[„The Economist“ (Jahrgang 1866)
[17 February 1866.
N. 1173. (Fortsetzung)]
The Economist, 10. Februar 1866. S. 191/192.
on Banks and Currency
Schließen (als Zeuge vor dem
französischen Bank Enquête
„As to the order of making the B. o. France invest money in foreign securities … the gravest fault it could commit. Such a measure a constant menace to foreign banks, and a cause of serious disquietude and distrust. If, f.i., 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 the B. o. England, and it were forced to raise its rate 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 holdings, 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.|
24 February 1866. N. 1174.
The Economist, 24. Februar 1866. S. 217.
Reduction in Bankrate from 8 to 7%.
Eastern demand for silver suspended, if not exhausted. Gold retained und foreign gold received.
The Economist, 24. Februar 1866. S. 229.
Corresponding Week ended 24 February.
Die Bankdaten beziehn sich auf B. o. England.
|Circulation of Notes incl. Bank Post Bills||19,254,614||19,715,828||20,207,871||20,101,978||20,973,521|
|Other Deposits.||14,762,364||13,367,153||12,406 673||14,140,885||12,591,493|
|Reserves of notes and coin.||6,508,872||10,147,041||8,794,497||9,590,713||8,260,305|
|Coin and Bullion.||10,757,392||14,614,096||13,819,412||14,600,233||13,822,935|
|Bank rate of discount.||6 and 7%||4%||6%||5%||7%|
|Price of Consols||913/8||921/2||911/8||891/4||875/8|
|Average Price of wheat||69s. 2d.||46s. 6d.||41s. 1d.||38s. 4d.||45s. 9d.|
|Exchange of Paris (short.)||25. 25. 50||25 171/2 221/2||25 25 35||25 121/2 20||25 221/2 321/2|
|Amsterdam (ditto)||11 181/2 191/2||11 51/2 16||11 171/2 18||11 16 161/2||11 18 19|
|Hamburg (3 months)||13 111/2 113/4||13 71/4 71/2||13 8 81/2||13 73/4 81/4||13 101/4 103/4|
The Economist, 24. Februar 1866. S. 223–225.
J. Rothschild. „We are much less advanced than the English with respect to credit. Twenty years ago you could not have travelled in France with a banknote – no one would have received it, or change it. to time you must leave the task of developing credit.[“]
It has been said very truly that it is the great speculations made at Liverpool in cotton which are the cause of the present crisis, and that they made the B.o.E. raise its discount – to force holders of cotton to sell.
The Bank of England leads all the other banks of Europe. When money is seen to be rare in England, people open their eyes, not only at Paris, but at St. Petersburg and everywhere. The situation is quite different to ours; the measures taken by the B. o. France do not produce the same effect abroad as those taken by the B.o.E.
The President. In France the limit in the issue of notes is left to the appreciation of the Bank, to its prudence and experience.
The Economist, 24. Februar 1866. S. 222/223.
Mr. Michell’s Titel von Marx
notiert in „Heft 3. 1868“ der „Hefte zur Agrikultur“ (MEGA²
IV/18. S. 587.17), einem Exzerptheft 1878 (IISG, MEN, Sign.
B 148) und im Notizbuch 1878/1879 (IISG, MEN, Sign. B
Schließen Report on English Trade with
The duty on Tea formed a principal item in the Russian revenue, and the trade was a strict monopoly at Kiachta. In 1861 the monopoly was abolished and legal importation has increased 42%.
We have ample evidence of a retrograde movement in Russian agriculture, and in essential national industries, such as linen, hemp, and leather, whilst the important tallowtrade has fallen to nearly half its former amount. Theils wegen cattle plague, but principally from the diversion of capital and labour |24 durch die high protective duties für künstliche Industrien, cotton etc.
Mr. Michell estimates the total importation of manufactured articles into Russia in 1864 at 2,930,000l. paying a duty of 645,333l., about 22% on the Russian valuation, but at least 50% ad valorem. This throws the greater part of the import trade into the hands of the smuggler; and the operations of the latter are on a proportionate scale. Differential duties in favour of importation by the land frontier also favour smuggling. Houses are established for the systematic smuggling of goods into Russia at a premium of 35%; and under this system British trade mit Russia, except as regards bulky articles, such as iron, machinery and coals, is rapidly dwindling into a contraband trade; whilst the trade over the frontier has facilitated the introduction of imitations of English goods with fraudulent trades marks. The interests of the Russian ports and Russian mercantile marine are also sacrificed by these differential duties, and the rate of freights for Russian exportations is materially increased.
As the result, Mr. Michell calculates that comparing 1859 with 1863, our trade with Russia has decreased 11%.
The Economist, 24. Februar 1866. S. 221/222.
The New Finance and Discount Companies.
With the increased numbers of money lenders created by the new joint stock banks, discount houses, and finance cos, the number of money borrowers has in some degree corresponded to the supply.
While premiums were in the ascendant, and were the leading consideration with the subscribers to these new constitutions created specially for the purpose of lending money, the subsequent struggle for place and dividends were little cared for by promoters and allottees.
Zwei ganz verschiedne sorts of business undertaken by the new cos. The discounter of bills of exchange requires a knowledge of men and their means; the finance manager, of securities and their value. The discounter has to look to the return of his principal at a specified moment; the finance manager to the intrinsic worth of the securities he holds, their market value in fact or in prospect, and their consequent negotiability. The discounter may take money on deposit for short periods with safety; the finance Co. can only borrow for long periods with any degree of safety.
Aus dem Report der Joint Stock Discount Co. folgt, daß ihre embarrassments und call of 5l. p. share, weil der manager Wilkinson took to financing. Railway contractors making railways, as is now commonly the case, for payment in shares or „Lloyds bonds“, offered these securities to Mr. Wilkinson for loans, no doubt at very tempting rates of interest; and the money borrowed at comparatively low rates, and for short intervals, thus became „locked up“ in securities for which there is no market and cannot be converted. The lenders on deposit must be paid. Hence call for the shareholders. The Joint Stock Discount Co. had taken on deposit on 31 Dec. last, nearly 31/2 millions, against which were held securities to the amount of 41/2 millions; but a large portion of the latter is locked up on securities by railway contractors.
Railway contractors’ securities of the class they now take in payment for
their work, Marx’ Worte. The Economist: cannot be
accepted by any money lender with anything approaching common
Schließen sind in der That keine securities. Hence the „London Financial Association“ compelled to admit recently some degree of embarrassment on account of advances of this nature.|
Session after session we have seen bills passed for millions upon millions of outlay upon railways, and we have seen, too, the railways themselves started into existence without shares or any market shape. Now we begin to see that the new money lenders have been their chief support, and that the high terms bid by railway contractors have not only induced the new Discount and Finance Cos to incur injudicious risks, but have contributed to no small extent to the high value of money in this country, for the last 2 years.
A far as the official figures go, there is nothing very alarming in the position of our new Discount and Finance Cos.
|Last dividend rate % per annum.|
|International Financial||3,000,000||750,000||91,014, for the year||10%|
|Joint Stock Discount||2,000,000 (call of 5£ p. share now made.)||8,000,000||19,595 für the 1/2 year||nil|
|General Credit||5,000,000||1,000,000||202,632 for the year||15%|
|Consolidated Discount||1,000,000||200,000||1,384 for the 1/2 year||nil|
|London Financial||2,000,000||600,000||40,422 for the 1/2 yr.||10%|
|Imperial Mercantile Credit.||5,000,000||500,000||91,862 für the 1/2 year||20%.|
|Average Dividend.||Surplus Profits after last Dividend. £.|
|Joint Stock Discount.||5||7||3||56,169|
|Consolidates Consolidated Discount||0||0||0||594|
|Imperial Merc. Credit||...||141/4||20||94,169.|
|Liability to the Public. (Deposits etc)||Assets|
|£.||In Hand (as valued)
|Calls in Reserve
|Joint Stock Discount||3,461,290||4,349,407||1,200,000|
|Imper. Merc. Credit||4,707,655||5,392,042||4,500,000|
|Total of Assets = 31,448,656.|
The one point upon which these official figures convey no comparative information is the all important mode of valuation of the assets in hand. The International Financial and General Credit Cos. took the market prices of their securities as their rule for valuing their assets on 31 Dec. last; but the Joint Stock Discount Co. apparently valued their assets at the amount of money advanced on their security. Und da darunter viele securities of railway contractors, the official figures really afford no insight whatever into their real position.|
The Economist, 24. Februar 1866. S. 217–219.
The Sound State of American Banking at Present.
»It is very generally believed, or feared, that there will be a sudden
crisis – some collapse of credit in America.« Kommentar von Marx.
Schließen Dieser englische Aberglauben sehr schön! Die Krise war unter ihren Füssen, zu London – sie sahen sie aber nur jenseits des Atlantic. Und der friendly „Economist“ sucht sie zu beschwichtigen durch Darstellung der Solidität des jetzigen amerikanischen Bankwesens!
»The Un. States Government stands in America in the same monetary position (vis-à-vis den banks) in which the B.o.E. stood here.[«] (vis-à-vis den country banks während der suspension of cash payments.) It has issued inconvertible paper, 90 Mill. l. St. in round numbers, for the present much depreciated as compared with gold. They are »legal tender«. If an American bank has enough of these notes, it will pay its way.
Before the civil war no national system. Each state had its own banking law. Annoyance of a currency so multifarious in a country where locomotion so constant and so distant. A Chicago note was at a discount at Washington, and a Delaware note was difficult to pass at Chicago. „Exchange“ dealings between the different states of the Union complex by the difference of currency. Chase provided a national uniform currency to replace the various States currencies.
The Act of Congress, to this purpose, interferes not only with the issue of currency, but with the trade of banking (d.h. securities for the deposits, not only for the notes). The Act permits no bank to be organised „with a less capital than 150,000 dollars, nor in a city whose population exceeds 50,000 persons with a less capital than 200,000 dollars“; though with the permission of the Secretary of the Treasury, a bank with a capital of no less than 50,000 dollars may be „organised in any place of which the population does not exceed 6,000 inhabitants.“ In the principal cities of the Union each bank must keep in lawful money 25% of its circulation and deposits, and banks in less important places 15%; and every bank is bound to carry 1/10 of its profits to the reserve fund before declaring a dividend, till that fund amounts to 20% of its capital stock etc. The aggregate circulation is limited to 60 Mill. l. St., and is divided amongst the banks according to the following singular clause: „The amount of such circulating notes to be furnished to each association shall be in proportion to its paid-up capital, as follows, and no more: To each association whose capital shall not exceed 500,000 dollars, 90% of such capital; to each association whose capital exceeds 500,000 dollars, but does not exceed 1 mill. dollars, 80% of such capital; to each association whose capital exceeds 1,000,000 dollars, but does not exceed 3 mill. dollars, 75% of such capital; to each association whose capital exceeds 3 millions dollars, 60% of such capital. And that 150,000,000 dollars of the entire amount of circulating notes authorised to be issued shall be apportioned to associations in the States, in the district of Columbia, and in the Territories, according to representative population, and the remainder shall be apportioned by the Secretary of the Treasury among associations formed in the several States, in the district of Columbia, and in the Territory, having due regard to the existing banking capital, resource, and business of such State, district, and territory.“ The whole |27 circulation is secured by the deposit of U. St. bonds with 10% margin. This deposit of U. St. bonds was of course, for the Finance minister, the primary point of the Act. Mr. Chase was sorely in want of money. The existing bank circulation was secured by state bonds; and it was of the first importance to him to replace it by a currency secured by Federal bonds. He thus got a loan for the national Exchequer out of funds before used by the State exchequers. At any other time such a proposal would have excited the old controversy of State right versus Federal right, and would most likely have been lost. In the civil war – Mr. Chase passed his Act.
Such an interference of Gvt. with country banking, or half such an interference, would have been impossible in England, but in a democratic country the inhabitants do not look on the Gvt. as something apart from themselves as we do, and do not feel humiliated by its interference; it is only themselves in another form enforcing what they think right, and so they do not mind it.
Chase coaxed the existing banks. He offered them tempting terms to become, instead of State banks under the old system, national banks under the new system. And all but an insignificant fraction have become so. „In about 21/2 years“, boasts Mr. McCulloch (finance minister under Johnson), „from the organisation of the first national bank, the whole system of banking under State laws has been superseded, and the people of the Un. St. have been provided with a circulation bearing upon it the seal of the Treasury department as a guaranty of its solvency.“
With the bold completeness which is its characteristic, the American gvt compels the publication of the most elaborate accounts by every bank in the Union, and the Comptroller of the currency publishes annually a report giving those accounts in detail for each banks, and a summary of them all. The following letzte Publication:
|(dollar taken at 4sh.) £.|
|Capital Stock paid in||78,631,441|
|Notes in Circulation||34,264,380|
|United States Deposits||9,634,076|
|Due to national banks||18,008,967|
|Due to other banks||4,877,236|
|Old Circulation outstanding issued by National banks while still State Banks:||11,953,795|
|Loans and Discounts||97,062,805|
|Real estate, furniture, and fixtures||2,940,656|
|Remittances and other cash items||14,461,970|
|Due from national banks||17,995,796|
|Due from other banks||3,478,646|
|Un. States bonds deposited to secure circulation||54,526,840|
|Other U. St. bonds and securities||31,019,420|
|Bills of other banks||3,249,448|
|Other lawful money||38,618,872|
No banks in the world such amazing solidity.
|Notes in Circulation (old and new)||46,218,175|
|Due to other banks||4,877,236|
|Against this they have in actual cash:||£|
Also über 25% ihrer liabilities. B.o.Fr. und B. o. England keep larger amount; am 15 Febr. (1866) B. o. France über 37% ihrer total liabilities, die B. o. England (am 14 Feb.) 343/4%. Aber diese reserves, besonders in England, are the banking reserves of the whole country. The amount of specie held in the tills of the London and provincial banks of this country is a trifle in proportion to the liabilities; it is not regulated by these liabilities; it is simply the ready money of the day. Um die reserve (metallic) der B.o.E. mit der der American Banks zu vergleichen, muß man sie im Verhältnis zu den total liabilities der English Banks betrachten. We do not know those liabilities. Aber 3 banks alone, London und Westminster, Union und London Joint Stock Bank haben 56 Mill. £. liabilities, während die der Bank of England nur 42 Mill. £. The American banks hold in mere cash 25% of their liabilities when thrown together; if the English banks were thrown together, we doubt if they would hold 5%.
Ferner, die securities der American banks:
|Remittances and other cash items||14,461,970|
|Liabilities||but just over 160,000,000l.|
That a bank should have 14/16 oder 7/8 of its liabilities either in Gvt. security or cash is to an Englishman perfectly astounding. An English Bank which holds 2/5 considers itself an example of caution, and many of the best banks in the country hold a proportion very much smaller.
The American banks are able to hold so large a reserve, and yet advance a large sum to their public because their capital is so enormous. An English bank does not consider it begins it its proper business till it begins to deal with the property of others; but an American bank lends mainly its own money, and so can keep almost all its customer’s money in hand and tangible. In round numbers the American national banks:
Advances: 97,500,000l. gegen A Capital of 78,631,441l. und Reservefund of 7,742,678l., Zusammen 86,374,119l.
No English bank lends only 14% of its own money.
Zusammenfassender Kommentar von
Schließen Der wiseacre schließt aus diesem state der American Banks daß kein credit collapse in U. St., möglich, wie 1837 oder 1857, wenn the State Banks of America kept very small reserves and failed by wholesale.
If banking credit, sagt er, stands firm, no general failure of other credit is likely. Individual failures may happen there as here, but no wholesale bankruptcy of ordinary traders.|
March 3. 1866. N. 1175.
The Economist, 3. März 1866. S. 253/254.
Board of Trade Returns.
|Also: Increase is our exports in 1865||gegen 1864 of £5,413,349|
|gegen 1863 of 19,260,060.|
|Worsted stuffs (pure wool and mixed.[)]||10,800,521||13,321,855||2,521,334|
|Arms (small fire)||348,850||425,857||49,027|
|Beer and ale||1,841,637||2,060,369||218,732|
|(Manufactures. piece goods[)]||43,917,471||44,860,239||942,768|
|Earthenware et porcelain||1,422,014||1,442,934||20,920|
|Haberdashery and milinery||4,797,552||5,013,757||216,205|
|Leather, wrought, boots, shoes||1,484,421||4,334,273||220,566|
|Linen manufactures. Piece goods||7,607,502||2,505,497||486,472|
|Machinery – Steam Engines||1,617,117||1,952,658||335,541|
|Machinery Other sorts||3,231,475||3,260,872||29,397|
|Metals – Iron, pig et puddled.||1,412,352||1,591,063||178,711|
|Wool (Sheep and lambs)||673,446||901,659||228,213|
|Woolen and Worsted. Yarns.||5,417,377||5,424,047||6,670|
|Woolen Manufact. Cloths||4,533,519||4,062,382||471,137|
|Carpets and druggets||861,499||861,564||65.||||
|2) Un. States||16,708,505||21,235,790||4,527,285|
|3) Hanse Towns||13,418,826||15,091,313||1,672,547|
|9) Turkey, Europe||4,481,222||4,931,742||50,520|
|10) Asia Minor||1,070,827||695,377||375,450|
|11) Syria, Palestine||1,366,608||1,339,665||26,943|
|13) British Nth. America||5,595,591||4,705,079||890,512|
|14) China (ohne Hong Kong)||3,092,611||3,609,301||516,690|
|16) Cuba und Portrico||3,002,025||2,207,511||794,514|
|18) Brit. West India||2,649,539||1,945,466||704,073|
|20) New Granada||2,058,843||2,372,497||913,654|
|21) Cape of Good Hope||1,814,319||1,454,540||359,779|
|23) Argentine Confederation||1,757,457||1,951,048||193,591|
|25) Hong Kong||1,618,867||1,561,851||57,016|
|26) Foreign Westindies||1,370,941||1,157,960||212,981|
|29) Singapore und Eastern Straits||1,181,680||1,442,450||260,770|
|30) Denmark (incl. Iceland)||1,152,767||1,263,953||111,186|
|32) Channel Islands||1,015,985||752,048||263,937|
|33) Dutch India (Java etc)||796,850||928,642||131,792|
|35) Brit. Guiana||795,831||740,553||55,278|
|36) Ilberia, Croatia, Dalmatia||792,119||725,789||66,330|
|38) Philippine Islands||765,719||945,624||179,905|
|39) Malta et Gozo||753,113||633,887||119,226|
|46) Western Africa (Foreign)||565,962||642,467||76,505|
|47) Greece (ohne Ionian islands)||433,887||583,253||149,366|
|50) Ionian islands (from 1st June)||310,084||437,236||127,152|
|51) Western Africa (Brit.)||272,896||403,383||130,487|
|52) Belize (Brit. Honduras)||204,625||160,445||41,180|
The Economist, 3. März 1866. S. 254–256.
James Rothschild Evidence (Continuatio)
Rothschild: „It is precisely those Gemeint sind die Goldfunde in Australien
Schließen discoveries which came to our relief. But for them, we should not have been able to do what we have done. There has been a substitution of Australian gold, new or native gold, in place of the specie which we have sent to China or to India, and which will be long before it returns, if it ever does return. … There was a moment when I trembled for a crisis in Germany, because silver had |31 disappeared: so much had been bought to send to China and India; it had become so scarce at Hamburg, Frankfurt, and in many other towns of Germany, where silver is the only circulating medium, as in China and India, that we knew not what to do. Silver was for a time at from 30 to 40f. premium per mille.[“]
President: Do you not think that the corrective of foreign investments, loans, railways etc. is to be found in commercial operations themselves, and that, f.i., a nation which borrows in the French market 300 or 400 millions, does not withdraw them entirely, but employs a part to pay for goods paid there?
J. Rothschild: Yes. 7/8 or 15/16 are employed in buying goods – locomotives f.i; it is impossible to say how many we send abroad. I speak from experience.
Michel Chevalier: If at a given moment there is a tendency among traders to export gold and silver, why should the Bank oppose it by any measures whatever? It does not trouble the export of wheat and wine, why should it trouble the export of gold?
J. Rothschild. Everybody has the right to defend himself, and if the Bank finds that too much gold and silver is being exported, and may consequently fear that in case the reimbursement of its notes should be demanded, it could not make it, – it is its duty to say: I will reduce my discount … so as to be in a situation to re-imburse my notes. … The raising of interest makes the rarity of money. Leave the interest of money at its ordinary rate, at a moderate rate, nobody is disquieted, nobody takes precautions; whereas the raising of interest always causes something unpleasant to be feared. I, f.e., am seated at my desk; I receive a letter from Alexandria, „Send me a million in 5f. pieces.“ The discount is at 4%, I see no danger. I can send the money. But if the discount of the Bank be raised, I say to myself: „I must take precautions“, and I do not send the money. Knowing that I shall have payments to make at such and such an epoch, and not knowing that money will not be still rarer at that moment, I keep my funds, and I renounce a profit of 3 or 4%, rather than send my money.
M. Chevalier: But if the sum be due, you cannot avoid paying it; even if the discount should be 12 or 15%, the money must be sent.
J. Rothschild. No doubt; but I put the hypothesis that I owe nothing.
President. Then you consider the raising of the discount as not being able to paralyse forced and obligatory operations, but … as preventing supplementary exportations, which would be the consequence either of too great security, or of too great facility in undertaking new operations.
The Economist, 3. März 1866. S. 260.
Rates of Discount (this week) in the
chief continental cities:
|Bankrate %||Open Market %|
|St. Petersburg||6||53/4 – 6.||||
10th March, 1866. N. 1176.
The Economist, 10. März 1866. S. 281.
The State of the Money Market.
The affairs of the
Joint Stock Discount Co
have caused a diffused alarm – they are considered as specimens …
of a very large class of recent business. Great many
small railways have been made which never ought to have been
made, and the money found for them in Lombardstreet. These undertakings being a heavy
loss, that loss must fall somewhere, and a good deal of it is now
falling on the lenders in Lombardstreet. In Manuskript II zum
zweiten Buch des „Kapital“ stellte Marx die Redeweise „to
finance“ bereits im Parlamentsbericht von 1857 zur Wirkungsweise
des „Bank Act“ heraus und schrieb: „Also dieß Wort schon
völliges Bürgerrecht 1857!“ (MEGA²
II/11. S. 185.20).
Schließen The year 1864 was remarkable for several things, and one of the most characteristic was the invention of a new verb. „Finance“ used to be a substantive only in English, but it then became a verb also … Generally sound and cautious people (in money matters) like to nibble a little at questionable securities. They do not like to be quite out of the world, they count the high profits; they are unwilling to be called slow. This class is sure to be left with the bad security. The clever, quick people who concoct the delusions have a much better chance of getting out of the ruin; they move much quicker than the slower race, and have much better information when the delusions are breaking up and it is advisable to get out of them.
The Economist, 10. März 1866. S. 284.
The Workhouse Hospitals.
Die infirmaries of workhouses are properly intended nur für die infirm poor. Sie sind es nicht who crowd the wretched infirmaries of our London workhouse hospitals. Persons actually sick of diseases, more or less acute, and requiring more or less active medical care, are crowded into the workhouse hospitals by order of the parish doctor and the parish relieving officer, who rid themselves of the trouble and the responsibility of attending to such cases by combining to get them into the workhouse. Of these cases, there are now over 6000 in the 41 London workhouses, giving about 150 really sick persons to each; in addition to this there are no less than 10,500 of the class properly called infirm, aged and feeble persons needing more than ordinary pauper care, of whom at least half want medical care as well as additional comfort, and 1,800 imbeciles or idiots. So that the poor who are properly infirm poor are crowded out of their proper accommodation by no less than 7,800 persons who do not really belong to workhouses at all, 6000 of whom should be in ordinary, well conducted hospitals, and 1800 of whom ought to be in asylums for the imbecile, or the insane. Daher the most terrible misery not only to the wretched patients themselves, but to the scarcely less wretched poor. Lord Carnarvon (in public meeting über dieses theme) stated that in one workhouse hospital, with 300 patients, the physician, who is never paid more than £150 a year, has at most 11/2 minute with each patient, for he cannot give more than 3 hours to the hospital if he is to support his family. The same overcrowding makes the nursing disgraceful in the extreme. The Boards of Guardians do not like to increase the rates. Hence they do their very best to keep down the expenses of these miserable hospitals. Old crones who are too infirm themselves for activity, too ignorant for intelligent nursing, and too habituated to misery and dirt to see the evil of inflicting misery and dirt upon others, are nominally appointed nurses, by which they gain some trifling addition to their allowances and the power of making the patients even more wretched than they would be without any nurse at all. These creatures are often drinkers occupied only in devices to get a little more spirit for their own allowance, and their mode of dealing with the sick is of course summary in the extreme. One nurse avowed that instead that of attending to the doctor’s orders, she gave the medicine 2 or 3 times a day to those who seemed very ill, or only 2 or once, as they seemed to get better. (Viele geben dieselbe Medizin an Kranke, für die sie gar nicht bestimmt sind) The male nurses are quite as bad. One head nurse was a broken-down potman, appointed by the influence of the guardian who used to drink in the pothouse where the man came from. Another admitted that he had never given any medicines for 3 days to a patient very ill with gangrene, because the said patient’s mouth had been sore. Nor is even this the worst. One |33 workhouse lets the premises outside to a carpet-beating Co. for 600£ a year, and the unfortunate patients get their lungs filled with dust and their ears with noise. Other workhouses leave their patients in the most filthy condition imaginable. A guardian of St. Giles’ workhouse said that none of these statements were true of his workhouse hospital … But the public have not yet quite forgotten the shocking case of Richard Gibson, who really rotted to death there in the most horrible filth, without help or hope; and the indignant virtue of the St. Giles’ Guardian seems therefore rather superfluous.
These things are gross abuses, public cruelties in short.
Das meeting in Willis’s Rooms, unter
Lord Carnarvon, (3 March, 1866) carried resolutions proposing
that the workhouse hospitals should be consolidated, supported by a
general metropolitan rate, and placed under uniform management in connection with the Poor Law board. Kommentar von Marx.
Schließen (Ueberal Ueberall Centralisation und centralised Gvt. action unvermeidliches Schicksal der modernen Gesellschaft!)
The Economist, 10. März 1866. S. 284/285.
The Late Railway dividends.
The new, or perhaps rather the renewed, feature of our recent railway reports and accounts, is the sudden addition to the capital expenditure attendant upon the rapid extension of our railway system, and thereby the effect upon dividends and market values. As a rule, the effect of a sudden and excessive expenditure of capital by a railway Co. is a fall in the dividend. The money spent upon new works yields nothing at first, perhaps very little for years, and possibly never produces a fair average profit, while in the interval of unproductiveness the investor expects his dividend or interest, and the productive section of the undertaking is made to bear the cost.
The Southeastern, and the London, Brighton, and South Coast
Cos. charged their capital accounts
with some part of the dividends and interest paid to the share
and bondholders; in fact, returned them back again as
interest and dividend a portion of their own capital. Kommentar von Marx. „xxx“ ist eine
nichtentzifferte nachträgliche Einfügung von Marx in den
Schließen (Dieß, was der Economist hervorhebt, keineswegs the pith of the thing. Unter capital account verstehn die Railway Accounts cookers Anleihn, Pump, aus dem sie xxx Theil der Dividenden zahlen.)
Measured by dividends earned instead of by dividends paid, the market values of some of our lending railway stocks diverge just now more strikingly from intrinsic worth than for many years past.
|Dividend earned. Rate per annum||Dividend paid. Rate p. annum|
|Half year ended.||Half year ended.|
|About P.C.||Per Cent.||P.C.||P.C.|
|London, Brighton etc||43/4||33/4||6||61/2.|
The Economist, 10. März 1866. S. 285/286.
The Economist, 10. März 1866. S. 289/290.
Discount and Money market.
The Stock Exchange Consols settlement has acted rather more than usual on rates, owing to disquieting rumours and the acknowledged unfavourable position of the affairs of the Joint Stock Discounting Co. After the decision taken by the directors a few weeks back, the committee of investigation |34 has reduced the proposed call of £5 to one of 2£. 10s, which was actually made, when, as it now appears, not only was one or the other sum insufficient, but the affairs of the co. in so desperate a state as to render their winding up necessary. The general opinion expressed at the meeting, where the committee of investigation delivered their report, was adverse to the shedding of too much light on the conditions of the account open. It is, however, to be regretted that the steps taken on that occasion were of a nature likely to mislead the general public, who might in many cases have escaped the loss in which they have since become involved by the purchase of shares on the representations then made.
March 17, 1866. N. 1177.
The Economist, 17. März 1866. S. 313.
The Fall in the Value of money.
Bankrate reduced to 6%. There is much foreign money in London attracted by high rates of interest, which is sure to go if the market falls to a low rate. The demand to the East might again revive. The number of schemes on the watch of our capital is now so great, that any monetary surplus is instantly drawn away from us.
The Economist, 17. März 1866. S. 315/316.
Mr. Thiers on Protection to French Agriculture.
Thiers says: rent has increased of late years, taxation has increased, and the supply of labour has decreased owing to the emigration of 3,500,000 persons into the great cities, until less than 18 fcs per hectolitre will not pay, and less than 20 will not yield a remunerative profit.
Economist says: The English remedy under these circumstances is to throw farms together till they tempt man with capital to try an expensive mode of cultivation, and this remedy we frankly admit cannot be tried in France. The manners and institutions of the country, together with the passion for proprietorship, do not admit of so vast a social revolution. But nothing in these circumstances prevents the combination of groups of little proprietors to work their land in common, and thus securing at once the high cultivation which is the merit of the English system, and the independence and comparative energy of the peasant which is the merit of France. A commune can be cultivated by its owners acting together quite as well as by one owner, a theorem now being demonstrated in Holland.
The Economist, 17. März 1866. S. 319–321.
Emile Pereires’ Evidence at Banque Enquête.
(7 Nov. 1865 diese evidence)
Emile Pereire. The crisis of 1863–4 was caused solely by the measures adopted by the Bank o. France. That crisis had no intrinsic, no real cause, having its root in the situation: on the contrary, there was unequalled prosperity. For a long time the country had not had so good a harvest; and yet it was after that harves harvest that the restrictive measures were taken by the Bank. … By the generalisation of commercial relations, by the multiplicity and low price of means of carrying, we succeed every day, and still do so more and more in rendering crisis arising from scarcities much less prejudicial to circulation …
The Bank o. F. has no capital, or rather its capital is entirely immobilised. The following was its situation, according to its balance sheet of 2nd November (1865):|35
|Profits in addition to capital||7,034,778||2|
|Reserves in securities||22,105,750||14|
|New fixed Reserve||4,000,000||0|
|Immobilised rente, and advances to the Treasury||209,430,488||0|
|Hotel and Buildings||8,475,341||0|
Thus the B.o.F. has immobilised a sum of 2,265,300f. above its capital and the totality of its reserves. With such a situation, it is impossible on the least derangement for the equilibrium not to be broken … the Bank desires to do all with nothing, for it has no capital. Notes payable at sights cannot be issued against immobilised stock. The first measure to be taken to avoid crisis should be to sell the rents of the Bank, and to constitute a reserve in paper on foreign countries. When one has bills of exchange in one’s portfolio, one has gold, because they can be exchanged at London for gold. But that is not even necessary; it would suffice to prevent the export of gold, if the exchange were unfavourable to exportation for the Bank to negotiate paper on London … I know this objection: „The Bank of England could do the same thing; it could have paper on Paris, and negotiate it at the same time as you do.[“] But the mechanism of exchanges is very simple. Paper on Paris cannot be demanded and rising at London, at the same time that paper on London is demanded and rising at Paris. It is the contrary which takes place; and is the forced consequence of this change of the debit or credit balance. Paper on London rises at Paris, when paper on Paris falls at London, and reciprocically reciprocally. So that it suffices to negotiate paper on London, in order to stop the export of gold from France to England …
On Oct. 5 (1865) the B.o.F. raised their rate suddenly, because they learned, by telegraph, that the B.o.E. had done so. … I only know 2 banks in Europe, that of France, and that of England. These 2 banks are the regulating establishments of commercial and public credit in Europe. They have each, independently of their mutual dependence, a speciality. England, by her old connection with all the world, is the market in which all the gold and silver of the New World and of Australia arrive … This monopoly is assured to England by her innumerable steam vessels. A steamship now leaves New York every day für England. In 1822, at Bordeaux, letters were only received 2 a week from Paris, and Bayonne only got letters 2 a week from Bordeaux. But now every day letters are received at London from New York. It is at London that all the precious metals arrive. … They are in great part spread over the Continent, and are centralised at Paris. It is at Paris that the great trade in the precious metals is carried on. Paris is also the principal exchange market, and that in which is concentrated all the bills of exchange drawn on England. Consequently, generally speaking, the metals destined to pay in Europe the transactions not settled by bills of exchange, return to Paris.
The par of the sovereign sterling at London is in the trade 25f. 16c. and at the Bank of England 25.20. The cost of displacing being estimated at about 7c., it results that gold may be imported from England when bills on London are from 25.10 to 25.121/2, whilst it is only possible to export at 25.371/2 or 25.40 on account of the loss sustained by the melting down of French gold pieces.
The American dollar sold at par is 5f. 16c. The expenses are 1%. The quotation must therefore be below 5.11 to render importation into France possible, and above 5.21 for exportation.
The gold napoleon is worth in Ejypt 776/40 piastres; which, with the cost of carriage, puts the rate at nearly 5.27 per Spanish piaster. (Spanish piaster = 5f. 17c.) To export gold coin from France to Ejypt, the rate must be superior to that price; to import into France it must be below 5.23.|36
All these calculations are made in estimating gold at par. If these were a premium, the parity would be changed.
If now we apply these different operations to the quotations of 4. Nov. 1865, we see that the quotation on London being 25.20 to 25.221/2, and the premium on gold 3%, the price of London is reduced to from 25.13 to 25.151/2. Therefore, we can at the present moment (7 Nov. 1865) neither import English gold into France, nor export gold to England.
The rate at New York against gold is 5.16. At that rate, which represents par, no operation of importation or exportation can be made without losing the cost of carriage.
On the 5. of October, when the B. o. France raised its discount, the rate of exchange rendered gold export absolutely impossible. The rate of bills on London was 25.25, on the 9. October London paper was worth 25.28. In beiden cases export et import equally impossible.
24. March 1866. N. 1178.
The Economist, 24. März 1866. S. 346/347.
Should the Bank of
England allow interest on Deposits?
The Private Deposits of the B.o.E. nearly the same as 10 years ago: 1856: £12,107,000. 1866: £12,478,000. Dagegen immense growth der private deposits der London and Joint Stock Banks. Z.B. Deposits of London and Westminster Bank in 1856: £11,170,000. 1866: £19,224,000.
According to our system, the B.o.E. is the „Bankers Bank“; the holder of the sole unused store of money of the nation.
Credit means confidence in pecuniary payments. Yet, after the suspension of cashpayments, the B.o.E. for 20 years did not perform its pecuniary promises; and no one thought the worse of it. … The Bank holds a great many public funds, money of corporate and quasicorporate bodies which can hardly go anywhere else … The bankers deposits are between 2,500,000l. und 4,000,000, and probably are generally over 3,000,000. Those deposits are most plentiful when they are most required. Most deposits at a time of difficulty and disaster tend to ebb away; the influence of distrust and the influence of high profits combine to attract them. But the bankers’ deposits at the B.o.E. augments at a time of panic, they rose to over £6,000,000 in 1859, and in any little difficulty of credit their rise is as sure as the rise of the tide at London bridge.
The Economist, 24. März 1866. S. 350–352.
E. Pereire. The B. o. England puts its discount at 7%, and we have it at 3. It is commonly said: „Since our discount is at 3, we will send all our money to England to supply it at 7.“ But it is not necessary in order to do that to send money at England. Bills of exchange on London can be taken and kept in portfolio: in that way the discount of 7% is secured without any displacing of money, for … gold cannot leave France unless the exchange on London accounts to 25f. 371/2c, in which case the banker who might have taken London paper to get 7%, would have had besides the profit coming from the rise in exchange. But in such circumstances a rise of exchange is not to be feared. The bills of exchange of all Europe are in great part centralised at Paris, and thence they go in different directions: consequently one can find at Paris as much paper on London as one wants, especially when France, for the balance of her own exchanges, is not the debtor of England. There is now (7 Nov. 1865) a difference of 2% between the discount rate of B.o.F. and of B.o.E. According to the prevailing prejudices speculators might profit by the difference of 2% to empty the till of the B.o.F. and fill that of the B.o.E. But that is not done. There goes not and cannot go a sovereign to England, because exchange is at 25f. 221/2c. It is impossible to send gold from here to London, and yet there is a difference of 2% in the rate of discount. Ask the first bill brokers at Paris, they will tell you that at this moment the sovereign sterling in short paper on London is bought at Paris at 25f. 221/2c., and in paper of 3 months at 25f. 271/2c., less the discount of 7%. A small profit is, therefore, made on this difference of discount paper is taken at a |37 higher price when it is long in order to obtain a higher discount. What is true for 2%, is true for 3 or 9, not for 10 or 20% … If 3% at B.o.F., 7% at B.o.E., there would be a difference of 4, could not be continued long. How would it be corrected? By gold leaving the B.o.F. or returning to the B.o.E.?
If, during a month or two that state of things were to exist … there would be such an advantage in taking at Paris paper on London, that none or much less would be presented to the B. o. England, which would permit that Bank to reconstitute its stock of notes, by the falling due of bills in its portfolio; and thus the equilibrium prescribed to it by the bill of 1844 would be promptly re-established, without the least of the world producing on the till of the B. o. France a drain … a level is re-established without displacing capital by the single fact of the temporary retention at Paris of the bills of exchange of the Continent.
M. d’Eichthal: What does Pereire tell us? That if the discount be 3% at Paris, and 7% at London, bankers will hasten at Paris, the great market of exchanges, to take bills on London: they will sell their securities, and receive in exchange paper on Paris with which they will buy paper on London. But suppose the contrary case. All the bills that I have on London I send to London, and I realise my capital to buy bills on Paris. The effect of the difference of the rate of interest, when it is higher at London than at Paris, is then to keep out of England, by the attraction of high interest, bills of exchange which but for that would go to be negociated negotiated at London by the Bank of England. What does the Bank of England do in raising its rate of discount? It compels all bills which would be presented to it to be discounted, to remain on the continent, and that renders the money less rare in England, and dearer in France. You are mutually dependent, and in that state of things the exchange necessarily rises. No, it is not necessary to send coin abroad: but when capital becomes rare and dear amongst our neighbours, if you do not detain it in France, they will come to take it; or in other terms, the debt which England has contracted remains in your hands, and it is your capital which pays the goods England has bought. You have no cotton to buy in Ejypt. Granted; but the debt of England comes into France, and you give credit to England.
E. Pereire. We lend to England. We give her credit for the amount of our productions, for those which we have exported; but we do not lend her money. There is consequently no danger for our metallic reserves.
d’Eichthal: rechtzeitige Herabsetzung des Zinsfusses nöthig, sonst nicht operations reduced at right time etc“ etc.
E. Pereire. You have too much experience of banking business to maintain that when English commerce is a debtor to foreign countries for very large sums, an elevation of the exchange on London is to be feared at Paris. The contrary takes place. If England owes a great deal for the cotton, wool, wheat and cattle she imports, that must augment the number of the bills of exchange drawn on her. Those bills arriving at Paris in larger quantities must bring down the exchange, and not make it rise. Now the fall of exchange prevents the sending away of gold.
M. Pastré: The exchange is not at all a determining element. In India the interest is 14 to 15%. The exchange indicates a very trifling profit; but as the discount is at 14 and 15%, masses not of gold, but of silver, are sent to India.
E. Pereire. It is not for the purpose of making investments that silver is sent to India, but principally for the balances in purchases of raw materials. When purchases of cotton have to be made in India or Ejypt, it is not a difference of 1 or 2% in the interest on a bill of exchange which will stop such an operation. When you buy cotton at Alexandria, the complete operation is effected in 3 months, – that time being necessary for sending, receiving, realising the affair. Difference of interest of 2% p.a. is 1/2% für 3 months, does not prevent the operation. You and all the other merchants of Marseilles undertake the operation only if you have a margin of from 12 to 15%. When you take the chance of losing or gaining 10, 15, 20%, no 1/2% of a temporary augmentation of interest will stop you. The warnings (durch raising der Bankrate) referred to, and which it is alleged must be given to prevent certain operations, warn no one: 1/2% cannot be an obstacle to an operation of this kind. But it embarrasses all other operations of commerce and industry.
Pastré: Nicht für die gewöhnlichen Operations, für France alone. It consumes only 30–35000 bales of cotton of Ejypt. Even if 30 000 or 35 000 other bales were taken for Switzerland, it would still matter little.
E. Pereire: The rate of interest does not indicate the abundance or rarity of money. England buys with her productions all the silver necessary für her commerce with India: she even manages to supply you with the coin you send to Ejypt: she is the great purveyor of the precious metals. She pays for her cotton from India and Ejypt with the silver drawn from the country in which that metal is produced, Mexico f.i., paying for it with her productions. At this moment, on all our coasts of the Channel and the Atlantic, she is buying up our grain because she wants it and we have too much: she is carrying off all the fresh vegetables, all the poultry, all the oxen that we can supply, so that England is our debtor. You cannot change that: the exchange cannot modify that situation. We are sellers to England.|38
Pereire: The extraordinary investments (in bills on England, when high discount at London) rarely exceed 60 or 80 Mill. fcs. The resources employed are not all taken from the Bk. o. France, and besides, as regards England, France only exports gold there very exceptionally. The B.o.E. raises its discount, not because it has no coin, but because it is not permitted to issue enough notes. The void is made up by delays, by credit. It is filled up from Paris, Brussels, Lyons, everywhere, because there is always everywhere disposable capital. The contents of the till of the B.o.F. are not 1/100 of the disposable capital in the county. … The consequence of a different rate of interest between France and England is that on the Continent – at Paris, Amsterdam, Berlin, Antwerp, Brussels, and in Switzerland, bankers retain English bills of exchange which bring in 7%, and greatly prefer taking them to accepting paper on Paris at 4 or 5. But as the demand for bills on London at 7% augments the demands for bills at a long date, the price rises, and the difference disappears – the level is re-established. … The bills of exchange on London, which the elevation of interest keeps naturally on the continent, not being presented for discount at the B. o. England, the demand for rates declines, and the equilibrium is re-established.
The Economist, 24. März 1866. S. 352.
The Apprehended mercantile convulsion in America
commercial convulsion is apprehended in America. Kommentar von Marx.
Schließen (nicht in England, where it came to pass in a week’s time!) Whether it comes to pass, or whether it is averted, in either case alike it furnishes a striking illustration of the mischievousness of that form of tax which consists in levying money by means of an inconvertible paper currency.[«]
The Economist, 24. März 1866. S. 353/354.
Professional and Amateur Farmers.
We all recollect that Mr. Mechi, when most loudly proclaiming the profitable character of his own farming, could never be induced, either by taunt or persuasion, to publish his balance sheet.
The Economist, 24. März 1866. S. 356–358.
Discountmarket tending to lower rates. The reduction of the rate in Paris to 31/2% is also indicative of growing ease.
Heavy decline in the value of the shares of financial cos this week has carried alarm amongst holders. Commencing in a speculative movement, it was accelerated by rumours carelessly or maliciously repeated, and ended in a condition of the markets rarely seen save in times of panic. Happily, the state of the money market is such that a run upon any of the institutions alluded to is improbable etc.
Railways and other shares.
Banking shares have, in common with the shares of the financial and discount cos., suffered somewhat, though in a much smaller degree. Indian guaranteed stocks have to some extent, participated in the general decline, and are lower. Financial shares have been rudely shaken by a rapid succession of sales, for which those most interested and best informed are totally unable to account. The shares of the International Financial Society declined rapidly from 1/4 prem. to 3/4 discount on rumours, completely unfounded, of an impending call. Ditto decline in the shares of the General Credit Co. It is remarkable that the shares of these 2 cos. should have been singled out for bear operations, as it would be difficult to injure their position or to succeed in any object affecting them, except so far as the loss to individual shareholders sacrificing their shares in the general alarm might be concerned. The shares of both cos. are 20£, and the deposits in the hands of the two are hardly worth naming. On the shares of the International Financial 5l. is paid, on those of the General Credit 4£, Hudson’s Bay shares, fully paid up, have also shared the general depreciation, and in several other cos. the decline in value very considerable.
Closing quotations this evening (24 March):
4/16 to 7/16 discount.
Credit, par to 1/8 premium. Credit Mobilier and Financier Foncier 11/4 to 11/2 premium, show a fall of 1l. in the day.
Overend, Gurney et
prem., are also lower. Imperial Mercantile, at
3/4 to 1/2 discount,
also lower. Some few orders from shareholders at a distance have
tended to the further decline of most of these shares, but
Zusatz von Marx.
Schließen ! the state of public opinion and feelings in town appears to be more satisfactory.|
31 March 1866. N. 1179.
The Economist, 31. März 1866. S. 378–380.
The good and bad Mode of making minor railways.
At this moment all persons concerned in making many of the newest minor railways are half ruined by it – the shareholders and directors who have been led to incur personal liability rather than that the line in which they are interested should stop in the middle; the contractor who took his payment in shares of the co. now worthless; the finance cos. which lent money on „Lloyd’s bonds“ of the Co. and on bills of the directors-bonds now all but worthless, and bills hard to get paid.
Three motives induce people to make minor railways in England: 1) The greatest number are made out of contention. (Theils auf debateable land zwischen 2 grossen cos. Dann the co. worsted in the mixed district, invaded the antagonist cos’ peculiar district; that co. retaliated and so on in a course surprising, for both parties half knew they were lessening their income.[)] 2) On speculation. A contractor who sees a district which 2 great cos. both want, makes a line there, and sells the line to the highest bidder. His trade being construction, he generally gets a fair profit of his adventure, and a large profit if the rival cos. are eager bidders, though of late the high rate of interest and the quantity of such securities in the market have made it difficult for him to get money on terms which would pay, have always made his trade difficult, and often ruined him altogether. 3) On vanity. An engineer and a lawyer, sure to gain, induce gentlemen of a district „on public grounds“ to take shares in a railway and to become directors of it. Letztre oft ruined.
To insure good faith and solvency of the promoters, Parliament tried two ways:
1) It prescribed a „subscription contract“ to be signed in sufficient amount by solvent persons pledging themselves to make the railway. The subscription lists were filled with unsatisfactory names, schwer to detect. Committee (Parliament) in London no judge of persons in province etc[.] System broke down.
2) Present plan: Parliament required a certain sum of money or stock to be deposited by the promoters of the line. The promoters simply borrow that money or stock on their credit or on their securities; very commonly the lender’s name is placed in the books of the B.o.E. along with that of the promoter’s; the stock or the money does not go out of his possession, and when the bill is passed, the borrowed capital is returned to the lender and is not used to make the railway. Just before the „depositing“ season all banks are besieged to lend their stock for this purpose, and its deposit, in fact, shows neither bona fides nor solvency; it shows only that the promoters can get a certain sum into hands upon a secured promise to return it. There is often no company when the bill is passed, even if there is afterwards. (So this plan has also broken down.)
Many non-paying railways exceedingly benefit the places through which they pass, and do so even when no manipulation of fares would make them pay any better. It may often be for the substantial good of a whole district to have a railway, though that railway, after the most remunerative settlement of fares, will only just meet working expenses, and never yield a dividend. The reason is that the railway benefits the stationary property which you cannot charge as well as the conveyed property which you do charge. You can only make a line pay its shareholders by taxing the people and things that travel on the railway. But besides these the whole saleable value of the land of the district is enhanced sometimes almost fabulously. A pretty residence near London, suitable to a man of substantial business, if near a railway, will sell for a price that could never pay the purchaser 2%. But if that residence was far from a railway, it would not get into the market … The case of building land of poor quality is still stronger. The London Chatham and Dover railway does not pay a dividend, perhaps it is not likely to do so; yet, it is well known, that it has enhanced the value of the estates through which it passes, often very much. An estate used to be worth 41,000l. becomes in a few years worth 60,000l., and other similar figures. In many cases no tariff will make these railways give a good dividend … Yet this maximum rate (for goods’ and passengers’ fares) may not to be enough to do more than keep the railway open, while all round the rails the land and the houses may be rising rapidly in price.
Richtige Methode in Switzerland und France. The railway, or portion of it, is made out of the canton or country rate. The sum is borrowed at once and paid off annually during a term of years. Thus the stationary property benefited pays its fair part of the charge. The |40 canton or department investigates which line suit the locality best, selects the line, and raises by local taxation the necessary funds.
The Economist, 31. März 1866. S. 382.
Meetings of Agricultural labourers.
The agricultural mind is disturbed. The Mark Lane Express is unhappy. Cattle plague und nun obendrein: the helpless labourers are becoming less patient and less helpless in the matter of wages. Even in husbandry, there is in many districts a demand for labour not altogether easily supplied. In Scotland, the meetings of the ploughmen and other farm workmen have been numerous, and indicated much purpose and good sense on the part of those workmen.
Lately, however, there has been a meeting of agricultural labourers at Maidstone, Kent „for the purpose of taking into consideration their present low wages, with the view of taking steps for an increase thereof“. 4–500 labourers from all the neighbouring parishes. It was agreed: „That this meeting is of opinion, considering the great rise in provisions and other necessaries, together with the fact that nearly every branch of industry had received an increase of pay, that the farmers in this district be solicited to grant their labourers an advance of 6d. p. day upon their present scale of wages.“ They also resolved „that an increase of 2d. on the shilling upon the present scale of piece work be sought for as commensurate with that of day-work“. Endlich: „that it is the duty of the employers to permit their men to leave their work at 4 o’clock on Saturday afternoon.“ Of course it must depend on the state of the labour market in Kent whether the rural labourers have or have not any prospect of success … The attempt, however, shows that there are some circumstances rendering success to be apparently possible. At an adjourned meeting 600 labourers were present, and then it was determined to memoralise the farmers of West Kent in conformity with the foregoing resolutions. A 1000 signatures were rapidly attached to such memorial. Doubtless many farmers will regard such a movement much as the workhouse dignitary regarded Oliver Twist when asking for more. That seems in part the spirit in which the Mark Lane Express deals with it. Our contemporary also applies the sort of „mutual confidence“ argument so often and so absurdly directed towards the farmers themselves on the part of their landlords. … This is not a question of sympathy at all. The landlord has made a hard bargain with his tenant, giving him scant security, and many burdens, and drawing as much rent as can be got; while the farmer, in his turn, drives the hardest bargain he can with his men. … This pressure on the part of their labourers arises out of the improving circumstances of the country, its continuance is inevitable, its increase more than probable. What is their remedy? They must relieve themselves from some of the pressure they sustain from above; insist on rational leases; shake off the game and the gamekeeper; require their landlords to do the necessary landlords’ improvements, render their farms fit for the occupation of enterprising and capitalist tenants. Let them do this, and they will find there is a power, at present latent, in the soil to produce more profits and higher wages.
The Economist, 31. März 1866. S. 385–387.
Discount and Money Market.
Money is steadily cheapening. Abroad, wie in England, besonders in France, the accumulation of capital goes on, and paper of London is readily taken as an investment at the higher rates prevailing here. Dennoch at Bank und in open market a sustained inquiry, owing to the approach of the quarter and the consequent necessity of providing for matured engagements in commercial circles. Some of the discount houses and financial establishments have also found themselves under the necessity of providing against the probable withdrawal of deposits by the public. The foreign exchanges, already high, seem likely to be supported, as the wool sales just concluded have proved heavy, and a larger amount than usual is likely to be exported from this country.|41
Foreign stocks. Considerable fall in almost all securities. State of Affairs in Germany, Fenian demonstrations in America. Jedoch little doubt that forced sales of stock to meet the losses incurred on financial and miscellaneous shares, with those effected in consequence of the closing of many loan accounts, have had much more to do with the decline.
Railway shares: In England Railway prices steady or rather higher.
Indian stocks and shares have recovered from the decline, from now at higher prices than those previously attained.
Banking shares in a few cases lower. The amount of acceptances afloat gives colour to the rumour that „financial“ business entered into more or less extensively by several of the less cautious joint stock banks.
Financial shares: A call of £5 announced in 2 instalments on the shares of the Imperial Mercantile Co. proved the signal for a fresh downward movement. On the settling day, however, the accounts showed a tolerably even state of things; perhaps the bear accounts were the most numerous. It was evident that a large number of sales had been effected by persons more or less alarmed at the prevailing rumours, but on the other hand fresh investors seem to have carried off the shares thus brought to market. While Imperial Mercantile and Overend, Gurney etc shares were heavy at lower prices, the markets were firmer in General Credit, International Financial, Credit Mobilier, and Foncier, and some few others that have all along presented stronger features than the rest.
The Economist, 31. März 1866. S. 393.
Manchester market, March 29, inactive; owing to the continued report of considerable quantities of cotton, prices slightly declined.
April 7. 1866. N. 1180.
The Economist, 7. April 1866. S. 405.
Get rid of the remaining slight corn duty. It interferes with the cheap feeding of cattle, on which the farmers more and more depend every year to pay their rent. Some things can only be done near the market, and fatting cattle is one of them. A long transit makes an animal lean again, and therefore by a natural law an animal should be made fit to eat as close as may be to the place where it is to be eaten. The farmers in the vicinity of great towns have discovered this, and will act on it more and more.
The Economist, 7. April 1866. S. 406–408.
One of the „original“ American taxes which the commissioners do not propose to abolish – is a stamp on matches. One cent on each bunch. Brachte 1865 250,000l. There was raised in America by internal revenue:
Und zwar von 150 heads of taxation. The income of the U. St. in the financial year ending 30th June 1865 was 65 Mill. £; but in the quarter ending 30 Sept. 1865 it was 32,000,000£.
The commissioners recommend: 1) to reduce the tax on
distilled spirits from 2 to 1 dollars. 2) recommend a tax of
5 cents per lb on cotton to be „levied and
collected from the manufacturer“, where the cotton is worked up at home,
and from the merchant at the port of export where it is sent away for
use abroad. 3d) income
tax to be levied on incomes über 200l.
a year statt jezt über 120l.
Customs und Excises werden geben mit
den andren taxes 87,000,000l., Expenditure 60 Mill. £, Surplus: 27 Mill. l. St. Schlagen vor
1) to repeal the taxes on many articles of luxury; 2) to repeal a duty on the repairs of engines,
ships, cars, carriages etc. 3) a repeal of a
portion of the tax on clothing. The great Tax Bill |42
imposes an excise duty levied on the manufacturer of 5% on boots, shoes,
gloves, mittens, hats, caps, bonnets, cloth and cotton clothes, and „all
articles of dress not otherwise assessed.“ Siehe Karl Marx: Le capital: „La
fiscalité moderne, dont les impôts sur les objets de première
nécessité - et partant l’enchérissement de ceux-ci, formaient de
prime abord le pivot, renferme donc en soi un germe de
progression automatique. La surcharge des taxes n’en est pas un
incident, mais le principe.“ (MEGA² II/7. S. 673.21–24.)
Schließen This is taxing the working classes more certainly than any despot would dare to tax them; and it is interfering with trade more than an „old world“ Gvt dared to interfere with. In America this tax has yielded more than 2 millions l. St.
The Economist, 7. April 1866. S. 413/414.
British deer farmers.
The potato blight in Ireland formed the last argument which condemned the Corn Laws; the cattle plague may prove the death-blow of that economical crime so widely perpetrated in this country, the appropriation of useful land to deer forests or game preserves. In every county in England there are dozens, perhaps 100 of game preserves, wherein hares, rabbits and pheasants waste and consume the agricultural products, which naturally and economically would be applied by the farmers in the rearing and fattening domestic animals for meat.
In Scotland, in the Highlands in particular, men no longer wanted as vassals, having been displaced for sheep, the sheep in turn have made way for deer.
Prof. Leone Levi schwatzte at recent meeting of the Society of Arts, on deer forests and Highland agriculture. The management of Highland property vermindre die production of food. Jezt the population of the Highland counties very scanty, only 22 persons per □ mile, obgleich diese districts once full of crofters and small occupiers. A farm is seldom to be met with, and miles and miles may be walked over without coming to a cottage. „The plan of depopulating the Highlands,“ sagt er, „and destroying the crofters has been forced and carried to a point inimical to the best interests of the country.“
The crofters occupied land of which the rental for each holding was little more on the average than 30l. a year, and the plan usually adopted was to turn out the tenants, burn down their cottages (often before their eyes) crowd them into fishing villages on the seashores, and convert all the arable land into pasture, on which sheep in large numbers were fed. Though the climate is unsuitable for wheat, oats and barley could be grown, and with roots and green crops would have largely increased the capacity of the Highlands for sheep breeding. It may be questioned, too, whether some amount of cattle should not have been still bred. The crofters were in the aggregate extensive cattle breeders, though of inferior sorts. Levi sagt: „Under the old system, it is said, the people collected in the glens and valleys between the mountains produced but little corn, and were mainly dependent upon cattle. By the overthrow of the cottier system, the clearing of the glens and the introduction of sheep farms, extensive mountain land, formerly useless, has been made productive etc.“
⦗Depopulation and conversion into mere sheep-walk presented the readiest means of income without outlay. …
the depth of a sheep-walk, the lower deep of a deer forest has been a
common change in the Highlands. The sheep are now turned out for the
sake of wild animals, as men were once turned out to make room for
sheep.⦘ „It is estimated (says the Professor)
that there are in Scotland upwards of 2 Millions
acres of forests; ⦗and one can walk from the Earl
of Dalhousie’s estates in Forfarshire to John o’Groats, without ever
leaving forest land.⦘ I might
mention the forests of Alyth, Athol, and Dummie, in Perthshire; of
Balnagowan and Lewis, in Rossshire; of Boyn and Glenavon, in Banffshire;
of Mar |43 and Birsa, in
Aberdeenshire; of The Economist: Gaiak
Schließen Gajak, in Inverness-shire; and of Platers in Forfarshire. ⦗In many of these the fox, wild cat, the marten, the polecat, the weasel, and the Alpine hare are common; whilst the rabbit, the squirrel, and the rat have lately made their way into the country. Immense tracts of lands, much of which is described in the statistical account of Scotland as having a ‚pasturage in richness and extent of very superior description‘, are thus shut out from all cultivation and improvement, and are solely devoted to the sport of a few persons for a very brief period of the year.⦘ It has been gravely asserted that there is only a difference in the kind of meat produced. But who will compare beef or mutton with venison? Who eats venison as food? Beef is the sustenance of the many; venison is the luxury of the few.“ High rents are or rather have been obtained for deer forests under the influence of fashion. Such rent is not wealth – it is not derived from the soil – it is simply the price paid by some overwealthy individual for the luxury of plunging for a few hours into the sports of the wilderness. Is not this what was done by our Norman conquerors? … Allowing that a certain amount of produce is extracted from the chase in venison and grouse, the market value of such produce is inconsiderable and altogether incommensurate with the expenditure incurred for such forests, while the permanent injury committed on the land, and far more, the withdrawal of such large portions of land from productive purposes, especially from sheep and cattle, must be considered as most injurious to the country at large.
April 14. 1866. N. 1181
The Economist, 14. April 1866. S. 437/438.
The State of the Money Market. Zusatz von Marx.
Bemerkung von Marx.
Schließen Folgende köstliche Klugscheisserei à l’envers:
Many persons, especially those old enough to remember past times, and so
to form their standards by those times, have great difficulties in
comprehending the present times. A new element has been introduced which
they do not appreciate, and of which they do not follow the effect. Formerly great disasters occurred together. A fancied
cycle of 10 years has been laid down for their recurrence. But
now failures happen at comparatively distant intervals. After a period
of excited business like 1863 and part of 1864 many failures are
inevitable. The number of mistakes is so great as to
ensure an equal number of ruins, and these are now happening from day to
day. First the
Joint Stock Discount Co., then
another Co., then a private firm … But the misfortunes of these people
now hurt no one but themselves. The Bank of England now manage well and
they used to manage ill. The directors used to let the reserve run low,
and at every period of consecutive failures there was then the
probability of a panic. Now the B.o.E. manage well, keep their till full, and the failure
of 50 discount cos., and the depreciation of all manner of shares,
produces no real effect on the world at large. We are now carrying on
the trade of the country with a sufficient balance at our bankers; we
used to carry it on with an insufficient balance. … Zusammenfassender Kommentar von
Schließen Der wiseacre prophezeit, daß money auf 5% fallen wird. |44 Our Credit is on the whole excellent.
As to bullion: The peculiar cause which has affected our cash balance of late years was the necessity of paying in bullion for cotton.
|From U. States||721||5,719||570,735|
|Bahamas und Bermuda||41,955||69,094||2,551|
Aber die increase owing to the new imports von den Un. St., für welche in commodities und nicht in bullion gezahlt wird. Taking the difference of price into account, the Oriental demand is less than last year for past imports, and while cotton falls as now, no speculative outlay is likely.
The imports of corn much heavier this year than last, nämlich:
|Schleswig, Holstein u. Lauenburg||73,112||20,819||22,437|
|Turkey, Moldavia, Wallachia||128,868||37,923||143.140|
|Brit. Nort America||10,838||2,294||8,727|
|Indian corn or maize||285,372||780,078||2,439,627|
|Wheatmeal and flour||from France||625,424||344,781||1,048,539|
|from United States||350,727||48,303||120,997|
|Brit. North America||3,779||8,024||4,343|
The Economist, 14. April 1866. S. 439–441.
The American Paper Money.
An irredeemable currency is a local currency. It only affects trade within the state, has no effect on trade between that state and other states.
F.i. An English merchant ships goods to New York, sells them for greenbacks, cannot use them in and have them remitted to England. He must buy one of 3 things with them, other goods or gold, or a bill of exchange. When he buys either of these he suffers by the depreciation of the currency as much as he gained before. [»]At first, the depreciation of the currency acts upon some commodities and not on others; those articles desired by the first possessors of the new currency are the first to rise, and then those desired by the second possessors, – those who have sold their goods to the first, and so on through society. But there is no general rule that imported products should feel the influence of new money first; it all depends upon what the first purchasers want to buy: those articles rise first, the rest rise afterwards.«
The Economist, 14. April 1866. S. 444/445.
Isaac Pereire’s Evidence before the Banque
Is. Pereire. Whilst the B.o.E. escaped from the consequences of the crisis of 1847, owing to the power of extending its issues, it was by the sale of its rentes to Russia, that is to say, by the realisation in coin of the immobilised portion of its capital, that the Bank o. France attained the same object. The year following, in 1848, the capital of the B. o. France being again placed in rente, it was obliged to solicit from the Gvt. the suspension of the cash payments for its notes. … the B. o. Engld. only needs the power of issuing more notes, the B. o. France is in need of more money.
There is no mutual dependence between the 2 establishments. The B. o. France might easily maintain its discount when the B. o. Engl. raises it rate. The proof is that now (26 Dec. 1865) there is a difference of 2% between the 2 banks. The discount is at 4 in France, and 6 in England, and yet gold from that country is constantly flowing in here, which indicates sufficiently that the B.o.F. has nothing to fear from the B. o. Engl. If the difference were to attain 3 or even 4%; the same would be the case, if the exchanges were in favour of France. That fact, besides, is not new, for in 1847 a difference of 3% long existed in the discount of the 2 countries.
When the Bk.o.E. raises its discount, a certain superfluity of bills of exchange payable at London comes naturally to Paris to find an easier and more advantageous market. The B. o. France, in such a case, instead of following the B.o.E. in its usurious policy – to take itself part of these bills of exchange, and so aid our neighbours. This indirect assistance, which would give it the opportunity of very usefully employing parts of its funds, would promptly put an end to the ephemeral crises which arise each year; it would enable the B.o.F., if necessary, to exercise a salutary action on exchanges, or … by the negotiation of those same bills when the price of paper on London should have a tendency to rise, in a proportion disquieting to its till. The Bank o. F. could besides if necessary employ those bills on London to purchase gold in England.
The Economist, 14. April 1866. S. 447.
Cotton during the civil war.
Kommentar von Marx.
Schließen (Der Kerl übersieht, rechnet nicht ein, die Schwarzerde etc)
verwendet in Manuskript II zum zweiten Buch des „Kapital“
(MEGA² II/11. S.
Schließen The (British) export of yarn and manufactured goods in 1862, 1863, 1864, more than equalled all the supplies of cotton during those years; the former amounting in weight to 1,208,920,000 lbs; and the latter, after deducting the raw cotton re-exported, and reducing the remainder to its equivalent weight in yarn, being only 1,187,369,000 lbs. Folgt daher:
1) Von Marx verwendet im Brief an Engels vom
9. Dezember 1868. Siehe auch die Briefe von Marx an Engels vom
12. und 14. Dezember 1868.
Schließen on 1. Jan. 1862 in the U. Kingd. stock of raw cotton and cotton manufacturers more than sufficient to supply the home consumption for 3 years; and that the Von Marx übernommen in Manuskript II zum zweiten Buch des „Kapital“ (MEGA² II/11. S. 68.26–27).
Schließen people here have been provided during this period with clothing, whose material previously here accumulated.
2) The enhancement of prices, which, within the period named, amounted to 100%, was not really paid by the people of this country, taken collectively; viz[.], so far as the stocks on Jan. 1 1862, belonged to natives or residents in this country. … The advance (vor dem 100% Aufschlag) of cotton prices already materially before the end of 1861, and attained their highest range in the summer of 1864; from which there was a decline of 25% before the end of the year. But the prices of yarns and manufactures had risen but little before January 1862. In 1865 a lower range of prices on the whole prevailed, and the supplies were more than sufficient to cover the export: being |46 equivalent to 580,714,000 lbs of yarn against 478,240,000 exported, the difference, however, furnishing only 2/3 of the estimated home consumption.
Zusatz von Marx.
Schließen (All dieß stüzt sich auf report of Messrs. Ellison and Haywood, published in der annual review des Economist 10 March 1866) This relates solely to the prices paid for cotton and cotton goods in this country, which do not seem to have occasioned a direct national loss during the period of the great rise of prices. The effects of the diminished supply of cotton in the enforced reduction of consumption, the curtailment of wages, loss of interest on capital invested etc, certainly constitute a very serious national loss.
|Cotton imported||533,176||691,847||896,770||thousands of lbs|
|Available to Consumption||316,213||430,913||649,576|
|Waste in spinning||53,756||64,637||90,940|
|Equal to production in yarn of||262,457||366,276||558,636||Total 1,187,369|
|Export of yarn||88,554||70,678||71,951|
|Do. in piecegoods etc||324,128||321,561||332,048|
April 21. 1866. N. 1182.
The Economist, 21. April 1866. S. 469.
The State of the Money Market.
Drain of silver to the East has almost died away; bar silver at former prices is almost unsaleable etc[.] tendency to expect cheaper money.
Some gold was taken for Paris; it is said in connection with the German Political difficulties, but rather perhaps with the large amount of foreign money now in London, which would leave us when the value of money became much lower than when that money was sent here.
Failure of Barned’s Banking Co: (Liverpool) Banks which have advanced largely on speculative securities, or lent on cotton, at treacherously high prices, and either with no margin or a margin which faded away just when it was wasted, must fail.
doctrine for the times is
Zusatz von Marx.
Schließen (d.h. die ruling Dummheit im head des Economist) … that the failures of those who have done bad business will in the present state of credit hurt no one but themselves; that what we now have is a gradual and successive weeding out of unsound speculators, whereas in old times they all failed at once in a mercantile crash and national disaster. Kommentar von Marx.
Schließen Weiser Salomon!
The Economist, 21. April 1866. S. 470/471.
The National Debt.
Remove a defective quality in the soil, or, by a railway f.i., the distance from a good market, and the farmer remains as he was: the improvement in the land is a benefit not to the hirer of the land but to the owner of the land – it enables him to raise his rent.
It is often said by those who advocate the payment of the debt, that we are squandering, or have squandered the wealth of posterity. But we can only spend what exists. Whether we raise money for a war by taxes or by loans, we equally raise it at once: it comes equally out of the present money of the living nation. Those who succeed are injured, but it is in a manner more refined. The expense of raising the interest, the expense that is of transferring a certain sum from A, B, C, D, E, F, etc, |47 who are the nation, to X, Y, Z, the, in comparison, few creditors of the nation … Posterity is injured by the use of loans by a former generation, and the non-payment of those loans, not in having lost the capital which those loans represent; that capital would have been equally lost if raised by taxes; but in having a constant annual expense in shifting the interest from one man to another, and in being obliged to use all the best taxes in that manner, and having consequently no good taxes (or at any rate fewer) in readiness for a sudden emergency. „Taxing posterity“ means making posterity pay more taxes and worse taxes.
The Economist, 21. April 1866. S. 481/482.
Railway shares firmer, the doubt and anxiety prevailing with regard to some of the financial and banking cos. leading to investments in stocks. The American securities firmly maintained; advance in the U. St. 5% bonds, close at 70 to 701/4. Colonial securities steady. In India there is a firm market.
Financial shares had recovered in several instances from 5s. to 25d. per share when the news of the suspension of Barned’s Bk. Co. produced fresh gloom. The shares of the General Credit Co firm; of International Financial Society steady. Those of Credit Mobilier and Foncier have slightly relapsed, and the quotation of Imperial Mercantile and Overend, Gurney et Co shares is lower, after operations of considerable amount. In Banking shares, Alliance Bank have fallen to 21/2 to 2 disc. Many of the new associations have suffered in price.
The Economist, 21. April 1866. S. 487/488.
Liverpool. April 19. Prices Current. Cotton
|Same Period 1865|
The cotton market was heavy on Friday, and on Saturday a further and decided decline was submitted to, quotations becoming almost nominal. This extreme depression attracted the attention of buyers, particularly for consumption, and a large business was done on Monday and Tuesday, accompanied by a rally in prices. Yesterday upon later advices of full receipts in the American parts the demand again fell off, and prices gave way. This morning the existing want of confidence increased by the announcement of the difficulties of a local bank, and business was checked; as the day advanced there was more steadiness, but the quotations still show a decline of about 11/2d. to 2d. from last week’s rates.
The Economist, 21. April 1866. S. 489.
Manchester, April 19.
With the exception of Tuesday, when a momentary check to the downfall of prices was felt, every day this week has shown increasing depression, to-day increased by rumours of banking disaster in Liverpool, where nearly a million bales of cotton may be said to be almost in view. Sellers of both yarns and cloth have been eager for offers, but buyers have lost confidence day by day. A considerable amount of orders has been cancelled to spinners and manufacturers who had failed to deliver in stipulated time, and some needful portion of such orders has been re-bought in the market at a lower figure.
April 28, 1866. N. 1183.
The Economist, 28. April 1866. S. 497/498.
„Finance Paper“ and The Rate of Discount.
Facts [which have] become public during
the last few weeks explain a considerable number of the phenomena of the
money market during the last 2 years
Zusatz von Marx.
Schließen (1865 und 64) or more. The lists of creditors of Mr. Savin, the great contractor for Welsh railways; of Mr. Watson, another contractor; of the Contract Corporation; of Smith, Knight and Co (Limited), also contractors; and of some others, show very clearly the sort of financial influence by which the 100 of Railway bills before every session of Parliament are suggested and sustained, and also the kind of financial devices by which the works themselves are started and carried forward.
Twenty years ago or less, when a railway was projected … people of some sort were found to subscribe beforehand for the shares, and to bind themselves to pay future calls till the line was made … with all the delusions and iniquities of subscription contracts, it is substantially true that until within a late period the costly public works of this country were made by virtue of a previous agreement among a large number of bona fide subscribers, each prepared, or believing he was prepared, to find his quota. In the numerous cases where the adventure was a mistake, the loss and suffering were diffused and severe, and the unlucky contributors were driven to straits and economies painful to contemplate. … The pressure of the period of excessive railway construction, from 1845 to 1853, fell directly, as it ought to do, on the savings of the country. The payments to the contractors were raised by calls from the shareholders, and the shareholders paid the calls by saving out of income, or by the sale of previous investments. But this system was gradually exploded, and for the last few years has been given up altogether. A project for a railway, dock, pier, or other public work, requiring a large conversion of floating capital into fixed, is now concocted by a knot of 4 or 5 persons, consisting of a solicitor, an engineer, a parliamentary agent, a contractor, and a financier. Some of the party have the command of the few thousands necessary to pay for surveys and indispensable preliminaries. They have, in most cases, name and position enough to enable them to borrow as much money as carries them as far as the Royal assent. That once obtained, the Act becomes a lively instrument of Credit. The directors issue Lloyd’s bonds, debentures, stock, preference shares, and the like to the contractor, and he in his turns turn finds avenues in the money market where, for rates of interest and commission almost fabulous, cash is to be had on these securities. Now, these securities are a mere speculation on the future, and a speculation subject to one principal and many smaller casualties. I) The line must be finished and placed in actual working before the obligations representing its cost can have any ascertained value at all. An unfinished railway or dock has no value whatever. II.) The line must not only be finished and actually worked, but in order to impart value to the bonds and shares there must be a positive profit surplus. The difference between securities such as these – wholly dependent on future and uncertain events to happen at distant and irregular dates, and liable to become worthless by the premature stoppage of the undertaking – and the class of securities which experience has shown to be best suited to the requirements of bankers and money dealers –, is not only marked in its character, but so wide and glaring |49 as to prepare any prudent person to expect mischief. Mischief has certainly followed in no limited measure.
There has been in the money market for some time past a very large amount indeed of these „financial securities“. Sicher no less than 5 or 6 millions or more. Many of them have been pushed off among banks who ought to have known better than listen to the temptation of extravagant rates on the bills of persons … wholly engaged in contracts more or less hazardous. Of course, there was the collateral security of bonds, debentures or shares. But both the promissory note or acceptance of the borrower and the collateral security were alike beyond the range of prudent bankers or discount brokers. The Joint Stock Disc. Co. with its millions of liabilities on one side falling due day by day, and its millions of finance securities on the other falling due goodness knows when or where, is the most extreme and lamentable carricature caricature of this folly.
The effect of the system has been to shift the burden of the largest part of the public works of the last few years from the savings in detail of the investing classes of the country and fasten it upon the merchants and others legitimately resorting to the money market for the discount of their ordinary trade bills, and for advances required for short periods to meet the nature of their business. The contractor making a railway in Wales, or Somersetshire, or elsewhere, has appeared in London, or Liverpool, or smaller places where banks are to be found, and has got his bill at 4 or 6 months discounted at twice or thrice the current rate of the time, fortifying it of course by a deposit of collateral security. When the due date arrived the bill could not be paid. It must be renewed, and renewed it has been, not once but several times. Now and then the lender has been lucky enough to get repaid out of his securities, or out of the pocket of some new party discovered and cajoled by the assiduous exertions of the well-paid and plausible emissaries of the people wanting the cash. The end of the process has been a lock-up of funds in advances which are really and truly mortgages on unfinished public works, or on public works struggling into profitable existence.
During the last month or two it is probable that there has been some
clearance The Economist: of this finance
Schließen of finance paper. The borrowers on it have been, in one way or another, enabled to offer securities to bona fide at prices which had led to a real distribution among the public – or, what is the same thing, a class of real shareholders has been found, not before the line was made or the calls required, but after both these things have been accomplished at a sacrifice about which prudence and pity alike counsel silence.
The finance cos. were set up expressly to do this sort of intermediate work, but have not done it at all well. Sie konnten nur lend safely what they possessed safely, their own capital and the deposits lent to them for long periods expiring at various dates. They resorted to credit; they counted upon the facilities of the market; and when the market ceased to be facile, because contractors were found to miscalculate and to fail, then the finance cos. had to turn round on their shareholders and call up in a hurry and [in] the midst of panic the capital they had been foolish enough to lend to others before they had it in hands themselves. … A bill of exchange drawn against goods bona fide produced and sold is a security which the ordinary consumption of the country will carry off and pay for, and is therefore a safe and proper instrument for circulation among bankers or bill brokers. A bill of exchange drawn in reality against an unfinished public work is a pure speculation on the possibility of that public work yielding a dividend on its cost, and finding purchasers in detail for its bonds or shares.
Fraud or misrepresentation should be punished as a criminal offence; as, f.e., by rendering personally liable the directors and officers actually signing any bond or security, which on the face of it implies any material circumstance at variance with the real facts of the case … Wenn dieß finance paper cleared out of the market, the rate of discount will then resume its former and proper function of indicating the relation between floating capital expressible only in terms of money on the one hand, and floating capital represented by merchantable bills and securities on the other.|
The Economist, 28. April 1866. S. 501/502.
The East Indian Railway Scandal.
Handelt sich um the great line which serves the valley of the Ganges. The Gvt was forced to order an inquiry into certain great mischief, which the enormous and unexpected prosperity of the railway is inflicting upon commerce. Pressure already severe (auf den rolling stock) when the full weight of the cotton trade fell upon the railway, producing a scene, when its duration is taken into account, entirely without parallel. Every European house rayed out its agents into the NorthWest and Central Provinces in search of cotton. Every native firm began making advances and bribing the little holders, and from 50 districts as big as English counties cotton, the very existence of which was hardly suspected, came pouring towards the line. The stations were choked to the roof, and in a little while the idea of housing was given up and the cotton piled upon the plain. At Cawnpore, says Mr. Robert, official Chief Auditor of the Railway, there were after the greatest efforts had been made 20,000 bales of cotton lying piled in the station, 20,000 more on the plain round it, and 24,000,000 lbs were in the store-rooms of the native town, all waiting transport at once. This represents a property of 21/4 millions lying idle at one station. The railway officials could not carry it, had not, after they had strained their powers to the uttermost, sufficient engines or trucks or time, and by the by they found a reason for not hurrying. The owners wanted the cotton very much – Heißt z.B. in extract from the evidence of a partner in the House of Schoene, Kelburn et Co.: „I have to complain generally of the detention of cotton at Mirzapore and an unfair distribution of waggons. We had goods at Mirzapore ready for dispatch in December and January last, 2,545 bales of cotton, of which up to date we have only received 260 bales. Application to agent on 18. January, reply on the 19. The traffic manager was doing all in his power towards distributing the waggons wagons fairly, and agent was very much surprised to find subsequently, that private instructions were issued to the traffick manager to give the preference to the Commercial Transport Association in the allotment of the wagons. … on our total quantity of cotton at this date there is a loss compared with the prices to be realised in January of 5rs. per mound, in round numbers 30,000rs, and, as the firm has paid for all this cotton, they lose monthly 2,500rs. interest.“
Thus pressed the great European firms used their social weight both with the Co. and its officials, and so obtained occasional preferences, but the natives went more directly to the point. They bribed the station-masters. Fabulous sums were offered to subordinates on 300l. a year, one man’s wife making by a sale of preferences above 1,400l. a month. Outcry. It was seen that the Commercial Transport Association was always served first. Besides being very great customers, they owed the railway a heavy debt … preference given them to pay this off. Committee of Inquiry proposed that the trains should be put up to auction. Whoever paid most, should have his cotton carried first … not met (this) the merchants’ approval … It would render the price of cotton at the part altogether uncertain, the bids being high one day and lower the next, would enable a lucky bidder to undersell his neighbour, and completely suspend all trade in goods unable to bear the heavy premiums. No final orders have, we believe, been issued, and whole the Board in England are straining every nerve to meet the demand, there the cotton lies heaped round the central and Northern stations[.]
These Indian railways are in fact state railways. The state gives the land out of taxes, gives the interest out of taxes, and assumes a direct and most searching control of the administration. Muß also für das interest der natives so gut sorgen wie für das der Europeans, und das der community as well as that of the shareholders. This the sale by auction does not do. It is a direct prohibition to the grower of anything except cotton to use the state railway at all, and as regards cotton itself, gives the capitalist an unfair advantage over the small dealer.|
The Economist, 28. April 1866. S. 502/503.
»Pollution of the river from the paper mills and sewage. In both cases valuable manure wasted and river poisoned. From one paper mill above a ton of dry fertility matter is thrown daily into the stream. Throughout the whole course of the Thames, from Cricklade downwards, the sewage of cities, towns, villages and single towns is suffered to pass into the river.[«] [„]There is no form of scavenging practiced for the surface water of the Thames, but carcases of animals float down the stream until wasted by corruption. The river water receives unchecked the whole of the pollution, solid and fluid, of the district, and this same water, after it has so been polluted, is abstracted, sand-filtered, and pumped into the metropolis for domestic uses.“
The example of London in removing its sewage from the river has not been followed. The water below Oxford is useless for the manufacture of white paper and unfit for drinking … It is true that the river is not so absolutely sewer-like as it was when the main drainage of London was turned into it.
The Commissioners inquire what can be done with the sewage, and whether the irrigation of land with sewage, as carried on at Croydon, Norwood, Worthing, Carlisle, and Edinburgh, has any bad effects on the health of those places. It has no perceptible effect, and they strongly are urge its general adoption. Dr. Carpenter, of Croydon, said: no injury to the neighborhood had arisen from the irrigated fields, and there was but a very slight smell from them in hot weather, just before rain. According to Mr. Latham sewage is completely deodorised as it touches the earth. But great care is needed in the management of the sewer. They must be properly ventilated, and that outside the houses. The sewage water must be passed over a sufficient area of land, and not to near dwellings. But if these precautions be taken, the benefit of the sewage water to the land is invaluable. It goes off from the land bright, tasteless, and inodorous. Mr. Cousins, of South Norwood, who rents some of the irrigated land, has raised crops of grass of 50 tons of the acre. … Near Edinburgh, sewage irrigation has been used for two centuries, and though the conductors were suffered to get out of order, and to become reservoirs of stagnant sewage, no special class of disease has been generated through the sewage.
The Economist, 28. April 1866. S. 504/505.
How to profit by the plague.
Take f.i. Cheshire and other localities where the plague has been virulent. Much of the disease which attacks the dairy cows due to the wretched accommodation, or rather the absolute want of accommodation in housing them, and to the poor system of feeding them during the winter months, well nigh universal in dairy farm districts.
[„]In no case should undrained stiff clay lands be ploughed; the first crop may be tolerably satisfactory, but the expense of tillage afterwards, and the uncertainties of the seasons, will add so much to the cost of production, that there will be little left as profit. I would advocate the allotment of none but good land for arable cultivation, but no more of it than could be well managed; a little well done will be more profitable than double the extent only half farmed.“
A certain number of sheep and a certain quantity of ploughed land would be great improvements on Cheshire farms as helps and auxiliaries to dairy husbandry. Without ploughed land there can be no straw, absolutely necessary to the comfort and good management of cattle during the winter months.
The best fields on most farms (I speak of the average class of land in Cheshire, and not of the very light or sandy portion) are those which were boned many years ago, when never less than from 1 to 2 tons per acre were applied, most of which was in lumps of the size of a thump. These bones, it will be found on ploughing, have sunk 9 or 10 inches deep into the soil, and are lying there in a half-decomposited state; by ploughing you replace them near the surface |52 where the action of the air and repeated tillage reduce them to powder, and lays them under a renewed contribution as fertilisers. There are hundreds of fields also whose grasses are run out, to use a common phrase, and which, by growing in a weak and spiral form and by matting together as they grow longer, ask to be ploughed; they can be returned to permanent pasture even in a better state than when first broken up. In expenses of ploughing, sowing, reaping, and harvesting good land are all less than they are in poor unsuitable soil, and less still in fields conveniently near the homestead , which will be better for the tenant.
The Economist, 28. April 1866. S. 508.
In financial shares trifling business. There is, in the Stockexchange and its „entourage“ a considerable „bear“ account or speculation for the fall. On the other hand, the public are in many instances uneasy, and on the slightest unsatisfactory news, reliable or otherwise, send constant supplies of shares upon the market.
5 May. 1866. N. 1189.
The Economist, 5. Mai 1866. S. 525/526.
The Sudden Rise in the Rate of Interest.
Drain of bullion and diminution in the Bank Reserve. Heraufgesezt Bankrate zu 7%. Der Bullion drain nicht for the East wie lately. Es ist nicht an Oriental, but an European demand connected mit den operations of foreign Gvts now preparing for war, besonders der Italian Gvt. Continental capitalists are selling securities in this market, in order to supply the wants of the disturbing Gvts. The Bank return shows a large diminution in the reserve of notes.
|Reserve of notes in the last account in April||7,551,000||5,520,000|
|Ditto first account in May||6,902,000||4,944,000|
Stelle konnte keine Entsprechung im „Economist“ ermittelt
werden. Möglicherweise Zusatz von Marx.
Schließen 15 Mill. der Bank of E. (statt 14) seit 1863, in Folge Eingehens von issue country banks. (15 Mill. paper not issued against Gold.)
The Economist, 5. Mai 1866. S. 531/532.
Agricultural Labourers on Strike.
The farm labourers in the village of Peasemore, Newbury, Berks have struck for an advance of wages. Their present pay is 9s. per week, and many of the men have large families. Some farmers have written to the Times that some of their labourers have received from 9s. 9d. to 14s. p. week since Michaelmas – probably by occasional piece-work or the aid of their wives and children – but the general rate of wages for ordinary farm labourers in the parish is not disputed to be 9s. p. week. The advance asked by these Berkshire men is 1sh. p. week. Throughout the rural districts of England there has been at certain times and in several districts an actual scarcity of labour. We know not how the rural workmen can avail themselves of this to them favourable state of the labourmarket so readily as by some general and combined action, and to those who have known the farm labourers of the West of England 20 or 30 years ago, the fact of theirs thus combining for the assertion of their own right to make the best bargains for their labour the market will afford is a sign of hope and promise.
Low wages produce a want of spirit and energy amongst the farm labourers, which often unfits or disinclines them for more active exertions than they have been accustomed to make even when offered better wages.|
The Economist, 5. Mai 1866. S. 535/536.
Generally very low quotations. Financial shares have mostly given way, quotations in every case show a decline, and in many cases the fall has been severe. Rumours of calls, and the vague feeling of alarm still prompts the public to part with share. Operations for the fall are also active. Banking shares are also lower.
12 May. 1866. N. 1185.
The Economist, 12. Mai 1866. S. 553/554.
The State of the City.
The failure of Overend, Gurney et Co (Limited) has given
occasion to a panic more suitable to their
historical than their recent reputation. Overend, Gurney unlimited, for the sake of
high interest took bad securities. As to Overend, Gurney and Co. (Limited), they did the best they
could, but could hardly help bringing over old business of very
questionable nature from the old firm. … Lombardstreet has been thronged
and almost stopped by curious wanderers in a way we never saw it stopped
before, and on the whole we doubt
Kommentar von Marx.
Schließen (trotz seiner beständigen Prophezeiung des Gegentheils!) if there ever was a collapse of credit more diffused and more complete.
It has hardly been observed how new an element of danger limited cos introduce. The moment the operations of the Stock Exchange depress their prices, that instant a run begins. Many cos may go which did not deserve it merely from the depression of their shares.
Bk. act of
1844 must be suspended. Large sums have been
withdrawn from the Banking department to-day, notes to a great amount
have gone into the country, discounts and advances at the Bank have swelled to an extent almost
unprecedented. If these demands have reduced the Bank reserve to such a
state as 1847 and 1848 … it is not a matter of theory (die
suspension des Bankacts von 1844) at all; it is plain insolvency and must be mended somehow …
After a certain though very late period yesterday, the Bank did not make advances on Gvt. securities, wohl weil
their reserve was in danger of exhaustion. If the B.o.E., the sole
banker of the English Gvt., will not advance
on the securities of that Gvt, there is no saying what may
happen to any one. … As to the General state of the
trade of the country, we have no doubt of its substantial
Kommentar von Marx.
The Economist, 12. Mai 1866. S. 554/555.
What a Panic is etc.
The provisions of Peel’s Act aggravate alarm. They cause panic where there would have been merely fear. In solchen Zeiten der
B.o.E. is augmented. In
the ordinary working of banking in England, a mechanism of diffused
credit economises the use of banknotes, of visible
instruments of exchange, of money in the ordinary sense of the
word. By the aid of the clearing house, of country bankers, of London
bankers, of the B.o.E. all working together … the
most important bargains are settled without the use of any banknotes
or coin whatever. A cheque is given,
and by the aid of the system of set-offs, this
bit of paper pays for cotton or indigo as effectually as sovereigns, and
pays for it in every part of the kingdom. Darin all wholesale
transactions settled. Mit Ausnahme des North of England, where
a rather barbarous mode of charging bank commissions restricts the use
of cheques and banking, no one pays any large debts except by cheque.
The wholesale currency of the country is a ledger
currency – a currency of bankers’ deposits transferred by bankers’
cheques. Banknotes in general, and in their customary use, are
but a retail currency. Small matters are settled by them; large matters are settled without them. In a panic this
auxiliary and supplementary currency is at once in part annihilated. Its
very |54 foundation is taken away. That foundation is
credit, and there is discredit. A person f.i. who has lent money on
securities will not take his debtor’s cheque and give up these
securities. He asks for banknotes. The general machinery by which
bargains are settled and debts paid in this country is in times even of commencing panic disturbed and
superseded. The Banknote is a most coarse form of
credit as compared with the cheque currency. Taking a banknote
(even when not a legal tender) only involves trusting the Bank; but
taking a cheque presumes also a trust in the cheque giver. Kommentar von Marx.
Schließen (Viel weniger als by bills of Exchange!) Weil in dem panic die cheque currency partly destroyed, we fall back on credit of the first sort, upon Banknotes. We require more Banknotes, just because the feeling, the confidence which made few Banknotes effectual has disappeared. The same cause operates in another way at the same moment. Die country bankers provide themselves mit notes etc[.] Wenn Scotch or Irish issuing Bank should fail, die other Scotch or Irish banks would issue notes upon bullion to fill the void, but obtain that gold by getting a credit balance at the Banking Department of the B.o.E., by drawing a cheque on that balance, by getting notes in payment of that cheque, and getting those notes paid in gold at the Issue Department. Those notes are then cancelled, but the effect is the same as if they had been taken to Ireland, or Scotland, and there issued. The panic has in both cases destroyed the local circulation, and taken notes out of the Banking Department of the Bank to replace them. In one case it has issued and in the other destroyed them; but that is immaterial: the demand on the Bank issue, the void in London is the same.
Also pressure on the Banking Department of the B.o.E. More notes are required, taken out of the reserve there. Dazu Bk.o.E. notes a legal tender. … Yesterday (11 Mai 1866) was perhaps the worst day ever known in a week of that sort.
The Economist, 12. Mai 1866. S. 559/560.
The Irish Landbill.
Fortescue’s bill. Tells us that it is merely to render the Act of 1860 effective. Aber das Neue drin: a provision giving a tenant a claim on his landlord in consideration of outlay incurred, irrespective or even in defiance of the landlord’s wishes … The assertion in a general form of the subordination of the Landlord’s right in his property to the public welfare has not yet been made in distinct terms in an Act of Parliament. This would be entirely sound.
The proper object of a measure for tenant-compensation is, to secure to the tenant full property in the thing he has himself created, or, in lieu of this, its value from the man who under the law may appropriate it. It is, however, an inevitable circumstance that the value which the tenants tenant adds by his improvements to his farm becomes, when the outlay has once taken place, inextricably blended with the general value of the land: it is thus a preliminary condition to the practical solution of the problem that a separation should, with at least approximate accuracy, be effected between the elements of value added to the land by the tenant’s outlay and those due to the general circumstances of the country. Moreover, in all progressive communities the value of land – as a consequence of the longer demands made upon it for subsistence by an increasing population – and wholly irrespective of agricultural improvement tends to rise, wozu jezt noch kömmt die immensely increased production of gold and silver. 100l. means not now what before the Australia et California discoveries. This affects wie den price aller Dinge the price of land. … A railway runs through a district, and the value of land in the district rises …
There may, or may not, be good reasons for retaining the land of a country in the hands of the State. The benefit of its augmenting value may thus be reserved for the community at large.
Confiscation is not for us the word of horror which it is for most of our countrymen. We can |55 well believe that a well-devised scheme of confiscation might easily be made productive of solid benefits to Ireland; nor should we shrink from this expedient were it necessary for the regeneration of the country. But our objection to Mr. Fortescue’s measure is that while paying the cost of confiscation, it secures none of its gains.
In dem Act steht: „The Gvt. do not propose to interfere with perfect liberty of contract.“ And the Act is only to come into operation „wherever there is no written contract to the contrary“. The measure is thus rendered absolutely innocuous, but also … perfectly idle. Do the Gvt. really suppose, that Irish landlords will incur the risk of indefinite claims being run up against them by their tenants if they have it in their power to prevent this by the simple expedient of an additional clause introduced a common form into every lease?
The Economist, 12. Mai 1866. S. 563–565.
The business of the old firm Overend and Co in July last (1865) transferred; its suspension followed by that of the English Joint Stock Bank, a still more recently created establishment. Some pressure during the day at a few of the banking houses, but all claims have been satisfactorily met in that direction. At the B. o. England the demand has been heavy; in other quarters the transactions reported are extremely few.
Rapid rise in the discount rate, to day advanced to 9%, seems to have checked demand and the export of bullion.
Chief failures transpired to-day those of 2 or 3 contractors unable to obtain the advances upon which they had been accustomed to rely. Also reported stoppage of a Liverpool House in the iron trade.
In all securities the depreciation has been sudden and beyond precedent within last 20 years.
Foreign Stocks. The rapid decline on the French Bourse and the pressures of sales on the extremely limited market in London occasioned a further excessive decline in prices.
Railway Shares: considerable decline in prices compared with those of last week. The chief depreciation may be attributed to the realisations of those who, to meet losses, have been compelled to sell any high investments at command. There is very little doubt that operations for the fall have had much to do with the further reductions noted in the list.
On Financial shares the panic has acted with unprecedented violence. Concentrated in its form on account of the limited space upon which it has been only able to act, the present panic in financial shares exceeds all that has been previously witnessed, although the depreciation of the past few weeks had been severe and extensive. At this moment the difference between the par value of shares on the „Miscellaneous“ list, and the quotations of this evening amounts to somewhere about 15,000,000l. St. Today the dealers have mostly refused to deal, except to close account; and the consequence of a resolution of this kind following upon a crisis like the present is the closing of a vast number of accounts, and the extinction in many cases of whole fortunes involved on too large a scale in shares on which the dividend depended entirely on the realisation of assets now rendered impossible. In many cases the profits declared have had no existence except on paper, and subject to the safe conclusion of the operations in which the societies had engaged.
Banking shares have suffered afresh; the degree is only inferior to that of the Financial Co. shares, but the results so far have been less disastrous.
Failures: Gibbs, Brothers Ironworks, liabilities 25,000l.; the English Joint Stock Bank limited, today followed Overend; W. Shrimpton, of Westminster, suspension; Bills of Sir Morton Peto returned last evening, and, we fear he will not be able to resume payment.|
The Economist, 12. Mai 1866. S. 569.
Cotton market. Liverpool.
Much depression. Quotations for Americans and East India are reduced all round 1d. per lb since Friday last. To-day there has been quite a panic in the market; sales about 3,000 bales, at prices quite nominal.
The Economist, 12. Mai 1866. S. 571.
Manchester. May 10.
Iron has given way considerably.
Prices have continued their downward course day by day. Both yarns and goods quoted 1 to 2d. per lb down since last week.
May 19, 1866. N. 1186.
The Economist, 19. Mai 1866. S. 581–583.
This panic more than any other we remember – a Credit Panic. The promises we have given to pay gold on demand could not be performed by many thousand times as much gold as there is in the country. And when this is the case our whole mercantile system must always be easily injured by causes comparatively slight … Last Friday (11 May) no one knew who was sound and who was unsound … the lenders of money were suspected of misusing it. The panic of 1866 was a credit panic, not a capital nor a bullion panic.
Charter Act (1844) suspended. Just before the suspension of the Act no bank was – considering the nature of its liabilities – in so much danger as the B. o. England. It had a reserve of only 3,000,000l. in town and country, and from all parts of the country demands on that reserve were pouring in every hour. Country bankers felt they must either get more notes and more sovereigns, or give up their business; London bankers were pressed upon not only by their country customers, but by a kind of oscillating run which now went to this bank and now to that. The B. o. England could not have increased its reserve by letting its bills „run off“; for they would not have „run off“, but have accumulated unpaid in its bill case. … On Friday the London bankers deposits in the B.o.E. amounted to a larger sum than its reserve. These bankers would not – and some of them used plainly such language – allow the B.o.E. to go on while they failed. Nothing is so imitative as panic, and if 1 or 2 large bankers had drawn their balances, all the rest would have followed like sheep, and the banking department of the B.o.E. must have been left bare … In figures its (the banking department’s of the B.o.E.) reserve looks larger than that of its competitors, but only because it includes that of its competitors. It was at least as badly off as they, for it existed on their sufferance. … No considerable amounts of Consols can be sold at moments when the Bank is for such purposes the only lender, and when it refuses to lend. The jobbers in stock are men of means, but not masters of secret hoards of ready money. It is not a question of price but a question of cash. In ordinary times if stocks come forward in unusual quantities for sale, he can (the Jobber) with ease borrow on it, or dispose of other securities to purchase it. But in a panic these „other“ securities are probably unavailable, and if the B.o.E. hesitate to lend, the other resources of the market are very scanty. If the Bank were, in a panic, absolutely to refuse to lend on Consols, they would not be saleable for cash.
Except in particular branches of speculative
trade – as cotton, or pig iron, or the ship-dealing
and owning fostered by Barned’s – English commerce was hardly ever
sounder Zusatz von Marx.
The Economist, 19. Mai 1866. S. 588/589.
The Suspension of the Bankact. (Von
Die Banks und many mercantile firms drew only out notes to protect themselves. Aber wahrscheinlich, daß wie in 1847, not a single note in excess of the regulations laid down by the law will have been issued. … Der Effect des letter (der suspension) a real gain. The run was checked, the deposits were left alone; but it was achieved by a process of the imagination; not a single additional note was set to work … The Bank Act of 1844 neither made nor healed the crisis; it had nothing to do with the matter; but the application of a delusion respecting it did do good, and so far the mechanical has an advantage over the discretionary issue of banknotes. It makes it possible to use its abolition, and the substitution of the discretionary method in its place, as an instrument supposed to be capable of working miracles in a panic.
In the hour of panic no one thinks of the gold as necessary for the B.o.E. note. Before 1844, the banknote was accounted as safe, as solid, as it is now. Since 1819 no man has preferred a sovereign to a B.o.E. note on grounds of safety. In 1825, when the severest run was made against the Bank, banknotes were demanded, and the Bank, in its banking department, was saved from the stoppage solely by the accidental discovery, not of bullion, but of a million of unburnt banknotes.
The Economist, 19. Mai 1866. S. 591.
In der French Correspondence des
Gladstone solle der B. o. England pay back the debt which the Gvt owes to it. By so doing it would relieve itself from the interest of 3% on that debt, which it pays the Bank; and that relief would be as effective as buying up Consols in the market. The Bank, on its part, would profit, by having the money as capital to work with. It has at present no capital, and that is a great anomaly in an establishment which directs the market and regulates the rate of commercial interest.
The Economist, 19. Mai 1866. S. 586.
Figures relating to Panic of 1847, 1857 and
|Notes in Circulation. £.||Public Deposits.||Other Deposits £.||
|Other Securities £||Bullion. £.||Reserve of Notes. £.||Minimum Rate of Discount|
|Notes in Circulation £||Public Deposits £||Other Deposits £||
Public Securities £
|Other Securities £||Bullion £||Reserve of Notes £||Minimum Rate of Disct. %|
The Economist, 19. Mai 1866. S. 589/590.
A Game Preserver’s Ukase.
The following curious notice to his tenants has been issued by Lord Denbigh to his tenants: „As complaints have been made to me of the damage done by rabbits in the cultivated parts of my property, and I am anxious to meet the wishes of my tenants as far as possible, I have arranged with my keeper to destroy the rabbits as far as he can on the arable land; and in order to insure this being attended to satisfactorily, I have given orders that 2 appointed rabbit-catchers shall be at the disposition of the tenants from Febr. 15 till the beginning of the breeding season on the following terms: The tenants shall have full leave to ferret all the hedgerows adjoining arable land on their farms (excepting covert hedges) as often as they like during that period, using neither dog nor gun, but only purse nets over the burrows. All the rabbits so caught by each tenant shall be kept by him, he paying the wages of the rabbit catcher so long as he employs him. No tenant is to ferret without being accompanied by the rabbit-catcher. In consideration of this concession I expect my tenants will preserve strictly for me all other game. As frequent complaints have been made of self-hunting dogs being seen on the property, I have given orders to my keepers to destroy all such found hunting etc.“ etc. Denbigh. Newnham Paddocks, April, 1866.“
That which most vitally affects the farmer, the question of whether he is himself to consume the crops he had paid for to Lord Denbigh, or whether Lord Denbigh is to consume those crops by |59 means of his game and rabbits, is to be arranged, not with the tenant, but behind his back with his lordship’s keeper! It is proverbially said, you cannot have your cake and eat it, but Lord Denbigh and his fellow game-preservers have found out the way of doing so. They first take rent for the use of their land, and then they consume for their own profit and amusement the crops raised on the land by means of their tenant’s capital.
At the Aberdeenshire election now pending says Mr. Fordyce, the farmer’s candidate: „From 1820 the Game Laws have gone on increasing until their number was now almost legion.“
The Economist, 19. Mai 1866. S. 592–595.
|At corresponding dates with week ended May 19.||1856||1863||1864||1865||1866|
|Circulation, includirte bank post bills||20,324,077£||21,268,315l.||21,313,352l.||21,769,022l.||26,650,817l.|
|Reserve of notes and coin||4,739,925||8,496,341||7,097,911||8,366,913||1,202,810|
|Coin and bullion||9,801,865||14,529,451||13,267,446||15,023,913||12,323,805|
|Bankrate of discount||6 und 7%||4%||8%||41/2 %||10%|
|Price of Consols||915/8||921/4||911/2||903/8||871/2|
|Average price of Wheat||68s. 9d.||46s. 9d.||39s. 3d||40s. 11d.||45s. 9d.|
|Exchange on Paris. short.||25 35 421/2||25 20 271/2||25 30 40||25 171/2 25||25 0 121/2|
|Amsterdam (ditto)||11 181/2 19||11 151/2 16||11 171/2 18||11 171/2 181/2||11 13 15|
|Hamburg (3 months)||13 103/4 111/4||13 71/2 8||13 91/4 93/4||13 91/2 10||13 10 101/2|
Discount market. Notwithstanding the remarkable pressure upon its resources, the Bank has not yet infringed the limit of the Bank Act … There are inquiries on account of foreign investors in first class 6 months paper of unexceptionable character of 83/4 to 81/2%.
Railway shares. Slight recovery in the prices, but business is of a very limited character.
Financial shares: The depression continued during the early part of the week, and reached extreme limits. Unreasoning haste on the part of the holders of shares contributed no less than the numerous sales of speculators for the fall to the fearful sacrifice |60 of property that ensued. It was no longer necessary to pay for shares. Holders became so anxious to be quit of their liability that they offered various, and, in some cases, large amounts to those who would consent to assume their places on the sharelists of the co. in which they were, or fancied themselves involved. The shares of Overend, Gurney etc Co with 15l. paid, were offered at 18l. discount, or a bonus of 3l. for taking the shares. Imperial Mercantile at 10% discount, with 10l. paid. Credit Mobilier and Foncier at 5 disc., with 5l. paid. London Financial, with 20l. paid, at 15 and 16l. discount. General Credit and Finance shares, on which a call of 2l. had most unexpectedly been announced, were offered at 5s. per share, as if the whole capital, or nearly the whole capital, of the co. had been entirely lost. The settlement on the 15. inst., by causing the closing of numerous accounts, served to put an end to many of these wholesale sacrifices of property. Within the past 2 days there is less despondency, and less disposition to sell so freely as previously, a considerable improvement is hence to be noted in very many cases. Credit Mobilier and Foncier have recovered to 25/8 disc.; General Credit to 21/2 disc.; London Financial to 13 disc. The shares of Overend, Gurney and Co. are still dull at 18 to 16 disc. The shares of the International Financial Society have held firm in consequence of the exceptional position taken by the co. in offering to discount its own acceptances at Bank rate.
- Messrs Penny et Co, Liverpool, East India Merchants. Liabilities 104,000l. Assets: 20,000l.
- Drafts of the Oriental Commercial Bank (Limit.) were returned unpaid on 17 inst. Liab. 350,000l.
- Draft of the New Zealand Banking Corporation have been returned. Co[.] formed in 1863, paid-up capital 60,000l. the last dividend declared 10% p.a.
- Fernie Brothers and Co., Liverpool, merchants and shipowners, have arranged for liquidation.
- Bank of Turkey, 17 inst., resolved to wind up.
- Shrimpton, contractor, 15 inst. meeting of creditors. Liab. 220,656l. Assets at their nominal value: 387,070l.
- British and Foreign Mining Financial Co (Lim.) winding up; ditto „London and Provincial Starch Co.[“] Limit.
- Failure of Hallett, Ommaney Ommanney et Co, Private bankers and navy agents, Westminster announced on 15. inst. Liabilities von 250 to 300,000£.
- Imperial Mercantile Credit Association (limited) stopped payment on 12 inst.| 61
- Failure of Mr. Charles Bedell, wine merchant, Markline, liab. about 100,000l.
- Northfield Iron and Steel Co. (lim.) winding up; ditto „Hop and Malt Exchange and Warehouse Co[“] (lim).
- Commercial Bank Corporation of India and the East, suspension of payments.
The Economist, 19. Mai 1866. S. 600/601.
Liverpool. May 17. Cotton Market.
The cotton market, which had previously declined to a comparatively low point, has not been so much affected by the monetary crisis as might have been expected.
Manchester. 17 May. The market opened with greater steadiness this week after the recent panic. A small hand-to-mouth business in yarns for manufacturers, who hold only their bare requirements. In cloths, for current general trade, the demand has almost ceased.
Leeds: A collapse of orders and sales of goods for Germany.
26 May 1866. N. 1187.
The Economist, 26. Mai 1866. S. 613/614.
The Substantial Grounds for increased
|Coin and bullion. £.|
Our discount rate 10% against 4% at Paris.
Besser if the Act had been nicht nur legally, but really broken. It would have been so, if the London bankers had not, to prevent it, sent in a larger amount of small notes than usual. Considering how much must be in the country branches, 800,000l. of notes is childish as a reserve. In fact, the Act was broken the moment the Bank began to act on the letter of this day fortnight; a course of policy then began inconsistent with every clause of it. If the directors were acting under no indemnity they would in the present state of the reserve deserve impeachment.
We are not frightened by the operations of the so-called „bear“ at the Stock Exchange. Some most unjustifiable ruses have indeed been resorted to by inferior persons which amount to aggravated plunder.
The operators, z.B. im case der London und Westminster Bank, could not get the shares which they sell without paying as high or a higher price than that at which they sell. They are indeed able to gain great profits and inflict frightful injury in two cases – first, where as in the case of the Bank of London there has been bad business, and the extensive credit of the Bank is thereby weakened. Then as soon as sales are pressed the price falls, and the operator is able to buy the shares he sold to-day at a far less price to-morrow. The profits so made where shares fall so quickly as those of the Bank o. London are very great, and the consequent ruin of the bank very quick. The same result also happens where, though no bad business had been done by the Bank, its shares are in the hands of poor people, who can bear no loss and |62 pay no calls. Such people rush to sell the moment the price falls; and the „bears“ thrive on their ruin … A fearful penalty is visited on incidental errors, and concerns which might have crippled on and got right, are by the depreciation of their shares crushed and swept down. But half of human justice works by decimation in this way.
The Economist, 26. Mai 1866. S. 614/615.
The Practical effect of the Act of
The main use of the law is that it compels the Bank to act at an early stage during
a foreign trade drain of bullion … Zusatz von Marx.
Schließen Aber, der Esel sagt selbst: the Banking department was bare in 1857 and 1847, before they had aroused themselves to act as they ought, Kommentar von Marx.
Schließen und damals existirte ja Act of 1844!
Evils of the Act: A panic is necessarily aggravated. As the auxiliary credit currency having been impaired and injured, more notes, more primary credit currency is wanted to supply its place. On what is called „Overend’s Friday“, the want of such currency was palpable, and it was given. The Act of 1844 is responsible not for the present want of credit but, but for the difference between the acute agony which preceded the relief from the Treasury and the slow suffering which we still feel. Certainly, Peel’s Act is a legal ligament which inflames panic into frenzy.
The Act of 1844 makes the quarterly payments of the dividends and salaries very serious matters, whereas otherwise they would scarcely be felt. The banking reserve being isolated, any considerable amount of notes withdrawn from it, even for internal purposes, makes a marked change, and … the rate of interest is raised unnecessarily. Whether a few more notes go out to the public is immaterial, if we make up the account in the „old form[“], or as the accounts of the B.o.F. are made up; but the loss of those notes, at critical instants, is made most important by the Act of 1844.
There is a danger from Peel’s Act we now experience for the first time; its suspension is liable to cause foreign discredit. This defect is most serious. Dieß bewiesen durch Clarendon’s Brief vom 12 Mai an die British Embassies and Legations throughout Europe, um klar zu machen, daß there is no suspension of cash payments or Bankerutt der B.o.E.
The Economist, 26. Mai 1866. S. 620/621.
The Supply of Animal Food.
During the last 20 years provisions of all other kinds have become lower and more stable in price, while meat had advanced in value far more than other food has diminished, so that even mit better wages our working men find themselves no more able to furnish their families with a fair amount of meat than in the old days before Repeal of the Cornlaws. The importations of foreign live stock do, to a small extent, supplement and increase our own supplies. Probably preserved meat will by and by be derived from those pastoral countries where hides and wool have hitherto been deemed the sole produce of herds and flocks.
There is not the slightest doubt that if the land of this country were properly used and managed, and a far grater population than that now living in these islands might be fairly supplied with meat at a reasonable price. It is not by the diminution of our grain that we shall increase our meat. In modern husbandry more cattle and sheep on a farm imply and furnish the means of growing more grain, while the increase of grain – with its accompaniment straw – is the origin of more stock and stock |63 provender.
„Practically“, says R. Smith, in a lecture at the London farmer’s club, „it depends first (increased supply of animal food) on the investment of capital to increase the fertility of the soil; secondly, on the subsequent improved rotation of crops, so as to secure a larger percentage of cattle food produce with increased economy and decreased waste in its consumption; thirdly, on improved animals, with precocious habits, as fattening stock, whether cattle, sheep, or pigs … For such a purpose the strong lands, which hitherto have done but little in the way of increasing the supplies of animal food, should be used during the summer months for growing green crops. This ought to be to the occupier of clay soils what the winter feeding is to the occupier of light soils. Cabbages, early turnips (sown on a stale furrow) mangolds, and kohlrabi may be grown on clays, the two former in time to be eaten upon the land by the end of September, and the two latter to be drawn off, stored, pulped, and used with wheat straw chaff. In this way all the straw not absolutely wanted for litter, may be advantageously eaten, and, with the aid of oil cake and crushed corn, a good deal of mutton and some beef (the former pays best) may be made from the produce of those soils, the occupiers of which have hitherto relied upon wheat and beans only. This change of system would require autumn cultivation for all the green crops, and so raise the question of efficient drainage and steam cultivation.[“] In dieser question einbegriffen the whole array of questions and difficulties which beset, trammel, and impede British husbandry. Efficient drainage, with its necessary concomitant, sufficient building accommodation for stock must be the work of the landlord, an outlay of capital to be compensated by interest in the shape of increased rent, – to be followed by outlays by the tenant in improved cultivation and stock management which any farmer must be absolutely insane to make unless protected by a long and rational lease. Then steam cultivation can only follow as a result from these other and preliminary improvements. And to render steam cultivation possible there must be a grubbing up of hedgerows and the removal of hedgerow timber, which must be done by the landowner as a capitalist, and completely, too. It is if no use to grub the hedges and leave the timber standing (as we so frequently see) in the midst of an arable field, greatly impeding ploughs with horses, and presenting an absolute bar to steam cultivation. Yet when landlords have consented to the grubbing of hedge-rows, even at the tenant’s expense, they object to the removals of the trees, leaving them as evidences of prejudices at once childish and unintelligible. Yet these prejudices are the serious obstacle to the progress of English agriculture.
Ferner obstacle: The feudal notions which infect all that concerns the ownership of land in England. It is tenacity with owners of land to retain the ownership – very often only the nominal ownership – of much more land than they have the means of managing. Hence we have, in a modified form, many of the evils which affect the Irish tenantry – farmers occupying farms in which many of the most necessary improvements – necessary according to the actual state of English agriculture – must either be made by the tenants or left undone. The result is, especially on the strong soils referred to by Mr. Smith as those on which more live stock ought to be kept, that the improvements are not made. In fact, the strong lands of England are less productive of meat than they were a century ago, and mainly because they cannot be well farmed without considerable preliminary outlay on the part of the landlord.
Ferner poultry much neglected. Smith says: „The late Mr. Pusey told us, 1838, that while England Wales contained about 37 millions acres, and Scotland and Ireland about 20 mill. each, there were in the U. Kingd. 20 millions of acres laying waste, one half of which might be improved.“ Ferner Smith adverts to the want of economy which results from the yearly[-]tenant system, which is the curse of English husbandry.|64
„Economy in Agriculture“, he says, „is a most important means by which an increased supply of animal food may be attained, the greatest of all being the increased fertility of the soil resulting from a liberal investment of capital under security of tenure, the fixed payments of a farm, such as rent, rates, and taxes, being the same; while, on the other hand, nothing can be well worse than the waste of capital where tenants are ‚farming in and farming out‘. There is economy in a good education; for, while a proper knowledge of the natural sciences is essential to profitable farming, it is equally important to understand the principles by which nature’s laws are governed. There is a marked economy even in well formed animals, as improved machinery at the farm factory, where the animal heat and the proportions of the boiler have alike to be consulted.“
Amongst other improvements he strongly recommended covered yards for stock. There, he says, „the cows having done growing would be placed in stalls to economise place, the fattening animals in warm boxes, the young growing stock would run loose in the centre yards, and the juniors would be placed in suitably arranged calf-pens; in the immediate vicinity of which are well-arranged root, chaff, meal, and mixing houses, which by their concentrated position afford an economy of labour, food, and supervision. Again, as the economy of warmth is a well known equivalent for food, so do covered yards economise feeding stuffs, while the even temperature of the building promotes both health and happiness. Covered yards are the things to save food; the cattle and food are all close together: what one won’t eat another will; nothing is wasted; and it is a capital thing pulping the roots and mixing them with the chaff. The best of all is, they don’t get washed by the storms. Their coats are so alike … They lie about like cattle on grass in the summer time, and don’t take near so much litter as the open yards.“
Mr. Cousmaker said: „too much importance could not be attached to the system of breeding … they ought to combine the breeding of stocks with its fattening: fattening.“ „He had himself escaped the cattle plague, although violently raging in his neighbourhood. In August and September they had lost in his parish 270 head of cattle. One of the causes of this escape was that he had not for years bought stock. He bred at one end and fattened on the other, and he never bought or sold, except to the butcher, beyond buying about once every 2 years a yearling bull, for the sake of change of breed.[“]
The Economist, 26. Mai 1866. S. 622.
Paris Correspondent. 25 May.
Contrary to what might have been feared, the failure of Overend, G. et Co, and the panic at London, have not brought down any banks here, though several have suffered, one or two greatly. Nor has the stoppage of the European Bank, though it had a branch in this city, done much harm. But the difficulties created by the impending war are beginning to tell on commercial firms. Two commission houses of some importance have stopped; others are reported to be in jeopardy; and in all the great branches of trade the existing perturbation appears likely to produce serious consequences, in Paris and the large commercial towns. News this day arrived of the failure of a firm in the cotton trade at Rouen with liabilities of 4,000,000f.|
The Economist, 26. Mai 1866. S. 624–626.
The Money Market.
Discount Market: Recovery from the panic very gradual, few symptoms only of returning ease. The public show small disposition to relax their hold on the sums withdrawn from deposit; and, as the bankers do not yet esteem themselves secure from further withdrawals, they are unwilling to make any advances, but hold their resources in turn, in reserve. In mercantile circles distrust prevails. Credit is subject to unusual tests, and paper, which in ordinary homes would be considered unexceptionable, is subject to fluctuations as to the rate at which it can be discounted … The demand for money under these circumstances sustained, on good securities, at Bank rate; on other than good securities it is difficult to secure advances; and, in many cases, claims have been held over in London and Liverpool owing to the impossibility of obtaining adequate accommodation. Nevertheless, orders from abroad are still received for English paper of the best houses. As a very limited amount only, compared with the demand, moderate as it is for this class of bills, is to be had, the rate undergoes a proportionate reduction, and takers bid from 81/2 to 8% for 6 months’ unexceptionable paper.
Gold appears to accumulate in the coffers of the B. o. France more rapidly than it is carried away from this country, and we may hence look for supplies of money from abroad on an extended scale so soon as the present partial distrust shall have been expelled.
With regard to the distrust at home – seeing that it is mainly owing to the unavailable nature of the securities in which the deposits lodged at the discount houses and banks have been employed, questionable whether legislative interference should not control the amount of deposits and limit their employment to securities, such as short bills on the one hand, or readily available securities on the other. The danger of the stoppage of banks in the present instance mainly arises from the possible enormous calls on them for the repayment of deposits at a moment when it is nearly impossible to convert their securities into available assets.
Foreign Stocks. Without exception heavy, prices subjected to very considerable decline. Danubian have fallen to near 50. Turkish stocks have also fallen.
Railway shares: Considerable decline from prices current last Friday. The unfavourable movement in the Bank market (Decrease of bullion of £466,019), and realisations with some speculation sales, account for the change. Indian railway stocks also lower.
Financial shares: Very limited dealings. (fast nur in 3 Cos.) Bargains in Overend, G. et Co shares, Imperial Mercantile Association and others, difficult; it being a matter of negotiation now that open market operations are no longer possible. International Financial Co’s shares moderately firm. General Credit improved slightly. Credit Mobilier et Foncier shares have fluctuated considerably, owing to large and sudden purchases, after which the price has mostly relapsed.
Bankshares: Great fluctuation. Previous to the transfer of the business of the Bank of London, unfavourable rumours afloat. Sales took place, followed by sales of shares in other banks, with a heavy decline. This evening prices firmer.
- European Bank (limit.) stopped 19 May. New Zealand Co (limited) not been able to meet their acceptance acceptances. Reese River Mining Co (lim.) winding up.| 66
- Suspension of Messrs. Robinson, Coryton, and Co. Private bankers at Manchester.
- Kynaston, Sutherland and Co, colonial bankers brokers failed. Liabilities about 100,000l.
- Commercial Bank Corporation of India and the East to be wound up.
- Owing to recent failures at Bombay, S. P. Framjee and Co, of Gresham house, stopped payments. Liab. about 300,000l.
- Sea and River Marine Insurance Co resolved to wind up voluntarily.
- Petition for winding up: Glamorgan Iron and Coal Co. (limited)
- Gellatly, Hankey, and Sewell, extensive mercantile and shipping house, resolved to liquidate under inspection
- Sithney and Carnmeal Mining Co. ordered to be wound up by the Stannaries Court.
- Luckie Brothers, merchants, stopped payment. Liab. about 70,000l.
- Bank of London transfers deposit and current account to the Consolidated Bank limited. Owing to the pressure of a continued withdrawal of deposits.
- McCulloch, John and Co, Liverpool, East India merchants, chiefly in the Bombay trade, stopped payment 24. inst.; liabilities nearly 3/4 million.
- Klenan, of Angel Court, is in course of compounding with his creditors. Liab. 2,100,747l.
The Economist, 26. Mai 1866. S. 631/632.
Cotton Trade. Liverpool. 24 May.
Business limited. Prices show a further decline generally.
Manchester. 24 May. This week (ausserdem Whitsunday holidays) almost a nonentity in business. Where any changes can be made in prices rather against the sellers. The amount of contracts also still in the hands of manufacturers has been such as to cause general surprise, though, here and there, as an exception, stocks begin to be found.
June 2. 1866. N. 1188.
The Economist, 2. Juni 1866. S. 641/642.
The Money Market.
Kommentar von Marx.
Schließen (foolish durch die Dummheit einiger Direktoren, die aus Panic, ohne allen Grund, auf ihre eigne Faust die Thüren dem Publikum schlossen) failure of the „Consolidated Bank“ (current deposits and other accounts 3,037,435l. und acceptances 780,530l. 14 days since)
One of the first effects of general discredit in any country is, that
even a very high rate of interest will not tempt foreign capitalists to
send their money there, halten die high rate offered
inconsistent with security. Hence slight drain of
bullion after the rate of discount raised to 10%, Kommentar von Marx. Marx schrieb darüber
auch in „How Mr. Gladstone’s Bank Letter of 1866 Procured a Loan
of Six Millions for Russia“ (MEGA² I/21. S. 102.10–13).
Schließen (In der That rief der Peel’s Act dießmal European „run on England[“] hervor.) withdrawing of foreign investments, instead of attracting them. Secondary effect (which has begun to act during the present week): Great discredit in any country discourages those who have to remit to that country from buying bills upon it even at a rate highly favourable to themselves. It is not worth their while to risk the value of the bill itself for the sake of any gain they may make by the purchase of the bill as compared with the cost of remitting specie. It happens not unfrequently that the value of bills will fall considerably below the specie level if there is any uneasiness as to their acceptance in the discredited country; so that the sellers even of good bills will have to offer a very great advantage as the equivalent of they the risk supposed to be run. Besonders in The Economist: credit crisis
Schließen banking crisis. Where banks have begun to fail, foreigners naturally feel that the men on whom they draw may, by no fault whatever of their own, be unable to meet their engagements. Hence the distrust of bills on a country in such a position. Thus we may now look for considerable remittances of specie from the very same cause which led at first to our loosing specie. Daher remittance of specie during this last week.
The Economist, 2. Juni 1866. S. 645/646.
Feudalism and deer forests.
Amongst the item items of news in a Scotch newspaper last week: „One of the finest sheep farm farms in Sutherlandshire, for which a rent of 1200£ a year was recently offered, on the expiry of the existing lease this year, is to be converted into a deer forest.“ Diese feudal instincts operate as at the time when the Norman conqueror destroyed 36 villages to create the New Forest. „In Yorkshire the whole country between the Tyne and the Humber was laid so desolate, that for 9 years afterwards there was not an inhabited village, and hardly an inhabitant left … Ebenso im New Forest … He afforested several other tracts. These favourite demesnes protected by the cruel forest laws.“ (Hallam) „Not content with these large forests which former kings possessed in all parts of England, he resolved to make a new forest near Winchester, the usual place of his residence, and for that purpose he laid waste the country in Hampshire for an extent of 30 miles, expelled the inhabitants from their houses, seized their property, and made the sufferers no compensation for the injury.“
Mr. A. Robertson lately read a paper at the Guildhall, Perth, on „Game Laws (diese moderne Ausgabe der Normännischen Forest Laws) and Deer Forests“. Cruel effects on the peasant population; detrimental effects on Agriculture. In reference to the Scotch Highlands he said: „The legalised protection to wild animals in the Highlands was most severely felt in reference to the peculiar products of that country. Two millions of acres had been laid totally waste, embracing within their area the most fertile lands of Scotland. The natural grass of Glen Tilt were among the most nutritive in the county of Perth. The deer forest of Ben Aulder was by far the best grazing ground in the wide district of Badenoch; a part of the Black Mount forest was the best pasture for blackfaced sheep in Scotland. Some idea may be formed of the ground laid waste for merely sporting purposes in Scotland from the fact that it embraced an area larger than the whole county of Perth. The resources of the forest of Ben Aulder might give some idea of the loss sustained by the country from these forced desolations. The ground would pasture 15,000 sheep, and as it was not more than 1/30 of the whole forest ground in Scotland, it might be roughly guessed that the country was deprived by the forests of 1/2 million of sheep. All that forest land was totally unproductive, never having repaid the money spent upon it. It might thus as well have been submerged under the waters of the German Ocean. With a rapidly augmenting population, it was nothing short of madness to continue |68 adding to these desolations, and thereby diminishing the supply of those commodities indispensable for the sustenance of the people. … Such extemporised wildernesses or deserts ought to be put down by the decided interference of the Legislature. The vulgar notion of grouse shooting and deer slaughtering being advantageous to the Highlands was now almost exploded. People had begun to see that the visit of a few sportsmen for a month in the year could not make up for 11 months forced idleness.“
The Economist, 2. Juni 1866. S. 646/647.
Nach dem Moniteur (Return) hatte die Bk. 31. May 1866: 563,095,201f. gegen 536,652,692f. am 24 May in cash und bullion = Increase of 26,444,000f. Ebenso increase in discounts of 50,721,000f., in the circulation of Notes (919,878,775 gegen 879,688,525) of 40,191,000f. und in the deposits 43,572,000f. The total of the last item now exceed 378,500,000f. – a figure which shows depression in commerce and speculation.
The Economist, 2. Juni 1866. S. 647.
Fraud in Cognac.
In a recent sitting in the senate, the declaration made by by Marquis de Lagrange, that in the Charentes – the department in which Cognac brandy is chiefly fabricate fabricated – „immense frauds“ are committed in that article, 100,000,000 litres more being obtained than ought to be. The consequence is, he added, „that prices have fallen for the real as well as for the adulterated brandy, and that honest dealers are injured. Another consequence is that England, a large purchaser, last year took about 2,000,000 galons gallons less than is her usual quantity.“
The Economist, 2. Juni 1866. S. 648/649.
Guthrie schreibt dem Economist on
the Banking Question.
Guthrie legte mit „Bank Monopoly the Cause of Commercial
Crises“ (Edinburgh, London 1866) ein Buch zu diesem
Thema vor, dessen Titel Marx in „Heft 3. 1868“ der „Hefte zur
Agrikultur“ (MEGA² IV/18. S. 587.18), in einem Exzerptheft 1878
(IISG, Marx-Engels-Nachlass, Sign. B 148) und im Notizbuch
1878/1879 (IISG, Marx-Engels-Nachlass, Sign. B 152)
Schließen The monopoly of the B.o.E. has been the cause of commercial crises, by inducing an excessive expansion of credit, the facilities of which are afforded not by the Bank itself, but by the hybrid discount banks and finance cos. to which that monopoly has given birth. These institutions are at present freed from the obligation of holding metallic money as the basis of their transactions, while they have, by their bills and advances, an infinitely more important influence on prices and the value of money than the Gvt. Bk. Hence there is a separation of the power of affecting prices, and the responsibility of maintaining a proper supply of metallic money, which has led to the futile attempt to control the movement of bullion by the rate of interest or hire … The breach of the law was therefore required to save London from universal insolvency.
The Economist, 2. Juni 1866. S. 649.
The Act of 1844 (by another
The fact that the reserve in the banking department was reduced to 730,830l. shows the necessity of change. Why, one man, the late Dickie Thornton might have walked into the bank and put his cheque across the counter for 800,000l. As long as our present system continues, interested parties will endeavour to make the reserve of the B.o.E., the reserve of all the banks in England.
The Economist, 2. Juni 1866. S. 650–652.
Money Market Movement.
B.o.E. 30 May: Circulation increase of 2,397,057l. in private securities. Increase of 20,989l. in coin and bullion, of 1,676,163l. to the private deposits. (Leztres shows continuance of precautions against pressure.) Decrease of Reserve: £528,236.
Discount and Money Market. Stoppage of the Consolidated Bank, on Monday morning last. Improvement in Exchanges.
Bullion: 218,000l. sent (in gold) to the B.o.E.
Bankrates: Paris 4%, Vienna 5, Berlin 9 (bills), 91/2 (advances), Frankfort 7, Amsterdam 61/2, Turin 8. Brussels 6 (bills) 61/2 (advances), St. Petersburg 51/2.
Railways: Slight reaction from the firmer prices quoted. The change chiefly owing to the decline in Consols on the receipt of lower prices from Paris, where the settlement is heavy.
Bankshares: general prices firmer; in a few cases, a decline to be noted.
Financial Shares: London Financial rather firmer; General Credit improved slightly; International Financial are held firm; and Credit Mobilier and Foncier, under continuous purchases, advanced to 21/4 to 2 disc.
The Economist, 2. Juni 1866. S. 657.
Cotton Trade. Liverpool. May 31.
After a long period of depression, assumed a much stronger position, and during the last 3 days large business done at advancing prices.
The Economist, 2. Juni 1866. S. 658.
Manchester. May 31.
In Folge of The strong accounts respecting cotton from the states, on Wednesday quite an active demand set in for both cloth and |69 yarn at the low rates lately quoted. To-day the improvement not maintained, being regarded as too sudden under the circumstances. Fabrics made from the better classes of cotton maintain firmly their value.
Cardiff. The steam coal proprietors of the district are well off for orders and fresh ones are coming in freely. Brisk demand from the foreign markets, especially from Italy, France, Austria, Prussia. Freights to those countries have advanced considerably. Inquiry for pig iron slackened; the tin-plate works have to depend on old orders to be kept going.
Birmingham. Orders on account of the Home Trade have fallen off.
June 9. 1866. N. 1189.
The Economist, 9. Juni 1866. S. 669.
The Money Market.
The Bank Return of Wednesday exhibit exhibits 4 great changes. 1) The total bullion is 11/2 millions more, arising from the large American arrivals. 2) Private securities 13/4 millions less, indicating greater facilities and here and there lower rates in Lombardstreet. 3) Banking Reserve is 2 millions more (nämlich 23/4 mill.) 4) Outstanding circulation is more than 1/2 mill. less. The drain of gold is quite at an end. The Java, just arrived from New York with dates of 30. May, brings a further 700,000l. in specie, and large sums are to follow.
The Economist, 9. Juni 1866. S. 669/670.
Failure of the Agra
On 7. June, sudden and unexpected. On the Stock Exchange the shares were marked out at an early stage of the panic as a favourite object of attack by the „bears“ … certain that devices of depreciation were resorted to in the last degree scandalous, and certainly rendering the perpetrators, if discovered, amenable to severe legal consequences. The adverse effect of these rumours and hostile attacks is not to be overlooked, and has probably rendered unavailable any chances of escape which under other circumstances the Bk. might have possessed. Aber der failure nicht wholly or even chiefly due to adverse rumours and speculative shares of sales. The directors [had committed] for some time false policy, and engaged its resources in kinds of business in the highest degree hazardous.
The Original Agra Bank founded in Agra, Upper India, 1833. It began with a small capital, and confined itself for several years to limited object of making temporary advances to members of Indian services. On the one hand it received deposits, mostly at considerable notice, and could safely give for them a comparatively high rate of interest. On the other hand it employed these deposits in loans to other members of the services requiring temporary assistance, and in this way did great benefice to the Anglo-Indian community by superseding the extortionate practices of the native money lenders. Gradually its business, besonders at Calcutta and Bombay, became principally mercantile. It opened an agency and then a head office in London, and entered largely into the exchange operations carried on between this country and India. The branches were next extended to China and Australia, and 15. 15 years ago it had obtained the 2nd, and in some sense, the first place among Indian banking institutions. Prosperity increased until about 3 or 4 years ago, when directors fell largely in ordinary London banking business, joining to an Eastern banking connexion, extending from Lahore to Shanghai and Sydney, the operations of an ordinary City Bank competing for mercantile accounts, advances, and discounts, and, of course, attending the Clearing House. More completely to work out this policy, directors effected amalgamation, April 1864, with the firm of Masterman et Co, on High terms of purchase.
Bisher war die London und Westminster Bank ihre London Bank gewesen, worauf sie chiefly drew. Henceforward the branches drew only on the head office, that is to say, the drafts of the Bank ceased to be in reality bills of exchange drawn by one independent party upon a second independent party, and became mere promissory notes upon the Agra Bank. This change schadet their credit in India. Nach und nach oozed out that it had considerable transactions with finance cos. and finance undertakers. By and by a branch was opened at Paris. In the meantime the 6 month’s acceptances of the Bk. drawn from the branches were largely current and met with less and less favour. There was also evidence of the Bank trading upon its credit by accepting bills for a commission. Money market became uneasy, long-dated promissory bills more and more disliked. Then Panic. Then Bank forced to close its doors, |70 after sustaining a severe and protracted drain, because it could not meet the recoil of its Indian business. The telegraph conveyed to Calcutta and Bombay and the other branches news of the difficulties of the London office, led to a pressure of depositors at nearly each place. To meet this pressure, the local managers had only limited local means, and they could only offer bills, i.e. promissory notes, on the head office – the very part of the institution most in Peril. Vergeblicher effort der directors to attempt to negotiate a credit with a first-class London firm against which the branches might be authorised to draw. Kam zu dazu nicht. Ausserdem too late. The points to be protected too distant and scattered. Its collapse almost a national misfortune. It will carry poverty and sorrow to hearts of 100nds of men and women, who, after a long Indian service, had intrusted entrusted all to this institution. The usance of Indian bills ought from 6 months’ sight to be shortened to 4. The Creditors are not only subjected to ultimate loss of part of their money, but for several months wholly ohne die means of raising a sixpence on the security of their estimated dividends.
The Economist, 9. Juni 1866. S. 672/673.
Protection for Public Credit.
Forged orders to bankers (to sell shares) etc. Telegrams ferner (falsche) of outbreak of war to Times, next day all over the world that a great Bank had failed. The next day after the signature of the Paris Correspondent of the Times is forged to a telegram which fortunately finds the Editor on his guard. Morning Post of Monday (2 June) folgender Paragraph: „Last night the person or persons who, by impudent forgeries, have lately succeeded in obtaining the publication of false news … attempted to play a similar swindle upon the Morning Post … the forger’s object is purely stockjobbing, for when affairs looked peaceful he forwarded warlike news to the Times, from Lord Clarendon; now that matters look warlike, and all funds are depressed, he is good enough to forward to us news of peace.“ (nämlich letter von A. H. Layard (Foreign Undersecretary), daß Prussia and Austria have come to terms.) Similar hoax attempted on the Daily News, also unsuccessful.
The real difficulty this: There is not the same difficulty in the
detection of direct fraud, because darin ist something tangible, wie bei
forged cheque z.B. But when a
stranger sends off a telegram, the telegraph clerks have no interest in
verifying it, or in taking note of its identity. … Der
Siehe Marx an Kugelmann, 27. Juli 1871:
„Die Tagespresse und der Telegraph, der ihre
Erfindungen im Nu über den ganzen Erdboden ausstreut, fabriciren
mehr Mythen (und d. bourgeois mind glaubt und
verbreitet sie) in einem Tag, als früher in einem Jahrhundert
fertig gebracht werden konnten“ (IISG, Marx-Engels-Nachlass,
Sign. C 133).
Schließen Telegraph the most enormous machine for the diffusion for rumour für all the agencies at work in the panic. Circulars warning the shareholders in different co. cos. of impending ruin, cautions to depositors, mere lies by word of mouth The Economist: caused perhaps as much mischief as the telegraph
Schließen neben dem Telegraph. The evil that may be done by the telegraph is generally at a distance from the seat of the panic, but the panic itself is felt most on the spot. …
If bears can be taught the exact limit where cleverness ceases, and dishonesty begins
Zusatz von Marx.
Schließen (!), there may be panics in the money market, but they will not be such as that of 1866.
The Economist, 9. Juni 1866. S. 675.
Savings’ Banks Returns.
|The Fund for the Banks for Savings:||37,120,284£. 3s. 4d.|
|Post Office Savings’ Bk. Fund:||7,242,063, 9s. 10d.|
|44,362,347l. 13s. 2d.|
|Ditto by last monthly account:||44,622,080l. 5s. 8d.|
The Economist, 9. Juni 1866. S. 678–681.
Money Market Movement.
Discount Market: The institutions indicated in the first instance by the bear operations meist die, which have subsequently fallen. Secret ihrer risked enterprises known by many persons. Von diesen die sales for the fall have evidently been effected.
The Influx of gold to the Bank of France continues. Ihr Increase in cash and bullion £.1,570,000. Decrease in bills discounted £.2,342,000, in Banknotes £1,660,000.|71
Foreign Stocks. The overcharged condition of the markets does not admit of any improvement in prices; unsettled state of European politics has led to further decline in several cases.
Railways: The markets firm.
Failures: Meeting der creditors of Peto, Betts and Co.
The Economist, 9. Juni 1866. S. 686.
Cotton Market. Liverpool. June 7.
Monday large animated business at advanced prices on news from U. States of increased shipments of specie, and of reduced receipts and exports of cotton. Tuesday demand fell upon the warlike aspect of the continent, sales almost entirely confined to the supply of the immediate wants of trade. Friday news of suspension of Agra Bank, increased depression, decline of prices.
June 16. 1866. N. 1190.
The Economist, 16. Juni 1866. S. 697.
Still 10 Per Cent.
Attracts no money hither. Dazu our credit too much impaired. The ordinary international currency now deranged. It consists generally of bills, and bills largely upon London. Letztre now suspected; we pay gold and silver where we used to pay bills, and receive gold and silver where we used to receive bills. But zugleich high rate of interest contracts transactions, diminishes trades, lowers prices; tends to encourage exports, diminish imports, and so alter the balance of trade, bring in bullion, and what is more important still, to contract the sphere of our commerce, which was based on good credit.
The Economist, 16. Juni 1866. S. 697/698.
Gurney, and Co. Limited and Unlimited.
The report of the authorised accounts reveal an „interior“, such as has seldom been seen.
The old firm at the time of its conversion into a limited Co. insolvent by at least 4 millions £. St. The new Co. took over the assets of the old one under a guarantee. Unter den assets die partners’ private estate estates, aber auch der goodwill, hoch angeschlagen und keinen farthing wd werth. Diese in den Assets eingeschlossen bleibt deficit of 4,246,000. It is difficult to understand how any honest et able men could persuade themselves to sell, and still more strange how any such men could be so blind to buy, such a business. The old firm had engaged in extra-bill[-]broking operations, which would compel the Gurney family and others interested in it to sell their private estates; the moment those operations were known, the credit of the old firm was at an end. Der Glaube an sie in the provinces dauerte fort.
Auf die neue firm a run since months. Their credit was daily diminishing. Von Juli 11, 1865 bis 10 Mai 1866 fielen ihre Deposits of other people’s money um 4,660,000£; Von 14,400,000l. auf 9,800,000; or nearly 1/3. The moment the partners in the old firm were announced to be ruined – and this began to be Town Talk from February at least – the new co. was drained, pressed upon, and weakened day by day, while the absorption of means by the bad assets of the old firm rather augmented than diminished as time went on.
At the stoppage, the current bills discounted by the new Co. were:
|Bills left with depositors security||6,285,000|
|Bills in hand||1,149,000|
The first are said by the accountants to be good, but all will not been paid. Of the rediscounted bills „a large amount will be returned, and in the first instance rank against the estate“ of the Co. The bills in hand are estimated to produce only 1,100,000l., being a loss of nearly 50,000l. on that item, and their realisation even at that sum spoken of as distant and even problematical.
The current bills clearly contain many questionable ones, and there are other losses too.
The paid up capital of the Co, 1,500,000l., is all gone. Now the Co. bought and involved business:
|Deficit der old firm after deducing all receipts from the partners’ private estates||720,000|
|Sum given for that business||500,000|
which is by far the grater part of 11/2 mill., and the bad bills and expense of liquidation will account for all the rest.
There must be a considerable call. Independently of other liabilities, the Co. owes to unsecured depositors 3,800,000l. Die shareholders werden wenigstens 20l. od. 17l. 10 p. share verlieren.
The Economist, 16. Juni 1866. S. 700.
Shortening the Usance of Indian Bills.
Von Marx zitiert in Manuskript II zum
zweiten Buch des „Kapital“ (MEGA² II/11. S. 212.1–10.)
Schließen The crisis of 1847 enabled the banking and mercantile community of that time to reduce the India and China usance from 10 months’ date to 6 months’ sight, and the lapse of 20 years mit all the accelerations of speed and establishment of telegraphs renders necessary further reduction from 6 months’ sight to 4 months’ date as a first step to 4 months’ sight. The voyage of a sailing vessel via the Cape from Calcutta to London is, on the average, under 90 days. An usance of 4 months’ sight would be equal to a currency of say 150 days. The present usance of 6 months’ sight is equal to a currency of say 210 days. These 210 days renders it possible for a large part of the trade to be carried on by men who have little or no capital of their own, and who simply deal with other people’s money. They pay for the goods in India by the proceeds of the bill which they draw against them, and their correspondent on this side provides for the bill by selling or pledging the goods, assuming the English market to be favourable and to leave any margin in the operation. If the markets happen to be unfavourable the holder of the bill is left to pay himself as far as he can out of the The Economist: hypothecated
Schließen hypothetical security. The parties most interested in shortening the usance are the Indian Banks Zusatz von Marx.
Schließen (in London.) … Not only is the term of 6 months’ itself most objectionable even for single bills, but it becomes doubly objectionable and doubly dangerous, in consequence of large masses ⦗batches, in fact⦘ of these bills having to be accepted, and, therefore, to be made payable on some single day, from the circumstance that the Indian mail arrive at particular periods and bring masses of bills, all of which are of course presented for acceptance within an hour or two after the delivery of the letters. On the 9. June, f.i., the amount of acceptances by the Agra Bank due on that particular day was not less than 1/2 mill. l. St. The bank had closed 2 days ago, and the bills were not met; but the certainty of having to meet a large amount of acceptances on the 9. had a good deal to do with the resolution to close on the 7.
The Economist, 16. Juni 1866. S. 706–709.
Movement of the Money Market.
Bank of England 13 June. (Wednesday). Increase of Circulation: 557,820l., Bullion 1,202,934, Reserve 689,509. Decrease: Private Deposits 79,336l., Private Securities 501,568.
Discount Market: notes to the extent of 5 or 6 millions have already been taken by country and other bankers and individuals to supply the reserve and additional circulation rendered necessary by the stoppage of so many banks and the loss of so much banking accommodation as has been thereby entailed. Indisposition to contract new engagements. The depreciation in the value of produce and in most kind of raw materials so great that few fresh imports are now engaged for. Outstanding indebtedness to this country is being discharged in gold; and, at the same time, foreign capital is again sent here for investment in longdated bills.|73
A number of letters, addressed to the holders of London and County Bank shares, anonymous, and posted in London, E. C. N. 73 stampmark, have to-day been sent up to the head office of the bank from the country. The contents were simply: „Sell bank shares at once. From a friend. June 1866.“
On the subject of speculation in bankshares, an injudicious proposal is to be brought before the H.o.C. with the view of rendering „bear“ or „speculative“ sales a misdemeanour.
- Hawkey, Whitford and Co, private bankers, of St. Columb and Falmouth bank, Cornwall. Liab. about 200,000l. Assets: 250 bis 300,000l., locked up in property.
- Messrs James Barnes et Co of Liverpool, and T. M. Mackey and Co., of London, the wellknown shipowners, in consequence of the suspension of Barned’s Bkg. Co.
- Stoppage of the „Universal Banking Corporation“ (Limited) (Eastcheap, London.)
- The Foreign Lands and Mineral rights Purchase Co. (Lim.) voluntary winding up; ditto the „Dining Halls Co.“ (Limit.)
23 June. 1866. N. 1191.
The Economist, 23. Juni 1866. S. 729.
Ten Per Cent still.
During the week the imports of bullion 1,651,481l., of which B.o.E. only received 369,000l., and the exports 865,233l., while large orders for exportation are understood to be on hand. The drain to the Continent would have been of very painful importance but for the opportune supplies from America.
The Economist, 23. Juni 1866. S. 730/731.
The Crisis of 1866.
All panics in a large sense are credit panics. Aber der of 1866 specially so. The fabric of credit may be disturbed: 1) By our transacting too much business, and, as a consequence, engaging in too many undertakings. We may promise more than we can perform. There is only at the annual disposal of every nation a certain fund set free by the annual industry for production. We have only a certain set of commodities und nur by their help we can keep our engagements. So far as they suffice we can do so, but when they cease we must fail. In such a case a panic arises from a scarcity of capital. We have not enough things to do what we have promised. Something of this sort in 1847. We had made so many promises to build railways which were halfmade and were constantly requiring to be finished, that a large number of persons had to break their promises, that the rupture of these engagements caused first diffidence – then distrust – then panic. This could not be helped in 1847, for the error was in 1845 and 1846. A capital panic arises from our having made more promises than we can perform.
2) Bullion Panic: Though the ultimate object of all contracts is to obtain capital and procure commodities, the universal language in which contracts are expressed is money. The debtor undertakes to produce such and such sovereigns; the creditor absolves him from all claims by receipt in full when he does so. We have to keep our promises not only in articles, but in money. Indeed at first sight a person looking only to the terms of the contracts would say that we need money only, and need nothing else. And in law such is the case. But money will not make a railway. You must have land, sleepers, rails and labour. If these are scarce, the more money you have to spend on them, the more their price will rise. But money, though not sufficient, is plainly necessary, and in the last resort actual sovereigns. Banknotes, credits in ledgers, deposit receipts, are only so many different forms of contract to pay sovereigns. Our whole credit system may be described as an engagement to deliver gold and silver when required, and until a good stock of these metals is kept for that purpose, there is no assurance that such contracts will be performed. Without much of those metals many those contracts could not be performed. The public knows this, and as soon as the stock of money in the country runs low, they begin to doubt if contracts to pay money will be performed. In 1847 this happened: bullion was then scarce as well as Capital; a bad harvest had created a sudden demand for bullion to pay for foreign corn, and the B.o.E. did not then know to keep a stock of bullion. In 1857, also, the B.o.E. allowed the stock of bullion to get very low, and a panic came on in consequence.|74
3) The speciality of 1866: we had nearly enough bullion and capital, and panic as severe as 1847 and more severe than 1857. We have now 14,800,000l. bullion. We have never had less than 11,800,000l. 1847 we had 8,312,000£. und 1857: 6,484,000. As to our capital the test is not so easy. Was die investments angeht,
|Capital expended on railways open for traffick||£.|
|The capital paid up in public Cos, including premiums||£|
no terrible sum, when any truth in the estimate that our savings about 130 Mill. l. St. annually.
Aber ausser dem physical, moral element
of credit. Persons, most largely in credit, and who most largely use
credit, may have given occasion to distrust. Now, it has been
conspicuously shown that some of our principal borrowers and men of
credit have been quite unworthy of confidence. So Overend, Gurney et
Co. The old firm was hopelessly insolvent, and could not, even after
absorbing the millions owned in private by the partners, have paid
depositors in full. But the new Co
Zusatz von Marx.
Schließen (nämlich durch deliberate fraud upon the public!) can pay every one. The shareholders will lose, nicht die lenders. Kommentar von Marx.
Schließen (Aber ultimately, und dieß ist schon loss, ja ruin für Viele.) The fact is, the private firms, as Overend, G. et Co, unlimited banking cos, like the Bank of London, limited banking cos, as Agra bank, have all sinned alike. They all took securities not fit for them, they held their money payable at short notice; they invested in securities only to be realised after long time, and sometimes not realisable at all.
The Economist, 23. Juni 1866. S. 732/733.
Financial Reforms in the Irish Law Courts.
The Encumbered Estates Court worked its way
though misconception and general distrust to appreciation and general
confidence und ebenso its successor, the Landed Estates Court. A large portion of Ireland, more than 1/6 of its whole area, has passed under
the jurisdiction of the Court. The value of the land thus sold much more
than 30 Mill. l. St. A new
race of proprietors has been created
Zusatz von Marx.
Schließen (schöne Kerls!), in the main solvent and enterprising men, who occupy the place of the reckless and impoverished squirearchy of former days.
Movement of the Money Market.
The Economist, 23. Juni 1866. S. 736.
Schließen Bank o. E. 20 June. Circulation: Decrease £886,572 und Private Securities Decrease of 61,115. Increase: Private Deposits 1,044,010. Bullion: 369,225. Reserve: 1,228,780.
The Economist, 23. Juni 1866. S. 736/737.
Schließen Discount Market: As the note circulation rapidly increased and distrust, so its subsidence marks the mending of matters after the panic. The stoppage of commerce and trade in Germany durch war, will even more rapidly turn to the augmentation of the amount of the precious metals in this country. Money market easier; a better tone prevails, |75 and satisfactory advices received to-day from Bombay. The marketrate for ordinary bills 1/2 below the Bank minimum; and for first class six months’ Bank bills the rate is 7 to 63/4%, with very few offerings.
The Economist, 23. Juni 1866. S. 737.
Schließen Bankrate p.c. Paris 4, Vienna 5, Berlin 9, Frankfort 6, Amsterdam 61/2, Turin 9, Brussels 6, Madrid 9, Hamburg (open market) 9, St. Petersburg 51/2 . The accumulation of gold in the Bank o. France continues.
The Economist, 23. Juni 1866. S. 738.
Schließen Railway shares: Depression. Operations on behalf of investors not numerous, hence speculative sales had full effect upon a sensitive market.
The Economist, 23. Juni 1866. S. 738.
Schließen Bankshares: Improvement on all the quotations compared with previous week.
The Economist, 23. Juni 1866. S. 738.
Schließen Financial Shares: Fresh efforts made 2 days ago to depreciate the value of the shares of the few remaining financial cos. Reports and rumours The Economist: industriously
Schließen industrially circulated, set forth that further losses had been sustained by one or the other of these, and that additional calls had become necessary. Special attempt against the International Finance whose shares forced down nearly 1l. under the pressure of sales on a depressed market. All the rumours set afloat false, and bears will have some difficulty in providing the shares they have oversold.
- Suspension of George Furness, railway contractor.
- Acceptances of W. Rattray et Co, of Roodlane, Westindia merchants, returned unpaid. Liab. probably not over 70,000l.
- Failure of Th. Rose, of the Millfield Iron Works, Birmingham. Liab. about 40,000l.
The Economist, 23. Juni 1866. S. 738/739.
The Economist, 23. Juni 1866. S. 744
Schließen Manchester, June 21: Depression, almost entire absence of business in Folge des German war in apprehension of commercial disasters in Eastern markets.
The Economist, 23. Juni 1866. S. 745.
Schließen Bradford. transactions confined to the small purchases of spinners who have exhausted their stock, and require to keep some portion of their machinery at work. Continued depression in yarns. Neither for home or foreign account more than the most trifling transactions. A few insignificant transactions in piece goods for America. Unemployed machinery is on the increase.
June 30. 1866. N. 1192.
The Economist, 30. Juni 1866. S. 761/762.
Still Ten Per Cent.
10% and 15 Mill. l. St. in the till Zusatz von Marx.
Schließen ! The foreign exchanges, indeed, take away much of the gold and silver which comes here. This in the main quite as it should be. The bill currency in which international transactions are settled is now disordered, and as we receive more bullion than we used to do, so we ought for the same reason to pay away more. We need not try to augment our bullion beyond the amount which we commonly think about enough. The B.o.E. have till now retained some of the gold which passes through the country, but now they need not do so. A part of the remittances from America are upon German account. The Germans who invested in American securities when very low are now realising and bringing both their principals principal and profits home. Such remittances must go to Germany, and it is preposterous to try to retain them by a high rate of discount. Mit Bezug auf such money, the maintenance of the rate is an ineffectual means towards an undesirable result. Bullion in the Bank of France, increased again more than 800,000l., is now at the astonishing amount of 26,000,000l. It has often of late years been 12 Mill., and once, at least, 8 Mill. A foreign drain of bullion is, of course, infinitely less likely, when the principal continental centre for such matters is overloaded mit bullion and has money at 4% than if money were dear there, and bullion, as at some former times, snatched at by irregular means. Revival of confidence in England prevented by the %. Country people think there must lurch a secret, in the possession of the B.o.E., behind it. The banknotes now wanted to fill the Bank till will never come back, till the signal is given durch lowering the rate of discount.
There is no reason why 10% should be fixed in Gladstone’s (treasury) letter of 11 May any more than a less rate. As money gets cheaper, the growth of auxiliary credit is likely to become more rapid; it will begin to increase when money ceases to be 10%. A letter in which the rate is prescribed requires a series of postscripts.
The protracted continuance of this crisis makes this variation of rate during the period of permitted infraction of more than usual importance. In 1847 and 1857, the panic being mainly mercantile, the cure was quick. quick; as soon as the condition of trade changed, and we regained enough bullion, all was right. But a credit, a banking panic is a |76 is a subtler thing; it attacks confidence not in its adjuncts, but in itself. Nothing will cure it but a reduction of the rate.
The Bank reserve must be less for the next 2 weeks than it is now, and it would be very pernicious that for a fortnight longer a terrifying value of money should be artificially maintained.
The Economist, 30. Juni 1866. S. 763/764.
The Mode of Dealing in Bank Shares. Zusatz von Marx.
Mr. Leeman, the member for York, has brought in a Bill to regulate the traffic in Bank or other shares. He proposes in substance that no one shall sell Bank or other shares unless he already possesses them, and as a test of his already possessing them, he requires that they shall be described, if possible, by the number of the shares in the register, and when there is no register, in the next most intelligible manner. The object of course is plain. A great number of persons have acted as „bears“, that is have sold the shares of some particular banks which they never owned, have depressed the price of those shares and have ruined the credit of the bank. Of course, where the bank perished, the speculation was most profitable; the „bear“ sold Agra and Masterman’s share shares at a premium for future delivery, thereby depressed the market price, and bought them afterwards if necessary when they were at a discount. Such operations certainly profitable to those who deal in them, and certainly disastrous to those whose property is so dealt in.
The prohibition, if there is to be one, ought to
be a legal prohibition, and not a prohibition by
the Committee of the Stock Exchange. The whole
jurisdiction of that Committee is an anomaly. Why any particular set of
men – in fact a sort of „Trades’ Union“, –
should have the power to regulate the traffic in millions’ worth of
property is very strange. … Diese bears useful: they have served as detectives of bad cos. Overend’s and the Agra are obvious cases of concerns
which might for years have gone [on], and
might have got worse and worse if it had not been for this effective and
stringent effect check. Kommentar von Marx. „Satte Tugend und
zahlungsfähige Moral“ stammt aus dem Gedicht „Anno 1829“ von
Schließen (Sehr charakteristisch! Eine Infamie stets checked by a still worse infamy! Dieß ist satte Tugend und zahlungsfähige Moral.) (Uebrigens, wenn der Economist sagt, daß no good concerns ruined durch die bears, so massenhaft private possessors of good securities frenzied into selling them.) »Unless there is a true and important nucleus for calumny, it is powerless.« The bears may not have a pleasant trade, but they are useful as scavengers are useful. They remove pernicious and evil matter which taints the air.
The Economist, 30. Juni 1866. S. 767.
Deer versus sheep. (Communicated)
The public does not suffer more from this circumstance than from most other unproductive expenditure.
The best result of augmented wealth and civilisation is to increase the desire for expenditure not strictly productive, and also to increase the means of bearing it. Has not one institution, the London and Chatham and Dover railway, wasted more of the national wealth in a few years than could be wasted by all the deer forests of Scotland during many generations?
The Economist, 30. Juni 1866. S. 767/768.
Game. Farmers Protest.
Gegen Lord Denbighs ukase of 19 May durch 120 of the largest occupiers, within a radius of 30 miles of Denbigh’s seat. Represents the views of at least occupiers of 50,000 acres.
The Economist, 30. Juni 1866. S. 769/770.
(Correspondence.) Usance of Indian Bills.
Von Marx zitiert in Manuskript II zum
zweiten Buch des „Kapital“ (MEGA² II/11. S. 212.10–22).
Schließen The Brazilian usance remains at 2 and 3 months’ sight, bills from Antwerp are drawn at 3 months’ date, and even Manchester and Bradford draw upon London at 3 months and longer dates. By tacit consent, a fair opportunity is afforded to the merchant of realising the proceeds of his merchandise, not indeed |77 before, but within a reasonable time of, the bills drawn against it fall due. Daher die usance für Indian bills not excessive. Indian produce, for the most part being sold in London, with 3 months’ prompt, and allowing for [loss of] time in effecting sales, cannot be realised much within 5 months, while another period of 5 months will have previously elapsed (on an average) between the time of purchase in India and of delivery in the English warehouse. We have here a period of 10 months, whereas the bill drawn against the goods does not live beyond 7 months.
The question lies between the large and the small capitalist. The extinction of the latter class of traders, and the concentration of the Indian trade in the hands of the large capitalist, … would be a return to the system of monopoly by which this important trade was formerly restricted. A trade of 10 millions, carried on by 1000 traders will be safer than if carried on by 100. It is to the subdivision of credits characteristic of the present system that we owe the comparative fewness of commercial failures during a period without parallel as regards the fluctuations in the prices of produce. The opulent merchant has already an advantage in purchasing his export goods at cash prices; 2) that of saving the bank commission if he buys with funds of his own in the markets of Asia; and 3) he is able to compete with the banks themselves in exchange business, by transmitting bullion from this country to be invested in bills or produce.
The Economist, 30. Juni 1866. S. 771–773.
Money Market Movement.
Bk.o.E. 27 June.
- Decrease in: Circulation of £308,566, Priv. Deposits 331,607, and Private Securities 325,352.
- Increase in: Bullion of 191,279 und Reserve 479,079.
Discount Market: Additional gloom. Bad rumours afloat. The pressure of 10% discount must tell upon ordinary operations.
Railway Shares: Subsequent to the Breaking up of the Bank Court yesterday prices gave way, and have been further to-day depressed in consequence of vague rumours regarding the financial position of some of the cos. and their outstanding engagements.
Financial Shares: Considerable advance had taken place, again declined at the news of the non reduction of Bank rate of discount.
- Drafts of Messrs Snead et Co, private bankers of Chepstow, have been returned by their London agents.
- Price, Marryat and Co, private bankers, King William Street, London, stopped payment. Liab. about 250,000.
- Dadabhai Naoroji et Co, East India merchants, of Great St. Helen, stopped payment, owing to losses in cotton and other produce. Liab. about 300 000l.
The Economist, 30. Juni 1866. S. 779.
Manchester. June 28. Towards the end of last week telegrams of 17. inst. from Culcutta and Bombay were received here, reporting favourably of these markets, in the face of very adverse advices from this side to the 7. inst. This These dispelled the depression previously existing here. Considerable business done, before close of the week recovering of prices to a large extent from their late fall. Later telegrams from Bombay, rumouring the suspension of large Parsee firm, contributed to check further advance. Today business decidedly limited, but the extension of the engagements of producers, since the 21st prevents much quotable decline on the advanced prices, although continuance of 10% is a disappointment tending to favour buyers.
Birmingham. Very dull foreign trade. The best part mit U. States. On account of that quarter a fair quantity of orders in hand.
Sheffield: Steel trade decidedly dull except in railway material. Cutlers fairly employed, owing to improved American and Canada Canadian orders, and arrears of country orders not yet entirely completed.
Wolverhampton: No improvement, works generally at half time.
Saturday, 7 July 1866. N. 1193.
The Economist, 7. Juli 1866. S. 789.
We hold that the Bank is still
acting under the sanction of the Treasury letter, that on other grounds
it ought not to have its till so low as it now is, and, if it is so
acting, its conduct not wise and prudent. Kommentar von Marx.
Schließen ⦗On the contrary! They acted very prudently – for their own pockets! They used the letter only to buy a tax of 10% and allow their reserve to run down to any amount. They issued too many notes – according to their own theory – in proportion to their reserve, that is, in proportions to their banking liabilities they cared nothing for any reserve whatever. But in proportion to their Bullion they did, by their note issue, not infringe on the Act of 1844. They did not want to do this, 1) because, by the Treasury letter, they would then have been obliged to pay so much to the State; 2) because a nominal infringement on the Act of 1844 – instead of their real one – threatened to give the occasion to their adversaries to spring the whole Peel machinery, so extremely profitable to them.⦘
Why the Panic in England has not caused a Panic in
The Economist, 7. Juli 1866. S. 791.
Früher dieß immer der Fall. The apprehension hier um so grösser when it was seen that large sums in gold were paid by America to England. Aber 1) The connection between the U. St. and England violently broken by the civil war. Our commerce has begun to grow again with stupendous rapidity. But still, the trade being recent, has not yet had time to create that close, intimate, and indissoluble union between the 2 countries which there was in former times. Allied houses here did not as formerly pull down allied houses in New York, because allied houses are not so common – at least not so closely bound as once – and because houses of that sort have not failed in any great numbers here. We had very few mercantile failures.
2) The large payments which America has made to us in bullion would undoubtedly have deeply affected her if bullion had been the basis of her credit system. But it is not so; greenbacks are its basis now. Gold is there simply an article of common merchandise. As long as they have „lawful money“, they can get [on] without gold or without silver.
3) What has happened is this. When it became necessary to remit gold to Europe, gold rose rapidly in value; and the Gvt., which is the principal holder of gold, sold freely. The Gvt. is always a large holder, because it receives Custom duties in coin, and only pays the interest of part of its debt in coin – an out-going much less than the receipt. A balance of gold, is, therefore, constantly accumulating in the treasury, and a large item of the miscellaneous revenue is composed of „profit“ on gold sales. Specie dollars are received as before the war, and, as if there were no greenbacks, at the Customhouse, and so credited in the books, but when surplus comes to be sold, it yields in „lawful money“, in the common currency in which Gvt pays its way, a large percentage more, and that premium is added to the revenue. When, in consequence of the remittance to Europe, the price of gold as measured in greenbacks rose, the Gvt. hastened to sell, in order to gain the additional premium. The sum wanted, therefore, for commerce was supplied without trenching on the wants of commerce or the habits of credit.
This facility of meeting sudden foreign payments may seem a great advantage in the system of inconvertible currency, and in truth so it is. Die disadvantages overweigh it. The constant, incalculable, illimitable variations in the price of commodities, the feeling that the price of everything, and, therefore, the property of every man, may be reduced at any moment for the Gvt. convenience; the disturbance of debts; the impossibility of long credit, because no one can make contracts |79 for a long time in a currency which may during that time be wholly changed in value.
Die folgenden sieben Absätze sind eine
Notiz von Marx.
Schließen ⦗Under the present system bleibt Gold und Silber Weltgeld. Es bleibt mit der Warenproduktion überhaupt die Nothwendigkeit des Geldes und zwar bleiben gold und silver das Material dieses Geldes, das measure of value, weil sie als Weltgeld functioniren. Die zu lösende Frage die: Erstens die Noten (Papiergeld überhaupt) equivalent mit dem Gold und Silber zu halten, dessen Werth sie repräsentiren. Zweitens a treasure of gold und silver für die Weltmarktsbedürfnisse zu haben. Dazu:
1) Inconvertibles Staatsgeld, wie in Preussen. Dieß ausgegeben für Zahlung von dem Staat und returnirt durch die Steuern. Aber nur ein Theil des so cirkulirenden (currency) erfahrungsmässigen Minimums muß in Papier, der andre in Gold und Silber ausgegeben, also auch die Steuern zum Theil in letztren gezahlt werden. Diese Ausgabe to keep gold and silver in the channels of every day circulation bei diesem System unvermeidlich, soll das Geld Staatsgeld nicht depreciiren. Dient auch im Nothfall als Reserve. Das Gleichgewicht des Werths zwischen Gold und Silber nichts, paper andrerseits nicht nothwendig durch ihre convertibility bedingt, sondern dadurch daß sie gleichmässig nebeneinander cirkuliren, wie in Preussen der inconvertible Papierthaler neben dem Silberthaler, der 10 Thalerschein neben dem doppelten Friedrichsd’or. Depreciation des Geldes und Fluctuation besonders der Arbeiterklasse schädlich. Beweis: U. States und England während der suspension of cash payments.
2) Inconvertibles Staats-Bankgeld, ausgegeben auf bills und Handelssecurities. Diese müssen (ihr Charakter) gesetzlich bestimmt sein. Staatsbank (ausschließlich) mit Zweigbanken, wie in Frankreich und mehr und mehr in England. Namentlich auch Depositenbank (mit discount of bills) vom Staat zu monopolisiren. Die Sicherheit liegt hier in der Art und Weise des Ausgebens, wie der dadurch bedingten returns, wie bei den jetzigen Banks of Issue.
Kein Kapital. Banking trade ist Handel mit other people’s money. Jezt das Kapital der Banks nur security für das Publicum gegen Privatpersons. Die Banks of England und France haben jezt in der That kein disponibles Kapital. Es ist ganz dem Staat gepumpt. Ihr Kapital ist also blosser Credit, den das Publicum dem Staat giebt, und hat nichts mit ihrem Geschäft zu thun. Sie haben Schuldscheine auf den Staat. Der Staat braucht natürlich keine Schuldscheine auf sich selbst.
Das Personal der Staatsbank muß ebenso unabhängig von den Geri von der jedesmaligen Regierung sein wie die Gerichte. Sind zu ernennen und unter direkter Controlle der Parlamente etc, kurz der Volksvertretung.
Soweit der Staat selbst Geschäft treibt, Eisenbahnen, Minen, Telegraphe etc, und dieß wird er in immer grössrem Umfang thun, sind diese Departements gänzlich getrennt (Fremde für) von der Staatsbank. Wenn er die Vorlage hier hat, hat er auch die Einnahmen. Er kann daher nur soweit bei der Staatsbank discontiren lassen oder leihen, soweit er ihr Sicherheit giebt, ihr seine Einnahmen überweist (wie bei der B. o. England) etc[.] Die Staat d Regierung darf nicht vermittelst der Staatsbank Geld ins Publicum werfen, außer soweit er sie es ihm entzieht.
3) Sichrung eines treasure für den
International Commerce. Der Staat giebt mintnotes zum Ankauf von Gold
und Silber aus, nach dem fixed legal standard,
also nicht höher im nominellen Belauf als das Gold. Diese
mintnotes gegen Barren ausgegeben oder gegen Gold
gemünztes Gold und
Silber zu ihrem
Preis (den Schlagschatz eingerechnet.) (Ein Standard, z.B. Gold. Silber dann nach seinem
jedesmaligen Marktpreis berechnet) Diese
mintnotes dürfen |80 , wie Ricardo
dieß vorschlug, nur für höhere Summen sein, die
einzigen, die im international commerce Rolle spielen.
Schlagschatz Marx bedient sich hier des Berliner
Schließen muß sind, D. Silberbarren und Goldbarren Silber- und Goldbarren müssen damit der Staat nicht münzt(?) für die Bullionhändler. Es ist möglich, daß by heavy drain of bullion, die Münznoten (die auch legal tender sein müssen, wie alles andre Geld) deppreciiren, prämium tragen, gegen das inconvertible Staatspapier und die inconvertiblen Banknoten. Dieß geringres Uebel als die zu vermeidenden. Perfect ist diese Sauce nicht zu machen. Sie Sieh über einige Details Fullarton p. 231 sqq.⦘ (Auch securities bought by the State Bank, i.e. Foreign Securities, foreign Staatseffecte which it can send, in times of drain to foreign market, and there buy bills for them, really withdraw national bills from their market.)
The Economist, 7. Juli 1866. S. 792/793.
of Indian Bills.
Von Marx zitiert in Manuskript II zum
zweiten Buch des „Kapital“ (MEGA² II/11. S. 212.23–29).
Schließen On 2 July notification von Oriental Bank, Chartered Mercantile Bank of India, London, and China; the Chartered Bank of India, Australia, and China; the Bank of Hindustan, China, and Japan (Lim.); the Delhi and London Bank (lim.); and the „Comptoir d’Escompte de Paris“ which has a large business in Calcutta und elsewhere, – also notification to the effect „that from 1 Jan. 1867, their branches and agencies in the East will only buy and sell bills of exchange at a term not exceeding 4 months’ sight“.
The Economist, 7. Juli 1866. S. 796.
Influence of Entails upon Agriculture.
The law of primogeniture, by which land not disposed of by its owner descends entire to his oldest son or other heir male, and entails, which limit and restrict the power of the actual possessor of land – rendering him in fact merely a tenant for life – in order that the land may devolve entire to the male head of the family for the time being, are entirely feudal in their origin, and due solely to the exigencies of the feudal system.
Husbandry in this county has come to be carried on by farmers possessed of considerable capitals, who hire their farms at yearly rents from the proprietors of land. The division between the occupation and the ownership of land is complete … It is the fact that the owners of land do not perform their part in the work of production. On the vast majority of farms in England, permanent outlays are required to be made in effecting permanent works, which would constitute investments of capital – additions to the value of the property – the return for which would consist of increased rental, and which, as the rule, can only be properly and prudently made by the owner. In ordinary cases the tenant cannot prudently invest his own capital in executing those permanent improvements, viz: draining, building, road making, the removal of superfluous fences and timber, straightening and deepening brooks and outfalls for water, warping, irrigation, and so forth. It is not too much to say that fully 1/4 of the fee-simple value of the farm ought to be and might profitably be so laid out by the landlord upon 3 farms out of 4 throughout England. Until that is done farmers cannot farm their land properly, cannot make the profits or raise the produce of which the capacity of the land aided by modern skill and appliances would admit. Why then are not these permanent outlays made? The chief reasons are that the owners of land are not full owners, but are so restricted by entails and settlements to be only life tenants, while the estate will go exclusively to their eldest son. They are to a large extent only nominal owners, because the estates being charged mit debts, jointures, portions for the younger children of former owners, and the like, great part of the rental is applicable to the satisfaction of these encumbrances. Then, when the estate is encumbered, |81 – and most estates are both settled and encumbered – the landowner, who occupies the social position of owner, and has all the expenses of an estate much exceeding that which is really his, as tested by the income he can retain for his own use, is practically unable to execute the improvements his estate demands.
The Economist, 7. Juli 1866. S. 798.
The Bank Rate of Discount. (Correspondence)
1865 Bullion der Bank 16,407,666l. being 1,365,276 in excess of the bullion on hand this year (1866). (Same date of 27 June.)
Ebenso on the same date, 27 June: 1865 liabilities der Bk.o.E. £24,663,912, 1866: 29,364,399. The Reserve 1865: £.9,931,821, und 1866: £5,218,409. This year daher die liabilities 4,700,487l. in excess of the liabilities of last year, and the reserve in the till of the Bank this year: £4,713,412 less than last year. Last year the reserve 1,700,517l. beyond 1/3 of the liabilities, this year l.4,569,724 less than 1/3 of the liabilities.
Compared daher to last year same date:
|bullion less by:||1,365,267|
|Liabilities greater by||4,700,487.|
The Economist, 7. Juli 1866. S. 798.
Usance of Indian Bills. (Correspondence)
The reasons urged by the 5 banks Zusatz von
Schließen (sieh vorige Seite, p. 80) for the course they have pursued are, the large losses incurred by them during the last 2 years, and their unwillingness to run the risk of so variable a market as cotton for so lengthened a term as 7 months. Their losses, however, have chiefly arisen from their own imprudence in making enormous advances upon cotton during a speculative period, and having by such means encouraged speculation they now turn round upon the merchants whom they have helped to ruin, and say: „In future we will have a 5 instead of a 7 months’ risk.“
The Economist, 7. Juli 1866. S. 798/799.
Bulling and Bearing. (Correspondence)
The public appear to suppose that this thing is peculiar to the Stock Exchanges; while the fact is, it prevails in every business of any extent, where prices have more or less of fluctuation. It is just as common to sell corn, or cotton, or iron, or tea, or any produce whatever, for a fall, as it is to sell shares. The simple difference is, that in case of stocks or shares the various shades of prices and almost every particular transaction is noted and publicly quoted; while in the case of produce the transactions are only noted in the lump, with the general prices of the day. Moreover, the thing is carried on every day on the Stock Exchanges, while in produce it is pretty well confined to market days. But still the practice really prevails as much in one case as in the other. Every man in business of any magnitude often sells first and buys afterwards. In Manchester, f.i., a spinner, just as often as otherwise, sells yarn for future delivery, when perhaps an ounce of it is not spun, hoping and thinking that he can cover, by buying cotton in Liverpool in a few days or a week an advantage. What is this but bearing the markets? … If a seller of shares is to be compelled to produce vouchers that he actually possesses them, why should not every merchant be compelled to do the same before he enters upon his transactions? … It is supposed that „a bull“ never takes his stock up, and that „a bear“ never delivers what he has sold while in other business he does. Now this is simply a mistake. A „bull“ of shares at the end of every account must, and does, either take up his stock or get others to do it for him, or he must lend it to some one who wants to borrow it. One of these things he must do, and always does, and the seller invariably gets his money for his stock … In what business is more done than paying for what is bought. On the other hand, it is not true that a „bear“ never delivers the stock he sells. On the contrary, when he sells he enters into a distinct engagement that he will deliver at the end of the account, and he always does. He either buys back before the end of the account, or he borrows from |82 some one who wishes to lend, or in some other way he gets for delivery what he has sold, and the buyer invariably gets the shares he has bought. What more can the seller do than provide that the shares shall be ready at the time stipulated, which is never longer than 1/2 month, from the time the transaction is entered into.
The fact is, it is not the liberty to sell and buy shares that has produced the supposed mischief in the late transactions in bank and finance shares, but first, the reckless mismanagement and rotten state of the banks themselves, and next, the „Organisations“ which have been formed to bear the shares. „Organisations“ to raise or depress prices either of stock or produce, partake more or less of the characters of swindles. The ordinary buyer or seller has no chance again such combinations, and hence there is no fair play in dealing in those things in which a powerful organisation is operating. This is really the cause of whatever mischief has happened.
The Economist, 7. Juli 1866. S. 802.
- Messrs Charles Harvey and sons, private bankers of Longton, North Staffordshire, stopped. Liab. 40,000l. Bank established in 1821, had a fixed note issue of 5,624l.
- Voluntary winding up: Great Devon and Bedford (Colcharton) Copper Mining Co. limited.
- Wolverhampton: Any new sales of Iron now must be at a decided reduction.
July 14, 1866. N. 1194.
The Economist, 14. Juli 1866. S. 817.
State of the Money Market. (Still 10%)
The Decrease in the active circulation very satisfactory at this time of the year, when the payments for the dividends are going out … As long as the „danger“ signal is kept up, unusual reserves by way of protection will be kept … In ordinary times, all sound country bankers will hold proportionate reserves in London against their liabilities, but not a sixpence more than is wanted in banknotes in the country … Still efflux of gold. We drive the money away by maintaining the rate of interest at a point which makes everybody believe that there is some great calamity about to supervene which the exceptional rate is to prevent.
The Economist, 14. Juli 1866. S. 818–820.
The Crisis of 1866.
Why did the banks and discount firms engage in this bad business, and as if by set concert select this special time for so doing? The bad business goes back to 1862 and 1863. Rate of interest for a long period very small, therefore difficulty in employing the loanable capital in the money market. This one of the fundamental causes of bad business. If you leave much money in people’s hand to employ it for their own advantage, and they cannot so employ it in obvious good business, they are very apt to search out recondite bad business. John Bull, it has been said, „can stand many things, but he cannot stand 2%“. As soon as the rate of interest has for a considerable time [been] very low, some bad business is likely to be undertaken.
In general the mercantile community, excited by the facility of obtaining money, engage in mercantile adventures properly so called, and their failure, when it occurs, is generally of vast magnitude. It is then that capital panics are generated. A whole nation of industrious men of business are excited by a long continued facility, and rush into adventures which never pay … though in the aggregate each of them is small, upon the whole swallow up many millions and strain the national capital. But this pervading stimulus to a trading community takes time to act; it has to diffuse itself over a vast surface, and can only produce its full effect after a long lapse of time. |83 When this happens the banking firms, the holders of loanable capital, are relieved from this surplus accumulation; it is carried off in this surplus trade. And though that trade be bad, it does not follow that the bankers who advance the capital upon which it is carried on will lose in proportion to its badness. If the bankers take good security, they may preserve themselves from loss, though the traders to whom they lend are ruined. If there is only one good name on a bill, that in the worst event is enough for the banker, the unfortunate possessor of that „good name“ may pay other people’s debts and expiate other people’s follies. But still the banker gets out. He is not ruined. He witnesses tranquilly the ruin of others. But it sometimes happens that the banker is not willing to wait till the expansion, possibly the excessive and too sudden expansion of trade brings new and safe business within his reach; he is anxious to do „something“ when there is nothing safe to do for him.
The circumstances of 1862–3 rendered that difficulty natural. Concession of limited liability. Bad cos. formed. There was a great set towards the establishment of new banks and discount cos. The great English Banks were then paying enormous dividends, and we wrote on 24. October 1863:
„The causes of the great success of the original joint stock banks war waren: The banking of the country was underdone. The richer classes kept banking accounts, the less wealty wealthy classes did not. The shopkeeping classes were generally unaccommodated. Man sah nicht that a great number of small accounts is a much more valuable business to a bank than a small number of great accounts. Ebenso waren, obgleich nicht so viele wie jezt, many banks in large towns and great seats of industry, but the smaller towns had no banks. The system of banking now takes the savings of quiet country places, when they could not be employed, to large mercantile cities where almost any amount of capital can readily find employment, and this is one great source both of their profitableness and usefulness. In former times this was not done completely, and in many districts was hardly done at all. English Banking was underdone und badly. English law would not allow a bank to have more than 7 partners, and it is imposed on all these bankers unlimited liability … Many inferior people, especially those who had wages to pay, were eager for the money of others, wrote Bank over their doors, took deposits, and issued notes especially to their workpeople. They knew nothing of banking, kept no reserve, invested the money of the bank in some business of their own, and in a time of difficulty had no available resource. In 1793, in 1825, and other seasons of distress, these petty bankers failed by hundreds. There never was a better field for mercantile enterprise than the improvements of English banking 30 years ago. There were excessively few banks to receive the deposits of the richest nation in the world, and many of the existing banks were bad ones. The Joint Stock Banks changed this. Every little town has now at least one bank, generally two; all classes of the community, down to the small farmer, keep bank accounts … The same thing cannot be done twice. The best of this thing has been effected. Generally, the profits of a new bank must be made by diverting to itself some part of the profits of existing banks.“ Nun, in 1862 sqq. competition of banking in London extreme. The number of new banks of various kinds – some Indian, some provincial, some foreign, but all London too – which started in those years, was extreme. Each wanted to make a great and sudden profit on a considerable capital; each offered a large interest for money, since it could not make anything till it had money; each compelled others to give that interest too, or they would lose the funds which were the means of their livelihood and the implements of their trade. Just when the natural interest of money was low, because there was a difficulty in lending it well, a new class of money dealers sprang up who bid high for it, and therefore were almost obliged themselves and almost forced others to employ it amiss.
With discount companies the effect, though different, was even more pernicious. A great many new cos. were founded, and they came into competition with Overend, G. et Co. Overends, an old firm quite insolvent, and propping up its great reputation, by high rates of interest, could not let the money go, and the new Cos. wanted to make the money come. Between the two the rate of interest given by intermediate borrowers so to speak – by borrowers who insisted |84 to lend again – was forced up to an unreasonable amount, and yet the rate of profit on actual undertakings, the earning fund, the productive capacity of the country, remained where it was. The specific danger of the time was the accumulation of loanable capital in the hands of those who did not know how to use it because the profits of active capital were at the moment so small, and yet, partly from the competition of banks and partly from the foundation of discount and finance cos, the rate of interest given by these intermediate holders was beyond all precedent excessive and dangerous. Greater folly than has been committed by banks and discount cos during the two last years has never be been known before.
The Economist, 14. Juli 1866. S. 820.
The True Mode in whic which a shareholder should watch its Co.
A shareholder only sees the half-year’s accounts – in too many cases carefully prepared to meet his eye, and concealing under delicate ambiguities and well-contrived words exactly what it most concerns him to know. Attendance at a halfyearly public meeting mostly useless. A public debate on a co’s matter has rarely, if ever, done it good; and a single shareholder can scarcely generate a debate at such a meeting if he desires it. The directors in office never wish it, and while the co. is prosperous, can always prevent it. After the Co. is ruined, of course there are discussions enough.
If the principal directors who start a Co. are leaving it as if in terror; if they who know its secrets are leaving its ranks; if they are selling their shares and diminishing their responsibility – there is something wrong. If the directors are selling their shares, other welljudging people sell theirs too. The whole Co. is weeded of its rich capitalists, and left to women, clerks, and vagrants.
July 21. 1866. N. 1195.
New Facts relating to the Act of 1844.
The Economist, 21. Juli 1866. S. 845/846.
Schließen Weiß nichts Gutes von dem Act zu sagen, als daß durch rechtzeitige Erhöhung des Zinsfusses von 1861–66 we kept sufficient bullion. Die längre high rate (vor dem Panic) attracted hither an unusual supply of foreign money. But this money was lent us on credit, leaves us mit impaired credit. When you create by law a limit to the issue of banknotes, you entail by inevitable events occasional acts of the Executive to break that law. The foreign discredit occasioned by such acts must not be charged to them. They are part and parcel of the Act itself –, inseparable from it. So are the evils they cause. Ferner: the Act led the B.o.E. to keep the rate of interest higher than it ever was for so protracted a period. Mit gutem credit, the more interest you offer the more money will you get; as soon as your credit is doubted, the higher the rate you offer, the less the money will come in. Dann high interest means bad security. And the foreign holders of bills on England have lately largely acted on it. … For a moment all large holders of a commodity have great power over its price, and at a moment of panic the B.o.E. has nearly despotic power over the price of money. If the B.o.E. had charged 15% for the last 6 weeks, the general market would have approximated to it, and been guided by it more or less nearly.
The Economist, 21. Juli 1866. S. 846/847.
Schließen … verschiedene English Banks (Union Bank, London Joint Stock Bank f.i.) do not distinguish between the acceptances they give and the money they receive. receive (i.e. deposits), so daß kein Teufel ersieht, how much of this is paper given, and how much is money received.
The Economist, 21. Juli 1866. S. 852–855.
Money Market Movement.
Bank o. E. Increase: Circulation: 227,418l. Decrease: Private Deposits 1,651,546, Private Securities 1,287,285, |85 and Reserve: £576,045.
Railway shares. The difficulties of the London, Chatham and Dover railway have produced fears concerning the position of some of the other cos, with speculations adverse to firm prices.
- Birmingham Banking Co. Liabilities 1,800,000, Assets 200,000l.
- Carleton (Brothers), wholesale warehousemen. (London)
- Preston Banking Co on 19 June. Liabilities about 1,000,000l.
July 28, 1866. N. 1196.
The Economist, 28. Juli 1866. S. 879–881.
|Capital employed.||Per Cent paid upon them (in dividends etc)|
|Capital employed in them: (all money invested, whether raised by ordinary shares, preference shares or debentures.[)]|
|A) Return of capital of every kind expended in
(Preferential shares, Debentures etc)
|B) Return upon ordinary shares.|
The Economist, 28. Juli 1866. S. 883.
Deer versus sheep. (Communicated)
As some indication of the proportion borne by the expenditure on deer forests when compared with other forms of unproductive expenditure, it may be stated that many years ago the disbursements of the English subjects, travelling or residing on the Continent, almost wholly unproductive, was valued at 12 millions p. annum. It is now far greater.
The Economist, 28. Juli 1866. S. 883/884.
Long is England treated as an axiom that feeding cattle were merely manure making machines, and expensive machines too. The profit was looked to from the corn crops, whose increase formed the purpose of all the elaborate processes of stock feeding. The beasts had as much cake or corn as they would eat for long periods of time, besides large quantities of hay or root. Hence Loss, charged to the manure. The Scotch farmers long in advance of the English farmers in this respect, that by the consumption of their turnips with straw they chiefly produced their fat cattle; though in their case also when any artificial food – cake or corn – was used, they usually gave too much and too long – that is, for profit. Hauptsache: Skill in selecting, – in breeding and buying the store stock – and careful management in feeding them. Dieß subject of 2 papers, one by Mr. George Hope, the other by Mr. Wm M’Combie, read in the Edinburgh Chamber of Agriculture at a recent meeting. Hope said: We must begin with well bred animals, as they fatten easily, have little offal, and get flesh on the parts that fetch the highest prices per lb. Coarse and large boned animals are invariably large consumers of food, while their meat is of less value. Warmth and comfort are of great importance in promoting feeding, and the cattle ought to be separated into small lots. The greater the subdivision or the smaller the number in any one place, so much the better do the animals thrive … ample shed room or cover is indispensable for profitable feeding. „In the Lothians, the cattle feeding was long considered as merely subservient to the production of cereal crops, but from the great change that has taken place in the relative value of grain and butchermeat, crops are more and more grown for the purpose of being converted into butcher meat.“ meat. Foreign substances also, such as linseed and other cakes, |86 white peas and tares, are being used to an extent that 50 years ago would have been thought incredible.“
A piece of grass that will maintain an ox grazing will not keep more than 6 sheep, although as a rule animals generally eat in proportion to their live weight, modified by their age and condition. Sheeps Sheep kept in great numbers on meadows will soon diminish the quantity of the grass produced. In England der Ausdruck „meadows … oversheeped“. In Hertfordshire, on the strong loams, we always found the hay crops to be disappointing whenever sheep were much fed on the meadows. Cattle for meadows, and sheep for arable land, and upland pastures … the practical rule for stock farming.
To return to cattle grazing. The great secret of profitable feeding is to supply the best food at the right time. Hope says: „When an ox is becoming ripe for butcher he gradually eats less and less; he rests more and becomes fatter. And it is at this stage that cattle pay best for linseed cake and rich feeding, and it is most profitable to give it to them without measure. Feeders frequently lose the best part of their profits from selling their stock a month or 6 weeks too soon. An ox may be very good, fat, and readily find a purchaser; but if kept on for another month, or even 2, he would increase more rapidly in weight in proportion to the food consumed than he ever did at any previous stage of his existence, and also from becoming extra quality, he would be worth from 3 to 6d p. stone additional.[“]
„Almost all cattle are sent too soon to the butcher. Cattle grow steadily, and increase in weight until 4 if not 5 years old. But the practice is not even to give them time to attain their natural size, but to force fat on them, as quickly as possible and then off with them to the market.[“] Ferner nöthig: variation in the kind of food – such as potatoes, beans and peas, as well as turnips and oilcakes. … Feeding stock should be kept always improving, and the richest food and greatest warmth and shelter ought to be reserved for the last part of the feeding process.
The Economist, 28. Juli 1866. S. 887–889.
Bk.o.E. 25. June
- Decrease: Circulation 248,985£, Private Deposits £.1,274,170, Priv. Securities 1,009,933
- Increase: Bullion 70,854. Reserve: 229,144.
Bk. Shares. Of the newer cos dull, with, in some instances, a heavy fall.
Financial Shares. Steady.
Failures: Getherton Iron Co. (Birmingham) liab. about 20,000l.
4 August 1866. N. 1197.
The Economist, 4. August 1866. S. 905/906.
State of the Money Market.
State of the B.o.E. unsatisfactory. Reserve very low, and Bullion little increased, for under 15 Mill. at which we wish to see it.
|Its Banknote Circulation 1 August||£.22,340,809||22,489,710||23,203,757||26,236,388|
The reserve – part of whose usual quantity has gone out to the public – 3,273,000. It was 1865: £6,461,000, and rate of interest 4%. Anyone on the Continent who has a debt to receive in England now asks for money, not for bills. He will not as a rule, take bills except those of 3 or 4 first-rate houses, and the usual bill currency of the world is suspended to a corresponding extent.
The Economist, 4. August 1866. S. 906.
Proposed Inquiry into our Banking Laws.
Mr. Watkin brought in H.o.C. his motion for inquiry. It was admitted by Sir Stafford Northcote that there was a „run upon England“. Watkin urged that Clarendon (late Foreign Minister) obliged to issue a letter to explain to foreign nations an Act of Parliament, and so to induce them to continue the credit which their misconception of that Act was inducing them to refuse; and surely such an Act of Parliament and such a letter are anomalies in English history. We have never before written a circular to Foreign Gvts to say we deserved the credit from their subjects. When the Habeas Corpus is believed to be dangerous, its operation is definitely and specifically suspended; but here we have only a letter from an extinct Gvt, saying that if the Bank directors have to break the law, that extinct Gvt will propose a bill of indemnity. For 3 months we have been living in the worst of all states, that of contemplated illegality. A rate of discount is prescribed for the permission to break the law.
The Economist, 4. August 1866. S. 907/908.
As to the outline of arterial lines of railways, the plan more coherent and useful in proportion to the outlay than in England. The object was to connect in a vast territory the great centres of commerce; to open up communication with, and thereby to utilise and render productive, an interior teeming with the means of wealth, but lying comparatively destitute for want of a method of intercourse; and to facilitate the gvt. of the country by rapid communication and easy transit of troops. The direct railways now on the verge of completion between Calcutta and Delhi, between Calcutta and Bombay, between Bombay and Madras supply these wants so far as they go … The guarantee of the State to Indian railways possesses at least this merit, that the states state looks after itself, and forbids the waste of capital squandered in this country in useless and competing lines, and forbids also that ruinous system of Parliamentary bungling and indifference which in England has given us bad railways at an exorbitant cost. … Mr. Danvers in his 8. Annual Report (1866), recently issued, shows that the system of guaranteed Indian railways comprises a length of 5000 miles, of which about 2/3 finished. The track is for the most part single; clear now that für grossen Theil it must be doubled, perhaps more than doubled. At present the cost estimates for the double line are confined to 1/3 only of the entire distance, and with that provision the minimum estimate for the 5000 miles is 81 mill. st., or something more than 16,000£. per mile. With nothing to pay for land, no parliamentary expenses, and a track for the most part single, this cost per mile extreme, might, under proper management have done for half the price. When the miles doubled, and rendered thoroughly efficient, the cost will now be much more than 81 mill. per mile. Of the 81 mill., nearly 61 mill., were raised and expended on 1st May last, and there remains, therefore, still to be raised 20 mill. to complete the system of 5,000 miles with only 1/3 of double line. … The gross receipts during the year ended June 1865, were 3,122,480l., as compared mit 2,303,288l. in the preceding year (1864). So from 1864 to 1865 the gross revenue of these Indian railways increased more than 35%. The |88 net profits of the year ended June 30, 1864 were 840,704l. und im folgenden Jahr 1,341,550l., increase of nearly 60%; and this rate of increase in net profit by contrast of gross revenue, completely accords with our experience of railway business in this country. The number of miles worked in the 1st year and the 2nd did not vary materially vary materially, and the cost of working was, therefore, not enhanced relatively to the receipt. A mile of railway costs no more for maintenance, or very little more, with 500 passengers p. day passing over it than with 100, and thus with the sudden growth of traffic the profit of Indian railways increases more rapidly than the business transacted or the freights conveyed. The net profits realised on the Great Indian peninsula relieve the Gvt. from all obligation on account of its guarantee. Population of India 5 × greater than in the U. Kingd. Bis jezt dort will be 5000 miles meist single railed, hier about 13 000 miles of double railway.
The Economist, 4. August 1866. S. 910.
Restricted ownership of land. Zusatz von Marx.
Schließen (Land Improvement Cos.)
There are several Cos which supply the money for land improvements, and furnish the machinery by which they are carried into effect. The whole is subject to the approval of the Enclosure Commissioners. The money advanced with the expenses is repaid by terminable annuities, extending from 22 to 30 years, and such annuity takes precedence of all other charges on property. One Co. „The Lands Improvement Co“ has advanced within the last 12 or 13 years about 21/2 Millions l. St. to landowners in England, Wales and Scotland. Besides what this and other cos have advanced for improvement, there have been large sums advanced from the Treasury under the authority of several acts, of which the first was brought forward by Sir Robert Peel in 1842. In addition, landowners may themselves advance their own money for the improvement of their settled estates, and procure, with the approval of the Enclosure Commissioners, the annuities charged on the entailed property to be vested in themselves. Dieser plan wenig acted upon; terminable annuity ist nicht kind of property wie der landowner es braucht, z.B. als provision for a younger child etc. Interference with agriculture and the productiveness of our soil are necessary incidents to the modern phase of our feudalism. The root of the evil lies in the motives which lead to territorial aggrandisement, and that irrespective of the actual wealth of the owners. Thus a man retains or acquires the nominal ownership and control of a vast tract of territory, of the value of which not 1/2, perhaps not 1/3 belongs to him.
The Economist, 4. August 1866. S. 912–914.
Ten Per Cent Discount. Communicated. Zusatz von Marx.
Schließen (Interest and Profit)
Loans of capital being made in money, and interest being paid in money,
every change in the supply and demand of money, in its rate of
circulation, and in the state of credit, affects the rate of interest, disturbs its proportion to the rate of
profit, and, as there is an accumulating
force in these influences, often so clogs „the great wheel of
circulation“, The Economist: that the whole of the
machinery is thrown into disorder, and a commercial crisis, such
as has recently taken place, is occasioned.
Schließen that commercial crisis etc[.] The proportion between the rate of interest and the rate of profit being for the time disturbed, the profit of the merchant or manufacturer is increased or diminished in proportion to the amount of capital on which he has to pay interest … A rise of interest involves the transfer of an increased share of profit from those directly employed in production, to those who devolve the task upon others … When a great deficiency occurs in the harvest, the general rate of profit is reduced, but the efflux of bullion diminishing the supply of money the rate of interest is maintained, and the simultaneous contraction of credit often raises it, increasing the disproportion between the rate of interest and that of profits. War, or a foreign loan, has the same effect in a minor degree. On the other hand, the fall in the rate of interest, which follows from the progressive increase of capital under ordinary circumstances, tends to raise profits for the time, and promotes the inflation of credit and a speculative rise of prices, which checks exports, increases imports, and drives capital out of the country. Required some means by which the rate of interest shall be made to conform more promptly and more uniformly to changes in the rate of profit, instead of oscillating as it now often does in the opposite direction … Though the rate of interest ultimately conforms to the rate of profit, it reacts upon it, and if it were possible to secure a permanently low rate, profits must fall in the same proportion. … It is the excessive extension of manufactures and trade caused by the reduction of the rate of discount to 3 or 2%, which gives rise to the necessity of a rise to 7, 8 or 10% and the consequent check to production and trade which ensues.|
The Economist, 4. August 1866. S. 914.
Reaction of the Agra
Bank Failure on India.
Calcutta. June 21. On the morning of 14 known the Agra stoppage of payment; this led to the immediate suspension of a leading and much respected firm of produce brokers, having very extensive engagements with indigo concerns in the mofussil, and a panic followed paralysing business of every kind in a manner wholly unprecedented in the presidency, and from which the mercantile community has not yet recovered. During the past week the distrust, more especially in the bazaar, has been very great, fostered by rumours of the wildest kind as to the standing of various banking and mercantile firms. Money, however, continues plentiful, and is offering in the bazaar at 9% on Gvt. securities.
Madras. June 27. Very little doing during the past fortnight. Bankrates unaltered 10% for advances on Gvt securities, and 12% on private bills. The distrust in almost all our local banks has been so great, since the stoppage of the Agra and Masterman bank, that Madras Bank post bills have been chiefly used by our merchants for remittances.
The Economist, 4. August 1866. S. 915–917.
Money Market Movement.
Quotations of Discount. Bankrate. (Hamburg Open
- P.C. Paris 31/2, Vienna 5, Berlin 6 (bills) 61/2 (advances) Frankfort 7 (open market), Amsterdam 7, Turin 8, Brussels 5 (bills) 51/2 (advances) Madrid 9, Hamburg 3 (open market) St. Petersburg 51/2 (bank) 81/2 (open market.)
- Edington and Son, iron founders and engineers, Glasgow.
- Stopped: Bk. of Mssrs Kennedy et Co, of Dublin, and: Bank of G. W. Hale, of Congleton, Cheshire.
August 11. 1866. N. 1198.
The Economist, 11. August 1866. S. 933/934.
The State of the Money Market.
Deputation of Joint Stock Banks to Disraeli. Proposed that the 10% clause in Gladstone’s letter of licence shall be cancelled, and another written without that clause. The semi-suspension of an Act is puzzling. We fear that 10% must now be endured for some time longer.
There are two ways in which a high rate of interest tends to bring ease in Lombardstreet. First), it attracts foreign capital here. But this time no such magnetism. We doubt its drawing much; and we fear it will still deter some.
Secondly): A high rate operates in a more
natural way, by diminishing transactions, lowering imports, increasing
exports, and so righting the balance of trade
and bringing bullion hither. And this process is
now going forward. Kommentar von Marx.
Schließen ⦗Wunderschön! „righting the balance of trade“ and „bringing bullion hither“. Die Worte und der Geist des Monetar[-] oder rather Mercantilsystem. Aber dieser return nothwendig!⦘ And this Process is now going forward. Zusatz von Marx.
Schließen Doch scheint es
Zusatz von Marx.
Schließen Thirdly) auch damit nichts zu sein. Denn: It is true Zusatz von Marx.
Schließen (obgleich this process is now going forward) that the figures of the Board of Trade do not yet show such to be the case. Aber there is „another disturbing agency“. At a time of crisis we call in our debts from foreign countries, and the first consequence is an increase of imports. Der „Economist“ zitiert im folgenden Absatz aus: The Economist, 20. Februar 1858. S. 194.
Schließen We explained this in 1858, just after and in reference to the crisis of 1857, as follows:
„When we arrive at a period of crisis, the country is more influenced by its past transactions than those of the
moment or those which follow. When a crisis occurs, it is generally
preceded by what is termed Overtrading; and
this, usually, if not always, takes the form of very extended
exports – accompanied by a relative increase
of imports of raw materials and other produce. As a rule,
however, this country gives a somewhat lengthened
credit upon its exports, while its imports are drawn for at the moment of shipment from abroad,
and are paid for in cash shortly after |90 their arrival.
England gives credit to the whole world, and takes little or none. Zusatz von Marx.
Schließen (?) Then it must be borne in mind, that an adverse exchange is caused, by a balance of payments falling due at any one period, and not by the exports or imports of the moment. We may be exporting as largely, or more so, than we are importing; but if in the one case we give a long credit, and in the other are paying ready money, the balance of payments may be against us, while the balance of transactions is in our favour. That such was the case at the commencement of the late crisis, and is usually the case at similar periods, there can be no doubt. We had extended our credits beyond our means. Our capital was absorbed to an inconvenient extent by foreign shipments. What was the natural remedy? Not to increase our exports, but rather circumscribe our transactions, reduce our foreign credits, and wait the arrival of remittances as they fell due for shipments already made. At such times the commerce of the country is placed in a condition of partial liquidation. Liquidation can be, and is, effected as much by commodities as by gold. The same motives which induce to large shipments of gold to England at such times, lead also to shipments of commodities.“
In time we must expects expect our imports to fall off under the influence of diminished transactions. But such is not the first effect of a crisis. The goods sent in payment of old debts confuse the accounts, and make us look as if we were transacting an augmented business.
The Economist, 11. August 1866. S. 935–937.
Northcote and Gladstone on the Panic.
Northcote ascribes this panic to a scarcity of loanable capital. Wir finden darin no explanation of 10% interest for 3 months. Last year the rate was 4%, and there has hardly been an outlay of loanable capital to raise it to 10%; d.h. raise its value 150%. We must not reason first backward and then forward – we must not infer the scarcity of capital from the high rate of interest, and then account for the high rate of interest from the scarcity of capital.
Trade has gone at an equable rate. In 1865 it can hardly be said to have augmented at all.
Kommentar von Marx.
Schließen (Der cotton famine verminderte das Geschäft. Aber zugleich setzte er Kapital frei, welches zu den Finanz etc schwindeleien im Innern führte.) So for a whole year our trade was stationary. During the present year (1866), it is true, there has been a considerable increase.
Similar changes have often occurred in our railway expenditure and in our trade without causing an augmentation in the value of money either similar or comparable.
It is true that a part of this railway expenditure has been effected in a
mode singularly calculated to affect the money market. These railways
have in part been made by bankers who advanced money to constructors and
others. Such loans are in the nature of an extra
and additional conversion of floating capital into permanent or fixed
capital. The usual course is that the proprietors and makers of the
annual savings of the country, after letting them lie as it were in transitu in some bank, Kommentar von Marx.
Schließen (Wie soll man das anfangen, die annual savings in einer Bank liegen zu lassen?), invest them on their own account. The banker holds a fund permanent in amount, but made up of many changing items.|
The customary accumulation of the country passes through the bank, but does not rest there. But if in addition to this normal and natural process, the banker on his own account begins to invest in a permanent form the deposits left with him, the pressure on the short loan market is necessarily greater. The ordinary outgoings made by the owner go on as usual, and the extraordinary outgoings made by the banker have to be met as well. The rise in the rate of interest consequent on investments in railways made by the banker out of his deposits, all else being equal, will be more than from similar investments made by common individuals from ordinary savings.
But these observations only apply to investments by banks, not those of finance companies. The latter are the channels into which common people have chosen to throw their money. These are not like investments from bankers’ reserves, but common investments from ordinary savings. Nor, again, do those observations apply to loans on railways made by the banker at first, but then repaid to him by individuals. These, again, are but the ordinary investments by individuals, forestalled, indeed by the banker, but repaid to him in the end. And the whole argument as to the peculiar effect of a banker’s investments is subject to an important distinction. Banker’s means have of late largely tended to augment. The high rate of interest, offered, not only in London, but generally through the provinces, has filled the coffers of banks with money which else would have been embarked in permanent investments by the owners of it. Accordingly bankers have had more than usual to invest, and common people have been willing to invest less. Ordinary operations have not gone on as usual; they have been diminished at the moment when the investments by bankers have been increased.
The substantial conclusion remains that there is no evidence, that an increased investment of loanable capital is cause of the value of money being 21/2 times as great now as at this time last year. The aggravating cause is the credit – a panic from bad business. The inevitable effect of a loss of credit, especially loss of banking credit, is to send up the rate of interest very rapidly. Persons under large obligations must borrow largely on their securities, and for a moment, even on the best securities, it is difficult to get money. The large loans by the B.o.E. would have quite met this difficulty, and long ere this the panic would have died away; but unhappily we had as a country been trading upon borrowed capital. Owing to the failure of Overend, G. et Co , the suspension of Peel’s Act, the explanatory letter of Clarendon, foreign nations took fright, withdrew from us the capital we possess, and placed it in safer keeping.
Gladstone sagte mit Bezug auf the banking business of the country: „practice of showing reserves on paper, which reserves themselves have been lodged in investments[“].
The Economist, 11. August 1866. S. 941–943.
The movement of the Money Market.
|Liabilities £||Assets £|
|25,665,018 Circulation||Securities 36,681,678|
|3,160,456 Public Dep.||13,602,429|
|17,660,244 Private Dpts.|
|Banking Department. Reserve: 3,579,229l. (Increase of 306,839)|
|Issue Department Bullion: 12,775,260 (Decrease of 190,911)|
Foreign Exchanges improving. On France: 25.221/2.
- Suspension of G. Evans, Evelyn Iron Foundry, Newport.
- Bomanjee, Framjee, Cama et Co, Parsee, liabilities about 500,000l.
August 18, 1866. N. 1199.
The Economist, 18. August 1866. S. 965/966.
The Reduction of the Bank Rate to 8% (16 Aug.)
The foreign exchanges have now been turned, notwithstanding the discredit drain. They now bring gold here and take it to the Bank.
This panic has happened in the spring, and from a concurrence of 2 causes money is always dearer in the autumn. 1) There is usually a tide of coin in the hands of non-banking classes, consequent on the harvest. 2) The imports of England from tropical and other countries being vegetable raw products, are dependent on the seasons, and happen to arrive here, and therefore happen to be paid for, in the latter part of the year. Most panics have happened in November, in the naturally dearest month of the money market, and the reaction towards cheap money occurred at a time when money would usually have tended to be cheaper. But this panic has occurred in the summer, and the consequent reaction will fall upon the period when money would naturally become dearer. The present movement towards cheap money will therefore be a mitigated movement, while those of 1847 et 1857 were intensified movements. The usual rate of interest has risen since 1847 and 1857, and the number of ways of carrying off and investing surplus money have largely increased.
The Economist, 18. August 1866. S. 968.
Necessity of Selling Insolvent Railways.
The directors of London, Chatham and Dover Railway have issued a letter to their creditors stating that they cannot pay, and the railway itself has been thrown into Chancery.
The Economist, 18. August 1866. S. 969.
London Joint Stock Banks. – The Recent Accounts.
Last half year, the profits of the London and Westminster Bank at the rate of more than 50% p. annum upon the paid up capital; Union Bank: 30%, Joint Stock Bank 25%, London and County 23%, City Bank 12%. These 5 out of the 8 to be mentioned afterwards seem to have had all the cream of the jointstock business.
|Capital||Reserve of Profits Undivided|
|Subscribed £||Paid up £||Uncalled £||£|
|London and County||1,875,000||750,000||1,125,000||267,469|
|Metropolitan and Provincial||1,686,600||337,320||1,349,280||10,844|
|Summa||23,411,600||6,305,795||Summa Uncalled 17,105,805||Summa of Reserve of Profit 1,758,325|
|Liabilities to Public||Assets|
|Deposits and Acceptances.||Cash||Government Stocks, Exchequerbills etc.||Bills and Debts||Total including other Assets|
|London and Westm.||22,298,454||3,464,467||2,594,712||16,578,044||22,637,229|
|London and County||12,750,974||293,691||293,691||10,410,722||13,863,607|
|Metrop. et Prov.||469,355||82,686||82,686||572,825||817,345|
|Bonus and Dividents. Past Half Year|
Net Protits. Half Year
|Rate % p. annum||Balance of half years profits after dividend.|
|London and Westminster.||251,263||140,000||28||111,263 Surplus|
|Joint Stock||134,571||108,000||20||26,571 do|
|London et County||85,441||82,500||22||2,941 do|
|Metrop. et Prov.||5,299||8,433||5||3,134 ditto|
The 4 old Banks, viz. London and Westminster (diese allein 1/3 of the whole), Union, Joint Stock, London et County together earned 650,499l. or nearly 90% of the whole. The profits earned und Dividends (incl. bonus) nicht identisch. F.i. Profit earned by the London and Westminster at the rate of more than 50% p. annum, rate of dividend and bonus only 28%.
The Economist, 18. August 1866. S. 969/970.
The Bill promoted by the City of London for providing better gas than that which gives bad light, but good dividends, was referred to a Select Committee, dessen Report und Evidence nun vorliegen. The Corporation and the gas Cos. were heard by counsel (Advocaten). Diese examiniren schärfer als members of a committee. The Committee says that the illuminating power of the gas in other towns is greater, the quality better, and the price to consumers cheaper than in London. „The purification of the gas in the metropolis is imperfect, and an excess of sulphur remains highly injurious to pictures, leather, metals, etc. Since the passing of the Act 23 et 24 Vict. c. 125, the price of gas to consumers has been increased until recently, whilst the power of light has been less, and the quality of the article worse.“ It (the Report) then states that since the Gas Act of 1860 the market value of gas shares has risen considerably, and every Co. in the metropolis pays a dividend of 10%. According to a table at the end of the Blue Book, during the last 4 years the dividend of one Co. averaged more than 18%, of another more than 13, of three Cos. more than 12%, of 3 more than 11%, and of 3 more than 10%. It therefore recommends that the minimum illuminating power should be increased, and the minimum price reduced; that a chemical board should be appointed by the Secretary of State, at the expense of the Gas Cos., to fix a standard of purity and eliminating illuminating powers; that testers and analysts should be appointed by the local power; and that, in the event of the local authority making default in the appointment, the Secretary of State shall have power to appoint officers at the expense of the local authority.
The Economist: less
Schließen Faule defences der Gas Cos: As for the existing state of the gas, Mr. Jeffery, of the firm of Howell and James, said that the colour was at times almost an ochre, and that it took out the colour of silks and satins. Its action on metals was to deposit a thin film, which eat into the metal if not removed every day, and necessitated reguilding regilding. These complaints had not arisen in the same business at Liverpool, while at Clapham the gas was rather worse than in Regentstreet. The effect on leather, as proved by a boot maker was utter rotteness rottenness; the witness produced a boot that had never been worn, and tore up the leather as if it had been blotting paper. He had sold hundreds of these boots at 1s. and 1s. 6d. a piece, though they had cost him 18s. to 20s. … Dr. Letheby found as much as 10 grains of oil of vitriol in two inches of the leather, and he mentioned a case where 2 volumes of a work were bound at the same time with the same leather, and one remained on the shelf in a room lighted by gas, while the other was taken away by a reader. After a considerable time this volume was restored by the reader, and its binding was sound, while that of the one of the |94 shelf was rotten. Mr. Hedley, a gas engineer, described the gas as subject to variations; „occasionally during the middle of the evening, it is as if a cloud passed over the gas.“ He observed too that the gas was so overcharged with ammonia, „that when the servants washed the globes of the chandeliers they complained that it was just like standing over a bottle of smelling salts, the smell of ammonia was so strong in the water.“
It was proved that at Manchester 22 candle gas was supplied at 3.s. per 1,000, while the illuminating power required in London is 14 candles, and the price is 4s. 6d. Mr. Baxter, solicitor to the gas cos., says that if the illuminating power is to be 14 candles at the end of 6 miles, it must be 17 candles at the works, and that Newcastle coal will not make more than 14 candles. Dr. Letheby, however, says that gas will travel 6 miles without losing any illuminating power and proved it. At Hastings they are making gas from Newcastle coal, and they are producing 14 candle gas at the very end of St. Leonards. In Birmingham the works are 6 miles from the town, they use Derbyshire coal, and supply gas of 141/2 candle candles.
But if there is no reason why our gas should not be better, sufficient
reasons for our having no redress under the present system. Zusammenfassender Kommentar von Marx.
Schließen Fälschung der tests und Kapitalmacht baffling the legal proceedings of individuals: The tests are notoriously evaded, and attempts to enforce the Act are met by technical objections which no doubt would be cleared away in process of law, but which show that the Cos. are resolved to fight to the last, and have the means of commanding the best legal assistance. „There have been some futile efforts made occasionally by some desperate men (to put the Act in force), but they have died off“, says one witness. Another says it would be knocking your head against a post to appoint a gas inspector. The result of the inspection, as admitted by Dr. Letheby, proves this.
In the first place, the test is applied with a specific pressure to a particular burner, while the consumers have no control over the pressure, and have not generally the same burner. Then the testing houses provided by the Cos are often unfair; in one of them the walls are not blackened, and a large reflector is placed in the room so as considerably to enhance the illuminating power. The ease with which the tests may be defeated appears from the evidence of several engineers. The Co has 3 hours notice before the test is to be applied. So lange dieß der Fall, the test must prove inadequate. „By throwing a little cannel coal into a retort“, says Mr. Hedley, „or charging a certain number of retorts according to the size of the work, you may change the quality of the gas 6 miles off in a quarter of half an hour; or by having a syphon made at the entrance of the gas works by pouring spirits of petroleum or coal-tar naphtha into it, as the weak gas goes through it will lick it up, and you can increase your 10 candles to 16 candles as the gas travels.“ Mr. Hedley did this himself at Uxbridge, to convince Dr. Letheby. „Whilst he was on the works I converted 12 candle gas into nearly 15 candle gass gas in less than 1/4 of hour.“ Another engineer says the same effect can be produced by a slight mixture of photogenic oil, the gas might be raised 5 or 6 candles in value under the eye of the experimenter without his knowing that any trick was being played upon him.
Dr. Letheby shows that during
the last 16 months the violations of the law of which 3 Cos. were guilty
amounted in one instance to 71%, in another to 58, and in another to 48%
of all the testings … To the question, „What is a poor man to do if he
gets a grievance from the gas Co.?“, we have the reply, „Why, to be robbed and submit to it – nothing
Kommentar von Marx.
Schließen The Parliamentary Committee hat diese Spitzbuben wie immer sehr zimperlich behandelt. »Dividends averaging from 10 to 18%, tests that can be evaded, Acts of Parliament through which they can drive a coach and four, and charges that they can enforce at their pleasure, are, doubtless, equally sweet to directors and shareholders.«
One complaint against the Gas Cos is the state to which they reduce the streets … they are solely answerable for the pollution … wilful manner in which the Cos. wait till new roads are put down, and then break up the surface for their pipes; as well as gas escapes, traced 30 or 40 feet under the pavement, by the earth, taking fire whenever a brand was applied to it.|
The Economist, 18. August 1866. S. 971/972.
Chambers of Agriculture.
Recent movements in 2 English counties, Shropshire and Gloucestershire, to establish Chambers of Agriculture. (durch die farmers gebildet.) Already have the Chambers of Agriculture in Scotland given to the farmers a certain political and social power.
The Economist, 18. August 1866. S. 975–978.
Money Market Movement.
B.o.E. 15 August Notes issued: 28,151,595. Active Circulation: 25,234,029. Reserve: 3,611,505. (Zusammen mit gold and silver coin in Banking Department 4,610,866.) Increase in Reserve: £1,030,637. Bullion: 13,151,595; Increase: 548,527l. Private Deposits: 18,125,280; increase: 636,000. Priv. Securities: 25,224,317; Decrease: 932,238.
Discount Market. Bankrate on the 16 Aug. reduced to 8%. The activity in the money market yesterday and to-day not been greater; on the contrary, the tendency of rates is downward, and a rapid decline is now looked for in the value of money. There is a much more general disposition to take ordinary mercantile paper at about market rates. The joint stock banks are working freely under 8%.
Railway Shares: The difficulties of the London, Chatham and Dover. Railway Co. have occasioned great anxiety in the general market. Although it must have been foreseen that railway Cos. were at the mercy of the money market for the renewal of loans falling due at various periods, debenture holders express uneasiness at the inability of the cos to fulfil their engagements.
- W. Hopwood and Son, spinners and manufacturers from Burnley, liab. about 70,000l.
- Joseph Fletcher, of the Spring Hill Iron Sheet Mill, Birmingham, suspended payments.
- Failure of W. Bates, Ironmaster, of Tunstall;
- Suspension of the Bourne Brook Mill Co announced from Birmingham.
- G. Little and Co (London) suspension of payments.
August 25, 1866. N. 1200.
The Economist, 25. August 1866. S. 993/994.
Gurney and Co. (limited.)
Nach dem Report der liquidators: even with the call (den sie noch nicht gemacht) they only propose 5 months after the failure of the Co. to pay its creditors a first dividend of 5s. in the £. Do not hint when the creditors are to have the remaining 15s. Die Liabilities of the estate theils those of creditors for money lent to the Co. und diese cannot be recovered from any 3d party; zweitens liabilities on acceptances and bills rediscounted by the Co.; davon part at least to be recovered from the parties to whom these acceptances were given, and from the parties whose names are on the bills. The account runs:
|to be repaid to the Co. in part at least.||£.|
|To Creditors on bills payable||200,000|
|in respect of bills rediscounted||1,050,000|
|Not to be repaid to the Co.|
|Creditors whose securities are insufficient||250,000|
|since 18. May.|
Against this the liquidators will have on 1 October immediately applicable:
|By call of 10l. a share||1,000,000|
The Economist, 25. August 1866. S. 995/996.
Is it better that the Banking reserve of a Country
be kept in Single Bank or distributed between several
In England and France, the banking reserve is kept by a single bank.
Country Bankers as a rule, only keep the minimum of cash sufficient for
their daily wants; their reserves, properly so called, i.e. their
extraordinary fund for extraordinary occasions, is held in Consols, Exchequerbills, money at the bill
brokers, and other like modes. London Bankers add to these a credit at the Banking department of [the Bank of] England. But these
so-called reserves are not money. They are but
means of getting cash. The only reserve of real cash against the banking
liabilities of the country |96 is the reserve in the banking department of
the B.o.E. Just so in France.
Its reserve both against The Economist: currency
Schließen current liabilities and note liabilities is the Bullion the B. o. France holds.
In America the main reserve of the Banks is not specie, but greenbacks. The Bank Accounts of the 59 New York City Banks (Associated Banks) for the week ending with the commencement of business on June 23, 1866, were:
|Loans and Discounts.||Specie dollars.||Circulation. (dollars)||Net Deposit dollars.||Legal tenders. dollars.|
The banks themselves have a small circulation, but as it amounts to only 1/9 of the total liability, we can easily suppose it forfeited to the Gvt., and sufficient sum struck off both sides of the account. The entire reserve would then be, as almost all of it is now, kept against the banking liability. The general result of the 59 Banks:
|Gvt. legal tender paper||16,168,102l. St.|
or more than 35% of the liabilities; a very satisfactory account if compared mit der insignificant proportion which the reserve in the banking departments bears to the total liabilities not of the B.o.E. only, but of this country. The reserve is distributed about equally between all the banks; those who have the greatest liabilities have the largest reserve, and umgekehrt. Here is an example of many banks, each of which keeps its own reserve.
A single bank, overtopping and overpowering all others, feels that its credit is too good to be questioned. The B.o.E. and the B. o. France know that happen what may they are sure to be in good credit. But when a considerable number of banks keep the reserve of a country, each feels that its position depends on its own prudence. If it does not keep a reserve which will meet the demands upon it, when those demands arise, it will fail.
Again, a number of banks are much more likely to be independent of State control than a single bank. A single predominant bank is always the banker of the Gvt. It is connected with it by relations the most intimate. It receives its taxes, advances its loans, gets to be called the national bank. The credit of the nation and the stability of Gvt. come to be borne up with its reputation, and in a time of difficulty the State must come to the aid of the bank. It will suspend an Act of 1844 or make an Act of 1819; it will authorise a suspension of cash payments; authorise everything necessary to enable the bank to continue its operations and do the business of the Gvt. Ist nicht the case mit any ordinary bank. It is not the basis of national credit, and could not be treated as if it was so.
The Economist, 25. August 1866. S. 1001/1002.
Indian News. (Money Market.)
Calcutta July 6. No fresh failures. Distrust continues very great. Discounts not obtained without difficulty. Business generally very restricted.
Madras. 13 July. The Bank of Madras rates for accommodation reduced 1%. Now 9% for advances on Gvt securities, 10% on 3 months private bills. No transactions reported. In fact business of all kinds suspended. Our principal exchange banks have decided upon reducing the currency of Indian document and other bills from 6 months’ to 4 months’ sight, from and after January 1, 1867.
The Economist, 25. August 1866. S. 1002–1004.
Money Market Movement.
Bank o. E. 22 August.
- Circulation: decrease of £436,301; ditto decrease of Priv. Securities 336,159.
- Increase: Private Deposits 638,194, Bullion 621,264; Reserve 979,239.
Discount Market. notes and gold sent in from the provinces at a period when, almost invariably, owing to harvest operations, withdrawn to meet the additional circulation exacted by so many diffused payments of coin.
Railways: Much disappointment in the declaration of dividends experienced, hence considerable variations in prices, besonders speculators.
Failure: Younghusband and Co, Australian Trade.
Saturday September 1, 1866.
The Economist, 1. September 1866. S. 1021/1022.
State of Money Market and Trade of the Country.
B.o.E. rate reduced to 6% on 30 August. It is certainly very difficult to believe that if the B.o.E. reduces its rate of discount to 5% next week, there has been since 17. August a reduction of 50% in the value of loanable capital.
A reduction in price here (and this is the usual effect of dear money) has a tendency to promote export, not to diminish it. The only way in which a high rate of interest affects the export trade is that it cramps traders who live by borrowed capital. They cannot do so much as usual; but for a trader with capital, it is better to export when a high rate of interest has sent down prices, than when a low rate has sustained them. At this period of the year our export trade usually increases, wie gezeigt durch folgenden
so that the trade was in round numbers:
|In First 2 months. £.||In Last 2 months.|
In fact our trade (within this year, compared the last mit den first months), in consequence of the high rate of interest, has not increased at all. This non-increase is for the purposes of the money market a natural decrease.
showing an increase of 40 Mill. £, and more than 50% over last year. The greatest increase is in the value of cotton imported. The total account is as follows:
|Raw Cotton||1864 (£)||1865 (£)||1866 (£)|
|Bahamas et Bermudas||2,038,809||1,320,109||43,484|
showing an increase of nearly 27 Mill. l. over this time last year, of which 25 Mill. is mit U. States. Returns, this trade, to its former state. Our imports from America used far to outvalue our direct export to America. The balance was made up by other countries, besonders Oriental countries which exported much to U. St. and imported nothing thence, but imported much to England compared to what they took from us. It was a triangular trade. So: (verte)|98
|1865. £.||1866. £.|
|England imported from America||4,338,917||30,839,017|
|exported to America.||6,214,937||15,224,220|
The Economist, 1. September 1866. S. 1022–1024.
Non Paying Railways.
Lord Redesdale has induced the H. o. Lords to pass a standing order reviving the old system of subscription contracts, and requiring the promoters of a railway to show that they are real people, with actual money, in fact intending to make it.
The Economist, 1. September 1866. S. 1027.
Monetary Crisis of 1866. (Communicated.)
The characteristics of 1866: a complete exhaustion of the national capital in enterprises of all kinds, at home and abroad, and the vast amount of engagements to furnish more capital. It is to the vast extension of deposit banking, and to the absorption of capital by new cos., that our main difficulties are mainly to be attributed. By deposit, as opposed to ordinary banking, is here meant that form of banking in which the depositor receives interest on the sum placed or left in the banker’s hand. Solche banks existirten seit long in Scotland. Only introduced in London since about 30 years. Has been since then gradually growing in importance and now threatens to swallow up the system of ordinary banking, as still carried on by private firms. The sums thus held in London probably about 150 mill., in the British Islands must exceed 300, perhaps reaches 400 millions. The limited liability Cos., (other than banks, discount and finance Cos) are all collectors, some of them also distributors of capital; the object of the latter class being to make loans either to individuals or other bodies, while the former employ their money in mercantile or industrial occupations of their own. … The mode in which it was proposed to raise the capital for all these cos., both banking and miscellaneous, was by instalments, and this fact had a material influence on the march of events, and largely contributed to the exhaustion of the money market. The shareholders paid their deposit and the first call with little regard to the necessity of meeting subsequent calls, or to their means of doing so.
8 September 1866. N. 1202.
The Economist, 8. September 1866. S. 1049/1050.
The Circulation of Banknotes in England since the
Overends failed on Friday Evening Fehlerhafter Zusatz von Marx. Gemeint ist Freitag, der 11. Mai
1866. Laut Angaben der „Money Market Review“ stellte Overend,
Gurney and Company allerdings bereits am Donnerstag, den 10. Mai
1866 die Zahlung ein (siehe S. 187 des vorliegenden
Schließen (9 May), and by the next Friday the active circulation had increased by, 3,776,000l. , und zwar, wie Return by order of H.o.C. zeigt, folgendes der change in der increase der notes of different denomination:
|Denomination of Note.||May 9.||May 16.||Total Increase||Percentage of Increase|
|£20 to £100||6,482,000||8,185,000||1,703,000||26|
|£.200 to £500||1,798,000||2,337,000||539,000||30|
|Notes held by the public||22,345,000||26,121,000||3,776,000||17|
Daher evident, daß by far the highest percentage increase in the notes above 20£ und daß 2,500,000l., or in round numbers, 2/3 of the whole sum, were in notes as above 20l. also. The This shows the purpose for which the great demand on the B.o.E. was made – for deposits. The demand for notes above 20l. could not be to supply the place of the country circulation, which consists wholly of 5l. and 10l. notes.
The country circulation did not instantaneously fall, but it very rapidly did so. It fell at the worst period 909,000l., while the B.o.E. 5l. and 10l. note circulation increased at the worst time, 1,225,000l. The main strain of the demand on the Bank was for a reserve – the deposits of other bankers – for notes of a high denomination suitable for that purpose, and for it only.
The return also shows that before the Panic and since February there had been an increase of the banknote circulation, of 1,782,000l., nämlich:
|Denomination of Note||Febr. 29||May 9.||Total Increase.||Percentage of Increase.|
|20 to 100||5,916,000||6,482,000||566,000||9|
|200 to 500||1,590,000||1,798,000||208,000||13|
|Notes sold by the Public||20,563,000||22,345,000||1,782,000||8|
Similar change in 1864. Febr. 24, 1864 active circulation was £19,857,000 und 9 May 1866: £21,484,000.|
The Economist, 8. September 1866. S. 1052.
The Meeting of the London, Chatham, and Dover Railway Co.
There was a most startling revelation of the mode in which railway debentures are issued. As soon as the power of issuing debentures is obtained, large numbers are at once issued en masse, and a loan raised upon them. As the public, i.e. as real investors, ask for debentures, new ones are granted. But when the limit of the borrowing powers is reached, this process becomes very dangerous. The public money comes in in exchange for new debentures, and with this money the existing loans are paid off, and the old debentures redeemed. But almost necessarily the new debentures are issued before the old ones are got in. There is a moment when both the new and the old are running together. And sometimes the money received in exchange for the new debentures is not used in paying off the old debentures. This happened in the case of the London, Chatham and Dover: the Co. was in great difficulties, their financial agents, Peto et Co , were under immense obligations, and the money was used for other purposes. Hence 128,000 debentures have been issued in excess of the borrowing powers, and these the public, the real investors, hold. The first and good debentures were only advanced upon by bankers and others.
Mr. Rankin, a railway solicitor of the greatest experience, says this is the general practice of railways companies. Who can be sure, then, that his debenture a legitimate one, and not, a fraud? The credit of railway debentures as a security will not survive a series of instances like the present.
The second minor point
Kommentar von Marx.
Schließen ⦗dieser ist aber sehr wichtig in den U. States.⦘: It seems these metropolitan cos. turn their compulsory power for taking land into a happy machinery for land speculation. People must sell to them; the value of land near great cities is always rising, and so the Co. eke out their own deficiency of capital. Lord Sondes, the chairman of the Lond., Chat. and Dov., said: „Their solicitor, Mr. Newman, had obtained for the Co. as much land as possible in the city; any portion of it would could now be sold at a profit of at least 20%.“ Also die Co have got a large profit by buying as much land as possible whether they wanted it or not. In future Parliament must be more rigid in confining the area of the land powers it grants, and probably a future juries will compel railway cos. to pay a price for their land higher even than at present.
The Economist, 8. September 1866. S. 1058–1060.
On 6 Sept. Bankrate of Discount reduced to 5%. Increase of bullion in B.o.E. of £363,192, und Reserve 40,457. Decrease in Private Securities £.711,697.
Failures: Suspension of R. Morrison et Co, of the Engine works, Ouseburn, Newcastle.
September 15. 1866. N. 1203.
The Economist, 15. September 1866. S. 1084/1085.
The Crops and the Harvest.
Promises ill in consequence of the immense quantities of rain which have fallen in the Midland and Northern counties of England. In many places heavy floods, and the quantity of grain still in the fields – many fields of barley still uncut – is very considerable. In the Midlands besonders schlechte arable cultivation. The great prevalence of grassland has commonly a prejudicial effect on it. Schon leztes year’s crops below an average; dieses noch mehr. „Last year the England and Scotch harvests were simultaneous; this year the harvest in the North is fully 3 weeks later than in the South.“ Wheat on all high-conditioned loams, welldrained clays and deep chalk soils will be a fair average, and the grain well developed. The area of wheat is gradually diminishing as not so suitable for stock husbandry and less favourable to turnip-growing as the other grains. Barley crop is rapidly supplanting wheat wherever the mixed system of husbandry is progressing. Turnip crop seldom before so good in England as this year. Potatoes as well as hay abundant. [„]With the exception of wheat, all the crops in England average or above average; while in Scotland, except barley and potatoes, all crops are under average.“ Everywhere pastures are abundant, grass and roots together will furnish more than the ordinary supply of autumn and winter food. A great demand for autumn store stock will be the consequence, which Ireland, the North of Scotland, and Wales, have surplus stock to meet. Sheep have proved the most profitable stock. The high price of this stock have led many who hitherto but fattened, to become sheepbreeders … . Mr. James Sanderson (in seinem Hauptreport in der Times) confirms our views that at present British agriculture is non-progressive: He says: „Apart from improved machinery and more liberal manuring, agriculture, on the whole is in a non-progressive state … Nor need marked agricultural progress in England be expected, for, until tenants obtain a proper security of tenure, and unmeaning covenants, which only rob landlords and fetter tenants, be removed, a large area of |100 British soil, especially in the southern counties, will remain, as now, undeveloped.[“]
The Economist, 15. September 1866. S. 1090.
David Murray, of Belmont Row (Birmingham) Contractor.
September 22, 1866. N. 1204.
The Economist, 22. September 1866. S. 1105/1106.
Bill Brokers and Bankers.
The bill brokers were in 1857 very much what the bankers were lately; the borrowers who wanted sudden and incalculable advances. But the bill brokers were told not to expect the like again.
The Economist, 22. September 1866. S. 1111/1112.
General Court of
Erklärt dividend von 61/2% für Halbjahr, wäre 13% für Jahr. Einer der proprietor Kerls, named Jones, says: „The main cause of the recent monetary crisis was that, while we had bought 250 Mill. l. worth of foreign produce in 1865, the value of our exports had only been 165 Mill. l. St., so that we had a balance against us of 110 Mill. l.[“]
The Economist, 22. September 1866. S. 1115/1116.
Indian Money Market.
Bombay 22 Aug. (Stoehr,
Zusatz von Marx.
Schließen ! Prieger et Co.): Features of the money market same as before; abundance of money for legitimate trade with few opportunities for employment, and continued distrust, kept alive by the numerous failures and petitions for winding up under trustees, and has during the last few days rather increased through rumours of fresh embarrassments at home. Bankrates remain 8 to 10%.
September 29. 1866. N. 1205.
The Economist, 29. September 1866. S. 1133/1134.
Deranged Action of the Eastern Exchange and its
Effect upon the Money Market.
Large remittance from India, nearly 1 Mill. l. St. in a single ship, and others beside besides. The common international currency is a Bill Currency. Those who have payments to make from country A to country B buy in country A as cheap as they can good bills – bills sure to be paid – upon country B. When these bills get very scarce, their price rises, or, their „premium“ is augmented, and at a certain point it becomes better to incur the loss of interest, the expense of carriage, and the cost of insurance incident upon the transmission of bullion, rather than to pay a premium upon bills unusually augmented. But such a scarcity of bills and such a premium are exceptional. The balance of international payments is settled in the precious metals; the ordinary current payments are made by bills. But a bill is an instrument based on credit: Its value depends on the fact that the acceptor can pay and will pay. When credit is disturbed, all the first class bills in the market rise in value; everybody knows them and competes for them, but the inferior bills no one touches. Accordingly the premium upon first class bills – upon the only bills practically useful – becomes considerable, and bullion is accordingly transmitted. This happened in America, as soon as the news of the panic here reached that country. Immediately, there was a great demand for bullion as a remittance, and, under ordinary circumstances, it would have been difficult to meet that demand. Just so in the East now. The premium on the best bills has become so great that even the Indian gvt are ready to send bullion. The very same cause, the distrust of longdated bills accepted in England, makes distant countries, as India and America, send us bullion, and makes near countries, as France and Germany, take our bullion.
Generally, if England receives money from India, it is perfectly certain that she will not have to send money to India. But when credit is deranged bullion may easily have to go both ways. The ordinary balance of payments may cause the transmission to the East; the extraordinary perturbation of credit may cause the transmission from the East.
The Economist, 29. September 1866. S. 1134–1136.
Liquidation of the Overends.
Zusammenfassung von Marx in eigenen Worten. The Economist: The
shareholders should first pay their creditors, and then recover
compensation from those whose fallacious representations induced
them to incur these liabilities.
Schließen Various shareholders refuse to pay, weil betrogen durch den Prospectus der Directors. Aber sie müssen die creditors zahlen, die defrauding directors prosecute.
October 6 1866. N. 1206.
The Economist, 6. Oktober 1866. S. 1161/1162.
The Money Market.
Both here and in France the harvest of this year is materially inferior to the harvest of last year. Even up to the present time in England there has been considerable increase in the import of foreign breadstuffs.
|1865 (£)||1866 (£)|
|Indian corn or maize||801,763||2,363,133|
|Wheatmeal and flour||1,170,613||2,433,732|
We have imported 1866 für £53,569,684 raw cotton ⦗davon für £28,004,469 aus Amerika⦘
statt für 24,534,839 im Jahr 1865. India von
den 53,569,684l. für raw
cotton lieferte für 13,905,053l. doppelt so viel
wie 1865. Kommentar von Marx.
Schließen Er (Economist) gratulirt England, daß Overends die Mine im Frühling, statt Herbst 1866 sprengte.
The Economist, 6. Oktober 1866. S. 1163/1164.
Four years ago our cottonsupply in jeopardy. This year larger than ever before. Already the aggregate importations during the first 9 months of the year exceed the average of the 2 years before the war, and we have still large quantities to receive, much of which is actually at sea. Er rechnet auf about 570,000 bales between 1st Oct. und 31st Dec. und giebt dann folgende comparative receipts from all quarters:
|2,829,000 bales||3,367,000||3,036,000||1,445,000||1,932,000||2,587,000||2,755,000||3,785,000 bales.|
Under the stimulus of extraordinary prices and
profits, between 1861 and 1865, or in little more than 4 years,
Egypt and Brazil trebled their production, while
the production of the East Indies, or rather their
supply to this country (for a good deal was diverted from China
Kommentar von Marx.
Schließen (and ass! from the home market)[)] increased in a greater ratio even.
Prices have fluctuated even more widely than supplies, as always in articles of general and indispensable consumption. Total Supply in 1862 = 1/2 supply of 1859; but the average prices of 1862 were threefold, and the extreme price fourfold those of 1859. Aber erst 1863 und 1864 prices reached their maximum. In der folgenden Lese the average and the highest price per lb of middling Orleans und fair Surat, the usual standards of comparison are given.
Thus, in fact, a falling off of less than 30% in the supply brought about an advantage of 450% in the price. Quantity of cotton reduced 1/3, cost increased near 5 fold. At the present time the current prices of the 2 qualities are 12d. for Orleans and 9d. for Surat. They have been lower in the course of the year.
The consumption of cotton has nearly recovered its former dimensions. The weekly deliveries in 1860 bales 50,600 und in 1866 bales 49,000 up to the 1st of October. All the factories in full work, wo nicht, cause is not want of cotton, but deficiency of hands. It is a remarkable fact that factory operatives, so fearfully redundant 3 years ago, are almost scarce now, at least in some of the country districts.
October 13. 1866. N. 1207.
The Economist, 13. Oktober 1866. S. 1189–1191.
The History of the London, Chatham and Dover Railway.
The law has been systematically evaded; published accounts have been totally misleading; many persons – some probably of small means – have been altogether deceived; a property of great natural value has become of no value at all. Daher Lond., Ch., Dov. Railway „is not a single railway“, sondern „a group“ connected by a personal union. The several sections have a common board of directors, but in other respects they are always independent, and sometimes hostile to each other. The largest davon is „the General Undertaking“, has 116 miles out of 136, und the next largest are the „Metropolitan extensions“ (14 miles). Und the „General Undertaking“ has taken off many small lines, and has subsidiary agreements peculiar to itself. Besides which there is a „common fund“, a sort of general contribution from all the units, and regulated by laws of its own.
The Lond., Chat., and Dover is a „contractor’s railway“, … was made by borrowing money, not by subscribing capital. „Since 1860“, say the investigators, „Messrs. Peto et Co. have subscribed for the whole share capital of the Co. of every kind, and such capital was subsequently placed upon the market by Messrs. Peto et Co., either on their own account, or in some instances, as they allege, on behalf of the Co.“ These loans were often secured by Peto et Co’s acceptances, and have been floating about Lombardstreet these 6 years, growing each year larger and larger.
|Nominal receipts on capital Account: £.5,425,000 (Ordinary Stock) £5,533,290 (Preference) 4,295,230 (Debentures) =||15,253,520|
|Real Capital expended and received||10,625,498|
|so that the Co, although dividend to be paid upon it,
never The Economist:
In one case „2,207,300l. stock was publicly sold, in respect of which Messrs. Peto et Co claim to give the Co. credit for only 27l. 10.s. % of its nominal amount, less 38,500l. further deducted as the expense of placing it“.
Such was the mode of dealing with share capital upon which advanced advances could be procured upon the market, but there were parts of the line, the shares in which were an unmanageable security, and would yield nothing. There was especially a certain unfortunate „Eastern Section“ out by Greenwich peculiarly intractable. But though no money could be obtained on shares on that line, „debentures“ being a first charge on it might be more useful. A legal impediment certainly existed. Parliament required that debentures should not be issued until one-half the amount of the capital was actually paid up, and „certified to be so by a justice of the peace“. But in the year 1864 financial ingenuity was exceedingly sharp. Receipts were given by the contractors as if for work done „in respect of the contract“; and on the same day the Co. gave receipts as if for money paid „in anticipation of calls“ on subscribed capital. These receipts were as follows:
|(Copy.)||London, Chatham, and Dover Railway.||Secretary’s Office, Victoria Station, Pimlico, S. W.|
|Metropolitan Extension (Eastern Section).|
|Received from Messrs Peto, Betts, and Co, the sum of Two hundred and fifteen thousand four hundred pounds, for deposit, and in anticipation of Calls on 42,500 Metropolitan Extension (Eastern Section) “B” Shares.|
|£215,400||(Signed)||W. E. Johnson, Secretary.|
|“Copy.”||9, Great George Street, Westminster, S. W.
April 22, 1864.
|Received of the London, Chatham, and Dover Railway Co. the sum of Four hundred and twenty nine thousand seven hundred pounds in respect of our Contract for the construction of the above named Section.|
|Per pro. Peto, Betts, and Crampton.|
|£429,700. 0. 0.||C. Christian.|
„These feigned payments (heißt es im Bericht des Investigation Committee) were then entered in the books of the Co., the only authority for the entries being the receipts above-mentioned. Upon this the statutory declaration was made, and a certificate of a justice of the peace obtained in order to bring the borrowing powers into operation, |103 whereupon the full amount of debentures authorised (356,300l.) were issued and are still outstanding.“
These documents are in fact, two mutually destructive fictions. The contractor acknowledges the receipt of money never paid on account of work ever never done; the co. acknowledge the receipt of capital subscribed by the contractors which never was subscribed. Debentures were then issued, and their produce is the only real money ever actually expended on the Eastern Section. We doubt the legal effect of this „balance entry“ of two deceits; but its financial effect is certain, the Co. got 356,000l. by it which they still owe on debenture.
But this legal impediment thus adroitly encountered, was not the only one which the Lond., Chath., and Dover met with. After the right to issue debentures had been obtained, the amount of debentures so to be issued is limited; it must not exceed 1/3 of the paid up capital. There are 2 ways in which debentures may be used. First, they may be issued to the lender in the usual way, to be held by him or his assigns till they run out; or they may be pledged in the money market to bankers and others for temporary loans, to be repaid when the time fixed for such short loans is expired. But there is a difficulty about using both modes. If a Co. pledges all its debentures to bankers and money dealers, it has none to give to the ordinary investor who wants one, and yet it is on the ordinary investor that at last everything depends. The Lond. Ch., and Dover did, through Peto et Co., pledge all its debentures, and when common investors wanted some, issued new ones, and trusted to Peto et Co’s redeeming the old ones, which they did not always do. New and old ran on together, and a large amount of illegal debentures is outstanding still.
The investigators report that the accounts are very faulty; for the year ending 20. June 1866:
|The Investigators say the loss was||274,165||17||6|
|The directors formerly said the loss was||78,485||2||4|
|Difference between the 2 statements||195,680||15||2||Wilful misstatement Zusatz von
「Peto et Co. were at the same
time contractors to the Co. subject to no competition, and financial
agents subject to no control. Accordingly, the Co. claims 186,000l. from Peto et Co, and Peto Kommentar von Marx.
Schließen (wie sich herausgestellt hat, mere imprudence) claims 384,000l. from the Co. Das übrige frißt ein Court of Chancery.
Das Capital von 1,000,000 der railway created
on 12 August 1864. Von dem share Capital 300,000l. contributed by the Great Northern Co.,
700,000l. nominally by Peto. „Immediately after the publication of the Zusatz von
Schließen (false) accounts (half year Dec. 1864 Zusatz von Marx.
Schließen (nämlich Peto figurirt hier als having paid)) in February 1865, the Co. began to take money from the public on mortgage of these lines, placing the sums to credit of separate accounts with the banker, to be drawn against by the Secretary of the Co. jointly with Mr. Christian, the Financial Manager of Peto et Co., and the arrangement was, that the money received from the public should be paid over to Peto et Co. for the express purpose of ‚retiring‘ the pledged debentures, that they might be returned to the Co. and cancelled.[“] Von 303,905l. so paid to Peto and Co, they applied 180,000l. in retiring an equivalent amount of the pledged debentures, which were delivered to the Co, and cancelled, leaving a balance of 123,900l. in the hands of Peto et Co. …
|Debentures now outstanding:||460,678l.|
|Parliamentary limit is||333,300|
Kommentar von Marx.
Schließen Die als reich verschrienen Citykerls etc, die als directors der co’s cos gewählt, heissen: „guinea pigs.“ 」
The Economist, 13. Oktober 1866. S. 1192/1193.
Mr. Fawcett in the North.
Everywhere, Mr. Fawcett pointed out, the class of labourers is combined together in large masses, and weighing itself against the class of the capitalists, who wish to dictate the terms of labour … All over the country we hear of these combinations and counter-combination counter-combinations. The masters are distrusted, the men are defied; time, which is all important to the rate of profit, is lost. Capital locked up in valuable machinery is lying barren while these articles of war |104 are discussed. … So long as every great adjustment of terms between capital and labour has to be fought out, a great part of the natural advantages of this country for productive purposes must be lost in paying for the great waste of time, savings, and profits involved in fighting it out. … The only certain way of palliating this evil, is, the growth of such associations such as Messrs. Brigg’s Coal Co., in which the interest of the capitalist and the labourer are so completely identified, that, instead of higgling for terms, the workmen will be glad enough to take whatever rate of wages seems most reasonable, in the full certainty that if they are being underpaid, they will receive the difference at the end of the half-year in a bonus from surplus profits. The plan at Messrs. Brigg’s is to pay, first, the regular rate of wages in the district, then 10% on all the capital of the co, and finally to divide the surplus between the capital and the labour, so that mere labourers, even without a share in the Co., receive a bonus at the end of the half-year if the profits exceeded 10%. This plan has been found to conduce to economy of time and material to a degree scarcely credible to those who have not tried it. … Mr. Briggs explained that the result had been not only to put a good bonus into the pocket of the labourers – a bonus of 5% on their wages – but to yield to himself, as a capitalist, a larger profit than he had ever before received, even in the most prosperous years of the colliery’s existence.
… Free contract between independent persons is the natural and healthy system, but to give ignorant parents an absolute right to contract for their children’s labour … leads to shortsighted bargains in which the future of whole generations of men is mortgaged to secure a few extra shillings a week in the present.
Saturday. October 20. 1866. N. 1208.
The Economist, 20. Oktober 1866. S. 1217–1219.
The State of the Money Market.
The mere fall in prices, when diffused, of itself causes, or at least much promotes, cheap money in Lombardstreet. Bills for the sale of the same quantities of produce amount – say to to 10% less money, and therefore the efficient demand for money is diminished, while its supply remains as it was.
October 27. 1866.
The Economist 27. Oktober 1866. S. 1250.
The State of the Money Market.
Schließen (Selling of Securities
after a Crisis)
The continued low price of securities still excites remark … During every crisis, and still more, before every crisis, loans are contracted which cannot be repaid till it is passed away. The securities upon which these loans were effected cannot be realised till the agony of the panic is passed; but when the panic is over, the lenders begin to require them to be realised. They call in their loans and at any price the securities must be realised. Such especially the case now, because the class most hit is the class possessing securities … . A large number of excellent shares have been pledged during the last few months to pay up calls in failed and futile Cos.
The Economist 27. Oktober 1866. S. 1250/1251.
Half the directors in disorganised railways do not know what is being done, and others wish to do what is illegal. … It now appears that the debentured debentures pawned by Peto at Lombardstreet are not fully filed filled up or not adequately registered and so are questionable. It is, indeed, certain that they were at the time treated both by the Co. and Peto as debentures. The Committee of Investigation state expressly: „Cheques were drawn from time to time on the joint account and delivered to Messrs Peto and Co. to the amount, in the whole, of 303,900l. and they gave written acknowledgements of having received such cheques on account of City Lines Debentures.“ The Lombardstreet lenders must have believed they held „debentures“, when both the Co. and Peto treated them as debentures. Now Peto says they are not. Dieß kommt hinzu zu dem case of the „Eastern Section“, wo debentures issued by the Co. when no real capital whatever was subscribed, sondern nur die fictitious receipts exchanged between the Co. and Peto. Some „Justice of the Peace“ must have certified the reality of the capital, and he could not have comprehended that there was none.
„If such things can be done by Sir Morton Peto“, ruft Economist aus, „what will not others do?[“]
November 3. 1866. N. 1210.
The Economist 3. November 1866. S. 1279–1281.
The „Law“ of Demand and Supply.
(Mit Bezug und für Thorntons Article in der Fortnightly Review): Price may be determined, i.e. may settle for a time at a given point, while demand and supply are not equal, and have no tendency to become so.
It may be shown that the cases in which Mr. Mill’s doctrine would hold good, are such as rarely or never occur in real life; while Mr. Thornton’s examples, purely hypothetical as they are, appear to us to represent pretty accurately the conditions of an ordinary market, and to be, as he maintains, fairly „typical of commercial transactions in general“.
„Demand and supply, the quantity demanded and the quantity supplied will be made equal. If unequal at any moment, competition equalises them, and the manner in which this is done is by an adjustment of the value. If the demand increases, the value rises; if the demand diminishes, the value falls; again if the supply falls off, the value rises; and falls if the supply is increased. The rise or the fall continues until the demand and supply are again equal to one another: and the value which a commodity will bring in any market, is no other than the value which, in the market, gives a demand just sufficient to carry off the existing or expected supply.“ (Mill. Pol. Econ. vol. 1 p. 541–2. 5th Edit.)
F.e. Mill says: „if the demand increases the value rises“, but the necessity for this entirely depends on the new demand being of such a kind that it will advance on the current price, whatever that price may be: short of this the demand might increase without producing the slightest tendency to a rise of value. And so of the other factor of the problem. „If the demand diminishes, the value falls“, which requires for its truth the analogous supposition with regard to the holders of the commodity, viz. that they are prepared to sell at any sacrifice rather than withdraw their goods from market. Where both these conditions are fulfilled, where demand and supply are both without reserve, where purchasers, numerous enough to absorb the existing supply, and sellers are each determined at any cost the one to obtain, the other to dispose of, goods will doubtless sell or tend to sell in conformity mit Mill’s law. Let us endeavour to present to ourselves the state of mind in which buyers and sellers enter an ordinary wholesale market – we say wholesale market, as it is there that competition comes most freely into play. The great majority of dealers have probably already formed some notion, more or less precise, of the price at which the commodity – the subject of the bargaining – ought to sell. This they take as their guide in their subsequent operations, allowing themselves however, to be drawn from it in one direction or the other by what they find in the market. If the purchaser finds the demand greater than he expected, he will be prepared to advance a little upon his ideal standard; while the holder of the commodity, in the opposite condition of the case, will on his side be prepared to make some concession in a decline of price. In general … these limits within which either will feel inclined to move in a direction opposed to his interest as buyer or seller will not be very great, though cases will occasionally happen when the market will reveal conditions of which both were before in ignorance, and may induce either to deviate widely from his original judgment. As a general rule, however, the data on which all, whether purchasers or sellers, form their opinion as to a legitimate price – the price, we mean, at which in the actual state of the market it is considered safe to trade – are pretty nearly the same. These data are what they know of the state of consumptive demand on the one hand and the supplies coming forward or expected to come forward on the other. … The object of their dealing is in general the same – to obtain the current profit on their transactions. Instead of the indefinite elasticity of demand on the one side, and the equally indefinite urgency to sell on the other, which Mill’s theory assumes, we should have sellers and purchasers conducting their operations within very definite limits – limits which for the great majority on either side would not lie very widely apart.|106
Mr. Thornton not
„merely points out some inaccuracies in the ordinary statement of the
law“, but, as it seems to us, proves that Von Marx
zitiert im Brief an Engels vom 14. November 1868.
Schließen no „law“ of demand and supply, in any sense which has yet been assigned to these words, exists; that neither in fact, nor in tendency, do market prices conform to the rule which is commonly supposed to govern them. … What a theory of market prices ought to give us is a statement of the conditions which determine them. … All the phenomena of value which are not of a strictly temporary value are referred by the existing doctrines of political economy, not to demand and supply, but to the principle of cost, that principle no doubt acting through demand and supply. … the modes and conditions under which demand and supply affect prices (marketprices) are so numerous and complicated that they do not admit being brought into a precise formula, but can only be set forth in a number of distinct propositions more or less connected.
Demand for labour is a demand without reserve,
since it is the means by which the desire for
profit, – an insatiable desire – seeks
to satisfy itself. Zusatz von
Schließen Dieß sagt er dagegen daß nach Thornton labour „forms a notable exception to the rule, that commodities are almost never offered unreservedly for sale“.
November 10. 1866. N. 1211.
The Economist, 10. November 1866. S. 1305.
The State of the Money Market.
Bankrate reduced von 41/2 to 4%. The disturbed state of confidence is still shown, because money is being remitted from the East, while the demand for remittance to the East rather augments than the reverse.
The Economist, 10. November 1866. S. 1306–1308.
There seems no end of the railway scandals which this crisis will detect. While money is plentiful it can be borrowed, and used to pay dividends, debenture interests, any one in fact whom it is convenient to pay. But when money cannot be borrowed, these claimants become first irritable, then importunate, finally aggressive, upon which the latent sin is at once discovered. In the case of the North Brit. Railway no debentures have been issued in excess, no Act of Parliament intended to protect lenders has been violated, but a series of erroneous accounts have been palmed upon the shareholders and the public, and confirmed by dividends distributed, on the faith of which ordinary shareholders believed they had an excellent property, and preference shareholders – in several sets – lent money to the concern. The fraud here is a business, not a legal fraud; it consisted in publishing false figures, not in transgressing Parliamentary limitations. The North British is a very large railway and has many branches; more than 700 miles aggregate length, and an authorised share and loan capital of more than £22,000,150. Like so many railways in England, the North British has always been before Parliament, in a series of contests with the Caledonian etc … For a long times time its dividends about 3% p. annum. But the Committee of Investigation find that they have been procured by „manipulation“. The accountant is examined:
„You have stated that from your examination of the revenue accounts of Jan. 1865, you found that the revenue was some £36,000 deficient to pay your preference dividends? – Yes. – Did you report that to Mr. Hodgson (the chairman of directors) or to Mr. Rowbotham (general manager)? Yes. – Before the January accounts were published? – Yes, I required instructions what to do. … I was told the dividend must be paid under any circumstances. That day or a day or 2 afterwards, I was told to bring out a dividend of 21/4% that half year. (these instructions given by Mr. Hodgson.) – How did you do that? By making these cross-entries? Yes.[“] Mr. Rowbotham confirmed this. He was „cognizant of the irregularities in the accounts, and that dividends were declared and paid which had not been earned; but that he did not order or instruct the operations by which the balance-sheets were to show results unwarranted by the position of the co, and that the instructions on that point emanated directly from the chairman to the accountant. He also stated that, although he is the recognised medium of communication between the board and the department of accounts and audit, he did not convey |107 to any member of the board his knowledge of the irregularities.“ Herr Hodgson in seiner published defence, in reply to the Investigation Committee, says: „it would manifestly have been impossible to obtain or maintain the value of the railway without a temporary departure from the strict rule, whereby the limits of expenditure out of revenue and out of capital are defined.“ Und daher North British pumpte sein Geld on preference stock and debentures, because the accounts of the Co. looked well.
|Share Capital of the North British||£.4,771,000|
|Its preference shareholders of all kinds||10,642,000|
|Debentures all but a very little issued||5,799,000|
Hodgson seems to think that shareholders are necessarily benefited by false puffing accounts. But shareholders are a very fluctuating body. The shares of A become to[-]morrow those of B by transfer. Daher diese accounts a fraud on the buyer for the gain of the seller.
The mode in which the entries were managed was, that a certain amount of expenses which ought to have been by the halfyear were charged to various „deferred“ accounts. Das Investigation Committee says: „Apart from carrying to capital sums which should properly have been put to revenue, complicated and elaborated exertions have been made to conceal a large amount of expenditure under the head of suspense accounts, consisting of ‚line renewals‘, ‚line suspense‘, ‚surplus property‘, otherwise ‚postponed expenditure‘, ‚locomotive suspense‘, ‚suspense account, N. 2‘, ‚suspense account, 1863‘, and ‚contingent account‘. (‚Life‘, half the brokers of England think, in regard to railway accounts, ‚is not long enough to understand such things.‘) Purpose dieser entries, to bring out the intended dividend.[“]
The Persons most to blame are the Auditors. Hätten sie ordentlich zugesehn, so discovered daß die dividend paid out of borrowed money.
The Economist, 10. November 1866. S. 1316.
Schließen This latest development of railway misdoings has communicated fresh alarm to the minds of holders of railway stocks and shares. Auf dieser Basis renewed die Bear manoeuvres, wie früher mit den Bankshares, most of which have recovered from the unauthorised reports. … Unless the money market alter very materially, not in price, but in character, it will be impossible to renew the greatest part of the maturing railway debentures.
The Economist, 10. November 1866. S. 1316.
- Dent and Co’s (China) drafts refused by their London Agents: Dent, Palmer et Co.
- Stoppage of James Russell et Sons, Crown Tube Works, Wednesbury.
- Utley Uttley and Lee, manufacturers at Burnley, liab. 20,000l.
November 17. 1866. N. 1212.
The Economist, 17. November 1866. S. 1335/1336.
The First Interior of a Finance Company.
Nämlich Public account der „General Credit Co“. Gestehn loss by loans to Foreign railways, etc aber their capital intact, und reserve funds. »We scarcely consider the dividend of 15% which the Co. has divided, justified by the result. Such investments as they dealt in yield occasionally large gains; many private persons have made immense fortunes by dealing in them. But a company has very material difficulties in such a trade. First, it cannot be idle; it must employ its money, pay a dividend and it will not be entirely easy to carry on 2 kinds of business, one in times of enterprise, another in times of caution. An individual can stand still. A Co. is always restless, and always existing. It is, so to say, immortal. It has to take the average not of a year or 2 like a chance speculator, but of all years to come … The only permanent high dividends are those of Cos which in some shape or other are dealing with much money of other people, and have to divide only upon a small capital of their own.[«]|
The Economist, 17. November 1866. S. 1338.
English Agriculture. Zusatz von Marx.
Schließen (Tenant-Right or Leases?) (Improvements)
A more striking illustration of the stagnant condition of all, or nearly all, that concerns the management of land in England could scarcely be found than the fact that the Report on agricultural customs contained in a recently (1866) issued blue book is merely a reissue of the report of Mr. Pusey’s committee of 1848. „That part of the report which recommended the assimilation of the law as to agricultural fixtures to that of trade fixtures has been accomplished.“ Except that infinitesimal progression, for in all else this report might as well have been made now as 18 years ago.
Farmers may be certain – and there are few districts in England which have not afforded sad examples – that any reliance on customary allowances – (statt rational leases) – whether of the old or new pattern, are as unsafe in fact as unsound in principle. We know that many who seek to delude farmers, by a sort of mock liberality, represent such allowances as equivalent to a lease, but let any farmer holding his farm under such terms try it. Let him quarrel with the game keeper –, let him interfere with the game bred on his farm and fed on his crops for his landlord’s profit, – let him vote against his landlord’s candidate at the county elections, and he will then test the real value, the no value, of the „tenant-right“ panacea. The following extract from a letter to the Times by Mr. James Anderson Sanderson , a very able land agent, sagt u.a: „For my own part, whenever I fix farm rentals I put from 5 to 7s. 6d. per acre more upon land of medium quality farmed under the security of a lease than if occupied on the system of annual tenancy. But this additional rental is a mere tithe of the value that landlords obtain by granting leases. Farming under the lease system is progressive, and from the large tenant outlay which the security of a lease induces, it is no unfrequent occurrence for farms during a 19 years’ lease to be doubled in value without any outlay on the part of landlords. Indeed, what are usually termed landlord’s improvements on a farm let on annual tenure become tenant’s improvements on farms let on lease. Tenant’s outlay under the former system is too often limited to what one year will exhaust, while under the latter it embraces improvements which are recovered by periodical returns after a lapse of time. Taking into account the increased and increasing outlay in the shape of labour, manure and implements which land requires to make it remunerative, I consider the question of security of tenure no longer doubtful, and that farm leases are essential to the further development of British Agriculture.“
The Economist, 17. November 1866. S. 1343.
- Suspension of Philip Levi et Co, Adelaide, South Australia, liab. 300,000l. Ditto:
- W. Dryman et Co, warehousemen, Sydney und ebendaselbst Love et Son; wholesale grocers, mit liab. respectively of 42,000 und 40,000l.
24 November 1866. N. 1213
The Economist, 24. November 1866. S. 1361/1362.
Why Overends failed.
The business established early in the century, was very profitable, gab
for the 5 years preceding 1860 the average net income of 190,000. But
then, or rather just before, a change occurred. Samuel Gurney
, the great, ✝ in 1856 und
Chapman, his nephew retired soon after the panic
of 1857. Danach a more lax and less intelligent regime began 1861, where John Henry Gurney, residing in
Norfolk and doing the quiet local business, Zusammenfassung von Marx.
Schließen sah wie’s stand, interfered und decided that no profits should be divided till the bad accounts incurred were liquidated. The unique fact remains, that the principal partners drew nothing from the firm of Overend, Gurney, et Co. for 5 years, |109 and thus arose the great sum of 940,000l., which stood to their credit in the books when the business was sold.
There were 13 large accounts open at the time of the transfer, and the partners on going into the matter estimated that there would be a loss on these of £. 2,788,000l. The details are these:
|Due to Overend, G. et Co.||Estimated value||Deficiency|
|Atlantic Royal Mail Steam Packet Co.||839,344||19||0||160,000||679,344||19||0|
|Millwail Ironworks Co. et C. J. Mare||422,565||12||5||…||422,565||12||5|
|East India and London Shipping Co.||397,653||3||10||25,000||372,653||3||10|
|Greek and Oriental Steam Navigation Co.||144,144||3||11||7,000||137,144||3||11|
|David Leopold Lewis||341,559||13||4||182,000||159,559||13||4|
|Kelsson, Tritton et Co||291,391||4||2||187,000||103,891||4||2|
|Railways belonging to Overend, managed by J. E. C. Koch||243,069||17||1||54,000||189,069||17||1|
|Laurence and Fry||148,543||14||6||21,000||127,543||14||6|
|T. and G. Garraway||190,977||4||4||10,000||180,977||4||4|
|Charles Joyce and Co||78,728||10||0||62,000||16,728||10||0|
|Halliday, Fox et Co.||34,628||5||9||3,000||31,628||5||9|
|Z. C. Pearson||35,693||4||5||…||35,693||4||5|
Everybody familiar with these names has heard that „Overends“ were „deep in with them“. Viele hieltens für böswilligen City Gossip. Dieß nur der estimated loss at the time the new Co. was formed; the real loss was greater still. At the time of the transfer the total amount of „exceptional“ loans was 4,199,000l., but it was „hoped“ that the securities held against them would yield enough to reduce the ultimate deficit to 3,117,000l. Against this the partners prepared to set: