June 9. 1866. N. 1189.

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.

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.

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 (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 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 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 , there may be panics in the money market, but they will not be such as that of 1866.

Savings’ Banks Returns.

 The Fund for the Banks for Savings: 37,120,284£. 3s. 4d. Post Office Savings’ Bk. Fund: 7,242,063, 9s. 10d. 44,362,347l. 13s. 2d. Ditto by last monthly account: 44,622,080l. 5s. 8d.

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 continues. Ihr Increase in cash and bullion £.1,570,000. Decrease in bills discounted £.2,342,000, in Banknotes £1,660,000.|

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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.

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.

27 April. 1867. N. 1235.

Bank o. France. (Aus der Enquête etc)

Der Governor der Bank (French) (1856) asked for the suspension of cash payments. Verweigert. Andouillé, subgovernor, adds: „It was on Octobre 5, 1856, that the Governor and the Subgovernors of the Bank repaired to St. Cloud to demand a suspension of cash payments; there was a discussion in the Council of Ministers and in presence of upon the measures to be taken; the suspension was abandoned, but it was decided that no bill with more than 2 months to run should be discounted … No application of the kind has been made since the Bank has been invested by the law of 9 June, 1857, with the power of raising its rate of discount above 6%.“

Andeuillé (Subgovernor der Bank of France): We used to fear that the establishment of branches would have the effect of scattering our reserve, but we have now grounds, derived from experience, for believing that the small branches we have still to create will only feebly augment the circulation, and will feed their own reserve. We begin by sending them 20,000l., and at the end of a certain time they give us an available surplus.

M. Chevalier: The current accounts of the whole 54 branches are not nearly enough to make 80,000l. a branch, for the whole of them for all the branches is less than 1,200,000l.

Andouillé: I speak of the reserve, not of the deposits. We have branches which have not £.400 of deposits, but from which we derive 80,000 to 120,000l. in coin every year; it is the payment of bills of exchange which more than anything else brings coin to our tills.

The President: You mean that independently of the gain by discounts, there is an advantageous drainage of coin?

Andouillé: Thus the branch of Toulouse where the deposits hardly exceeded 4,000l. give us 800,000l. of coin a year, which we distribute among other branches. No long description could convey to an Englishman so true a conception of the beggarliness of French banking, as these few facts. The Bank of France … is almost the only great distributing machinery for money capital in the country, and its branches with 4,000 on deposit, and its looking to coin as a great means of profit, are evidences of utter banking barbarism. … In England, the diffused country banks were enabled for years to live by the profit of local issue; they then became banks of deposit, receiving shops for capital, and thus, by a series of petty and unnoticed efforts, they filled London with capital, and created the London money market.|

The Unions secure considerable advantages to the main body of workmen in each trade, they distinctly injure the best workmen in each trade, they diminish in all trades the incentives to rapid and general progress. That they tend to raise the average level of wages, by depriving the master of his main instrument, the fear of hunger, is beyond question, and is indeed unquestioned, because, if they did not, masters would have very little reason to bestir themselves in the matter. They would not be displeased with a strike to lower wages, if such a thing could occur. Up to a certain point this process is beneficial, as without some resistance of some kind the tendency of employers would be to lower wages to the limit below which life could not be preserved, a point actually reached in some kind of agricultural work. It seems, also, clear that the Unions always diminish the number of minor strikes … And lastly the effect of the Union has been to substitute moral force, social compulsion for physical force, compulsion by the pike, and vitriol throwing and fire raising. A strike ordered by a Union is a very bad thing; but it is a better thing than an organisation like that of the Luddites, which years ago kept Nottinghamshire in terror. On the other hand, the Unions crush down special power, activity, and originality in workmen.

We do not see, f.e. how under the Union theory, any general progress is to be made in trade at all. The Union decrees, it may be quite justly, that to lay, say 100 bricks an hour, is good average work. But if the best men were tempted by the free enjoyment of their faculties to do all they could, they might bring up the standard to 200 bricks, and devise appliances enabling inferior hands to keep up to them. The Unions themselves say that it is possible, for they discourage piecework, upon the ground that it tempts men to „overstrain“, that is tempts them that is towards perfection.

Mr. Applegarth, the Unions’ best advocate, tried very hard to show that while the average wage was fixed, a master might give a specially good hand any extrapay he liked. But Mr. Applegarth forgets that the master’s interest is to make that extrapay as little as possible, and trust to the man’s pride in his work

At present, the Union men are subject, at all events, to emulation and competition from non-Union men, but the Executives try to attract all of a particular trade, by steady discouragement to outsiders.

The single thing to prevent is intimidation, whether physical, or, if we can reach it, moral. So far from making Unions, or rather leaving Unions illegal corporations, we would give them every opportunity of legalising themselves, insisting only that their rules shall be public, and that every member shall be free to depart without fine or other punishment. At present, he loses all back payments.

The ablest men would form new and smaller Unions of picked men. Jobs would be undertaken by Associations, which would be, in fact, Competitive Unions. By refusing to recognise the Unions, we shall not extinguish them; but we shall turn them into illegal combinations with written, instead of printed laws, and a secret and, therefore, oppressive, system of punishment for secession. That was the direct effect of the laws against combinations, and it would be also in a less degree the effect of placing or leaving them outside the law.

There is not a State in the world which, deprived of the power of coercion, would not go to pieces, and if we can but destroy that, and we can, the Unions will divide. Allow new combinations to start easily, and they will be numerous enough, and competitive enough, to keep up the natural progress of society. Persecute a sect and it holds together, legalise it and it splits and resplits, till its unity is either null or a non-oppressive bond.

United States. – Evidences of Pressure.

The revenue of 1866 was largely exceptional. The „Commercial Chronicle“ confesses week after week that the „existing system of taxation is oppressive, and that the inequality of its pressure is such that if not speedily revised, political discontent and general suffering may perhaps precipitate changes more radical than safe.“ It says, referring to the small diminution of the debt (1867): „Experience has shown us that until our internal taxation is better adjusted and more skilfully distributed, a needless oppression of the productive power of the country would be induced by the attempt to pay off from this source, any considerable account of the public obligations.“

Der New York correspondent des Standard sagt in letter vom 5 April inst. (1867):|

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„Trade has not been so dull since 1857 as at present. The warehouses are filled with idle dealers, the shops with idle clerks, the streets with idle mechanics. The spring business is already over. The people are wearing their old clothes, drawing on the savings’ banks, and giving another turn to the economical screw. Rents and provisions are enormously high; and although dress goods are cheaper than at the same time last year, the people have no inclination to buy. … The newspaper proprietors, with one exception, are drawing on their capital. The business of the railway Cos. is much smaller than at the corresponding period 1866. The Woollen and Cotton mills are running upon short time, and some of them will soon suspend work altogether. And the clamour of the Gold Room and the Stock exchanges are more furious than ever. Während des war all seemed to thrive. And then came Petrolium, with its immense profits etc.

All this has changed. The Army has disappeared. The 100ds of workshops where army clothes and munitions were manufactured are closed. The working men have used up their savings of paper. To be sure, the paper dollar is, when compared with the gold dollar, worth more than it was a year ago, but it will buy less than then.

Take the condition of the ordinary working man, a Carpenter f.i. While at work, he receives, if an adept in his business, 31/2 dollars a day. Before the war, he thought himself fortunate, if he obtained 11/2 dollars a day. But he now pays $6 a week for the Rent of 3 rooms; before the war paid rent of$1.50 or $2.$2 for the same rooms. For flour of medium quality, he now pays, if he buys it by the barrel, $12 to$13 per barrel, or $17 to$20 per barrel, if he buys it by the sack or small parcel; before the war, he rarely paid more than $5.50 or$6 for a barrel of flour of the same quality. The Beef for his Sunday dinner costs him now 18 cents a pound; in 1860 nur 6 to 10 cents a pound. Potatoes now sell for $1 a bushel; before the war, they were dear at 20 cents a bushel. Mutton sells in 1867 for 18 cents a lb, 1861 for 5 and 8 cts a lb. Turkeys and chickens 1861 für 10 cents a lb, now 30 to 35 cts. Butter, 1861, 15 to 20 cts a lb, 1867: 30 to 40 cents. Cheese, 1861: 6 to 10 cts a lb, 1867: 22 to 30 cts. Eggs, 1861: 8 to 10 cts a dozen, 1867: 30 to 35 cts. Veal, 1861, 4 to 7 cts a lb., 1867: 18 to 23 cts. Pork, 1861, 6 to 10 cts a lb., 1867: 17 to 25 cts. Bacon, 1861, 6 to 8 cts a lb, 1867, 18 to 20 cts; Lard, 1861, 5 to 7 cts a lb, 1867: 17 to 25 cts. Red onions, 1861, 40 cts a bushel, in 1867,$2,25 to $2,40. Beets, in 1861, 25 cents a bushel; in 1867,$1. White turnips, in 1861, 30 cts a bushel, in 1867: $1.25 to$1.30. White cabbages, in 1861, 2 to 3 cts a piece, in 1867, 10 to 12 cents. Marrow squash, in 1861, 10 to 12 cts a piece, in 1867, 10 cents a lb. White onions, in 1861, 75 cents a bushel, in 1867 $6. Red cabbages, in 1861, 8 to 10 cents a piece, in 1867, 25 to 30 cts. Carrots, in 1861, 20 to 25 cts a bushel, in 1867, 75 cts to$1. In fish and shellfish the advance has been quite as great. Clothing costs 3 to 4 × what it did in 1861. A mechanic could lay up money out of $10 a week before the war; he can save nothing now out of$20 a week.

Noch schlechter sind die fixed income Leute dran. Die Arbeiter hatten advance von 100% in wages, aber nicht so clerks, agents, reporters etc[.] Ein armer clerk mit 800$a year, or a little over$15 a week, must pay at least weekly \$4 for his lodging und theures Fressen selbst bei den schlechtesten Restaurants. … Our Labour market is now greatly overstocked.[“]

Tenant Right in Ireland. (Communicated)

It is maintained that the tenant’s claim should in all cases be liable to a deduction proportionate to the time which has elapsed since his outlay; otherwise, he would be paid twice over; once from the profits derived from the improvements during his occupancy, and a second time on quitting. If no such deduction were allowed, it would be the interest of the landlord to eject the tenant as soon as the improvements were completed, for he might have to pay as much compensation at the end of a long period of years, without any corresponding benefit.|

Progress of India (Bluebook just issued. (April 1867) (First) „Statistical Abstract“ of India.)

Area. (□ miles) Population. (estimated)
British India 955,238 144,674,615
Native States. 596,790 47,909,199
States under French Gvt. 188 203,887
States under Portuguese Gvt. 1,066 313,262
Total 1,553,282 193,000,963
 Calcutta (population nach Census von January 1866): 377,924. Bombay (dto Census von Febr. 1864): 816,562 Madras (administrative report von 1863): 427,741.

1864–5: 2,747 miles of railway were opened in India, and conveyed 12,826,518 passengers. There were 1421 postoffices; 17,117 schools maintained or aided by Gvt. Average attendance of pupils: 435,898 und Gvt. expenditure upon them 391,277l. 4,473,263l. expended in the year upon public works. 11,736 miles of Gvt. telegraph lines were opened.

Commerce in British India.

 Jahr 1840–41: 8,415,940l. 1860–61: £23,493,716. 1864–65: 28,150,923l. in addition to 21,363,352l. treasure 1848–49: Cotton goods imported for 2,222,089l. 1864–5 for 11,035,885l.
 1840–41: l.13,455,584. 1860–61: l.32,970,605. 1864–65: l.68,027,016. This last increase due chiefly dem effect des American war (cotton) 1859–60: Export of raw cotton from British India l.5,637,624. 1864–5: l.37,573,637. The other chief exports in 1864–5: Opium, 9,911,804l. Rice: 5,573,537l. Seeds: 1,912,433l. Indigo: 1,860,141l. Jute: 1,307,844l. The U. Kingdom took 7,054,388l. exports in 1840–41 und 46,873,208l. in 1864–65. Exports of 10,874,652l. in 1864–5 went to China and Japan, and 2,902,596l. to France.

Public debt: 34,484,997l. in 1839–40 und 98,477,555l. in 1864–5. The troops employed in British India 35,604 Europeans und 199,839 natives in 1839–40, dagegen in 1864–5 … 71,880 Europeans und 118,315 natives.