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Updated: June 20, 2025
When Overends failed, as I have said before, they had borrowed in this way very largely. There are others now in the trade who have borrowed quite as much. As is usually the case, this kind of business has grown up only gradually. In the year 1810 there was no such business precisely answering to what we now call bill-broking in London. Mr.
But this policy had no effect, except that of exciting a distrust of 'Overends': the credit of the Bank of England was not diminished; Overends had to return the money in a few days, and had the dissatisfaction of feeling that they had in vain attempted to assail the solid basis of everyone's credit, and that everyone disliked them for doing so.
They always know the questionable standing of dangerous persons; they are quick to note the smallest signs of corrupt transactions; and no sophistry will persuade the best of them out of their good instincts. You could not have made the directors of the Bank of England do the sort of business which 'Overends' at last did, except by a moral miracle except by changing their nature.
The great evil to be feared was an indistinct conception of the fact, and that is now avoided. 'The importance of these declarations by the Bank is greater, because after the panic of 1857 the bank did not hold exactly the same language. A person who loves concise expressions said lately "that Overends broke the Bank in 1866 because it went, and in 1857 because it was not let go."
They let the tide of business float before them; they make money or strive to do so while it passes, and they are unwilling to think where it is going. Even the great collapse of Overends, though it caused a panic, is beginning to be forgotten. Most men of business think'Anyhow this system will probably last my time.
But if there had been no such guarantee, and no sale of estates, if the great losses had slept a quiet sleep in a hidden ledger, no one would have been alarmed, and the credit and the business of 'Overends' might have existed till now, and their name still continued to be one of our first names.
We need not too precisely examine such language; the element of truth in it is very plain the great advances made to Overends were a principal event in the panic of 1857; the bill-brokers were then very much what the bankers were lately they were the borrowers who wanted sudden and incalculable advances. But the bill-brokers were told not to expect the like again.
As everyone knows, that panic began quite suddenly, on the fall of 'Overends. Just before, the Bank had 5,812,000 L. in its reserve; in fact, it advanced 13,000,000 L. of new money in the next few days, and its reserve went down to nothing, and the Government had to help. But if the Bank had not made these advances, could it have kept its reserve? Certainly it could not.
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