January. 1866.

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

Eight Per Cent.

Bankrate 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 Gr. Brit. is consumed by the various branches of the iron trade. 2Bei der 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  % p. a.; in 1880 will be 160 millions; u. if it continues thus to increase, the whole 80 000 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 geht 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. p. ton in America, against 6s. in England.

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