The crash was precipitated by the crop failure of 1846. England, and
 particularly Ireland, required enormous imports of foodstuffs, notably corn and
 potatoes. But the countries which supplied them could be paid with the products
 of English industry only to a very limited extent. Precious metals had to be
 given out. Gold worth at least nine million was sent abroad. Of this amount no
 less than seven and a half million came from the treasury of the Bank of
 England, whose freedom of action on the money-market was thereby considerably
 impaired. Other banks, whose reserves were deposited with the Bank of England
 and were practically identical with those of that Bank, were thus also compelled
 to curtail accommodation of money. The rapid and easy flow of payments was
 obstructed, first here and there, then generally. The banking discount rate,
 still 3 to 3½% in January 1847, rose to 7% in April, when the first panic
 broke out. The situation eased somewhat in the summer (6½%, 6%), but when
 the new crop failed as well panic broke out afresh and even more violently. The
 official minimum bank discount rose in October to 7 and in November to 10%; i.e., 
 the overwhelming mass of bills of exchange was discountable only at outrageous rates of interest, or no longer discountable at all. 
 The general cessation of
 payments caused the failure of several leading and very many medium-sized and
 small firms. The Bank itself was in danger due to the limitations imposed by the
 artful Bank Act of 1844. The government yielded to the general clamour and
 suspended the Bank Act on October 25, thereby eliminating the absurd legal
 fetters imposed on the Bank. Now it could throw its supply of bank-notes into
 circulation without hindrance. The credit of these bank-notes being in practice
 guaranteed by the credit of the nation, and thus unimpaired, the money
 stringency was thus instantly and decisively relieved. Naturally, quite a number
 of hopelessly enmeshed large and small firms failed nevertheless, but the peak
 of the crisis was overcome, the banking discount dropped to 5% in December, and
 in the course of 1848 a new wave of business activity began which took the edge
 off the revolutionary movements on the continent in 1849, and which inaugurated
 in the fifties an unprecedented industrial prosperity, but then ended again — in
 the crash of 1857. — F. E.]