ported that it was doing business beyond its nominal capital, the shares went down to 3, 4, and finally 9 discount on the day that it closed its doors.

On that afternoon there

was tremendous excitement in the city. Lombard Street and its approaches were filled by a crowd, through which applicants broke their way to find the house shut up. Cabs drove up in haste for their occupants to discover that the rumour of ruin was only too likely to be fulfilled. It was at first thought that the Bank of England would come to the rescue by advancing money on remaining securities; but, after conferring with the heads of other large banking establishments, and examining the books, it was found that no such assistance as could be given would be effectual to remedy the disaster.

On the Friday the panic was general and unreasonable. A few people who could afford to speculate, and kept cool heads, doubtless made remarkable bargains, for in some instances shares in banks and finance companies were offered for nothing. Holders of securities and brokers who acted for investors in such speculations hastened to get rid of them at almost any price, or to close all speculative engagements even at a considerable loss. The bank rate was raised from 8 to 9 per cent., and for special advances to 10 per cent. Only on bills of the most undoubted security could accommodation be obtained, and even at the high rate of discount the applications were so numerous that it was difficult to do business. The banking-houses were crammed with flushed and eager crowds. A concourse of people filled Lombard Street for hours, and at the closed doors of some of the large financial houses, stood men, moody or uncertain, waiting as though in the forlorn hope that some better intelligence might be forthcoming. It was a dreadful day. As though a financial earthquake devastated London ruin seemed to follow ruin. The English Joint Stock Bank failed for £800,000, and then the message came straight from the Stock Exchange that the great contractors Peto and Betts had gone for £1,000,000, and Shrimptons the railway contractors for £200,000. The Imperial Mercantile Credit Association and the Consolidated

Discount Company followed, and towards the end of the day the Agra and Mastermaus' Bank was reported to be shaky, the shares which had been at 33 premium in January having fallen to 1 discount. Eventually the Agra Bank, with which Mastermans' was associated, stopped payment, although during the crisis of these few days it paid £3,000,000 over the counter. This was one of the cruel results of that scandalous misrepresentation which so often accompanies a financial panic. The failure had been caused by a run on the branches of the bank in India, in consequence of false telegrams having been sent to say that the London bank had stopped payment.

Of course these terrible calamities affected numbers of persons and whole families who were reduced from a position of comparative affluence to poverty, and the successive failures disclosed how dangerously speculative was the manner in which many large and important enterprises were conducted. Undertakings so reckless that they could scarcely be dissociated from fraud, fell like houses of cards, and carried ruin to hundreds who had neglected to inquire into, or had no opportunity of examining their pretensions. To individuals the disasters of these few days in 1866 were sad indeed; but happily the community, that is to say the whole nation, was moderately prosperous; the financial condition of the country was sound, nor was the entire balance of trade long or seriously disturbed. At midnight on that "black Friday" Mr. Gladstone, after long and serious interviews with bank directors and representatives of great commercial projects, announced to the House of Commons that the government had determined to authorize the suspension of the Bank Charter Act. For the purpose of affording relief the Bank of England had extended its loan and discounts to above £4,000,000, leaving a reserve of only about £3,000,000.

We have already touched upon the war between Prussia and Austria, which followed the disputes raised in consequence of the occupation of Schleswig-Holstein, and a complete account of it would not necessarily belong to these pages, though the result has been of the

utmost importance in European politics. The old rivalry came to a definite struggle, brought about, as it appeared at the time, by the policy of Count Bismarck, who was bent on the aggrandizement of Prussia. The seizure of the duchies was effected by the two powers, because neither could afford to yield to the other the forward place as the representative of Germany. When they entered on possession disputes became inevitable. Austria could not annex any portion of the conquered territory, and it became a question how to prevent the Prussian minister from taking advantage of the situation. The dispute had been temporarily suspended in 1865, when King William met the Emperor Francis Joseph at Gastein. William was not then ready to commit himself to a high-handed policy against Austria, and an arrangement was made for Prussia to take the provincial administration of Holstein, and Austria that of Schleswig. It was almost impossible that the policy of the two governments would agree, and Austria proposed a settlement by the arbitration of the Diet. Prussia had little regard for the Diet or its decisions, and Bismarck had perhaps foreseen the opportunity for a rupture. Whether he did so or not, it was expedited by the rather ostentatious preparations made by Austria for increasing armaments. When fighting is looked upon as a near and a not very detestable probability, pretexts will not long be wanting. Prussia made the preparations on the part of Austria a reason for demanding of the minor German states that they should determine on which side they would range themselves. Austria, it was alleged, had broken the treaty of Gastein, and it was urgent for Prussia to know on whom to rely for assistance in case of being attacked or forced into war by unmistakable menaces. An alliance was entered into between Prussia and Italy, both to declare war on Austria at the same time should Prussia determine to do so, and to continue it till Venetia should be restored to Italy, and the Prussians be in legal possession of the Elbe Duchies.

Austria called upon Prussia to disarm, and the reply was that she would do so when Austria set the example, and that Austria's pro

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posals for disarmament were nullified by the preparations against Italy. War became imminent, and it was soon useless to disguise the fact. The armies were placed upon a war footing. Saxony made preparations which were denounced by Prussia, and supported by the Frankfort Diet, who determined to ask specifie assurances from the Prussian government. Invitations for a conference sent by England, France, and Russia to Austria, Prussia, Italy, and the Diet were unavailing, Austria demanding as a previous stipulation that no territorial addition should be made to any of the contending states; and informing the Diet that no amicable arrangement could be come to with Prussia with respect to the Duchies. On the 12th of June, 1866, diplomatic relations ceased; Prussia declared war, and on the 15th Prussian armies were in Saxony and Hanover.

It was at first believed that the Prussian troops would be disaffected, or that the people would be half-hearted because of the dictatorship which had been exercised by Bismarck, and the suppression of popular representation. It was also assumed that the levies which had been taken into the Prussian army were no match for the trained soldiers of Austria, and that their generals were far inferior to those of the Southern forces under Benedek. Never were greater mistakes indulged in. The Prussians were apparently willing to condone past political tyranny for immediate military success, and the elevation of Prussia to the dominant position in Germany. The North German troops had been drilled, trained, and carefully exercised; and not only was that large army excellent in physique, but it was admirably equipped and armed with the breech-loading rifle, which had not at that time been regularly adopted by any other troops in Europe. As to generals, Bismarck had made prompt arrangements, and General Von Moltke had already settled the order of the campaign, as an accomplished chess-player might solve a problematic game against an antagonist with whose method he is well acquainted. Prince Frederick Charles and the Prince of Prussia were ready to lead their troops. It was important to obtain the first move. When the Diet, on the motion of Austria, voted the mo

On the 5th of April about 140 members of the Liberal party met at Mr. Gladstone's house to determine on the course which, under the circumstances in which they were placed, should be adopted with regard to the government bill. It was decided at this meeting that Mr. Coleridge should propose the following resolution before the house went into committee on the reform bill:-"That it be an instruction to the committee that they have power to alter the law of rating; and to provide that in every parliamentary borough the occupiers of tenements below a given ratable value be relieved from liability to personal rating, with a view to fix a line for the borough franchise, at which all occupiers shall be entered on the rate-book, and shall have equal facilities for the enjoyment of such franchise as a residential franchise." Much discussion took place with regard to this proposal, and some difference of opinion was expressed; but it was understood to be decided that the motion should be brought forward on the 8th of April, the day on which the house was to go into committee on the bill. However, on that very evening a meeting, consisting of between forty and fifty members of the Liberal party, was held in the tea-room of the House of Commons. At this meeting it was agreed that the persons composing it should unite for the purpose of limiting the instructions to be proposed by Mr. Coleridge to the first clause of his resolution, which applied to the law of rating. They then appointed a deputation to Mr. Gladstone to convey to him the feeling of the meeting, and to assure him that the members composing it would continue to give him a loyal support in committee. Mr. Gladstone, finding that by the defection of so many of his supporters he was almost certain to incur a defeat, yielded to their demands, and the resolution was altered accordingly. Mr. Disraeli accepted the altered resolution, and the house then went into committee on the bill. Thereupon Mr. Gladstone gave notice of several important amendments, which Mr. Disraeli declared to be the relinquished instructions in another form, and distinctly announced that if they should be carried, the government would not proceed with the bill. As most of

the members who composed the meeting at the tea-room still held together, and were known as "the tea-room party," a majority of twenty-one defeated the first of Mr. Gladstone's resolutions. After this he could not hope to carry his remaining resolutions; he therefore announced his intentions in a letter to Mr. Crawford, one of the members for the city, who had asked him whether he intended to persevere in moving the amendments of which he had given notice. In reply to this question Mr. Gladstone wrote:-"The country can hardly now fail to be aware that those gentlemen of the Liberal party whose convictions allow them to act unitedly on the question are not a majority, but a minority, in the existing House of Commons; and they have not the power they were supposed to possess of limiting or directing the action of the administration, or shaping the provisions of the reform bill. Still, having regard to the support which my proposal with respect to personal rating secured from so large a number of Liberal members, I am not less willing than heretofore to remain at the service of the party to which they belong; and when any suitable occasion shall arise, if it shall be their wish, I shall be prepared again to attempt concerted action upon this or any other subject for the public good. But until then, desirous to avoid misleading the country and our friends, I feel that prudence requires me to withdraw from my attempts to assume the initiative in amending a measure which cannot, perhaps, be effectually amended except by a reversal, formal or virtual, of the vote of Friday the 11th; for such attempts, if made by me, would, I believe, at the present critical moment, not be the most likely means of advancing their own purpose. Accordingly I shall not proceed with the amendments now on the paper in my name, nor give notice of other amendments such as I had contemplated; but I shall gladly accompany others in voting against any attempt, from whatever quarter, to limit yet farther the scanty modicum of enfranchisement proposed by the government, or in improving, where it may be practicable, the provisions of the bill.”

The discussion of Mr. Gladstone's first re