THE year 1825 is one of the few key-dates in Bill Market history, for the great crisis of that year wrought changes in the banking structure which were responsible for every major influence upon market evolution in the succeeding twenty years. The crisis itself can be briefly dismissed, for its immediate impact upon the bill brokers, though sufficiently unpleasant at the time, is of only passing interest. Its principal cause was widespread speculation, stimulated partly by a series of good harvests, partly by the low yields on Government securities.! but especially by improvident finance on the part of the country banks. To a great extent, the banking excesses were traceable to an error of judgment by the Government, which in 1822 had unexpectedly announced that country bank notes of less than £5, which were to have been forbidden in 1823, could be issued for another ten years . This step invited over-issue, especially as the Bank of England, in an imprudent effort to employ the very large reserves it had accumulated against the expected reduction of the country circulation, promptly reduced its rate to 4 per cent. and extended the currency of eligible bills from 65 to 95 days. Abundant credit was thus made available to finance the many speculative projects which were afoot.> and especially the numerous " development .. schemes for the newly established South American Republics. 3

The inevitable results were a precarious position in many commodity markets, an adverse trend of the exchanges, and an ominous drain of gold.