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.


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 in 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. Erklärt dieß, 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, mit 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 undertakings „have been in appearance successful and have paid large dividends“.

5 Consols (1865) fallen von 89 3 8 zu 87 3 16 . Actual decline von 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

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