary,
after all, to issue notes beyond the number permitted by the
Act of 1844.
The incident did much to discredit the reputation of Peel
The Bank as a financial authority. The measure, which had been
justifies its , “ . ‘
position. intended to prevent the inflation of prices, had served to
check the action of the Bank in intervening to redress the
328
| Wilson, Capital, Currency and Banking, p. Xvil
# Northcote, Twenty Years, 83.
Palgrave, Dictionary, 8.v. Crisis.
