more precise on Wednesday and Thursday, as the full significance of the Bank's action was borne in upon the minds of an increasing number of City men. On Friday the name of Messrs. Baring was freely mentioned and a panic was imminent, especially when it became known that a meeting of representatives of leading firms and banks was being held at the Bank of England. That evening a preliminary but effective agreement was come to that Messrs. Baring should be assisted. Their great immediate danger was their inability to meet their acceptances, and it was arranged that these should be provided for by the Bank of England, the Bank being protected against loss by the creation of a guarantee fund. This fund, which at the commencement amounted to five or six millions, rose to ten on the following day (Saturday), when the announcement of what had been done calmed the City a good deal, and quite averted the threatened panic. Eventually the fund rose to over eighteen millions, but of course many of the later subscriptions were sent in by people who thought it would 'look well' to have their names on the list. The really useful offers of help name from the first dozen or so of houses and institutions, whose conduct showed that they 'meant business,' and were prepared to run risks. Great credit must also be given to the Governor of the Bank, a man of coolness and courage, without whom the proposed body of guarantors would have resembled a sound spear-shaft minus its steel head. Of course the Bank and the guarantors had satisfied themselves that the risks were not too great. They knew, on the very best authority, that Messrs. Baring's securities were in the main satisfactory, though owing to the evil situation in Argentina and the United States, and the fact that most people in London were carrying as much stock as was safe already, these securities were incapable of immediate realization. Under these circumstances those who originally put their names to the guarantee deserve credit for both wisdom and courage in the unusual circumstances of the case. The whole business was abnormal, and cannot safely be regarded as a precedent for the future, unless indeed the traditional prudence of men of business in the City of London deserts them.
It is not necessary to dwell much on the events which followed the collapse of Messrs. Baring, and the adoption of measures to prevent the panic which would inevitably have resulted from that event, if the firm's enormous liabilities had not been provided for. The crisis once over the money market rapidly became very easy, and a recovery took place on the Stock Exchange, owing to the repurchase by operators for the fall of part of the stock sold by them in view of a highly probable catastrophe. Investors also took the opportunity of buying the fairly numerous class of good stocks which had been thrown on the market by holders through necessity or excessive apprehension. Since this recovery, however, the volume of business has been very small. In the first revulsion from the feeling of extreme terror there were a certain number of people who appeared to imagine that the danger avoided might be considered as never having existed, and that commercial activity would soon be resumed. The same class of persons talked as if a new means for the prevention of panics had been invented, and asked why the trouble of 1866 had not been met in this manner. Of course the notion that every trader who has become insolvent could he safely relieved from the consequences of his folly by a guarantee fund was not nakedly stated, but it was said that any one who had 'good' securities which were temporarily unsaleable might be helped. This is a most dangerous fallacy. No really good security is ever un-
