## Saturday, 7 July 1866. N. 1193.

### 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.

### Why the Panic in England has not caused a Panic in America.

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.

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 , 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.)

### 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 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.

### Usance of Indian Bills. (Correspondence)

The reasons urged by the 5 banks 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.“

### Bulling and Bearing. (Correspondence)

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.

### Failures.

• 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.

## 25 May, 1867. N. 1239.

### The State of the Money Market.

The savings of the country accumulate day by day , and unless there is a daily increase in the channel by which they are to flow out, they will encumber the market und bring down interest; a fortiori mit diminishing foreign trade. Generally, when money is cheap, credit is good. Dieß Jahr das Gegentheil. The railway scandals, the number of private ruins, or semi-ruins, going on all through the country, the disenchantment with old names by the fall der Overends, the alleged complicity of banks mit railway errors, tend to generate distrust. 1864 credit viel besser mit 8% als jezt mit 3. (und diese nur nominal)

### The Causes of the Existing Depression.

Bankers can only lend to one set of customers the money left with them by another set … Trade is dull, losses heavy and general, and accumulation almost suspended.

Since Sept. 1866, average price of wheat over 60s., or 50% beyond the average price of about 40s., which had prevailed during the 4 years preceeding ’66. Corn dear all over West Europe. An advance of 20s. per qr on wheat means a home trade crippled in all its ramifications; and if an enhancement almost as serious extends to France and Germany, the effect is a similar falling off in the purchasing power of some of our best foreign .

Nach dem influence der harvest, condition des Cotton Trade. It is now ascertained that a large part of the activity of the cotton trade last year was premature and speculative. Goods were sent to India, Australia, and elsewhere, on manufacturers’ account, and have not been sold, if sold at all, at remunerative prices. In all these markets, therefore, there is more or less dead stock to be cleared off by such demand as may be stipulated by falling prices. Since the close of 1866 the manufacturers have by short time and total cessation of work reduced the production by about 1/5 und daher der price of middling Upland cotton has gone down von about 15d. to under 12d. a lb. The average price of middling Uplands in 1865 was 19d p. lb.; in 1866 151/2 d., or 18% less; the real revival of the cotton industry depends entirely on the re-establishment of a low price of the rawmaterial. The world cannot afford to buy anything like the same quantity of goods mit cotton at 19 or 15 or 11d. p. lb, as when at 7 or 6 or 5d. In order to employ fully our people, machinery, mills, warehouses, ships, all the industries set in motion by a large volume of export trade, die alten cotton prices nöthig.

The severe regimen of the past 12 months has brought down the cost of producing most of the great manufacturing staples of this country not much less than 30%, taking into account the fall in the prices of raw materials, and in the wages of labour.

In times of active prosperity our weekly accumulations probably 2 to 3 mill. l. Since May 1866 they have fallen short of that sum.

### United States. Strikes. Taxation. Local War Taxes.

In April last addition to the Federal Debt of 5 Mill. l. St. The increase of debt to be entailed by the Volunteer Bounty Bill of last session will not be less than 20, may reach 40 mill. l. st. Under special arrangements, their will be two collections of income tax in the course of the present fiscal year.|

134

Der Standard Kerl fährt fort in seinem Brief vom 7 May: „Whatever may be the causes of the movements among the working men of Europe, the agitation among the working classes in the U. States is due to the increased cost of living produced by the great and growing taxation. The struggle is not for political advancement, nor for social recognition, for the labourer has as many political privileges as the millionaire, saving only the power to purchase votes; and, outside of the cities, there are practically no distinctions of class. On Dec. 1, 1860, the debt of the State of New York was 34,182,975 dls, and on Dec. 1, 1866 it was 51,753,082 dls. It has been increased some 10,000,000$by the legislation of past winter. The debts of the Counties and Towns of New York State have grown in the same proportion, so that the total State, County, and Town Debt of New York certainly not less than 90,000,000$. In Massachusetts the increase has been greater; its state and local debt was in 1860 about 12 Millions $; now it is in round numbers 55 Mill.$, and will soon be increased by 15 Mill. $. Rhode Island was free from State Debt in 1860, and her County and Town indebtedness was small; now her State debt alone is 3,626,500$. |135 Vermont had no State debt in 1860; it is now 1,567,500$. The State debt of Connecticut was, in 1860, about 50,000$; now it is something over 10 Mill. New Hampshire, in 1860, had State debt of 82,000$, now it is 4,169,818$. In some of the Western States the increase has not been so great. Iowa statedebt has grown from 322,000$to 622,000$; in Missouri from 23 Mill. $to about 38 Mill.$; in Wisconsin from 1 Mill. $to 2 Mill. In mehren states the Town und County Debts have increased much faster than the state debts; in other States they include State debts – viz., debts incurred by the States in aid of Counties and Towns have been transferred. The Municipal Debt of New York (City) about 22 Mill.$. The County and Town debts were incurred principally, in the effort to meet the demand of the Federal Gvt. for troops. Under the threat of conscription, the people offered enormous bounties for volunteers; in some localities as high a sum as 3000$paid to each volunteer. Of course the only method of equalising this forced loan was by taxation. It is probable that the Federal Gvt. will in time assume all the debts incurred in carrying on the war – State, County, and Count Town debts. In fact, Congress has already established a precedent by assuming the war debts of several of the States … Our working men may strike therefore, and strike till doomsday; they cannot remove one atom of the burden of taxation. They have a remedy in their hands. All other means of relief exhausted, they, the majority, will surely use it. That remedy is repudiation. Just here speaking of the debt and of the working men’s movements, I may cite the opinion of (of Boston), who will be recognised in Great Britain as a good authority. He says: ‚The condition of the poorer kind of mechanics is lower than before the war. They are bleeding at every pore. They are falling into the wretched tenement life.‘ Daily News New York Correspondent, d.d. 7 May 1867 says: „The Labour strikes still continue all over the country … The cause of all the trouble is, of course, the excessive lowness of wages. I doubt if in the history of the country wages have ever been so low, estimated as they ought to be, ⦗Currency more than 1/3 depreciated⦘, in food and clothing, and house rent, and not in money. The harvest last year was bad, and daher flour, which usually sells at 9 or 10$ a barrel, has been 18$throughout the winter, and is now 21. In fact, the dearth so great that the Northern States have been importing wheat and the demand has been so great that it has actually paid to send it from San Francisco round the Cape to New York. Until the last year or 2 California has never been able to supply her own wants. The consumption and waste of Cattle during the War has also been severely felt in the markets. Beef and Mutton are double their old price, and show no sign of falling. The high tariff and heavy internal taxation keep up the price of clothing. A coat costs more in this country now than a whole suit used to cost 4 years ago. The abrogation of the Reciprocity Treaty with Canada, which the protectionists were able to secure by the aid of the hostility towards the Canadians, bred by their conduct and language during the War, at once nearly doubled the price of timber, as the greater portion of the timber to be found in the market in this part of the country has for many years been drawn from the great Canadian pine forests. As most houses in America, outside the large cities, are built of wood, this rise has put almost a stop to house-building. It is safe to say that it now costs 3 times as much to construct a house in any material as it did 3 years ago. Of course, people must have shelter, and the population is growing as rapidly as ever; consequently house-building would go on as of yore at any price, if there were no fear of a fall. Aber keiner glaubt that the present state of things will last, daß vielmehr either on the resumption of cash payments, or at some period not very remote, prices will come back, if not to the old standard, to one very near to it. Consequently, there is a general reluctance to fix capital in any way that can be possibly avoided. Men do not like the idea of putting 10,000$ into a thing which in 3 or 4 years may sell for, or yield them interest on, 5000. There has accordingly been an almost total cessation of housebuilding for the last 3 years. This is no exaggeration. In the large cities wealthy men, who will be comfortably lodged, and to whom the price of any house is but a trifle, have every year been building themselves a few dozen mansions in each of the great towns; but it is safe to say that the increase in the number of houses for |136 for the class of moderate means, or for the working class, have not been 1/20 part so large as the increase of population. In New York the state of things is rather worse than elsewhere; rents here have more than trebled since 1863; but all over the country there is a positive distress for house room. People of small incomes are compelled to deny themselves all their luxuries, and many of their comforts, in order to keep a roof over their heads; while the working men are crowded into miserable lodgings, or find themselves forced to choose between absolutely bad food and bad clothing and the surrender of their homesteads … During the War, the excitement, the steady rise of prices under the expansion of currency, and the great demand for labour kept up by the enormous drafts made on the Market by the Army and Gvt. Orders, kept the labouring classes in good spirits; but they now find themselves down upon what the goldminers call the hard pan, and they can think of no mode of relief but a rise in wages. The Manufacturers go to Congress every year, and plead the dearness of labour as a reason for asking for higher protection; this raises prices, and the labourers in their turn go to the manufacturers, and plead the dearness of living as an excuse for asking higher wages, and so on, in one unvarying round. The manufacturers, of course, find trade extraordinarily dull; there is no demand for anything; and yet prices remain high as ever. Many of the great mills and workshops are kept going merely to keep the operations together, and prevent suffering. Daher strikes besonders irreasonable und less likely to produce a result than at this moment; and yet strikes are the order of the day. There is no trade in which a strike is not raging. The Trades Unions are not here the perfect organisation as in England. The country is too large, and the working men are too little of a distinct class, and are largely divided by difference of origin and religion into too many distinct sects, for any Union to secure the wideness of ramification or perfection of discipline secured by those of England. The consequence is that strikes are partial, isolated, and desultory; but they are incessant. They are at this moment more general than they have ever been and there is no immediate prospect of their termination. The 8 hour law, passed by the Illinois Legislature last winter, and which has just gone into operation, has thrown the large towns in the State into commotion, and given the Striking Mania in the West a violence which it does not display in this part of the world. Absurd this 8 Hours’ Agitation. It was begun by some of the better class of the workmen, believing in its salutary effects on the moral and physical condition of the labourers. Owing to the enormous profits which the manufacturers were making 2 years ago, the economical objections to the scheme made little impression on the agitators. They denied that a reduction in the hours of labour would materially diminish production, and maintained that even if it did it ought not to cause a restriction in wages, as long as capitalists were making, as many of them were, 100%. All that would happen, if 1/5 were taken off the working hours, would be that the enormous gains of the employers would be slightly diminished, while the condition of the whole working class would be greatly improved. The argument drawn from these large profits has of course since lost all its force. They have disappeared. The reduction of 1/5 labour would be = reduction of 1/5 production, und daher an increase of prices. But, unfortunately, by the time this demonstration of the absurdity of the movement was ready, the rank and file of the Irish, and other foreigners, ignorant and bigoted, had entered into it with zeal; politicians had got committed to it, and it has raged on without rhyme or reason, until it has at last got an act passed in Illinois, and has come near doing so in Pennsylvania and some other States.“