payments in the United States. This was the spark which exploded the magazine, already stored with inflammable material to a danger. ous extent. Additional trouble and distress were felt by many houses with American connections, who were forced to suspend. Great gloom gathered over commerce. A panic set in in earnest, and bankruptcies, stoppage of business, a fall in the value of merchandise and securities, with a chronic prostration of trade, ensued.

Ten years later came on the great English panic of 1847. This was not, like the preceding one, accompanied with a commercial crisis in the United States, but it arose, like the former one, from an inflated use of credit, though in a new and different form. Capital had become abundant in England, and profitable methods of investment were eagerly sought for. The railway, then a comparatively new means of transport, was assuming great prominence. In 1846, railway acts were passed, involving an expenditure of about £15,000,000. In 1845 the rage for railway speculation reached a most extraordinary height. The prices of shares, both of railways in operation and of merely projected lines, rose enormously. Great Western shares were quoted at £156 in January, and at £228 in September. The Midland, which in January was at £114 a share, rose in September to £188. Fortunes were made and lost, and people became wild with a market so excited. New railway enterprises by the score, and finally by the hundred, were thrust before the public, the London Gazette on a single day containing as many as three hundred columns of official railway advertising. Of course multitudes of abortive schemes, una real enterprises, and fraudulent shares were foisted upon credulous investors. The frenzy soon brought about its own retribution. A partial crop failure came in, the rate of interest began to rise, money was no longer procurable on easy terms, and the value of railway shares fell fearfully. Heavy losses ensued to all who held them. Alarm and anxiety spread by degrees from the share market to the various branches of trade. The grain merchants lost heavily from the great fall in prices. A speculation in pig-iron, which had been largely sold for future delivery (another trick of inflation times), led to the ruin of many. The price of iron went down from £5 to £3 per ton. Several banks succumbed; consols fell to eighty-five, and every thing appeared to portend an approaching national bankruptcy. Parliament not being in session, the Ministry urged upon the Bank of England to enlarge their discounts for the relief of the community, and promised a bill of indemnity if the Bank Restriction Act should be infringed. This assurance that additional relief might be obtained produced the same effect as if the Bank of England had made an issue, because it brought out the hoards of notes which the destruction of confidence had hidden away, and they went into circulation. Thus the cause of the panic was gradually removed. A parliamentary report by a committee of investigation attributed this commercial

crisis to the diversion of capital from its legitimate employment in commercial transactions, to the too rapid construction of railways, to the undue expansion of credit, and to the exaggerated expectations of extended trade.

The crisis of 1857 was accompanied by the stoppage of many banks and commercial houses. Just before this there had been a steady drain of specie from England for export to the East for a large expenditure in railways. A great amount of specie had also gone abroad for silks and other imported articles, while the war in the Crimea caused a large remittance of money for the payment of troops. At the same time, the banks of London and other cities had been long loaning upon all sorts of securities to the utmost extent of their means. "The chief failures of 1857 did not arise so much from the panic," says Levi, in his "History of British Commerce," as from the effect of a system of acceptances and open credits, or from trading on fictitious credit, then largely prevalent." This state of things was charged by an investigating committee of the House of Commons as the principal cause of the panic. Said the report:

"It is impossible for your committee to attribute the failure of such establishments to any other cause than to their inherent unsoundness, the natural, the inevitable result of their own misconduct. Thus we have traced a system under which extensive fictitious credits have been created, by means of accommodation bills and open credits, great facilities for which have been offered by the practice of joint-stock country banks discounting such bills and rediscounting them with the bill brokers in the London market, upon the credit of the bank alone, without reference to the quality of the bills otherwise."

The British commercial crisis of 1866 sprang primarily out of the undue extension of credit in the formation of multitudes of joint-stock companies. These companies, based upon the leading idea of the French Credit Mobilier-which was, to limit the liability of all the shareholders to the amount of capital each contributed-led to an enormous expansion of these corporations. From 1855, when limited liability companies were for the first time admitted in the English law, to 1866, there were organized 7000 limited companies, involving a nominal investment to the amount of £893,000,000. These companies adopted not a few of the objectionable features of the Credit Mobilier of Paris. One of these illegitimate abuses of credit was the indorsement of the bills of the projectors of public works. No sooner was a project started, involving investments of millions, at home or abroad, than these finance companies indorsed the debentures, bonds, stocks, and shares, which were created and circulated in the community, producing all the risks and evils of an irredeemable paper currency. These bills were founded, not on solid security or completed enterprises, still less upon gold and silver, but they represented, like irredeemable paper, no real value. Says the London Economist:

"Such securities were a powerful speculation on the future, and a speculation subject to all kinds of casualties. An unfinished railway or dock has no value whatever."

We have no space to detail the sad story of this inflation. The disgraceful failure of Overend, Gurney & Co., Limited, one of those inflation houses which did a business of some thirty millions of dollars on fictitious securities, is a part of the history of that time. Two thirds of the speculative corporations ceased to exist, and out of £504,000,000 in shares, supposed to have been invested by these great companies, two thirds disappeared-some through bankruptcy, some through winding up, and some by a sudden disappearance from the market.

THE NATIONAL DEBT OF GREAT BRITAIN.

Compiled from Fenn's Compendium of Funds, 12th ed., 1874; the Financial Reform Almanac, 1877; and The Stock Exchange Year-Book, 1877.

THIS fiscal monster, which has swallowed upwards of TWO THOUSAND MILLIONS during the present century, owes its origin to Indirect Taxation, the Funding-i.e., Mortgaging system, and "the Balance of Power." From the Norman Conquest to the accession of Charles II., this country contrived to fight and pay its way, without contracting a farthing of debt, because its revenue was derived from lands reserved to the Crown, lands allotted on conditions of feudal service, and feudal payments from the allottees, strictly in the nature of rent; with occasional direct levies on the community generally, duties on commodities being almost entirely unknown. As a condition of his restoration, probably, Charles II. did away with these feudal obligations and payments, and his Parliament of Landholders, converting themselves into Landowners, gave His Majesty and his successors Excise duties on Beer, etc., payable by the people, "in compensation" for what they and their predecessors had been bound to pay as tenants of the Crown. The "Merry Monarch" contrived to overrun his means to the extent of upwards of half a million, but the debt was called "the King's," not that of the Nation. It was somewhat increased by his successor; but with William III. came the notion that it was the function of this country to maintain "The Balance of Power in Europe;" and hence arose the Funding System, which was a mortgaging of taxes; a conversion of the "King's Debt" into the 'National Debt ;" and a very rapid growth of the latter.

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The National Debt, at the period of the Revolution in 1688, amounted to about £664,000.

It was during the war with France in which this country engaged at the time of the Revolution, and which continued for a period of nearly ten years, that the foundation of the present National Debt was laid. At the close of this war in 1697, the debt was found to amount to nearly £15,000,000, and the revenue was deficient the sum of £5,000,000. At this time, also, from the irregularity with which the interest upon the floating debt was paid, Exchequer tallies and orders were at a discount of 40 per cent; and government, to redeem the credit of the nation, as well as to provide for the deficiency of the revenue, was obliged to contract a further debt, and to fund a portion of the floating securities.

At the close of the reign of Queen Anne, in 1714, the public debt had increased to about £36,175,460, bearing an annual charge for interest and annuities of £3,063,135.

In the year 1718, the interest on a part of the permanent debt, £3,775,028, was reduced from 6 to 5 per cent, the creditors having the option of taking the reduced interest or accepting payment of their principal in full, and a regular sinking fund was provided by act of Parliament for the redemption of the permanent debt. The National Debt, at the close of the reign of George I., amounted to upwards of £52,000,000. The annual charge was considerably diminished by the reduction of interest in 1717, and by a further reduction from 5 per cent to 4 per cent in 1727.

From the year 1739, the National Debt received vast additions annually for several years. The debt in 1748, after the Treaty of Peace at Aix-la-Chapelle, amounted to nearly £76,000,000, being an increase during the war of about £29,000,000.

The return of peace in 1749 having lowered the current rate of interest, and the 3 per cents, in consequence, rising to par, whilst the 4 per cents were at 107, the scheme for reducing the interest of the whole public debt to 3 per cent was revived, and carried into effect by several resolutions of the House of Commons. On the 29th of November, 1749, the act passed for this purpose, stipulating that the interest should be reduced on all the public debt redeemable by law, then bearing 4 per cent interest, including the sums due to the Bank and East India Company, and the South Sea Annuities, amounting together to £57,703,475.

The companies and the proprietors of 4 per cent stock, upon signifying their consent to the reduction on or before the 28th of February, 1750, were to receive 4 per cent to the 25th of December following; from that time to the 25th of December, 1757, 32 per cent; after which they could receive only 3 per cent, and no part of these debts, except that due to the East India Company, to be liable to be redeemed till after the 25th of December, 1757. The time for receiving the assents to this measure was extended to the 30th of May, 1750, on condition that the interest on the further loans subscribed should be reduced from 3% to 3 per cent, on the 25th of December, 1755. At the expiration of this second extension of time, there remained still unsubscribed the sum of £3,351,499 (of which £2,325,023 consisted of old and new South Sea Annuities). A loan of £2,100,000 was raised at 3 per cent, and the Bank advanced the remainder to pay off the above amount. Thus the interest on the entire British debt was "scaled" or reduced to 3 per cent in 1749-55 (at which it has ever since remained), by simply paying off old loans bearing higher rates with the proceeds of new loans at 3 per cent. Practically, however, the holders were in most cases glad to become themselves the purchasers. Various stocks were consolidated in 1751 into one fund, this being the origin of the present consolidated annuities.

The principal portion of the debt of Great Britain is not in the form of bonds, but of annuities. Strictly speaking, the government of Great Britain has no bonded debt. It is all a funded debt, and the practice of the government is to sell annuities; that is, upon paying £100 into the treasury, the subscriber receives a government promise to pay so much per annum during a certain time, but without any promise to return the sum paid in. The 3 per cent consolidated annuities, familiarly known as consols, practically make the funded debt of Great Britain consist of never-ending annuities, unless redeemed at the option of the government. It has never been the British practice to sell the government bonds payable at a certain time, or option, and bearing a certain interest, at a fixed price, or to the highest bidder, as in France and the United States.

The war with France, which broke out in 1756, though it continued but seven years, added nearly £60,000,000 to the public debt, which at the conclusion of the war in 1763 amounted to £133,000,000. During the twelve years of tranquillity which succeeded the Peace of Paris, about £6,000,000 of the debt was discharged; so that at the commencement of the American War, in 1775, the debt amounted to £126,842,811. During the seven years in which this country was engaged in war with the United States, the National Debt was more than doubled; for although the independence of America was acknowledged in 1782, yet loans were raised in several subsequent years in order to defray the remaining expenses of the war;

and it was not until 1786 that the revenue was found to be sufficient for the expenditure. In that year, the debt amounted to £245,466,855.

Early in the year 1793, the war with France commenced, which continued, with only a very short interruption, until 1815, a period of 22 years. This long contest brought with it an immense increase in the expenditure of the country, and a consequent augmentation of the public debt; stock to the amount of upwards of £613,000,000 was added to the National Debt during this contest, and about £23,000,000 to the annual charges.

The following table shows the progress of the National Debt, funded and unfunded, from its commencement to the close of the war in 1815, and its decrease since:

Since the conclusion of the long war in 1815, the National Debt of the Empire has thus declined from £861,039,049 to £775,873,713, or about 10 per cent, in something over half a century, notwithstanding the additions in 1835, when slavery was