On the Crises of i8s7, 1847, and i8^y 27 



United States which, with the low rate of discount in England, 

 made it profitable to ship gold to America. With the raising of 

 the bank rate and the passing of the crisis, gold began to return. 



According to Juglar, England would not have suffered such 

 severe losses of gold had she manipulated her bank rate properly. 

 He contends that the crisis of 1839 was due entirely to the cotton 

 speculation in the United States, and that the drain of gold could 

 have been prevented by raising the rate of discount to the point 

 where it would have rendered the shipping of gold to America 

 unprofitable.^ This point seems to be well taken, since our un- 

 favorable trade balance would naturally be a good basis for a 

 contrary movement of the precious metals. 



Combining 'the movements of merchandise and gold, we find 

 in the United States an excess of imports of both kinds of com- 

 modities, which is conclusive evidence either that Europe was 

 investing in American securities or that she was granting credit 

 on goods purchased, or both. According to all authorities vast 

 amounts of American securities were being sold in foreign mar- 

 kets, and the low bank rate in England greatly facilitated the 

 sales. - 



In addition to this international extension of the credit system, 

 there was also an increase of credit transactions within the dif- 

 ferent countries. In the United States for the year 1838 the 

 North loaned the planters of the South $20,000,000.^ The mer- 

 chants in the North loaned or sold on time to the planters of the 

 South, and the exporters of Europe loaned or gave credit to 

 American merchants. Hence, when England refused to grant 

 credit any longer to the United States, the North w^as forced to 

 pursue the same policy with regard to the South, so that a gen- 

 eral collapse of credit followed. 



* Juglar, Les Crises Commerciales, 459-67. 



* Sumner, Crump, Dewey, etc. 



•Juglar, Brief History of Panic in United States, 70. 



169 



