1866 „The Economist“ (Jahrgang 1866) v. XXIV.

January. 1866.

Saturday, Jan. 6, 1866. N. 1167.

Eight Per Cent.

Banknote at 8%. Bank hӓtte früher raise sollen, zu 7%. Dann jezt nicht nöthig, den screw so scharf zu drehn. „We … carry on the trade of the country on the minimum of bullion which will suffice; and if the Banks are but a little behind in their protective operations, the result may be very serious … If Peel’s Act is to be worked, the Banks must keep so strong (its reserve) at the middle of a quarter that these calculable drains at the end of a quarter shall not become catastrophes in its policy, shall not spasmodically affect the value of money, shall not jerk the money market.”

What The Value of Money in 1866 is likely to be.

Unter diesem heading entdeckt der wiseacre: 1) Daß seit dem Freetrade, Abnahme auf einem Markt, Expansion auf dem andern sich compensiren. Vorher we had nur access to a few markets; wenn diese overstocked, all our trade was suffering. Jezt „for the most part, trade augments with regularity“; 2) Our system of credit is better than it used to be. Die Bank (the world, sezt er emphatisch hinzu) kannte früher das Geheimniß nicht Bullion festzuhalten durch Erhöhung des Zinsfusses. „When in old times our credit system was shaken by catastrophes, our commerce languished for months, and money was cheap because no satisfactory persons wanted to use it.“ 3) Now we lend more variously than we used to do … to foreign nations, to compagnies for purposes of work and construction in this country in forms and in quantities wholly unexampled. Daher the value of money, the average value, has permanently risen in Lombard Street.

We shall still deal very largely with the countries which take our bullion, and therefore the value of money will be to some extent affected by the abstraction of bullion. In 1866 this cause of dear money will not be so potent as in 1864 and 1865, though it will be more potent than in common years. …

But, now there is no reason to fear the least diminution of credit.As far as our credit goes, we may expect 1866 to be a normal year.

These variations of the rate of interest the moment a foreign drain sets in are inevitable, so long as we endeavour to conduct a vast trade, or rather two vast trades, one of selling, the other of lending, upon the minimum of bullion which will support that credit.

The Duration of our supply of Coal. (Jevons’ book.)

„At least half the coal raised in Great Britain is consumed by the various branches of the iron trade.” 2Bei dem present rate of increase, our coal exhausted in 100 years. Wir kennen jezt thickness and accessibility of our coal mines. Bleiben in Great Britain, down to a depth of 4000 feet, 80,000 millions of tons. Unsre jӓhrliche Consumtion 1860 war 80 millions. So die available coal would last 1000 years. Aber Consum increases 3 1 2 % per annum; in 1880 will be 160 millions; u. if it continues thus to increase, the whole 80000 mill. worked out before 1960. Aber früher. Weil gerechnet all coal down to 4000 feet: no coal mine has yet been worked at a greater depth than 2,500 feet. Going deeper „enhances the price“ u. mit dieser Preiserhöhnung gehet unser rate of progress u. special advantages zum Teufel. Mit tiefrem Arbeiten: the heat grows more insupportable, the shafts and passages longer, the danger greater, the ventilation more costly, the quantity of water to be kept out or got out more unmanageable. A very short period may raise engine coal and smelting coal from 5s. to 6s. per ton. Now a cotton mill of ordinary size will often use for its steam power 80 tons of coal per week; this at 5sh. is ₤1,000 a year; at 10s. per ton it is 2000. Aber die cotton mill is full of machinery; grosses Kostenitem dieser Maschinerie ist coal used in smelting and working the iron of which the machinery is made. Ebenso in den Transportmitteln, welche von u. zu der Fabrik führen, in den railways u. steamboats Kohle grosses Kostenitem.

The cost of carriage, therefore, which is a very large item in the contingent expenses of our factories, will be greatly increased both directly and indirectly by a rise in the price of coal.

Grosse Oekonomie im Gebrauch der Kohle schon eingeführt; in smelting iron we use 2 3 coal less than formerly, in working the steamengines 1 2 less.

It is only a rise in the price of coal that will goad us into a more sparing use of it; and this very rise of price is the proof and the measure of our danger.

Of all articles of trade and industry coal is the most bulky in proportion to its value; and it is the fact of having it at hand that has given us our manufacturing superiority.

3

Of 136 millions of tons now annually raised throughout the world, Gr. Brit. produces 80 mill., the Un. States only 20.

Their (the U. St.) coal fields are estimated at 196,000 miles in extent, ours only 5,400. But this is not all: their coal is often better in quality and incomparably more accessible than ours, especially in the Ohio valley. In some places the cost at the pit’s mouth even now is 2s. per ton in America, against 6s. in England.

Jan. 13, 1866. N. 1168.

The State of the Money market.

For the present the foreign drain (to the East) is checked; the silver market in London is dull.

Where does our gold go? Früher, in drain to India, silver went, nicht gold. Grund: Till a recent period, whatever silver was wanted for India was collected on the Continent and sent here. We sent it on to India. But now there is a French compagny sending silver, and French seamen carrying it from Marseilles without its coming here … Our gold goes to pay for the silver which formerly used to be sent to us bodily; but now it is used on our account indirectly, it is transmitted from Marseilles to India to pay our debts.

Many people wonder why, when there is a quick rise of money in Lombard Street, it should be cheap on the Stock Exchange. It is cheap in the latter, because it has quickly changed in the former. The quick change makes people uncertain u. dann der easiest market ist der Stock Exchange „from day to day“. Discount houses etc deal dann möglichst wenig in bills, use it daher on the Stock Exchange, where they can have it at once, just because they do not feel sure enough of the future to lock up their resources till definite dates.

4

Our Trade with America. (U. St.)

Alarmists raise warnings.

Our exports to America up to 31 Oct. 1864 15,403,017l.
Ditto 1865 14,844,704.
Nun 1859 our export to the U. St. 24,417,000

Wenn also nicht im Nov. u. Dec. 9,600,000l. importirt, so geringer als 1859.

England u. Europa jezt large buyers of American securities, railway debentures u. 5.20 bonds the imports which balance our exports.

Market Prices of Investments in the Year 1865.

As a rule, and in the long run, prices are the true indicators of value.

U. States: debt of more than 600 Mill. l. St. and annual charge upon that debt to be raised by taxation: more than 40 mill. l. St. Our Railwaystocks not improved in 1865. Erklӓrt daß, weil sonst profitlichere investments . Daher preference shares declined. Ferner the original railway stocks possessing no guarantee have been injuriously affected by the recent and prospective commitments of nearly all railway companies to raise additional capital for the formation of new railways. As yet there is no material decline in dividends.

Shares of the banks: On average prices wonderfully supported in 1865, … exception of Indian and some other banks.

Nicht so die Finance Compagnies. Fall ihrer Prӓmien (z.b. Credit Foncier and Mobilier of England, Financial Discount, General Credit, International Financial, London Financial, Land Securities, Oriental Financial). Obgleich die meisten dieser undertaking „have been in appearance successful and have paid large dividends”.

5 Consols (1865) fallen von 89 3 8 zu 87 3 16 . Actual decline v. beginning to end of the year 2%.

Hauptsächlich, weil andre securities profitlicher waren.

A Practical Check on Bubble Compagnies.

Consols depreciated, aber noch mehr limited liability shares, manche wholly unsaleable or standing at a disastrous discount, with heavy calls looming in the future …

Limited Liability is not really the sole cause of the present pressure, which is due largely, if not chiefly, to the feverish energy imparted to trade by the inflation of the currency in America and to the derangement of the cotton trade.

Bubble companies for working a patent, or constructing a railway, or „taking over” a line of steamers, or a private business, or purchasing and working a mine in Mexico, a tea estate in India etc

January 20, 1866. N. 1,169.

The Effect of the 8%.

No bullion gone out; but none yet attracted from abroad. We have a great though suspended drain to India and Egypt for cotton hanging over the market. Dann hovering about Egyptian Railway loan etc.

Market Prices of Investments in the Year 1865.

Insurance Companies u. Miscellaneous (embracing, die latter, the majority of the Limited Liability Companies recently created).

Insurance Cos. Meist profitable undertakings; singular steadiness of the market prices of their shares.

V. 97 descriptions of stocks and shares quoted in the insurance companies’ list of the Investor Manual (leztres Beiblatt zum „Economist”) nur 16 at a discount, daher trifling u. belongs chiefly to the shares of the new marine insurance cos’.

6

In den meisten lӓnger etablirten Dingern dieser Art (insurance) Prӓmien der shares im market.

Miscellaneous: In dieser Liste 519 different descriptions of stocks and shares quoted of which 286 mit limited liability, 233 aber unlimited.

Diese 233 descriptions of unlimited shares comprise canal, gas, steam marine, dock, water, and other cos’, darunter nur a few cos’ of recent creation. 63 von diesen 233 quoted at the close of 1865 at a discount, der remainder meist at a premium.

Von den 286 denominations of limited liability shares in the miscellaneous list, 80 were quoted at a premium, 94 at a discount, 112 without any market quotation, which in effect may probably indicate that they were unsaleable in the market at any price. Also result at the end of 1865:

Marketable and profitable 80 or 28% on the whole
Marketable at a loss 94 or 33%
Unsaleable, involving great loss 112 39
286 100.

So 72% dieser limited liability cos’ shares entailed loss of principal upon the original subscribers at par, or their representatives, the succeeding proprietors. Aber dennoch nicht so large proportion „valueless or even unsound”! By no means, dear me!

„there is not, so far as we can judge from dividends and market prices, anything so rotten in our new mode of speculation as to preclude its resuscitation at a more propitious moment. Hurrah!

Insurance is as unsafe as gambling; or, more correctly, it is gambling, if the number of risks to be insured is not enough to ensure an average result … Chance is eliminated from insurance by the number of ventures (Die Grösse der Area, worüber ausgedehnt:)

7

Un. States Commerce with France (1865).

In den ersten 11 Months exports from U. St.: 34,492,632f.
Import into U. St.: 84,456,666.

Assuming that the month of December averaged the 11 months preceding, 37,376,018f. import to 91,494,749f. export. So die U. St. indebted to France for 54,127,731f. worth of goods. Davon abzuziehn 5,793,000f. of gold coin and bullion u. 169,800f. of silver received in the 11 months; also, 5,577,390f. of the payments of silver which French silversmiths call regrets. Rechnet man proportionell ab so viel für December, so bleibt indebtness der U. St. to France von about 44 Mill. fcs od. 1,760,000l. St. Nicht viel. It only exceeds by a little more than 1 Mill. l. St. what was due at the end of 1864. Jedoch an important portion of the trade between France and the U. St. carried on via England, and figures in official returns as done with that country.

January 27, 1866. N. 1170.

The Memorial of some Liverpool Merchants on the Currency.

They ascribe „the excessive and usurious rate of interest“ der Act von 1844 u. Bank of England monopoly. Both to be abolished. Jede Person u. Compagny soll have power to issue notes, so viel they please, upon the deposit of stock or Exchequerbill, and so obtain a sufficiency of currency for the discount of bills and the commercial needs of the country.

Whether the currency be issued by 1 person or many, whether separated or combined with banking, it is equally a part of the credit system of the country; and that credit system can only be supported in one way. The credit of A means that A will pay gold or silver; it is a believed promise to hand over such and such sums in the precious metals if required. To secure the performance of such promises, a large stock of the precious metals must be kept.

8

The only known mode of keeping such a stock is by raising the rate of interest.

Das system, verlangt von den Liverpool memorialists, war das in New York before the civil war. Every bank could there issue notes, but every bank was obliged to deposit „security”; but that system did not absolve the banks from the necessity of keeping a stock of gold and silver, and it did not produce a low rate of interest. The normal rate was often very high ‒ higher than the present rate complained of. The banks, as soon as they saw their reserves of bullion getting low, raised the rate of interest, and kept that rate high till the stock was replenished.

If the banks keep the rate of interest too low for a time, they make it too high afterwards.

As long as a nation keeps its store of bullion at a minimum, the money market will be most delicate. And as long as bankers, one or many, are guided by their own interest, it will be kept at that minimum.

Die Liverpooler beziehn sich auf den present lower interest in France. Aber the banking power of the Bank of France is infinitely more authoritative than that of the Bank of England, and its „monopoly” of the currency is absolute.

Cattle Plague. Government Relief.

Government in Lancashire lieh Stӓdten, damit sie Arbeiter beschӓftigten. The Lancashire loan was not a compensation to capitalists. It was a loan for utilising men … Result: good drainage and good payment in some great northern towns.

Schlӓgt Eine einzige cattle insurance Compagny für ganz England vor; nicht to insure (to prevent fraud) more than 2 3 of the value.

9

The Recent Dividends of Joint Stock Banks.

1865 rate of interest hoch, aber nicht so hoch als 1864.

Averages of
Bank of England minimum rates of discount. 1864 1865
7.31 4.74

The Average Rate of Bank Dividends.

Last 4 dividends, Rate % per annum.

1864 1865.
June 30. Dec. 31 June 30. Dec. 31
Alliance 10 nil 5 5.
Bank of London 20 20 20 20
City Bank 20 12 15 12
Imperial 8 10 8 8
Joint Stock 32 1 2 50 18 22
Metropolitan and Provincial 7 1 2 nil nil 5
Union 20 20 30 20
London et Westminster 28 32 26 34.

Half Year ended 31st Dec. 1865

Capital. Dividends and bonus Reserve
Created Paid up. Rate per annum from calls from Profits
₤. ₤. Per Cent. ₤. ₤.
Alliance (limited) 4,000,000 985,785 5 3,014,215 71,840
Bank of London 800,000 400,000 20 400,000 304,411
City Bank 1,000,000 500,000 12 500,000 144,710
Imperial (limited) 2,250,000 448,970 8 1,801,030 58,560
Joint Stock 3,600,000 1,080,000 22 2,520,000 315,263
Metropolitan and Provincial (limited) 2,000,000 337,420 5 1,662,580 14,904
Union 4,000,000 1,200,000 20 2,800,000 350,660
London and Westminster 5,000,000 1,000,000 34 4,000,000 363,204

(verte)

10

Half Year ended Dec. 31, 1865

Liabilities to the Public Assets
Deposits and Acceptances Cash Government and other securities Bills discounted etc
₤. ₤. ₤. ₤.
Alliance. 2,504,168 435,930 147,913 3,007,456
Bank of London 4,335,877 820,497 302,167 3,985,036
City Bank 4,859,720 579,448 329,902 4,655,443
Imperial 1,543,281 188,642 59,619 1,836,741
Joint Stock 18,215,358 867,191 1,059,225 17,894,010
Metropolitan et Provincial 860,069 125,592 90,259 984,592
Union 17,794,263 2,816,994 1,665,725 15,085,836
London and Westminster 20,779,301 1,677,841 2,489,412 16,600,522

Half Year ended 31 Dec. 1865

Assets
Liabilities to Public Cash and Securities Calls to be made Total means.
Alliance (limited) 2,504,168 3,591,299 3,014,215 6,605,514
Bank of London 4,335,877 5,107,700 400,000 5,507,700
City Bank 4,859,720 5,564,793 500,000 6,064,793
Imperial (limited) 1,543,281 2,085,002 1,801,030 3,886,032
Joint Stock 18,215,358 19,820,426 2,520,000 22,340,426
Metropolitan and Provincial (limited) 860,069 1,200,443 1,662,580 2,863,023
Union 17,794,263 19,568,555 2,800,000 22,368,555
London and Westminster 20,779,301 20,767,775 4,000,000 24,767,775
70,892,037 77,705,293 16,697,825 94,403,818.
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February 3. 1866. N. 1171.

The Money Market.

Rate immer noch 8%. The demand for silver for the East to pay for cotton is likely to last for a month or so to come. Ordinary credit is sound. (! weiser Mann!) The revelations of the Joint Stock Discount Company and other such cos are disastrous to those concerned, but they have no diffused effect. The public at large never heard of them. There are no signs of collapse in industry, nicht einmal of mitigated or minor collapse wie 1865, viel less of such a collapse as in the spring of 1848 and 1857.

Durch den hohen Zinsfuß (höher als in Frankreich) französisch money wurde attracted to London. There is a very unusual amount of French money in London. This is now invested in short-dated bills becoming due, and renewed or not renewed, according to the rate. So long as the value of the money continues dear, this French money will stay; so soon as it becomes cheap, that money will go from us.

The Credit Mobilier and the Finance Companies.

1865 veranstaltete\verursachte dieser Credit Mobilier die Bank enquête, um die policy der B. o. France umzuwerfen. Dieß Jahr bitterly attacked in Revue des deux mondes von Victor Bonnet. Verdoppelt sein Kapital. (Dazu berufen shareholders 12 February 1866).

„Finance business“ hat nur den special and characteristic part that it cannot be carried on, except with money, either belonging to the lender, or over which he has a long and sure control. Bekannt in Lombard street, daß Finance Cos in London (dieß jezt gezeigt durch ihre reports) invested money left with them in the bills of railway contractors „secured” by the deposits on shares in lines of railways either in course of construction, or not yet paying, and often in inferior districts of the country. The contractor commonly cannot get the money when his bill becomes due, except the shares should by good luck be then „saleable”, and, of course, they are not a „security” till they are saleable. Yet, some Finance and Discount Cos have persevered in lending upon them money which was only left with them for moderate periods, and which at the end of those periods they knew they would have to repay again.

Bubble Cos.

The Master of Rolls recently reverted „that many new Cos were started merely for the purpose of being wound up“. ... The case of a company quoted in the official list 12of the Stock Exchange, and having, therefore, complied with their rules ‒ the shares with ₤15 paid, are quoted at ₤12 discount: and why? Because it turns out that the scene of its operations positively lies within the Arctic circle. The operations, therefore, can only be carried on during some 90 days in the year, within which very limited period an income sufficient for the whole of the 365 days of the year, cannot, of course, be earned

Combination of Farm Servants in Scotland. Mid-Lothian Protective Society.

Overworked and underpaid. Let the Scotch ploughmen „strike“ for their union wages and terms, there would to-morrow be Irish substitutes.

English Farming.

Grosser Unterschied z.B. in Midland Counties agreements, containing terms and stipulations so one-sided, so onerous and unfair towards the tenant farmers that incredible. Besides regulations as to cropping and farm-management, which place the tenants most completely at the landlord’s mercy, provided that the landlord shall have power to distrain for his rent a year or 9 months in advance! Z.B. where a tenancy commenced on 25. March, when one quarter’s rent due on 24. June, the landlord is empowered by the terms to enforce by distress the whole year’s rent to then following 25. March — 9 months in advance! Diese tenants have little or no capital, kaum any live stock of their own, also obliged to let their grass and aftergrass, or to take in stock to keep, in order to consume the produce of their land. In such cases, the hirers of the grass, or the putters out of the livestock, have no idea that their animals can be seized for payment of the tenants’ rent in advance. Yet in some districts the landlord or his agent relies on the opportunity of distraining the stock of strangers to secure the payment 13 of the tenants’ rent. Wenn dazu reservation u. preservation of game, the tenant farmers in a terrestrial purgatory. Lausestand dieser estates, charged too, meist mit debts and encumbrances.

Dagegen Musterfarm of Mr. Robert Leeds, of the West Lexham (Graf Leisester landlord), near Brandon, Norfolk. 1200 acres land, 1100 arable, 50 water meadows. „Whoever knows the district will be aware that the soil is light and sandy, only to be farmed profitably by being farmed highly.” 20 years lease, Jagdrecht allein der tenant etc

The homestead is fitted up with the best possible machinery, where corn is dressed, chaff cut, seed crushed, and cake ground by steam power. This cake a grand consideration at Lexham, where from 3 to 4 times the rent of the farm is annually expended in feeding stuffs and artificial manures. Er bringt forward animals at from 20l. to 25l. each, and puts these on all the cake and corn they can eat, but never more than 2 bushels of roots a day. The beasts are on the farm 12―16 weeks, and the yards are continually filled up with animals as those fit are disposed of. Except the bullocks bought in for grazing the water meadows, and which do not require any until July, alles sagt „at Lexham is always eating cake, and the flocks of ewes are now having 1 2 pound of cotton cake, with a limited ratio of bran at night. The breeding flock averages 300 ewes, and about 1200 hoggets are fattened during winter.”

Money market.

Greatest depression in the shares of the London Financial Association, afresh quoted at heavy decline on last week; Joint Stock Discount Co., on its Report, fell to 5 3 4 discount. Rumours. Selling of shares without reference to the positions of the different Cos. Imperial Mercantile Credit Shares also considerably lower.

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10 February 1866. N. 1172.

Money Market.

„The Indian demand and the Brazilian demand having arisen from the same cause ‒ from the cotton payments, have slackened. … Probably, in consequence of the diminished Oriental demand the bullion in the B. o. France has increased 700,000l.”

There is still much new trade with America, but under her altered circumstances, America is now a new customer.

There have during the week been several failures of contractors and others are still rumoured

The finance and discount cos which hold the bills of such contractors are necessarily affected … These contractors made railways (mainly on their own account) in positions where they could not pay, and they obtained the capital wanted to make them at great interest in Lombard Street.

„No one cares whether „companies” stand or fall. Their credit is too recent to affect by its cessation the general public, to cause diffused fear.

On the whole, therefore, we (das Orakel) are not apprehensive as to the state of creditwe hope that they (the Bank of E.) soon may be strong enough to do so (i.e. reduce the rate of discount) wichtiger dagegen als der Economist selbst wußte, folgender Passus, der halb ironish ist:

„These (limited) companies give means to great firms in difficulties to get out of them, without a collapse that frightens the world. The ‚shell‘ of a great house once had to stand as long as it could; there was nothing else for it to do. But now it has a resourceit can turn itself into a company … The prestige of the great house is diminished easily; it does not fall with a crash. Even if 4 or 5 years afterwards the limited compagny gets into difficulties, no one cares; it affects no one (und Overend et Quesnay, wiseacre!) but the company itself. Reid, Irving et Co. would not have failed nowadays. It would have become ‚Reid, Irving et Co. Limited‘, and lasted over, perhaps succeeded etc.“

15

Cattle Plague.

We cannot feed the country on homegrown cattle. Year by year the amount of wheat consumed in the country augments. Following shows how rapidly the trade is augmenting:

Number of living animals imported in the 11 months ended November 30.

1863 1864 1865
Oxen, bulls and cows: 89,518 141,778 196,030
Calves 36,930 44,678 48, 926
Sheep and lambs 380,259 412,469 763,084
Swine and hogs 24,311 68,777 117,766.

American Protectionism.

The whole argument reduced to essentials amounts simply to this, that free trade is absolutely sound over an entire world, provided that world is governed by Congress. … It is better, f .e., that Louisiana, with its splendid facilities for growing cotton, should grow it and send it to Lowell to be made up than that it should waste a special resource by diverting its supply of labour to the making up.

Coal Supply.

Mr. Hull, in his useful work, 1861, calculated that if consumption in England were to proceed at the same ratio as that of preceeding 20 years, our coalfields would be exhausted in 172 years.

Sir W. Armstrong, in his Newcastle address, assuming 2 3 4 as the average annual increase in the 8 years previous to 1861, exhausted the available supply in 212 years.

Mr. Jevons estimated the average annual increase between 1854 and 1863 at 3 1 2 %, u. exhausted in 100 years at that rate of increase.

Mr. Hunt’s Mineral Statistics (1866). Danach die annual production die last 4 years:

1861 85,635,214 tons
1862 83,638,338
1863 88,292,515
1864 92,787,873.
1863 exceeded 1862 by 4,654,177 tons
1864 1863 by 4,495,358.

So ultimate catastrophe still more proximate.

16

Our Number of collieries: 1863 2,397
1864 3,268.

British exports of coal.

Amount (tons) Duty. Rate of Increase per cent of Exports in 10 years.
s. d.
1821. 170,941 7 6
1831 356,419 4 0 109%
1841 1,497,197 nil 320
1851 3,468,545 132
1861 7,855,115 126
1862 8,301,852
1863 8,275,212
1864 8,800,000

France.

Production (Metric Quintal) Consumption. (Metric Quintal)
1855 68,270,100 108,567,800
1863 107,079,800 165,800,000
Increase: 38,809,700 57,232,200.

Imports of Coal into France.

from

From All Countries. (Metric Quintal) From England (Metric Quintal) From Belgium (Metric Quintal)
1863 61,204,500 12,966,000 37,152,000
1864 62,232,870 13,948,124 31,582,551
Increase 1,028,370 Increase 982,124 Decrease 5,569,449.

The English treaty with France has seriously affected the Belgium coal trade, wovon d. North of France is becoming comparatively independent. Der Belg. supply finds still a market in the East of France u. from Brest to Marseilles. The French Gvt. does the utmost to stimulate national production, even at a pecuniary sacrifice. In the neighbourhood of Marseilles, for instance, where the coalfields are being worked, French navigation is exclusively supplied with French coal, which costs more than English; so, also at Brest, the dockyard is supplied with French coal at 36s. whilst British coal could be supplied at 17s. 6d.

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Value of French Import of Coals

1860 107,300,000f.
1864 121,300,000f.

Belgium.

The coal-producing district 1 22 of the territory. In 1840, Hainault alone produced more coal than whole of France, and Belgium production is said to have tripled since 25 years, whilst exports quintupled in the same period. English competition will now more and more limit them to their home market.

Germany.

British coal hitherto largely imported into Northern Europe. In Prussia and the interior, cheapness of the indigenous coal and facilities of transport bid fair to drive English coal out of the market.

Prussian Production.

1852 25,788,268 tons
1862 65,394,470
1863 71,654,478.

The most important supplies from Westphalian coalfields, the value of which is greatly increased by the proximity to the metal industry. Production hier 1852: 38,000,000 Quintals, 1864 dagegen: 140,000,000. Westphalian coal is rapidly excluding English from Holland, and it is expected to do as much in Northern Germany by communication via the Elbe.

Austria.

Might be unlimited supply of coal. Production only 4,500,000 tons p.a., half of which of inferior quality. Insufficient and expensive means of communications have limited operations.

Russia.

Grosse coalfields, noch wenig exploitirt. The coal of the Moscow basin is of an inferior quality; the value of the Oural district is increased by proximity to iron, and that of the Don District by its easy acces to the Sea of Azoff. Russia bis jezt keine Rolle im coalmarket. Nur das country accessible from the Baltic u. St. Petersburg, where the imports, chiefly English, have tripled since the Crimean war.

U. States.

In Pennsylvania ‒ the largest producer both of anthracite and bituminous coal ‒ the value of coal mined has increased in 10 years at the rate of 179%, whilst the corresponding increase in all the States is estimated at 186%.

Total produce der U. States in 1860. 14,333,922 tons
in 1864 16,472,410 tons.

1860–61 the ton of coal sold at Philadelphia at 4 dollars, the present price between 11 and 12 dollars. Coal at Boston sells at 17 dollars (3l. 9s. 9d.) per ton, and at Chicago, as high as 22 dollars (4l. 10s. 4d.).

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The Banking Question.

Even discount bankers and capitalists, who have been reaping a golden harvest at the expense of the mercantile and industrious classes, should, from recent disclosures, perceive the danger to discount companies from the present monetary system.

The evils suffered from our bankinglaws have arisen, not from a want of circulation, but from abnormal fluctuations of Bullion ‒ periodical superabundance with speculation in trade, and periodical scarcity with temporary ruin of trade.

Game and Bankruptcy.

Manche kleine farmers (i.e. small capitalists) gehn dadurch kaput. His little capital is exhausted in providing food for the game, and has been literally drained off into the poulterer’s shop, whereto the game killed in the 3 or 4 grand battues of each season has been consigned by the landlord

So case vor dem London Court of Bankruptcy, of James Harvey, late of Church Farm, in the parish of Eversley, in the county of Southampton. His creditors consisted of tradesmen and others living in neighbouring towns. The landlord was protected from all loss by his power of distress. His Debt 1355l., his effects small, deficiency of l. 1162. Er stated in crossexamination:

„Never been bankrupt or insolvent before. … farming all his life … Began … 3500l., had lost all that money. Five years ago he was worth 5000l., had lost the whole of that through the over-preservation of game on his farm. In 1862 he had 80 acres of wheat from which he did not get more than 6 bushels, in consequence of the destruction caused by hares, rabbits and other game.

Mr. Read (his attorney): Then, instead of your land producing corn, it produced game for the London markets?

Bankrupt: Yes, Sir, and my landlord would not allow me to give up the farm unless I found another tenant.

Der tenant not unfrequently tempted by the apparent moderation of the rental, and then he is rather pleased to find that with his comparatively small capital so large and good a farm should be open to his acceptance. He knows not or heeds not the fact that the more wealthy and enterprising farmers of the district shun the farm as they would a pestilence. Having entered, he is rather surprised at the small returns of his first crops, and a little annoyed at the restrictions he is under for the sake of the game, and at the insolent interference of the game keeper.

19

17 February 1866. N. 1173.

Money market.

Oriental demand for silver very much diminished. Supplies of gold coming to the Bank. Continental exchanges improving … we certainly hope that perhaps, even next week, the Directors of the B. o. E. will be able to diminish their rate of discount.

The Report of the American Commissioners on Revenue (appointed by the President) (Blue Book.)

1) Effects of war on people: „the consumption of coffee in the U. St. decreased from the annual average of 200 Mill. pounds in 1860 to less than 80 Mill. pounds in 1863. During the same period consumption of sugar decreased from 31 to 19 pounds per capita; and of tea for the whole country about 23%.” The rise of price caused by the immense issues of Gvt paper money greatly straitened all classes with small fixed incomes. Even now the Commissions estimate 60l. before the war as equal to 100l. now. Such a diminution of effectual income contemporaneous with immense increase of taxation.

2) The original parts of American finance are breaking down. Z.B. die Yankees erfanden wӓhrend des Kriegs 6% tax on the industrial products of the country, subject to some exceptions and modifications. Nun question: „What is a product?“ The law decided that a thing was produced when it was „made“. Of course when it is completed, and the only test of its completion is its being sold. But owing to the division of labour many articles produced in a 100 places, and the result which the consumer gets is the aggregate of a 100 previous sellings and makings. The law could make no distinction between articles sold to a manufacturer and a consumer. It would have been baffled by wholesale evasion. It taxed all „makings“ 6%. The Commission describes the curious result: „Under the operation of this law the Gvt. now levies and collects from 8 to 15%, in some instances 20%, on almost every finished industrial product. … A good illustration … is presented in the manufacture of umbrellas and parasols, as carried on in the cities of New York and Philadelphia. It was formerly the practice of umbrella-makers to manufacture the main constituents of their product as one business; but now the business of an umbrella-maker is rather to assemble the various constituents of an umbrella or parasol, which are made separately and in different parts of the country. Thus, for example, the sticks, when of wood, are made in Philadelphia and in Connecticut; part of native and part of foreign wood, on which last a duty may have been paid. If the supporting rod is of iron or of steel, it is the product of still another establishment. In like manner the handles of carved wood, bone or ivory; the brass runners, the tips, the elastic band, the rubber, of which the band is composed, the silk tassels, the buttons, and the cover of silk, gingham or alpaca, are all distinct products of manufacture, and each of these constituents, if of domestic manufacture, pays a tax when sold of 6% ad valorem, or its equivalent. The umbrella manufacturer now aggregates all these constituent parts, previously taxed, into a finished product, and then pays 6% on the whole. It is, therefore, evident that under the existing excise system, all the parts of the umbrella are taxed at least twice, and, in some cases, three times, thus adding from 12 to 15% on the umbrella direct; while we may feel certain, moreover, that each separate manufacturer makes the payment of the 6% tax on his special product an occasion for adding from 1 to 3% additional to its cost price, in some instances over 6%.”

„Again, in the case of books, pamphlets etc, it is claimed that, including licenses and income tax, the finished book and its constituent materials pay from 12 to 15 distinct taxes before reaching the reader. Every separate item that enters into the bookpaper, cloth, boards, glue, thread, gold-leaf, leather 20 and type material ― pays from 3 to 6% in the first instance, and then 5% on the whole combined; and this not upon the cost of the manufactured article, but upon the price at which it is sold.”

The effect of this tax, in appearance so equitable and simple, has been to impose a burden differing almost in every instance upon the different industries of the country.

Nor is this all. The tax of 6% on domestic products has led to the oddest results when compared with the tariff on imports. That tariff is necessarily a tariff on consumable articles: not on the bits and components of such articles. Umbrellas or books come by ship as wholes, and must be taxed as wholes. How then is an Excise-duty to be made equal to the Customhouse system, and no more than equal to the Custom-duty? The Commission describe the present contrast:

„In the case of the umbrella and parasol manufacture, the cover, as a constituent element of construction, represents from 1 2 to 2 3 the entire cost of the finished article. The silk, the alpaca and Scotish gingham, of which the covers are made, are all imported, the former paying a duty of 60% and the latter two about 50% ad valorem, the variation being slight on the quality of the texture. The manufactured umbrella, covered with the same material, whose constituent part are not taxed, either on the material used in their fabrication or on their sale, are, however, admitted under the present tariff at a duty of 35% ad valorem, or at a discriminating duty against the American and in favour of the foreign producer of from 15 to 25%. If we make allowance of the various U. St. internal revenue taxes, it is claimed by the American manufacturer that the discrimination in favour of the foreign producer is fully equal to 40%. It needs hardly to be added that, during the past 6 months imported umbrellas have been sold at auction in New York and Boston, with the original cost, duty, freight and charges paid in gold, for a less price than the American article can be manufactured; or that the business of making umbrellas and parasols in New York and Philadelphia, involving a capital of 2,000,000 dollars and employing the labour of some 5000 persons, a majority of whom are females, is threatened with utter destruction. In two instance cited to the Commission umbrella manufactures have closed their factories in the U. St., and, with a view of exporting to this country, have transferred their capital and skill to Europe. In a communication submitted to the Commission by a committee of umbrella manufacturers, they state that, unless relief is speedily obtained, we can perceive no other possible course to pursue but the alternative of retiring entirely from the field, and leaving it entirely to foreign hands.”

Ebenso mit books.

„The Commission would add that at the present time the one article which, above all others, would seem to be a peculiar product of American industry, viz. Webster’s Spelling Book, is now being printed in large quantities in London for the use of American schools.”

In practice no system of Excise pressing on all commodities can be made equal to a tariff pressing on all commodities. The home imposts cannot be too small, or they will not be worth collecting; the Customs duty must not be too large, or it will be a prohibition unproductive to the revenue and useful only to the smuggler.

Repairs: The Americans put a tax of 3 6 10 % on the repairs of every article if the cost of that repair exceeded 10% on the value. Aristocratic legislation. A repair of trifling cost is more than 10% of an article of small value; much less than 10% on articles of great value: hence, expensive articles of luxury can be repaired without a tax, but cheap articles of common use must pay a tax. „If“, say the Commissioners, „the worker in wood repairs a wheelbarrow worth 1 dollar by adding 10 cents to the value it is taxable; but if he repairs a carriage or piano worth 500 dollars, no tax accrues unless he adds 50 dollars to the value.“

It is amusing to think that the American financiers should have established a system so favourable to articles of luxury as well as to articles of foreign manufacture.

21 3) The great revenue now to be raised will necessarily bring about in America a great political charge. (Hierüber kohlt aber „Economist” nur das Oberflӓchliche der Commission nach über die Notwendigkeit stehende skilled collectors zu haben u. dem finance minister neue Stellung zu geben.)

On the whole, the finance management of America is falling back into the old humdrum inevitable channels of Europe, just as the finance itself is falling back. Money can only be got by certain modes and by certain men, whether on the East side of the Atlantic or the West.

The Bill Authorising Loans for the Construction of Houses for the Poor.

One half the population of Gr. Brit. now lives in towns. The Metropolis has a population equal to that of Scotland, twice that of Denmark, necessarily 3 that of Greece. London receives new inmates at the estimated rates of 300 a day. This packing has now reached a point at which it threatens to be destructive ― typhus has become endemic in London. … The railways become a swath of erased houses until it is officially calculated that within this single year, 16000 houses have been marked for destruction, and upwards of 80000 persons will be thrown upon quarters already over burdened. This cannot go on without one or 2 results ― pestilence or an attempt on the part of the disposed to obtain a remedy by force … Besides, a population so overcrowded must deteriorate in virtue, civilization, and in the capacity for works.

Mr. Childers bill, sanctioned by Gladstone, authorises the Commissioners of Public Work Loans to lend money at 4% to municipalities, vestries, companies and private persons to construct dwellings for the poor, the security being the buildings, and the duration of the loan 7 years.

Dwellings for Working Classes. ― Mr. Torrens’ Act.―

The last Act of the late session was to provide better dwellings for artizans and labourers. The preamble states that it is expedient to make provision for taking down or improving dwellings occupied by working men and their families which are unfit for human habitation, and for the buildings and maintenance of better dwellings for such persons. The Act is to apply to the metropolitan and other districts of the United Kingdom as set forth in the schedule. The mode of procedure under this statute is very simple. It provides for the appointment of officers where necessary, and if in any place to which the Act applies the officer of health finds that any premises therein are in a condition or state dangerous to health so as to be unfit for human habitation he is to report the same, and notice forthwith is to be taken to remove or to improve the same. Action is to be taken by local authorities on the report of surveyors against the owners to make them comply with the directions, subject to an appeal to the Quarter Sessions. On four or more householders living in or near to any street representing in writing to the officer of health that any premises in or near that street are in a condition or state dangerous to health he is to inspect them and report, but the absence of any such presentation is not to excuse him from inspecting any premises and reporting thereon. In the event of the local authority declining or neglecting for the space of three months after receiving such report to take any proceedings to put the Act in force, the householders who signed the representation may address a memorial to the Secretary of State, and he may direct the local authority to proceed under the Act. On the owner of premises being required to execute the works, and in his default, the local authority may either order the premises to be shut up or to be demolished, or may themselves 22do the work. Where the local authorities execute the works they may apply to the Quarter Sessions for an order charging on the premises the amount of all costs and expenses in and about the execution of the works, and the Quarter Sessions, when satisfied of the amount so expended, is to make an order charging the property with the amount and 4 per cent. interest which charge is to have priority over all other charges, and to be deemed a mortgage. If the requirements of the order involve the total demolition and not the improvement of the premises, the owner is within three months after service of the order to remove the same, and if he fails then the local authority is to execute the order and pay him any balance that may remain after the expenses from the sale of the materials. Instead of effecting the improvements required by the local authority, the owner may take down the premises. Where an owner executes the work required by a local authority he is to have an annuity as compensation for the expenditure incurred by him in the shape of a charging order. The annuity is to be ₤6 for every ₤100, and to be payable for 30 years. Every charging order on premises in Middlesex and Yorkshire is to be recorded in the Registry- office. With the view of a general adoption of the Act ― and there are many places where the working classes “most do congregate” ― the Public Loan Commissioner may make advances, and the local authorities may borrow money for the purposes mentioned. Many public improvements are being carried out and contiguous to the same are wretched dwellings; they could be improved or demolished, and the principle involved in the preamble that they were unfit for working men and their families as “human habitations” could be easily established. ― Times.

The Social Economist. (London). October 1,1868.

James Rothschild on Banks and Currency (als Zeuge vor der französischer Bank Enquête Committee)

„As to the order of making the B. o. France invest money in foreign securities … the gravest fault it could commit. Such a measure (constant menace to foreign banks, and a cause of serious disquietude and distrust. If, for example, the B. o. F. had in its portfolio 3 Mill. St., it might at a given moment throw them on the market, and produce a great perturbation in commerce. In presence of that eventuality, if the rarity of money were felt by B. o. England, and it were forced to raise its raise of discount, it would have to raise it higher and more rapidly than if that circumstance had not existed.”

Financial shares: The apprehension felt and expressed concerning some of the financial Cos., has been in part dispelled by the former appearance of the money market. Speculators had entered too ready into operations for the fall. The very considerable decline that has taken place followed by a reaction influenced by the re-purchases of some holders: indisposed to transfer their Lodgings, and by the efforts of bears to cover their outstanding sales of shares. … diffusion of the shares of the various Cos. over a larger area … one of the results.

  • 1866 „The Economist“ (Jahrgang 1866) v. XXIV.
  • The Money Market Review Jahrgang 1866.