London. 1868.

„Economist“ (1866 und 1867)
„Money Market Review“ (1866 und 1867)|


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

January. 1866.

Saturday. Jan. 6, 1866. N. 1167.

The Economist, 6. Januar 1866. S. 1.
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Eight Per Cent.

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

The Economist, 6. Januar 1866. S. 1–3.
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What The Value of Money in 1866 is likely to be.

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

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

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

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

The Economist, 6. Januar 1866. S. 4/5.
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The Duration of our supply of Coal. ( Titel von Marx notiert in „Heft 3. 1868“ der „Hefte zur Agrikultur“ (MEGA² IV/18. S. 587.14) und im Notizbuch 1878/1879 (IISG, Marx-Engels-Nachlass, Sign. B 152).

»At least half the coal raised in Gr. Brit. is consumed by the various branches of the iron trade.[«] |2 Bei der present rate of increase, our coal exhausted in 100 years. Wir kennen jezt thickness and accessibility of our coal mines. Bleiben in Great Britain, down to a depth of 4000 feet, 80,000 millions of tons. Unsre Jӓhrliche Consumtion 1860 war 80 millions. So die available coal would last 1000 years. Aber Consum increases 31/2% p.a.; in 1880 will be 160 millions; und if it continues thus to increase, the whole 80 000 mill. worked out before 1960. Aber früher. Weil gerechnet all coal down to 4000 feet: no coal mine has yet been worked at a greater depth than 2,500 feet. Going deeper enhances the price und mit dieser Preiserhöhnung gehn unser rate of progress und special advantages zum Teufel. Mit tiefrem Arbeiten: the heat grows more insupportable, the shafts and passages longer, the danger greater, the ventilation more costly, the quantity of water to be kept out or got out more unmanageable. A very short period may raise engine coal and smelting coal from 5s. to 6s. per ton. Now a cotton mill of ordinary size will often use for its steam power 80 tons of coal per week; this at 5sh. is £1,000 a year; at 10s. per ton it is 2000. Aber die cotton mill is full of machinery; grosses Kostenitem dieser Maschinerie ist coal used in smelting and working the iron of which the machinery is made. Ebenso in den Transportmitteln, welche von und zu der Fabrik führen, in den railways und steamboats Kohle grosses Kostenitem.

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

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

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

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


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

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

Jan. 13, 1866. N. 1168.

The Economist, 13. Januar 1866. S. 29.
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The State of the Money market.

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

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

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


The Economist, 13. Januar 1866. S. 30/31.
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Our Trade with America.  Zusatz von Marx.
(U. St.)

Alarmists raise warnings.

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

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

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

The Economist, 13. Januar 1866. S. 32/33.
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Market Prices of Investments in the Year 1865.

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

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

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

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


Consols (1865) fallen von 893/8 zu 873/16. Actual decline von beginning to end of the year 2%. Hauptsächlich, weil andre securities profitlicher waren.

The Economist, 13. Januar 1866. S. 35/36.
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A Practical Check on Bubble Compagnies.

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

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

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

January 20, 1866. N. 1,169.

The Economist, 20. Januar 1866. S. 61.
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The Effect of the 8%.

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

Market Prices of Investments in the Year 1865.

The Economist, 20. Januar 1866. S. 63–65.
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Insurance Companies und Miscellaneous (embracing, die latter, the majority of the Limited Liability Companies recently created).

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

Von 97 descriptions of stocks and shares quoted in the insurance companies’ list of the Investor Manual  Zusatz von Marx.
(leztres Beiblatt zum „Economist“)
nur 16 at a discount, dieser trifling und [»]belongs chiefly to the shares of the new marine insurance cos«. |6 In den meisten lӓnger etablirten Dingern dieser Art (insurance) Prӓmiums der shares im market.

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

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

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

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

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

»there is not, so far as we can judge from dividends and market prices, anything so rotten in our new mode of speculation as to preclude its resuscitation at a more propitious moment.[«]  Kommentar von Marx.

The Economist, 20. Januar 1866. S. 65/66.
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Insurance is as unsafe as gambling; or, more correctly, it is gambling, if the number of risks to be insured is not enough to ensure an average result … Chance is eliminated from insurance by the number of ventures (Die Grösse der Area, worüber ausgedehnt:)|


The Economist, 20. Januar 1866. S. 68.
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Un. States Commerce mit France (1865).

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

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

January 27, 1866. N. 1170.

The Economist, 27. Januar 1866. S. 89/90.
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The Memorial of some Liverpool Merchants on the Currency.

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

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


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

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

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

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

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

The Economist, 27. Januar 1866. S. 92/93.
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Cattle Plague. Government Relief.

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

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


The Economist, 27. Januar 1866. S. 94/95.
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The Recent dividends of Joint Stock Banks.

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

Averages of
Bk. of England minimum rates of discount. 1864 1865.
7.31 4.74.
The Average Rate of Bank Dividends.
Last 4 dividends, Rate % per annum.
1864 1865.
June 30. Dec. 31 June 30. Dec. 31
Alliance 10 nil 5 5.
Bank of London 20 20 20 20
City Bank 20 12 15 12
Imperial 8 10 8 8
Joint Stock 321/2 50 18 22
Metropolitan and Provincial 71/2 nil nil 5
Union 20 20 30 20
London et Westminster 28 32 26 34.
Half Year ended 31st Dec. 1865
Capital. Dividends and bonus Reserve
Created Paid up. Rate p. annum from calls from Profits
£. £. Per Cent. £. £.
Alliance (limited) 4,000,000 985,785 5 3,014,215 71,840
Bank of London 800,000 400,000 20 400,000 304,411
City Bank 1,000,000 500,000 12 500,000 144,710
Imperial (limit.) 2,250,000 448,970 8 1,801,030 58,560
Joint Stock 3,600,000 1,080,000 22 2,520,000 315,263
Metropolitan and Provincial (lim.) 2,000,000 337,420 5 1,662,580 14,904
Union 4,000,000 1,200,000 20 2,800,000 350,660
London and Westminster 5,000,000 1,000,000 34 4,000,000 363,204

(verte) |

Half Year ended Dec. 31, 1865
Liabilities to the Public Assets
Deposits and Acceptances Cash Government and other securities Bills discounted etc
£. £. £. £.
Alliance. 2,504,168 435,930 147,913 3,007,456
Bank of London 4,335,877 820,497 302,167 3,985,036
City Bank 4,859,720 579,448 329,902 4,655,443
Imperial 1,543,281 188,642 59,619 1,836,741
Joint Stock 18,215,358 867,191 1,059,225 17,894,010
Metropolitan et Provincial 860,069 125,592 90,259 984,592
Union 17,794,263 2,816,994 1,665,725 15,085,836
Lond. and Westm. 20,779,301 1,677,841 2,489,412 16,600,522
Half Year ended 31 Dec. 1865
Liabilities to Public Cash and Securities Calls to be made Total means.
£ £ £ £
Alliance (lim.) 2,504,168 3,591,299 3,014,215 6,605,514
Bank of London 4,335,877 5,107,700 400,000 5,507,700
City Bank 4,859,720 5,564,793 500,000 6,064,793
Imperial (limit.) 1,543,281 2,085,002 1,801,030 3,886,032
Joint Stock 18,215,358 19,820,426 2,520,000 22,340,426
Metropolitan and Provincial (lim.) 860,069 1,200,443 1,662,580 2,863,023
Union 17,794,263 19,568,555 2,800,000 22,368,555
Lond. and Westm. 20,779,301 20,767,775 4,000,000 24,767,775
70,892,037 77,705,293 16,697,825 94,403,818 |


February 3. 1866. N. 1171.

The Economist, 3. Februar 1866. S. 121.
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The Money Market.

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

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

The Economist, 3. Februar 1866. S. 123.
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The Credit Mobilier and the Finance Companies.

 Zusammenfassung von Marx.
1865 veranstaltete\[ver]ursachte der französische(?) Credit Mobilier die Bank enquête, um die policy der B. o. France umzuwerfen.
Dieß Jahr bitterly attacked in  Titel von Marx notiert in „Heft 3. 1868“ der „Hefte zur Agrikultur“ (MEGA² IV/18. S. 587.16), einem Exzerptheft 1878 (IISG, Marx-Engels-Nachlass, Sign. B 148) und im Notizbuch 1878/1879 (IISG, Marx-Engels-Nachlass, Sign. B 152).
Revue des deux mondes von Victor Bonnet
. Verdoppelt sein Kapital. (Dazu berufen shareholders 12 February 1866).

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

The Economist, 3. Februar 1866. S. 126/127.
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Bubble Cos.

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

The Economist, 3. Februar 1866. S. 127/128.
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Combination of Farm Servants in Scotland. Mid-Lothian Protective Society.

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

The Economist, 3. Februar 1866. S. 129/130.
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English Farming.

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

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

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

The Economist, 3. Februar 1866. S. 133.
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Money market.

Greatest depression in the shares of the London Financial Association, afresh quoted at heavy decline on in last week; Joint Stock Discount Co., on its Report, fell to 53/4 discount. Rumours. Selling of shares without reference to the positions of the different Cos. Imperial Mercantile Credit Shares also considerably lower.|


10 February 1866. N. 1172.

The Economist, 10. Februar 1866. S. 153/154.
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Money Market.

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

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

There have during the week been several failures of contractors and others are still rumoured[.] The finance and discount cos which hold the bills of such contractors are necessarily affected … These contractors made railways (mainly on their own account) in positions where they could not pay, and they obtained the capital wanted to make them at great interest in Lombard Street.

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

On the whole, therefore, we  Zusatz von Marx.
(das Orakel)
are not apprehensive as to the state of creditwe hope that they  Zusatz von Marx.
(the Bank of E.)
soon may be strong enough to do so (i.e. reduce the rate of discount.)

 Kommentar von Marx.
Wichtiger dagegen als der Economist selbst wußte, folgender Passus, der halb ironisch ist:

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


The Economist, 10. Februar 1866. S. 154–156.
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Cattle Plague.

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

Number of living animals imported in the 11 months ended November 30.
1863 1864 1865
Oxen, bulls and cows: 89,518 141,778 196,030
Calves 36,930 44,678 48,926
Sheep and lambs 380,259 412,469 763,084
Swine and hogs 24,311 68,777 117,766.
The Economist, 10. Februar 1866. S. 157/158.
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American Protectionism.

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

The Economist, 10. Februar 1866. S. 159/160.
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Coal Supply.

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

Sir W. Armstrong, in his Newcastle address, assuming 23/4 as the average annual increase in the 8 years previous to 1861, exhausted the available supply in 212 years.

Mr. Jevons estimated the average annual increase between 1854 and 1863 at 31/2%, und exhausted in 100 years at that rate of increase.

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

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

So ultimate catastrophe still more proximate.|


Our Number of collieries:
1863 2,397
1864 3,268.
British exports of coal.
Amount (tons) Duty. Rate of Increase p.c. of Exports in 10 years
s. d.
1821. 170,941 7 6
1831 356,419 4 0 109%
1841 1,497,197 nil 320   
1851 3,468,545 132   
1861 7,855,115 126   
1862 8,301,852
1863 8,275,212
1864 8,800,000


Production (Metric Quintal) Consumption. (Metric Quintal)
1855 68,270,100 108,567,800
1863 107,079,800 165,800,000
Increase: 38,809,700 57,232,200.
Imports of Coal into France.
From All Countries. (Metric Quintal) From England (Metric Quintal) From Belgium (Metric Quintal)
1863 61,204,500 12,966,000 37,152,000
1864 62,232,870 13,948,124 31,582,551
Increase 1,028,370 Increase 982,124 Decrease 5,569,449.

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

Value of French Import of Coals
1860 107,300,000f.
1864 121,300,000f.


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


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

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

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


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


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

U. States.

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

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

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


The Economist, 10. Februar 1866. S. 161.
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The Banking Question.

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

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

The Economist, 10. Februar 1866. S. 162.
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Game and Bankruptcy.

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

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

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

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

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

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


17 February 1866. N. 1173.

The Economist, 17. Februar 1866. S. 185.
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Money market.

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

The Economist, 17. Februar 1866. S. 187–190.
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The Report of the American Commissioners on Revenue (appointed by the President)  Zusatz von Marx.
(Blue Book.)

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

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

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

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

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

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

Ebenso mit books.

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

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

Repairs: The Americans put a tax of 36/10% on the repairs of every article if the cost of that repair exceeded 10% on the value. Aristocratic legislation. A repair of trifling cost is more than 10% of an article of small value; much less than 10% on articles of great value: hence, expensive articles of luxury can be repaired without a tax, but cheap articles of common use must pay a tax. „If“, say the Commissioners, „the worker in wood repairs a wheebarrow wheelbarrow worth 1 dollar by adding 10 cents to the value, it is taxable; but if he repairs a carriage or piano worth 500 dollars, no tax accrues unless he adds 50 dollars to the value.“

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


3) The great revenue now to be raised will necessarily bring about in America a great political change.  Kommentar von Marx.
(Hierüber kohlt aber „Economist“ nur das Oberflӓchliche der Commission nach über die Nothwendigkeit stehende skilled collectors zu haben und dem finance minister neue Stellung zu geben.)

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

The Economist, 10. Februar 1866. S. 190.
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The Bill authorising loans for the Construction of Houses for the Poor.

One half the population of Gr. Brit. now lives in towns. The Metropolis has a population equal to that of Scotland, twice that of Denmark, necessarily 3 × that of Greece. London receives new inmates at the estimated rates of 300 a day. This packing has now reached a point at which it threatens to be destructive – typhus has become endemic in London … The railways become a swath of erased houses, until it is officially calculated that, within this single year, 16 000 houses have been marked for destruction, and upwards of 80 000 persons will be thrown upon quarters already overburdened. This cannot go on without one or 2 results – pestilence or an attempt on the part of the dispossed dispossessed to obtain a remedy by force … . Besides, a population so overcrowded must deteriorate in virtue, civilization, and in the capacity for works.

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

[The Social Economist, 1. Oktober 1868]

Eingeklebter Zeitungsausschnitt
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The Social Economist, 1. Oktober 1868. S. 123.
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The last Act of the late session was to provide better dwellings for artizans and labourers. The preamble states that it is expedient to make provision for taking down or improving dwellings occupied by working men and their families which are unfit for human habitation, and for the building and maintenance of better dwellings for such persons. The Act is to apply to the metropolitan and other districts of the United Kingdom as set forth in the schedule. The mode of procedure under this statute is very simple. It provides for the appointment of officers where necessary, and if in any place to which the Act applies the officer of health finds that any premises therein are in a condition or state dangerous to health so as to be unfit for human habitation he is to report the same, and notice forthwith is to be taken to remove or to improve the same. Action is to be taken by local authorities on the report of surveyors against the owners to make them comply with the directions, subject to an appeal to the Quarter Sessions. On four or more householders living in or near to any street representing in writing to the officer of health that any premises in or near that street are in a condition or state dangerous to health he is to inspect them and report, but the absence of any such representation is not to excuse him from inspecting any premises and reporting thereon. In the event of the local authority declining or neglecting for the space of three months after receiving such report to take any proceedings to put the Act in force, the householders who signed the representation may address a memorial to the Secretary of State, and he may direct the local authority to proceed under the Act. On the owner of premises being required to execute the works, and in his default, the local authority may either order the premises to be shut up or to be demolished, or may themselves |22 do the work. Where the local authorities execute the works they may apply to the Quarter Sessions for an order charging on the premises the amount of all costs and expenses in and about the execution of the works, and the Quarter Sessions, when satisfied of the amount so expended, is to make an order charging the property with the amount and 4 per cent. interest which charge is to have priority over all other charges, and to be deemed a mortgage. If the requirements of the order involve the total demolition and not the improvement of the premises, the owner is within three months after service of the order to remove the same, and if he fails then the local authority is to execute the order and pay him any balance that may remain after the expenses from the sale of the materials. Instead of effecting the improvements required by the local authority, the owner may take down the premises. Where an owner executes the work required by a local authority he is to have an annuity as compensation for the expenditure incurred by him in the shape of a charging order. The annuity is to be £6 for every £100, and to be payable for 30 years. Every charging order on premises in Middlesex and Yorkshire is to be recorded in the Registry-office. With the view of a general adoption of the Act–and there are many places where the working classes “most do congregate”―the Public Loan Commissioner may make advances, and the local authorities may borrow money for the purposes mentioned. Many public improvements are being carried out and contiguous to the same are wretched dwellings; they could be improved or demolished, and the principle involved in the preamble that they were unfit for working men and their families as “human habitations”could be easily established.―Times.

 Handschriftlich von Marx.
The Social
ECONOMIST.  Handschriftlich von Marx.
[OCT. 1, 1868.

[„The Economist“ (Jahrgang 1866) (Fortsetzung)]

[17 February 1866. N. 1173. (Fortsetzung)]

The Economist, 10. Februar 1866. S. 191/192.
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James Rothschild on Banks and Currency  Zusatz von Marx.
(als Zeuge vor dem französischen Bank Enquête Committee)

„As to the order of making the B. o. France invest money in foreign securities … the gravest fault it could commit. Such a measure 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.
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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.
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Corresponding Week ended 24 February.

Die Bankdaten beziehn sich auf B. o. England.

1856. 1863 1864 1865 1865
£. £. £. £. £.
Circulation of Notes incl. Bank Post Bills 19,254,614 19,715,828 20,207,871 20,101,978 20,973,521
Public Deposits 4,141,551 7,901,658 8,153,601 6,665,364 5,048,777
Other Deposits. 14,762,364 13,367,153 12,406 673 14,140,885 12,591,493
Gvt. Securities. 11,946,006 11,043,079 11,174,584 11,023,211 9,915,483
Other Securities. 19,185,177 18,569,000 19,233,243 18,790,280 18,020,480
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.
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James’ James Rothschild’s Examination continued.

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.
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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 152).
Report on English Trade with Russia

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.
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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 prudence
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.

December 31, 1865.
Limited Cos.



Paid up.


Net Profits.


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. £.
1863 1864 1865
International Financial. 15% 10% 10% 59,473
Joint Stock Discount. 5 7 3 56,169
General Credit 10 15 15 20,072
Consolidates Consolidated Discount 0 0 0 594
London Financial 15 171/2 121/2 160,108
Imperial Merc. Credit ... 141/4 20 94,169.
December 31. 1865
Liability to the Public. (Deposits etc) Assets
£. In Hand (as valued)
Calls in Reserve
Internat. Financial 682,833 1,549,445 2,250,000
Joint Stock Discount 3,461,290 4,349,407 1,200,000
General Credit 1,117,372 2,473,015 4,000,000
Consolidated Discount 1,862,797 1,941,685 800,000
London Financial 795,088 1,593,062 1,400,000
Imper. Merc. Credit 4,707,655 5,392,042 4,500,000
12,627,035 14,150,000 17,298,656
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.
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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.
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
Surplus Fund 7,742,676
Notes in Circulation 34,264,380
Individual Deposits 99,195,962
United States Deposits 9,634,076
Dividends unpaid 986,211
Due to national banks 18,008,967
Due to other banks 4,877,236
Profits 6,470,145
Old Circulation outstanding issued by National banks while still State Banks: 11,953,795
Other items 188,810
Total 271,953,614
Loans and Discounts 97,062,805
Overdrafts 371,221
Real estate, furniture, and fixtures 2,940,656
Expense Account 907,905
Premiums paid 517,100
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
Specie 2,993,228
Other lawful money 38,618,872
Other items 3,809,702
Total 271,953,614 |

No banks in the world such amazing solidity.

Liabilities of the National American Banks to the Public.
Notes in Circulation (old and new) 46,218,175
Private Deposits 99,195,962
Public Deposits 9,634,076
Due to other banks 4,877,236
Against this they have in actual cash: £
Specie 2,993,228
Lawful money 38,618,872

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:

Cash 41,612,100
Government security 85,546,260
Remittances and other cash items 14,461,970
Total 141,620,330
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 Marx.
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.
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Board of Trade Returns.

Shipments of British goods and Produce.
£. St.
1863 146,602,342
1864 160,449,053
1865 165,862,402
Also: Increase is our exports in 1865 gegen 1864 of £5,413,349
gegen 1863 of 19,260,060.
Increase or Decrease in export of some articles 1865 and 1864.
Articles. 1864 1865. Increase. Decrease.
£. £. £. £.
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
Coals 4,165,773 4,431,492 265,719
Cotton yarn 9,083,239 10,351,049 1,267,810
(Manufactures. piece goods[)] 43,917,471 44,860,239 942,768
(Thread[)] 794,597 753,438 41,159
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 yarn 2,991,969 1,462,309 22,112
Linen manufactures. Piece goods 7,607,502 2,505,497 486,472
   Thread 492,194 558,865 916,463
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
      Bar etc 2,568,049 2,213,123 354,926
      Railroad 3,305,086 3,541,296 236,210
      Castings 670,111 771,124 101,013
      Hoop, sheet 1,776,652 1,597,604 179,048
      Wrought 2,257,406 2,494,371 236,965
   Steel. unwrought 890,395 779,487 110,908
   Copper. unwrought 586,147 496,957 89,190
      Wrought 2,912,137 2,290,850 621,287
   Lead. Pig 779,174 582,569 196,605
Tin. Wrought. 482,147 499,401 17,254
   Plates. 1,263,246 1,482,766 219,520
Paper. 425,257 351,233 74,024
Silk. Thrown. 568,781 474,957 93,824
   Silk Manufactures 1,460,520 1,409,221 257,253
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
   Flannels 554,543 431,955 122,588
   Blankets 797,023 613,115 183,908
      Carpets and druggets 861,499 861,564 65. |
 Die Nummerierung und die Anordnung der Länder in absteigender Folge von Marx.
Value of British exports to different countries. 1864 et 1865

£ £ £ £
1864 1865 Increase Decrease
1) India. 19,951,637 18,254,570 1,697,067
2) Un. States 16,708,505 21,235,790 4,527,285
3) Hanse Towns 13,418,826 15,091,313 1,672,547
4) Australia 11,857,213 13,352,357 1,495,144
5) France 8,187,361 9,034,883 847,522
6) Holland 6,884,937 8,111,022 1,226,085
7) Brazil 6,249,260 5,668,089 581,171
8) Egypt 6,051,680 5,985,087 66,595
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
12) Italy 5,597,496 5,376,886 220,610
14) China (ohne Hong Kong) 3,092,611 3,609,301 516,690
15) Spain 3,084,778 2,249,822 834,956
16) Cuba und Portrico 3,002,025 2,207,511 794,514
17) Russia 2,846,409 2,921,496 75,087
18) Brit. West India 2,649,539 1,945,466 704,073
19) Belgium 2,301,291 2,921,300 620,109
20) New Granada 2,058,843 2,372,497 913,654
21) Cape of Good Hope 1,814,319 1,454,540 359,779
22) Mexico 1,809,753 1,898,056 88,303
23) Argentine Confederation 1,757,457 1,951,048 193,591
24) Chili 1,683,580 1,603,753 581,171
25) Hong Kong 1,618,867 1,561,851 57,016
26) Foreign Westindies 1,370,941 1,157,960 212,981
27) Peru 1,361,692 1,193,335 138,357
28) Gibraltar 1,206,168 1,116,659 189,509
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
31) Prussia 1,134,399 2,102,714 968,315
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
33) Uruguay 993,951 813,448 180,503
36) Ilberia, Croatia, Dalmatia 792,119 725,789 66,330
37) Norway 772,095 677,458 94,637
38) Philippine Islands 765,719 945,624 179,905
39) Malta et Gozo 753,113 633,887 119,226
40) Sweden 731,294 900,959 169,665
41) Ceylon 826,333 685,308 141,025
42) Bermudas 657,045 62,659 594,386
43) Mauritius 655,852 596,848 59,004
44) Hanover 689,978 399,933 290,045
45) Japan 627,383 1,520,895 893,512
46) Western Africa (Foreign) 565,962 642,467 76,505
47) Greece (ohne Ionian islands) 433,887 583,253 149,366
48) Natal 427,885 223,420 254,465
49) Venezuela 482,988 387,032 95,956
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.
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James Rothschild Evidence (Continuatio)

J. Rothschild: „It is precisely those  Gemeint sind die Goldfunde in Australien seit 1851.
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.
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Rates of Discount (this week) in the chief continental cities:

Bankrate % Open Market %
Paris 4 33/4
Vienna 5 5
Berlin 6 6
Frankfurt 4 4
Amsterdam 6 6
Brussels 4 4
Madrid 9 Uncertain
Hamburg 31/2
St. Petersburg 6 53/4 – 6. |


10th March, 1866. N. 1176.

The Economist, 10. März 1866. S. 281.
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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).
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.
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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.
(Ueberal Ueberall Centralisation und centralised Gvt. action unvermeidliches Schicksal der modernen Gesellschaft!)

The Economist, 10. März 1866. S. 284/285.
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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 Satz.
(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.
1864 1865 1864. 1865.
About P.C. Per Cent. P.C. P.C.
South Eastern 41/4 21/3 53/4 41/2
London, Brighton etc 43/4 33/4 6 61/2.

The Economist, 10. März 1866. S. 285/286.
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Trade Returns.

Computed Value of the Principal Articles imported
1863 204,533,512
1864 226,161,840
1865 219,751,324.
The Economist, 10. März 1866. S. 289/290.
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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.
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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.
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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.
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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):|

f. c.
Capital 182,500,000 0
Profits in addition to capital 7,034,778 2
Reserves in securities 22,105,750 14
New fixed Reserve 4,000,000 0
Total 215,640,528 16
f. c.
Immobilised rente, and advances to the Treasury 209,430,488 0
Hotel and Buildings 8,475,341 0
Total immobilised 217,905,829 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.|


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.
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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.
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Emile Pereire’s evidence. Continuatio.

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.|


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.
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The Apprehended mercantile convulsion in America

 Kommentar von Marx.
(Der English clown, der diesen Artikel schreibt, heißt Bonamy Price. (Bon ami Price!)

»A commercial convulsion is apprehended in America.  Kommentar von Marx.
(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.
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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.
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Money Market.

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): International Financial Society 4/16 to 7/16 discount. General 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 Co at 13/4 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.
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.
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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.
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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.
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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.|


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.
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Manchester Market.

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.
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Corn Duty.

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.
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American Finance.

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:

1863 8,000,000
1864 23,000,000
1865 42,000,000

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.)
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.
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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. …

From 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
, 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.
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The State of the Money Market.  Zusatz von Marx.

 Bemerkung von Marx.
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 Marx.
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.

Imports of Cotton in the Two Months ended Feb. 28.
1864 1865 1866
cwts cwts cwts
From U. States 721 5,719 570,735
Bahamas und Bermuda 41,955 69,094 2,551
Mexico 9,411 49,645 1,391
Brazil 41,869 69,981 93,728
Turkey 18,540 23,345 13,616
Ejypt 159,591 322,663 148,268
Brit. India 233,645 186,104 305,907
China 28,988 45,652 …   
Other countries 10,010 39,398 17,926
Total 544,754 811,601 1,154,122.

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:

Imports of Corn in the two months ended Feb. 28
1864 1865 1866
cwts. cwts. cwts.
Wheat from Russia 532,722 588,089 2,310,657
Prussia 850,482 133,239 148,483
Denmark 161,248 59,448 28,803
Schleswig, Holstein u. Lauenburg 73,112 20,819 22,437
Mecklenburg 107,094 24,828 4,550
Hanse Towns 105,065 74,905 16,414
France 281,628 71,571 745,439
Turkey, Moldavia, Wallachia 128,868 37,923 143.140
Ejypt 206,003
United States 1,167,253 118,790 259,797
Brit. Nort America 10,838 2,294 8,727
Other countries 68,996 58,558 490,230
Total: 3,693,309 1,130,464 4,178,686
Barley 1,009,036 1,097,846 905,285
Oats 490,297 547,555 617,719
Peas 141,759 29,621 97,384
Beans 241,525 85,992 37,767
Indian corn or maize 285,372 780,078 2,439,627
Wheatmeal and flour from France 625,424 344,781 1,048,539
from Hansetowns 68,877 29,255 26,624
from United States 350,727 48,303 120,997
Brit. North America 3,779 8,024 4,343
Other countries 9,818 7,438 55,116
Total 1,058,625 437,801 1,255,619 |


The Economist, 14. April 1866. S. 439–441.
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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.
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Isaac Pereire’s Evidence before the Banque Enquête.

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.
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Cotton during the civil war.

 Kommentar von Marx.
(Der Kerl übersieht, rechnet nicht ein, die Schwarzerde etc)

 Von Marx verwendet in Manuskript II zum zweiten Buch des „Kapital“ (MEGA² II/11. S. 68.19–24).
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.
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).
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.
(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.

 Marx übertrug diese Tabelle in seinen Brief an Engels vom 12. Dezember 1866 und übertrug und übersetzte sie in Manuskript II zum zweiten Buch des „Kapital“ (MEGA² II/11. S. 68) und diskutierte dort die Angaben.
Statistics of Cotton in the U. Kingd. 1862, 1863 und 1864.

1862 1863 1864
Cotton imported 533,176 691,847 896,770 thousands of lbs
  Do.    exported 216,963 260,934 247,194
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
412,682 392,239 403,399 1,208,920

April 21. 1866. N. 1182.

The Economist, 21. April 1866. S. 469.
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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.

The main doctrine for the times is  Zusatz von Marx.
(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.
Weiser Salomon!

The Economist, 21. April 1866. S. 470/471.
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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.
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Share Market.

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.
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Liverpool. April 19. Prices Current. Cotton Trade.

Same Period 1865
Descriptions. Ord. Mid. Fair. Good Fair. Good Fine Mid. Fair Good.
Sea Island 28d. 30d. 36d. 44d. 58d. 72d. 37d. 42d. 58d.
Upland 121/2 141/4 16 13 15
Mobile 121/2 141/4 161/4 131/4
New Orleans 121/2 143/4 17 131/2 16
Egyptian 12 15 181/2 113/4 123/4 15
Surat. Broach 71/2 81/2 113/4 121/2 13 61/2 91/2
Dhollerah 71/2 81/2 113/4 121/2 13 61/2 91/2
Bengal 71/2 81/2 9 91/2 101/2 41/2 53/4
China 121/2 13 61/2 73/4

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.
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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.
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„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.
(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 paper
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.
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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.
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The Report of the Commission of Inquiry into the Pollution of the Thames.

»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.
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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.
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Share Market.

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.
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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.

1865 1864
£ £
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
649,000 576,000.

 Für diese Stelle konnte keine Entsprechung im „Economist“ ermittelt werden. Möglicherweise Zusatz von Marx.
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.
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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.
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Share Market.

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.
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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.
(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 soundness.  Kommentar von Marx.

The Economist, 12. Mai 1866. S. 554/555.
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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 credit 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.
(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.
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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.
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Money Market.

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.
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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.
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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.
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The Panic.

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.

Brief des Russell und Gladstone 11 May (suspension der Bankacte). Danach interest heraufgesezt zu 10%.|


The Economist, 19. Mai 1866. S. 588/589.
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The Suspension of the Bankact. (Von Bonamy Price im Economist)

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.
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In der French Correspondence des Economist.

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.
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Figures relating to Panic of 1847, 1857 and 1866.

A. 1847. 1847

Week ending

Notes in Circulation. £. Public Deposits. Other Deposits £.

Public Securities

Other Securities £ Bullion. £. Reserve of Notes. £. Minimum Rate of Discount
Oct. 2 19,577,278 9,329,057£. 7,961,767 11,661,340 21,259,929 8,565,307 3,409,300 51/2
9 19,503,372 9,414,713 7,713,896 11,126,340 21,437,443 8,408,750 3,321,700 dto
16 20,263,004 5,496,883 8,674,584 11,088,877 18,963,326 8,430,700 2,630,115 dto
23 21,265,188 4,766,394 8,580,509 10,899,707 19,467,128 8,312,691 1,547,270 8
30 21,764,085 4,696,032 8,911,442 10,613,607 20,409,897 8,438,874 1,176,740 dto
Nov. 6 21,318,118 4,991,313 8,804,395 10,598,607 19,919,915 8,729,551 2,030,085 dto
Nov. 13 20,931,680 5,991,765 8,312,171 10,583,607 19,560,468 9,258,520 2,797,710 dto
20 20,179,074 7,219,802 7,866,482 10,633,607 18,791,117 10,016,957 4,228,095 7
27 19,860,654 7,729,572 8,238,554 10,946,594 18,531,810 10,532,943 4,986,590 dto
Dec. 4 19,668,782 7,799,527 8,441,289 10,946,594 18,070,409 10,032,599 5,583,020 6
11 19,182,179 8,229,759 8,437,376 10,946,594 17,630,931 11,426,176 6,448,780 dto
18 18,615,039 8,763,497 8,606,976 10,998,214 17,198,338 11,991,376 7,551,140 dto
25 18,630,093 9,235,978 8,243,203 10,065,267 16,979,060 12,236,526 7,786,180 5


B. 1857.

Week ending

Notes in Circulation £ Public Deposits £ Other Deposits £

Public Securities £

Other Securities £ Bullion £ Reserve of Notes £ Minimum Rate of Disct. %
Oct. 3 20,824,714 8,243,214 10,002,282 10,593,607 21,835,843 10,662,692 4,606,040 51/2%
10 20,862,690 8,502,326 9,667,123 10,560,607 22,398,877 10,109,943 4,024,400 6
17 21,052,315 4,833,021 11,132,431 10,254,541 20,539,565 9,524,478 3,217,185 7
24 20,585,707 4,861,740 11,263,986 10,254,541 20,404,597 9,369,794 3,485,840 8
31 21,184,276 5,160,918 11,489,979 10,254,541 22,194,320 8,731,553 2,258,275 dto
Nov. 7 21,079,942 4,871,944 11,910,670 10,120,104 22,628,251 8,497,780 2,155,315 9
14 21,036,430 5,314,659 12,935,344 9,444,828 26,113,453 7,170,508 957,710 10
21 22,235,954 5,483,881 13,959,165 6,407,134 30,299,270 6,484,096 1,148,185 dto
28 22,156,143 5,788,998 14,951,516 5,807,494 31,350,717 7,263,672 1,918,840 dto
Dec. 5 21,943,691 6,072,267 14,436,186 5,441,647 31,191,386 7,356,467 2,268,340 dto
12 20,953,992 6,648,062 14,440,724 5,434,022 30,111,185 8,069,489 3,900,485 dto
19 20,537,314 6,944,352 15,077,428 5,446,131 29,264,940 9,450,855 5,757,175 dto
26 20,133,558 7,428,807 15,151,818 5,492,756 28,088,186 10,753,281 7,426,670 8
C. 1866
April 25 22,588,244 4,417,147 13,294,641 10,694,254 18,507,854 13,855,776 5,844,205 6
May 2 23,309,819 4,922,990 13,587,965 10,694,254 20,380,395 13,509,140 4,839,250 7
9 22,806,660 5,781,827 13,515,537 10,894,254 20,844,217 13,156,140 4,950,325 9
16 26,650,817 5,936,219 18,620,672 10,837,056 30,943,259 12,323,805 730,830 10
The Economist, 19. Mai 1866. S. 589/590.
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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.
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Money Market.

Comparative view.
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.
Public Deposits 2,991,956 7,610,278 7,566,661 7,566,661 5,936,219
Other Deposits 12,351,097 13,983,654 12,962,402 13,489,291 18,620,672
Gvt securities 12,479,416 11,151,395 10,785,267 10,984,441 10,837,056
Other securities 16,710,812 20,236,420 20,973,429 20,027,201 30,943,259
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.

Bankshares: extremely sensitive. Considerable fluctuation in Agra and Masterman’s Bank, Bank of London, and Alliance Bank .

  • 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.|
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  • 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.
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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.
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The Substantial Grounds for increased confidence.

Coin and bullion. £.
In 1837 2,400,000
1847 8,312,000
1857 6,484,000
1866 11,857,000

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.
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The Practical effect of the Act of 1844.

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.
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.
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.
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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.|


„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.
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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.
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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.

    Failures and stoppages:
  • 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.
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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.
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The Money Market.

Extraordinary  Zusammenfassender Kommentar von Marx.
(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).
(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
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.
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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.
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French Correspondent.

B. o. France.

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.
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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.
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Geo. 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) notierte.
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.
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The Act of 1844 (by another correspondent).

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.
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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.
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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.
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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.
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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.
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Failure of the Agra and Masterman’s Bank.

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.
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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).
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
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.
, 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.
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Savings’ Banks Returns.

May. 19
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.
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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.|


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.

Bankshares: fell heavily on the announcement of the suspension of the Agra and Masterman’s bank. To-day prices have rallied, and mostly close higher.

Financial Shares: General Credit shares better, International Financial firm at late price, Credit Mobilier has again given way.

Failures: Meeting der creditors of Peto, Betts and Co.

The Economist, 9. Juni 1866. S. 686.
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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.
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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.
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Overend, 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 rediscounted 8,266,000
Bills in hand 1,149,000
15,700,000 |

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.
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Shortening the Usance of Indian Bills.

 Von Marx zitiert in Manuskript II zum zweiten Buch des „Kapital“ (MEGA² II/11. S. 212.1–10.)
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
security. The parties most interested in shortening the usance are the Indian Banks  Zusatz von Marx.
(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.
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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.|


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.
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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.
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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.|


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 £.
1861 342,386,100
1862 355,107,280
1863 373,246,200
1864 391,396,680
1865 412,558,100
The capital paid up in public Cos, including premiums £
1864 24,229,633
1865 21,193,930
1866 17,781,560

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.
(nämlich durch deliberate fraud upon the public!)
can pay every one. The shareholders will lose, nicht die lenders.  Kommentar von Marx.
(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.
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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.
(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.
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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.
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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.
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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.
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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.
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Bankshares: Improvement on all the quotations compared with previous week.

The Economist, 23. Juni 1866. S. 738.
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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
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.

    The Economist, 23. Juni 1866. S. 738/739.
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  • 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. 744
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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.
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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.
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Still Ten Per Cent.

10% and 15 Mill. l. St. in the till Zusatz von Marx.
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 [10]%. 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.
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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 Heinrich Heine.
(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.
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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.
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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.
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(Correspondence.) Usance of Indian Bills.

 Von Marx zitiert in Manuskript II zum zweiten Buch des „Kapital“ (MEGA² II/11. S. 212.10–22).
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.
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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.
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Manufacturing markets.

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.
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Still 10%.

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.
⦗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 America.

The Economist, 7. Juli 1866. S. 791.
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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.
⦗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 Dialekts.
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.
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The Shortened Usance of Indian Bills.

 Von Marx zitiert in Manuskript II zum zweiten Buch des „Kapital“ (MEGA² II/11. S. 212.23–29).
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.
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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.
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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
Reserve less 4,713,412
Liabilities greater by 4,700,487.

The Economist, 7. Juli 1866. S. 798.
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Usance of Indian Bills. (Correspondence)

The reasons urged by the 5 banks  Zusatz von Marx.
(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.
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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.
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  • 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.
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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.
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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.
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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.

The Economist, 14. Juli 1866. S. 825.
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Movement of the Money Market.

  • Decrease in Circulation £.598,413, Private securities 1,710,620 und Reserve (total of l.3,800,640) £.264,440.
  • Increase in Private Deposits £.1,532,578 und Bullion: £.883,479.

July 21. 1866. N. 1195.

New Facts relating to the Act of 1844.

The Economist, 21. Juli 1866. S. 845/846.
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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.
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… 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.
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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.
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Irish Railways.

Capital employed. Per Cent paid upon them (in dividends etc)
1861 21,180,161 3.81
1862 22,873,401 3.27
1863 23,518,750 3.27.
1864 23,855,490 3.48.
Capital employed in them: (all money invested, whether raised by ordinary shares, preference shares or debentures.[)]
Whole United Kingdom
A) Return of capital of every kind expended in railways.
(Preferential shares, Debentures etc)
B) Return upon ordinary shares.
P.C. P.C.
1861 4.30 3.37
1862 4.22 2.33
1863 4.25 2.26
1864 4.49 2.51
The Economist, 28. Juli 1866. S. 883.
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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.
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Cattle feeding.

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.
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Money Market.

    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.
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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.

1863. 1864. 1865. 1866.
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.
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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.
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Indian Railways.

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.
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Restricted ownership of land.  Zusatz von Marx.
(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.
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Ten Per Cent Discount. Communicated.  Zusatz von Marx.
(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.
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.
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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.
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Money Market Movement.

    Quotations of Discount. Bankrate. (Hamburg Open Market Rate.[)]
  • 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.
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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.
⦗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.
Doch scheint es

 Zusatz von Marx.
Thirdly) auch damit nichts zu sein.
Denn: It is true  Zusatz von Marx.
(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.
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.
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.
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Sir Stafford 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.

Aggregate Capital invested in Railways at the end of:
1861 342,386,100£
1862 355,107,280
1863 373,246,200
1864 391,396,680
1865 412,558,100.
Showing an increase of 70 millions £ in 4 years, which surely is no unmanageable or stupendous sum.

Trade has gone at an equable rate. In 1865 it can hardly be said to have augmented at all.

1864 1865
Exports £212,619,000 218,858,000
Imports £274,952,000 271,134,000

 Kommentar von Marx.
(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.

Imports during the first 5 months of the following years:
1864 1865 1866
£77,111,991 59,933,184 92,029,657

Exports in the first 6 months.
1864 1865 1866
£78,047,586 74,128,638 92,857,830

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.
(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.
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The movement of the Money Market.

Bk.o.E. 8. August.
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.
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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.
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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.
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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 Westminster

5,000,000 1,000,000 4,000,000 473,014
Union 4,000,000 1,200,000 2,800,000 379,884
Joint Stock 3,600,000 1,080,000 2,520,000 346,563
London and County 1,875,000 750,000 1,125,000 267,469
City 1,000,000 500000 500,000 144,551
Metropolitan and Provincial 1,686,600 337,320 1,349,280 10,844
Alliance 4,000,000 989,335 3,010,465 71,013
Imperial 2,250,000 448,94 448,940 1,801,060 64,984
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
Union 19,424,532 2,362,827 1,362,827 16,871,532 21,261,374
Joint Stock 18,764,578 1,020,000 1,020,000 18,129,041 20,390,239
London and County 12,750,974 293,691 293,691 10,410,722 13,863,607
City 5,408,838 312,358 312,358 5,224,503 6,130,343
Metrop. et Prov. 469,355 82,686 82,686 572,825 817,345
Alliance 1,636,156 39,725 39,725 2,213,783 2,727,717
Imperial 1,234,706 20,669 20,669 1,518,656 1,785,936
Summa 81,987,590 5,726,686 5,726,668 71,519,911 89,613,790 |
Half Year ended June 30, 1866.
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
Union 179,224 150,000 25 29,224 do
Joint Stock 134,571 108,000 20 26,571 do
London et County 85,441 82,500 22 2,941 do
City 29,841 30,000 12 159 Deficit
Metrop. et Prov. 5,299 8,433 5 3,134 ditto
Alliance 25,416 24,743 5 673 surplus
Imperial 25,559 18,000 8 7,559 ditto
Summa 736,614 561,676

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.
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London Gas.

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 stringent
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.
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 else.“  Kommentar von Marx.
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.
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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.
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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.
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Overend, 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.
Unsecured creditors 3,728,000
Creditors whose securities are insufficient 250,000
Gesammtliabilities 5,228,000, mit interest
since 18. May.

Against this the liquidators will have on 1 October immediately applicable:

Cash 600,000£.
By call of 10l. a share 1,000,000
Deficit. 3,500,000 against immediate liabilities.

The Economist, 25. August 1866. S. 995/996.
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Is it better that the Banking reserve of a Country be kept in Single Bank or distributed between several banks.

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
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.
248,436,808 dollars. 8,504,096 26,585,934 201,969,288 80,840,518.

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:

Deposits 40,393,856l. St.

£45,710,934 liabilities
Circulation. 5,317,078l. St.

Specie 1,700,818l. St.
Gvt. legal tender paper 16,168,102l. St.
17,868,920l., das ist 17,868,920

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.
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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.
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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.
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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

Abstract of Total Value of British Exports in each month.
1864 1865 1866
£ £ £
January 10,413,586 10,489,339 14,354,748
February 12,698,121 11,376,214 15,116,063
March 13,554,674 13,770,154 17,520,354
April 13,225,039 12,071,111 15,366,414
May 14,176.640 13,194,758 15,870,131
June 13,978,526 13,227,062 14,630,120
July 14,394,364 14,113,410 14,957,834

so that the trade was in round numbers:

In First 2 months. £. In Last 2 months.
1864 23,100,000 28,300,000