depreciation in Argentine and Uruguayan securities. The fall in prices did not at first extend very far, as it was hoped and asserted by those interested that the new Argentine Government, being composed of honest men, would take strenuous measures for repairing the terrible injury done to the Argentine credit by the revolt itself, and also by the corruption which led to the revolt. Unfortunately the mischief had gone much too far to be remedied by a mere change of government and cessation of corrupt administration, and the prices of Argentine securities continued gradually to decline. The effect of this on the position of Messrs. Baring and another great firm interested in South American securities was very serious. Messrs. Baring more especially found to their surprise that they were beginning to have difficulty in providing for the daily demands on them. They had carried on their acceptance business with a want of caution which is astonishing, having allowed one Buenos Ayres house to draw on them to an almost unlimited extent. In August their position had become distinctly alarming to themselves, and it is probable that some hint of the situation had been received in certain quarters in the United States, but it was not till September that serious alarm began to prevail in London, and even then the firm which was most talked about was not Messrs. Baring.
The Bank rate which had, rather unwisely, been reduced to 4 per cent. on August 21, was raised again to 5 per cent. on September 25, money being then dear in New York and Berlin. The sales of securities on the Stock Exchange increased considerably, and throughout October they were more and more pressed. At the time, of course, the source of this selling was not known to any but a few, and even the few were unaware of their real significance. November began with a very gloomy feeling and an expectation that money was likely to become very dear, especially as gold was being withdrawn from the Bank for foreign countries, more particularly for Spain. It was somewhat of a relief to the City when Thursday, November 6, passed without a rise in the Bank rate, but this feeling was converted into one of vague alarm, when on the following day the Bank announced an advance to 6 per cent.
The reason given for this change was a sudden demand for gold for shipment to Spain, and we have the best reason for believing that the critical position of Messrs. Baring was unknown when it was decided on. On the following day, Saturday, however, one or two persons of high position in the City were made aware of the situation, and on Monday an investigation into Messrs. Baring;s affairs was entrusted to an eminent banker and a member of the Treasury Committee of the Bank of England. A very uneasy feeling prevailed in the City, as many persons outside the very small circle who were acquainted with the facts could not but be aware that something very serious had happened, and that it was necessary to take measures to strengthen themselves. A very large sale of consols added to the apprehension prevailing. On Tuesday, November 11, the Stock Exchange opened with a feeling of unusual uneasiness. This was to some extent allayed by the announcement made by the Government broker that a very large amount of gold was coming from abroad, a fact which was significant of the general alarm at the smallness of the Bank of England's reserve. When it was known that the amount of gold which it was proposed to bring was no less than £3,500,000 (the amount actually brought was £4,500,000) and that further sales of consols had been made, all thoughtful persons who were not among the ten or a dozen men who knew the actual facts came to the inevitable conclusion that the danger feared was of the first magnitude. This feeling of vague terror became much
