Oil the Crises of /<??7, i8././, and i8§y 39 



averaging- about ten points. In 1847, from January to Septem- 

 ber, Great Western fell from 139 to no and London & N. West- 

 ern from 202 to 167, In October they dropped to 102 and 161 

 respectively, near which points they remained for the rest of the 

 year. In all, from May, 1845, to the end of 1847, the fall in the 

 two securities amounted to over 50 per cent.^ 



So far we have confined our attention to railway securities. 

 Turning to government securities, consols, we find an almost 

 identical movement. An exception is to be found, however, when 

 from January to May, 1845, railway securities experienced an 

 excessive rise, government securities declined slightly. But dur- 

 ing all of 1846 and 1847 '^oth declined, although private securi- 

 ties declined the more rapidly.- The phenomenon observed in 

 the early part of 1845 rnay perhaps be 'explained by the sudden- 

 ness of the boom in railways, which promised enormous profits, 

 and this would turn aside capital temporarily from investment 

 in public securities. This alternation of demand between public 

 funds and speculative securities has been often noticed. 



In France the situation w^as practically the same as in England, 

 with the exception that the government was taking a more lead- 

 ing part in the speculative movement. Within a year or two the 

 government had borrowed from the Bank of France £2,000,000 

 sterling for the construction and improvement of public works. 

 When this w^as added to the enormous sums expended for rail- 

 way construction and for grain obtained from the Baltic and 

 Black seas, it constituted a severe strain upon the Bank. Finally 

 recourse was had to a loan, and the bank rate was raised. Eight 

 hundred thousand pounds was obtained from Baring Brothers of 

 London, and the rate of discount w-as raised from 4 to 5 per 

 cent.^ 



For reasons already presented, the European crisis of 1847 

 afifected the United States only slightly and even then not until 

 one year later. That the efifect of a foreign crisis can not be 

 entirely avoided is shown by this fact, that in spite of our ex- 

 cessive exportation of grain, giving us a favorable trade balance, 



^ See chart on the next page. 



"Evans, The Commercial Crisis of 1847-4S. 



^International Cyclopaedia, vol. VI. 



181 



