THE BANKERS' MAGAZINE;

AND

Journal of the Money Market.

JANUARY, 1855.

THE WAR EPOCH '54.

THE year one thousand eight hundred and fifty-four will occupy a prominent position in the annals of Europe. It will mark the important period of a transition from a lengthened continuance of profound peace to an outbreak of war, the termination of which depends upon a variety of contingent influences. To those sufficiently advanced in age to remember the memorable Wellington campaigns, the present crisis exhibits the remarkable contrast of the association of England and France to repress the designing ambition of Russia, and to preserve intact the balance of power in the East; while to those acquainted only with the stern realities of belligerent operations since the dispatch of the allied forces to the Crimea, the successes obtained must furnish an earnest of the lasting benefit to be derived from their cordial co-operation. Amidst the general distress, social and pecuniary, the fearful loss of life in the one case, and the derangement of trade in the other, each producing great discouragement, there is, however, the consolation, that the attempt of the Czar to subvert the government of Turkey has accelerated a union between the two countries whose natural position and resources entitle them to take the lead in regulating the destinies of the civilised world; and that, if the first exertions to secure an honourable recognition of their power have been attended with a heavy sacrifice, it will in the end be more than compensated by the advantages which are likely to accrue from the favourable nature of the relationship established.

It was not to be supposed that the current of financial and commercial affairs would, at an epoch like this, assume a steady and undeviating course, or that the prosperity of the two or three preceding years would, under such circumstances, be

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maintained in its full integrity. From the character of the negotiations entered upon, and the unflinching perseverance of the Muscovite interest to achieve the object of their ambition, almost every one, from the entry of the combined fleets into the Black Sea, was prepared for the alternative ultimately adopted. The significant fact of the retirement of the Russian ministers from the courts of London and Paris, followed by the declaration of war in March, brought the actual position of the case prominently before the public; and even many who had previously professed an utter disbelief in the probable commencement of active hostilities, were then compelled to admit the sombre hues of the picture presented for contemplation.

But, although a declaration of war had taken place, it was at the same time felt that the extreme measure had not been resorted to before every considerate attempt had failed to induce an honourable adjustment; and, although the public were not unanimous, after the issue of the "secret correspondence," that the Cabinet had, with the possession of this knowledge, proceeded as energetically as circumstances required, they cheerfully accepted the responsibility entailed, and, with an enthusiasm deserving high commendation, indorsed it with the character of "a people's cause."

The war announced, preparations were requisite to carry it forward. The early Budget of Mr. Gladstone, which provided for an extraordinary expenditure-the positive result of negotiations not having been then obtained-received support, despite a further increase of direct taxation; and the country, while agreeing that it was prudent to arrange for any emergency, appeared to regret that the fallacious hopes entertained of a settlement should prevent the Government from seeking a larger amount of assistance. The supplemental statement exhibited in May indicated that a larger provision was necessary, but recourse to a loan was studiously avoided the Chancellor of the Exchequer having refused originally to recognise the principle of rendering posterity liable for an outlay which should, according to his views, be discharged from the income of the period. Although the reasonableness of this position was contested at the time, and continues to be contested by high authorities, the majority acquiesced, and the whole of the plans propounded were ratified, and speedily put in motion.

While these auxiliary events were taking place, the presence of our fleets in the Black Sea and the Baltic, exercised an influential surveillance; and the enforcement of blockades, notwithstanding their temporary evasion, impressed upon the subjects of the Czar, through diminished trade and restricted resources, the penalty incurred by the despotism of their ruler. There was,

those waters;

however, on his part, no desire to avail himself of the friendly offices of Austria, who, throughout the whole of this difficult question, has endeavoured to arrange terms between the contending Governments; not probably from any latent disposition to assist the Western States, but to avoid, if possible, a personal embroilment with her haughty and irascible neighbour. In the intermediate period, a concentration of forces at Varna and Constantinople gave breadth to the proceedings of England and France, and the victories gained by the Turks over the Russians, under the leadership of Omer Pacha, presented, in a satisfactory light, the effective resistance of the presumed weakly antagonist. The retreat from Silistria, and the proposed evacuation of the Principalities, at once changed, in many essential respects, the features of the war. Suffering greatly, as the allied troops had been, at Varna and Scutari, from disease and inaction, loud complaints were raised of the absence of an active demonstration against Nicholas. The bombardment of Hangoe and Bomarsund, in the Baltic, although not considered brilliant achievements, testified to the anxiety of our naval forces to distinguish themselves in but the difficulty of the navigation, and the want of gun-boats, prevented the attainment of other desirable objects. It was at this important juncture that the expedition to the Crimea was publicly intimated. Arrangements previously in progress furnished evidence of some considerable movement being at hand. No direct information had, however, transpired; and, until the very sailing of the fleet, there was a doubt respecting its positive destination. It was then officially declared to be Sebastopol-an announcement that created the greatest enthusiasm. The intelligence of the landing of the whole of the forces, without accident, on the 14th of September, was a cause of congratulation, not the less satisfactory because of that circumstance, but because it was believed to present the prospect of an auspicious campaign. The passage of the Alma, the capture of Balaklava, and the celebrated battle of Inkerman, exhibited, in their strongest colours, the desperate courage and indomitable perseverance, surrounded by all difficulties, of both the English and French troops, who, having fought side by side with a valour comparable only to that recorded in the classic age, elicited the mutual encomiums of their commanders, on the field and in their published dispatches. But these brilliant victories, each of which may be veritably described in the pages of history as among the mightiest of the existing generation, have not been unaccompanied with a great sacrifice of blood and treasure; and the deplorable situation to which the army has been reduced, the wreck of supplies in the Euxine, and an unfavourable alteration in the weather, have increased the impe

diments already encountered to a vigorous prosecution of the siege. Russia's old ally, winter, through alleged negligence on the part of our general war administration, has proved, as in former cases, more antagonistic than was anticipated; since, had ordinary prevoyance been exercised, the rigours and inconveniences of a Crimean climate might have been mitigated, and the operations against Sebastopol effectively prolonged.

The war, and its influence upon trade and finance, is a topic which has been much canvassed. Extreme parties express extreme views, and consequently very different opinions have been current. The supporters of Government maintain that business transactions have not received so great a check as that which was predicted would ensue, when hostilities at first appeared imminent; while opponents, on the other hand, declare that the country is plunged in a state of deep distress, the whole burden of which is attributable to the vacillating policy of the Aberdeen Cabinet. Taking a more moderate estimate of the war and its consequences, a nearer approach to the truth is likely to be arrived at. Generally admitting the inexperience of the administration in military and naval tactics-conceding the point, that blunders have been made in perfecting preliminary arrangements, and which might, in all probability, have occurred had other parties been in power-it is impossible to conceal the fact that, considering all things, affairs have moved forward in a tranquil and satisfactory manner. While allowing this, it must, at the same time, be remembered that no struggle of this momentous description could be engaged in without creating some effect upon commerce, the relations of which are invariably disturbed whenever such events take place. The inactivity of trade, and the dullness which has, more or less, overshadowed every department within the last four months, have been provoked by other circumstances than the war. And these collateral incidents are, in themselves, of almost equal importance to those which may be supposed to have sprung out of the contest now going on with Russia. Taxation to defray the expenses of the war has, of course, been increased, and the weight has fallen on the public. But, unfortunately, in addition to this unfavourable state of things, Australia and America, the two principal customers of Great Britain, have been passing through phases of pressure, which have affected, not only the credit of mercantile and trading establishments in those localities, but also that of agents and correspondents resident here. Failures and other commercial disasters which have not arisen from these proximate causes, will be found to have been few and far between. With such an excess of business, mostly speculative, as is represented to have been transacted through these

connections, it was scarcely possible to avoid the effects of the revolution recently witnessed.

But if business has been heavy, and in the majority of cases unremunerative, great disposition has been exhibited to stretch forth a helping hand to those in difficulties, where the least hope of recovery existed; and the occasional symptoms of panic presenting themselves have thus been allayed, without being permitted to reach a height to endanger legitimate and healthy trade. With antecedents such as these, it was to be expected that money would, on the average, command full rates, and there has been active employment for the whole available amount of capital, both in Lombard-street and general banking circles. Although the supplies from Sydney, Melbourne, and California, have not decreased, they have barely been sufficient at particular periods to keep up a floating balance, requisite to create confidence at a moment of alarm, and when the metallic reserves of the Bank threatened to undergo a rapid diminution. Hence, so nicely has the alteration in the rate of discount been regulated, that the minimum terms of the Bank authorities have not varied more than one-half per cent.-the rate in May having been advanced from five to five and a half per cent.; and in August having been reduced from five and a half to five per cent., the present quotation; while the stock of bullion has fluctuated between £16,286,000 (25th of February) and £12,513,000 (20th May), now standing (December 16th) £14,028,000.

One essential element in inducing the public to hold up against prophesied adversities was the abundant harvest, which provided for a contingency that might otherwise have been attended with disastrous results; and, fortified with this certainty, they were prepared to combat with minor difficulties in a spirit worthy of the occasion. The subsequent fluctuations in the value of grain, through operations for export, have not diminished the confidence in the adequate nature of the home supply; and, although quotations may exhibit firmness at the average advance, there is little apprehension of lengthened scarcity. A remarkable feature to notice, in the midst of this general perturbation, is the almost inflexible stability of the funds. No doubt can be entertained that the greater number of capitalists, especially of the investing community, are less excited by war or war rumours than they were half century since. It is true that, during the agitation occasioned by the declaration of hostilities, Consols sank to 85, but the fall was principally produced through heavy speculative sales, which ultimately ruined many who engaged in them. The reaction, afterwards apparent, which caused a rise to within a fraction of 96, establishes a range of about 11 per cent., but there has once more been a change, and the nearer quotation is 91.