a very animated state of the markets for some important descriptions of foreign produce, as also for iron and other of the metals, and that the corn markets had experienced a great rise, the price of wheat having advanced nearly 50 per cent. within a few weeks after the close of 1835. From the concurrence of these causes, the spring of 1836 was attended with the display of a spirit of speculation, and of general excitement, which presented some resemblance to the spring of 1825, although far short of that period in extravagance, and attended with the important difference that, whereas in 1824-5 a considerable part of the speculations ran on investment in foreign loans and foreign mines, those of 1836 were chiefly, if not exclusively, directed to undertakings within the United Kingdom. But it was quite clear in the spring of 1836, as it had been in 1825, that a considerable part of the speculations in shares could only have admitted of proceeding to the length that they had done by an undue extension of credit, which allowed full scope to the delusive prospects then held out. Accordingly, those joint-stock companies only which had been established on a solid foundation stood their ground through the difficulties which prevailed in the money market at the close of 1836, try. I believe, indeed, that great good has arisen from jointstock banks; but the observations I have made with regard to other companies are equally applicable to many of the jointstock banks that are springing up in different parts of the country, and the existence of which can only be attended with mischief. I have a prospectus of what is called the English, Irish, and Scotch Joint-stock Bank, with a proposed capital of 3,000,000l. in England, 2,000,000l. in Ireland, and 2,000,000l. in Scotland; and which holds out the greatest possible advantages to the persons engaged in it. The shares, too, are of very small amount. I may mention, on this point, that I have seen some companies with shares as low as 107. The great danger of evil arising from speculations of this kind is obvious." and in the first six months of 1837, while the greater part fell to a discount, and no small number were finally abandoned. The markets for goods also, but for those descriptions only which had risen in consequence of scarcity, and of the exaggeration of demand usual on such occasions, experienced, as we have seen, between the close of 1836 and the summer of 1837, as the effect of large supplies and of a state of discredit, a considerable fall. And we have now to see to what extent the state of the circulation could be considered as in the relation of cause and effect, with the fluctuations which have been described in general terms as having occurred in the markets for goods, and for shares, in the period from 1833 to the close of 1837. SECTION 6.State of the Circulation from the Commencement of 1833 to the Close of 1837. The statement, to which in the course of this work there has been frequent occasion to refer, of the actual position of the Bank, as to its assets and liabilities, on the last day of February and the last day of August in each year, reached only to August 1832, being the period when the committee on the Bank charter, to whose Report that statement was appended, closed their labours. The statements which have since been published once a month, according to the condition prescribed on the renewal of the charter, do not give the actual position of the Bank with reference to its liabilities, its securities, and its bullion, at any one time, but only the average of each of these elements, without distinguishing the securities into public and private, for the three months preceding the date of the monthly publication. These materials, although leaving much to be desired, with a view to forming a judgment of the manner in which the regulation of the issues has been conducted at particular times, and of some of the consequences which directly affect the situation of the Bank, afford at the same time fair grounds for judging of the general management, whether as regards its consistency with the system professed by the directors, or its influence on the money market and on prices. With such light then as is afforded by these materials, and with such further light as has been thrown upon the subject, by the explanations to which the recent controversy respecting the causes of the late pressure on the money market has given rise, I shall proceed to examine the state of the circulation, with the causes of its variations, and the nature and degree of its influence on the great fluctuations which have been observable in the money market, and in the markets for goods and for shares, in the interval between 1833 and the close of 1837. After the very considerable reduction which the treasure of the Bank had undergone in the early part of 1832, when, namely, in February, the amount was only 5,293,150l. against liabilities amounting to 26,988,8807., while the securities amounted to 24,333,4907., there was a large reflux of the metals for some months following. By the Gazette return in October, 1833, the average amount of assets and liabilities in the three months preceding had been, £19,800,000 Securities £24,200,000 10,900,000 Circulation Deposits the bullion being thus, as nearly as might be, in proportion to one third of the liabilities. According to the return in January following, there had been in the interval a loss of bullion, on the average of the three months preceding, to the extent of about one million, accompanied by a re duction of the circulation by about 1,200,000%., and of the securities by between 600,000l. and 700,000l., while the deposits were unvaried. And so far the management leaves nothing to remark upon. But thenceforth a considerable degree of irregularity is observable; a progressive diminution of bullion was going forward, and, coincidently with that drain of the Bank coffers, a progressive augmentation of its securities had been taking place, insomuch that, whereas by the return at the end of September, 1834, the bullion had been reduced by upwards of three millions, as compared with October, 1833, and by upwards of two millions, as compared with January, 1834, the securities had been increased by five millions*, and the circulation by about a million, compared with the latter date. The comparison of the three periods stands thus: 1833, October. Circul. £19,800,000 Bullion Secur. £24,200,000 10,900,000 1831, Jan. 7. Circul. Here is surely any thing but the regularity of action which might be expected consistently with the professed rule of preserving the securities even, and of allowing the liabilities and the bullion to be acted upon by the public. The drain continued till May, 1835, the return being on the average of the quarter ending, June 4. 1835. Circul. £18,460,000 Secur. £25,562,000 Deposits 10,568,000 Bullion 6,150,000 The bullion was, probably, in the interval of the three months included in that return, under six millions. The great reduction of treasure is ex It has been stated that this excess of securities was occasioned by an increase of deficiency bills; but there is an end of the rule if deviations to this extent are to be admitted on the plea of a difference in the nature of the securities. plained on the part of the Bank by a reference to the effect alleged to have been produced by the loans to the governments of Portugal and Spain. "These loans were going forward from July, 1833, until towards the end of 1834, when the profits realised upon the daily extending engagements in the foreign stock market engendered a further spirit of speculation in almost every kind of previously neglected South American, Spanish, and Portuguese bonds, causing an enormous advance in all, and in some nearly 100 per cent. In short, until the spring of 1835, hardly a packet arrived from the continent which did not come loaded with every sort of foreign securities for realisation upon our foreign stock market. In reply, it may be stated, that not only the demand for the silver and export of the sovereigns originated and continued during the mania alluded to, but further, that that demand ceased the moment the reaction took place, in May, 1835, when a panic seized the dealers in foreign securities, causing their prices to fall with far greater rapidity than they had risen. In the progress of the contraction, which ensued upon the diminution of the bullion held by the Bank, the market rate of interest gradually advanced for first-rate commercial paper from 2 to 3 per cent. per annum, which may be quoted as having been its value in May, 1835. At that time there was no material increase in the paper money circulation of the interior; consequently, immediately upon the discredit taking place, the export of gold ceased, and the foreign exchanges further advanced, bringing back the major part of the gold which had been exported in the preceding eighteen months; thereby clearly showing that the currency was not redundant." Causes and Consequences of the Pressure on the Money Market, from the 1st Oct. 1833, to the 27th Dec. 1836. pp. 27 -29. By J. Horsley Palmer, Esq. Upon this explanation it is to be remarked, that if, during the interval in which the influence of these foreign stock speculations is supposed to have been in progress, the securities of the Bank had been preserved in tolerable uniformity of amount, and if the liabilities had been reduced in any thing like a fair proportion to the reduction of bullion, and if the stock of bullion which had been lost, as is alleged, in consequence of those speculations, had, upon the reaction and discredit following, flowed back as fast as it had gone out, and that this reflux had taken place without any material re |