| London 3 Oktober 2 November 1868

My dear Sir,

I was not yet able to discover in a mountain of manuscripts, the State Paper referring to the Czar’s title. I hope to get at it in a few days. Meanwhile, allow me some remarks on  Der Bank Charter Act von 1844, nach dem damaligen Premierminister Robert Peel auch „Peel’s Act“ genannt, legte die Kompetenzen der Bank of England fest und reorganisierte diese. Er hatte eine strikte Begrenzung des Geldumlaufs zum Ziel. In wirtschaftlichen Krisen, 1847, 1857 und 1866, wurde das Gesetz suspendiert, da sich die Deckungsvorschriften als zu eng erwiesen. (MEGA2 I/21, S. 1376).
Peel’s Act of 1844
, and its working in 1866.

1) Gladstone’s letter, of 11 May 1866, suspended the Act on the following conditions:

Firstly: that the minimum rate of discount be raised to 10%;

Secondly: that if the Bank overstepped the legal limitation of its note issue, the profits of such overissue should be transferred from the Bank to the Government.

Consequently, the Bank raised its minimum rate of discount to 10% (which means 15 to 20% for the common run of merchants and manufacturers), but did not infringe the letter of the Act in regard to the note issue. As I told you, they collected in the evening notes | from their banking friends and other connexions in the City, to reissue them in the morning. They infringed, however, the spirit of the Act by allowing, under the Government letter, the Reserve to dwindle down to zero, and that reserve, according to the contrivances of the Act of 1844, forms the only available assets of the Bank as against the liabilities of its banking department.

Gladstone’s letter, therefore, suspended Peel’s Act in such a way as to perpetuate and even artificially exaggerate its worst effects. Neither C. Lewis’s letter of 1857, nor Russell’s letter of 1847, lay open to the same censure.

The Bank maintained the 10% minimum rate of discount for more than 3 months. This rate was regarded by Europe as a danger signal.

2) The most morbid sense of distrust in English solvency having thus been created by Gladstone, out comes Clarendon, the man of the Paris conference, with an  Foreign Office. May 12. [Gez.:] Clarendon. In: The Times. London. Nr. 25504, 22. Mai 1866. S. 6, Sp. 6.
explanatory letter, published in the Times, to the English embassies on the Continent
. He told the continent in so many words that the Bank of England was not bankrupt (although it was really so, according to the Act of 1844), but that, to a certain degree, English industry and commerce were so. The immediate effect of this letter was a “run”, not of the Cockney upon the Bank, but  Die von Marx zitierte Formulierung („a run upon England“) stammte von dem konservativen Abgeordneten Sir Stafford Northcote, der im House of Commons am 31. Juli 1866 die Forderung des Liberalen Sir Edward William Watkin nach einer Kommission zur Untersuchung der britischen Kreditpolitik ablehnte. (House of Commons, Tuesday, July 31. In: The Times. London. Nr. 25565, 1. August 1866. S. 6, Sp. 1; Watkins Rede ebenda, S. 5, Sp. 2–5.) (MEGA2 I/21. S. 1376).
a run (for money) of Europe upon England.”
(That | expression was used at the time by Mr. Watkins in the House of Commons.) Such a thing was quite unheard of in the annals of English commercial history. Gold was shipped from London to France, while, simultaneously, the ban official minimum rate of discount was 10% in London and 3½ to 3% at Paris. This proves that the withdrawal of gold was no regular ‘commercial’ transaction. It was simply the effect of Clarendon’s letter.

3) The 10% minimum rate of discount having thus been kept up for more than 3 months, there followed the inevitable reaction. From 10% the minimum rate receded by quick steps to 2%, which is still the official bankrate. Meanwhile all English securities, railway shares, bankshares, mining shares, every sort of home investment was had become ext utterly depreciated and was anxiously shunned. Even the consols declined. (On one day, during the Panic, the Bank declined making advances upon Consols!) Then the hour had struck for Foreign Investments. Foreign Government Loans were contracted, and are still being contracted, under the most facile conditions on the London market. At their head stood a Russian Loan for 6 Mill. L. St. This Russian loan which, a few months ago, had miserably | broken down at the Paris bBourse, was now hailed as a godsend on the London stockexchange. Last week only Russia has again come out with a new loan for 4 mill. l. St. Russia was, in 1866, as she is now, almost breaking down under financial difficulties which, consequent upon the agricultural revolution she undergoes, have assumed a most formidable aspect.

This, however, is the least thing Peel’s Act does for Russia—to keep the English money market open for her. That act puts England, the richest country in the world, literally at the mercy of the Moscovite government, the most bankrupt government in Europe.

Suppose the Russian government had had lodged, in the name of a private firm, German or Greek, 1 to 1½ mill. l. St., on the beginning of May 1866, in the banking department of the Bank of England. By the sudden and unexpected withdrawal of that sum, she might have forced the banking department to stop payment at once, although there were more than 13 mill. l. St. of gold in the issue department. The bankruptcy of the B. o. Engld might then have been enforced by a telegram from St. Petersburgh.

What Russia was not prepared for in 1866, she may make ready to do—if Peel’s Act be not repealed—in 1875 or 1876.

Yours sincerely
Karl Marx |


Karl Marx an Collet Dobson Collet in London. London, Montag, 2. November 1868. In: Marx-Engels-Gesamtausgabe digital. Hg. von der Internationalen Marx-Engels-Stiftung. Berlin-Brandenburgische Akademie der Wissenschaften, Berlin. URL: http://megadigital.bbaw.de/briefe/detail.xql?id=M0005002. Abgerufen am 09.12.2022.