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.

July 6. 1867. N. 1245.

The Economist, 6. Juli 1867. S. 750–752.
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The National Bank System of the United States.

The notes of the States State Banks were purely a local issue, and were, therefore, constantly and rigidly controlled in quantity by the frequent exchanges and clearings. Notes issued by a small National Bank in Maine may, and do, float away 1000ds of miles from their point of starting.  Wahrscheinlich Kommentar von Marx.
⦗Dieß könnte einfach geheilt werden durch ein Gesetz wöchentlicher Interchanges, Clearings, zwischen allen Branchen⦘
It is hence a common occurrence for National Banks to have to provide for the redemption of a very small fraction indeed of the Notes they have originally paid away. The wide action of the Notes of National Banks has already reduced a large part of them to a discount; and to remedy this discredit, the Comptroller urges that all National Banks shall be compelled to redeem their Notes at par at New York, by means of funds maintained there in the hands of correspondents – that is, of some one or more of the New York National Banks. Aber, says the Comptroller: „If all the provincial National Banks are to redeem their Notes in New York, they must constantly maintain there large funds – the New York Banks will compete for the custody of these funds, and the more adventurous of them will bid for accounts by offering high rates of interest on country deposits. But if the New York Banks give high rates of interest for money left with them, they can only make a profit by advances more or less hazardous, and subject, therefore, to onerous terms. In order, then, to avert the catastrophe of a Banking collapse, Congress must pass a stringent law prohibiting Banks from allowing interest on any sort of deposits.“ Such legislation would be futile and mischievous. The Comptroller proposes other checks for the supervision of the 1600 banks. Z.B. Prevent Persons from setting up National Bks. who find the means of borrowing the largest part of the available means, and applying them to most objectionable speculations. Also clauses for monthly instead of quarterly Bank Returns: the quarterly Returns enable Banks „to prepare for a good exhibit on these particular days“.  Zusatz von Marx.
(Weekly public Reports!)
Schon cry in different parts of the Union about the dangers and abuses arising from the patronage des Secretary of the Treasury in regard to the selection of National Banks to be depositories of public money and financial agents of the Federal Gvt. It is a paramount object with a National Bk. to obtain the custody of the Gvt. money. Selection for such a trust is used as an |149 advertisement to attract private deposits and private business, and largely succeed. The First National Bank at New Orleans, holding Gvt. Deposits, has just failed, under disgraceful circumstance – about 300,000l. has been made away with in a clandestine manner, and a leading authority in New York writes: „The machinery of the National Bks. has proclivities to weakness et danger which cause wellfounded apprehension. Disclosures at New Orleans, and disgraceful previous failures of Natl. Bank Banks in various parts of the country, leave no room for further doubt. The best way for a shrewd manager of a Nl. Bk. to obtain private deposits, is to get up an appointment for his institution as a depository of Gvt. fund.“ Sagt ferner: the increasing number of Banks which even on the face of their quarterly returns do not hold the amount of cash reserved reserve required by law. The returns of October 1866 showed that 55 Banks then held reserves considerably below the prescribed limit. It is now complained in New York, „that the Comptroller has not announced publicly how many of the Banks are defaulters in their reserves since Oct. 1866, nor what measures have been taken to correct this serious defect“.

Up to March, 1865, or just at the close of the War, the circulation of the Nl. Bks. no more than about 25 mill. l. St. The expansion to the present limit of 50 millions l. is the work of the 2 last years. Their paid up capital only 30 mill. l. in March 1865, has risen to 84 mill. l. since that time. The advantage and strength of the State Banks arose from 1) Rigid enforcement of cash payments; und 2) perfect freetrade, subject to a few reasonable preliminaries, in banking business. The danger and weakness of the National Banks arises: 1) They have been called into existence, and been distributed over the country by the arbitrary discretion of a public officer, acting in most cases in perfect ignorance or misapprehension of circumstances, exceedingly prone to be influenced by motives of party patronage, and chiefly intent not on supplying the fittest banking institutions to the several parts of the Union, but on finding active and wealthy sympathisers with the Republican party, who, through the medium of the Nl. Banks, would support, first, Northern measures, and next, the views of the majority of Congress. 2) Under conditions like these, Nl. Banks have been set up by persons having no adequate knowledge of the business. They have started a Bank either chiefly as a party measure, or as a convenient mode of getting nearly double rates of interest for their money, or with a view of attracting deposits and employing them in private speculation of their own, or with the object of commanding a deposit of public money, and becoming Gvt. financial agents. 3) As the Circulation of the National Banks is essentially general and not local, the check of constant liability to its return through the exchanges does not operate. 4) The supervision of the Comptroller at Washington over 1600 Banks, of necessity, almost worthless for any purposes of practical control, ausserdem nicht desirable that all the Banking institutions of a country subject to the regulations of a party political officer.

The imperfections of the Nl. Bk. System became already practically manifest: 1) in the admitted imperfection of the returns made by the Banks; 2) admitted abuses prevailing in the administration of many of them; 3) admitted exercise of unjustifiable patronage in the selection of particular banks to be depositories of public money, and to be financial agents; 4) admitted necessity of further stringent legislation (f.i. the prohibition of interest on deposits)

If no modifications speedily introduced: The large number of incompetent, inexperienced, careless, scheming and speculating people, who have forced themselves or been attracted into the control of the Nl. Banks, will grossly mismanage the business; dissipate the deposits in foolish or disreputable advances, and the Banks will fail. Under the law of prior lien, the Gvt. will, out of any available assets, as far as possible, pay itself first, and in full, and the ordinary creditors, as in the recent case of New Orleans, will be left without a farthing. The Notes of the failed Bank will be at least to some extent covered by the lodgement of Federal Gvt. securities, but there will be a wide field for ingenious financing in the realisation, sudden or gradual, of these securities, and in the cancelling, sudden or partial gradual, of the particular Nl. Bk. tainted by default. A series of failures of Nl. Bks. may create a panic and bring down a large part of the organisation at once, or the distrust and dissatisfaction may operate more gradually. During the last 2 years, the Nl. Banks have had all in their favour. They have run up their Circulation from 25 to 60 Mill. St., and prices have all been rising. They have now reached the limit of their Note Issue. Process of reaction has set in which, by the by, will render cash payments again possible. This kind of reaction wird Masse dieser hastily set up concern ruiniren.


  • London. 1868.
  • 1866 „The Economist“ (Jahrgang 1866) vol. XXIV.
  • The Social Economist, 1. Oktober 1868
  • „The Economist“ (Jahrgang 1866) (Fortsetzung)
  • Jahrgang 1867.
  • Register der obigen Auszüge aus dem Economist für 1866 und 1867.
  • The „Money Market Review“. Jahrgang 1866.
  • The Money Market Review. Jahrgang 1867.
  • Register Money Market Review Jahrgänge 1866 und 1867