PANIC IN THE CITY.

Nelson Evening Mail, Volume I, Issue 121, 25 July 1866, Page 2

PANIC IN THE CITY.

Friday, the llth of May, 1866, was a day of confusion and alarm in the city such as has no parallel in the memory of the " oldest inhabitant," who is generally supposed to be well acquainted with local history. Certainly the panic which took place in the autumn of 1857, when the Western Bank of Scotland and four other great provincial banks, stopped payment, with a great number of private firms, never reached that height of anxiety and suspense which appeared everywhere to exist on this occasion. It was not till after business hours on the 10th that the suspension of Overend, Gurney, & Co. was made known ; and the effects became painfully visible early on the following morning. No one need wonder that throughout London, and even far away into the country, the tidings of the failure of a great house, accredited in the .popular imagination with almost boundless wealth, should diffuse a feeling of uncertainty and dismay, or that those who had the least to lose were precisely those who were most terrified ancl impatient. By 10 o'clock, when the more leisurely class of business men proceed to town, they found at every station that the journals were gone, and there was au unsatisfied demand for thousands more. In the city most of the banks were open by 9 o'clock, as if inviting the public to test their resources, but if any feeling animated the bankers in the morning, they must have been perfectly satisfied by mid-day that the public did intend to test them, and that severely. There was not at first much of a crowd, except in the immediate precincts of Overend, Guerney, and Co., where people assembled to satisfy themselves that the house was actually shut. Tliere was nolonger that cheerful look of business and wealth for which the establishment was formerly famous, but the shut doors told a sad enough tale to all who passed. The name on the brass plate seemed to read like an epitaph. The glory of the old house had departed^ There, where a great business had gradually been built up by years of carefulness, and shrewdness, and patience — there, where the Guerneys had first made the named beloved on account of their generous zeal and warm sympathy for the oppressed — all now was silence and gloom. From the old house came no sign, while the news was spreading througli the country, and there was flashing over tho telegraphic wires to every business centre of Europe tlie ominous word " suspended." The conduct of the banks was admirable. Not only did many of thom open an hour earlier than usual, but some did not close till an hour later. If fear ever reasoned, tliis display of solvency would have restrained the run, but the panic allowed no man to reason. Hour after hour, the palpitating crowd increased, aud rumors of the most alarming kind were circulated. About the Stock Exchange it early began to be whispered that the bank directors were sitting, and the conclusion oi their deliberations was eagerly looked for. It was not that the rise of 1 per cent, on the rate of discount would of itself have had any great significance on such a day, but the outside world wanted to know whether the bank had already begun to feel the panic. In the Stock Exchange itself, perhaps, there never was so much absolute consternation. It was in vain men attempted to keep cool and to di-precate the spreading of reports which might turn out to be false— the feeling of the hour was too much fur even the least excitable, and announcements were accepted as conclusive which, on otlier occasions, would not have been listened to. Some one had made up his mind that the Bank Act must be suspended, and it having been suggested that a deputation should wait upon the chancellor of the exchequer as early as possible for the purpose of urging this course upon him, that aud that were put together and placed upon the Stock Exchange as accomplished facts. All this was doubtless a- foreshadowing of what afterwards did take place, but at the time the statement was issued it was mere imagination. The chancellor's answer was also graciously given to the effect that the bank might issue five millions of notes above their maximum without holding gold to recover the amount. It is a curious illustration of how much all this panic is a question of confidence, that no sooner was tliis' announcement made than the market felt better. People began to breathe more, freely, . holders of stocks became saucy, and would not sell; at the ruinous prices which had prevailed, and, in short, there was a gleam of sunshine -in that most gloomy place. ** . - - • The primary cause of the downfall of, Overend,.; Gurney, & Co.'s- is attributed -to the operations of. speculators for a fall in the shares of the company,-, ' finally producing, such: a feeling of; distrust asjgo:_ cause a run upon their deposits. • Application to the Bank of England for assistance to meet the pressure

and avert more disaster was refused, and hence the closing of the doors and the subsequent general panic. The Money Market Eeview of May 19 writing of the panic says: — Thus the Bank Act of 1844 was for the third time suspended. And it was well — very well — that it was so, and that it was done so promptly, for had it not been suspended, or had its suspension been deferred only for another 24 hours, we do not hesitate to say that, in all human probability, every bank in London, including the Bank of England itself, and almost every bank throughout the country, would have been compelled to suspend payment on the following Monday. More than four millions were drawn from the Bank of England on Erirlay, and assuredly much more than four millions would have been required from the Bank on the Saturday. The private and joint-stock banks ofthe metropolis, of whose balances the Bank of England is the daily custodian, would of themselves have pressed for several millions, which the Bank could not have paid. Thus whilst the Bank was- being drained of its millions in the shape of discounts and advances for the purpose of hoarding, every banker in London would have been compelled to withdraw from it every shilling of his deposits in order to meet the urgent demands of his customers. The Bank's tills would speedily have beon exhausted, and its securities would have been utterly unsaleable, for all the notes "in circulation" M-ould have been hoarded and there would have been none wherewith the purchase of their securities could have been effected. This is not a mere opinion, it is susceptible of proof, and is acknowledged by every one, including even the city editor of the Times. This universal devastation ancl ruin, but for the good sense and promptitude ofthe Chancellor of the Exchequer, would have been the *24 hours' work of the Bank Act ! But suppose that some analagous state of things should arise at some future period, that Act still in existence, ahd with a Chancellor of the Exchequer possessing less intelligence, less courage, or less promitude than Mr. Gladstone does, what might be the consequence of only 24 hours' hesitation in such an emergency ?

In the Resident Magistrate's Court this morning, the following cases were heard : — F. Mayne v. Dupuis : claim, £20 for services rendered and cost of board nnd lodging, as per agreement. Defendant disputed the debt on the ground of neglect of duty and insolent conduct on the part of the plaintiff, who received a month's notice to leave and left at once. The "Magistrate gave judgment for plaintiff for £10. Judgment was given for plaintiff in the cases M'Coukey v. Rowley. £5 10s. 3d., and Corbett v. Flowers, £4 os. Barnes v. Lockhart was postponed until Saturday. David Murrelh the man who attempted to commit suicide, was brought up again. He seemed better but not fit to be at large. The Magistrate said he should bo kept at the police station a day o: two longei*, if he did not get better then he should be sent to the hospital for a short time. A mistake occurred in our police report yesterday, in stating that the Magistrate told Murrell he was liable to be sent 'to prisou on a charge of felony. The word misdemeanour should have been used instead of felony. We regret to learn that the schooner Deesse, from Newcastle to Nelson, with coals, was wrecked on the Farewell Spit oii Friday last. The Tararua, which arrived this afternoon, brought on her captain and ci-ew to Nelson. The Keera passed the wrecked vessel, and reported the fact to the maunger of the Panama Company in WeUington. Captain Benson instructed the captain of the Tararua to go to the spit, and bring off the shipwrecked men. The steamer Kennedy arrived at the Grey yesterday morning, and proceeded on to Hokitika. The steamer Wallaby arrived there on Saturday, the 14th inst. A correspondent requests us to notice the fact, that during" the past year, the Board of Works have held thirty-one meetings, these meetings Mr. Bentley has attended 29 ; Mr. Watts, 29 ; Mr. Cartel-, 28 ; and Mr. Burn, 26. The Wanganui Times of the 17th iust. aays that 400 of the disaffected natives have surrendered to Colonel Trevor, at Wereroa. The Patea expedition wai to start for the front immediately. The Wellington Advertiser reports the wreck of four vessels, with coals .for" the P.N.Z. & A.R.M. Co. The names of' the ships are,. the Esk, Midas,- William' Watson, and Sorata. The- three last have been, wrecked at Newcastle, and their cargoes entirely lost; The crews ofthe vessels effected their escape, except in the case of the • William Watson. Her captain, Moran, and one of the stewards, were lost iu her.

The Auckland correspondent, ofthe Sydney Morning Herald takes the following hopeful view of the state of things. Auckland seems to improve slowly, but I think surely. There is a large amount of kauri gum coming into the market, aud prices rule high; as much as 60 tons came in last week. The state of our out-settlements is greatly improved. The digging of gum and the cleaning of flax are likely to tide a great many families over the winter who would have been almost starved without something ofthe kind; and I now think we shall not have auy serious distress here this wintei'. We notice in the share list published by the Home News of the 26th May that the New Zealand six per cent, debentures are quoted at 94 to 96 and five per cent, debentures at 70 aud 73. New Zealand Bank shares are quoted at 8 premium ; New Zea-land-Trust and Loan Company at g premium; ancl Panama, New Zealand, aod Australian Royal Mail Company's £10 shares, with £9 paid up at 8| ; £5 shares all paid up at 4|, aud new £10 shares with £$ paid up, not quoted. The Sydney Morning Herald, ofthe 13th inst., declares the reported hostilities in Italy to be a telegi-aphic hoax. While we cannot be too irate with the perpetrators of such a scandalous fraud, we cannot be too thankful that the news turns out to be wholly false. The following is from the Sydney Morning Herald : — Our Melbourne correspondent states that since the arrival of the Bombay at Melbourne, it has been discovered that the telegram with reference to the entry of Garibaldi into Venetia and the flight of the Pope, pablished there as well as in Sydney, was a hoax played on a newspaper at Colombo. The Lyttelton Times has the following respecting the Dunedin Commercial Bank : — The last declared dividend was 10 per cent., and the shares are £10 each of which only £1 has been paid up. From this it is natural jto infer that the stoppage is only temporary j :at all events, in the absence of further iufortaation,it may be assumed that the bank is in a position to meet its liabilities. The telegram yesterday stated that the run on the bank 'was supposed to have been caused by a misconception ofthe English news. The public will doubtless be in possession of. full particulars iu a few days at the most.

The Government' pis. Sturt, Captain Fairchild, left "Wellington, on Friday morning with Captain Norris, of the ship Weymouth, and Mr. Donovan, the Telegraphic Engineer, and proceeded to Lyall's Bay to take soundings and see how near the Weymouth could go to the shore in laying the telegraphic cable. The soundings showed that she could go within a quarter of a mile of the shore at this side of the Strait, and within about the same distance on the Marlborough side, at White Bay, or as it is, perhaps, better known — Disaster Point. Owing to the rough south-east weather, anchoved during Friday night at Port Underwood, which place she left at 9 a.m. yesterday, avriviug at Wellington at 5*30 p.m. The p.s. Sturt will proceed across the Strait with the ship Weymouth and the s.s. Taianaki, while the cable is being laid, to render any assistance that may be necessary. The Marlborough Press, speaking of the submerging of the electric cable iu Cook's Strait, says there is now every probability of the adventurers' scheme for the separation of the two islands being upset at once and for ever.