The Panic of 1847 was a major British commercial and banking crisis, possibly triggered by the announcement in early March 1847 of government borrowing to pay for relief to combat the Great Famine in Ireland.
[11] From around £15m at the beginning of 1847, the bullion reserve of the Bank of England drained away, falling particularly sharply after the announcement of the Irish loan on 1 March 1847 to a trough of around £9m on 17 April 1847.
[13] However, capital outflows for investment in America and to pay for food imports to the United Kingdom overwhelmed the recovery, and both measures reached new low levels by October 1847.
It is interesting to note that on July 19, 1844, under the auspices of Peel, England had adopted the Bank Charter Act, which represented the triumph of Ricardo’s Currency School and prohibited the issuance of bills not completely backed by gold.
Nevertheless this provision was not established in relation to deposits and loans, the volume of which increased five fold in only two years, which explains the spread of speculation and the severity of the crisis which erupted in 1846.