November 10. 1866. N. 1211.

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The Economist, 10. November 1866. S. 1305.
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The State of the Money Market.

Bankrate reduced von 41/2 to 4%. The disturbed state of confidence is still shown, because money is being remitted from the East, while the demand for remittance to the East rather augments than the reverse.

The North British Railway.

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The Economist, 10. November 1866. S. 1306–1308.
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There seems no end of the railway scandals which this crisis will detect. While money is plentiful it can be borrowed, and used to pay dividends, debenture interests, any one in fact whom it is convenient to pay. But when money cannot be borrowed, these claimants become first irritable, then importunate, finally aggressive, upon which the latent sin is at once discovered. In the case of the North Brit. Railway no debentures have been issued in excess, no Act of Parliament intended to protect lenders has been violated, but a series of erroneous accounts have been palmed upon the shareholders and the public, and confirmed by dividends distributed, on the faith of which ordinary shareholders believed they had an excellent property, and preference shareholders – in several sets – lent money to the concern. The fraud here is a business, not a legal fraud; it consisted in publishing false figures, not in transgressing Parliamentary limitations. The North British is a very large railway and has many branches; more than 700 miles aggregate length, and an authorised share and loan capital of more than £22,000,150. Like so many railways in England, the North British has always been before Parliament, in a series of contests with the Caledonian etc … For a long times time its dividends about 3% p. annum. But the Committee of Investigation find that they have been procured by „manipulation“. The accountant is examined:

„You have stated that from your examination of the revenue accounts of Jan. 1865, you found that the revenue was some £36,000 deficient to pay your preference dividends? – Yes. – Did you report that to Mr. Hodgson (the chairman of directors) or to Mr. Rowbotham (general manager)? Yes. – Before the January accounts were published? – Yes, I required instructions what to do. … I was told the dividend must be paid under any circumstances. That day or a day or 2 afterwards, I was told to bring out a dividend of 21/4% that half year. (these instructions given by Mr. Hodgson.) – How did you do that? By making these cross-entries? Yes.[“] Mr. Rowbotham confirmed this. He was „cognizant of the irregularities in the accounts, and that dividends were declared and paid which had not been earned; but that he did not order or instruct the operations by which the balance-sheets were to show results unwarranted by the position of the co, and that the instructions on that point emanated directly from the chairman to the accountant. He also stated that, although he is the recognised medium of communication between the board and the department of accounts and audit, he did not convey |107 to any member of the board his knowledge of the irregularities.“ Herr Hodgson in seiner published defence, in reply to the Investigation Committee, says: „it would manifestly have been impossible to obtain or maintain the value of the railway without a temporary departure from the strict rule, whereby the limits of expenditure out of revenue and out of capital are defined.“ Und daher North British pumpte sein Geld on preference stock and debentures, because the accounts of the Co. looked well.

Share Capital of the North British £.4,771,000
Its preference shareholders of all kinds 10,642,000
Debentures all but a very little issued 5,799,000
Gepumptes Kapital 16,441,000,
so that 31/2 × the capital of the Co. has been borrowed of victims of the „regulated“ accounts.

Hodgson seems to think that shareholders are necessarily benefited by false puffing accounts. But shareholders are a very fluctuating body. The shares of A become to[-]morrow those of B by transfer. Daher diese accounts a fraud on the buyer for the gain of the seller.

The mode in which the entries were managed was, that a certain amount of expenses which ought to have been by the halfyear were charged to various „deferred“ accounts. Das Investigation Committee says: „Apart from carrying to capital sums which should properly have been put to revenue, complicated and elaborated exertions have been made to conceal a large amount of expenditure under the head of suspense accounts, consisting of ‚line renewals‘, ‚line suspense‘, ‚surplus property‘, otherwise ‚postponed expenditure‘, ‚locomotive suspense‘, ‚suspense account, N. 2‘, ‚suspense account, 1863‘, and ‚contingent account‘. (‚Life‘, half the brokers of England think, in regard to railway accounts, ‚is not long enough to understand such things.‘) Purpose dieser entries, to bring out the intended dividend.[“]

The Persons most to blame are the Auditors. Hätten sie ordentlich zugesehn, so discovered daß die dividend paid out of borrowed money.

Aus:
The Economist, 10. November 1866. S. 1316.
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This latest development of railway misdoings has communicated fresh alarm to the minds of holders of railway stocks and shares. Auf dieser Basis renewed die Bear manoeuvres, wie früher mit den Bankshares, most of which have recovered from the unauthorised reports. … Unless the money market alter very materially, not in price, but in character, it will be impossible to renew the greatest part of the maturing railway debentures.

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The Economist, 10. November 1866. S. 1316.
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Failures:

  • Dent and Co’s (China) drafts refused by their London Agents: Dent, Palmer et Co.
  • Stoppage of James Russell et Sons, Crown Tube Works, Wednesbury.
  • Utley Uttley and Lee, manufacturers at Burnley, liab. 20,000l.


October 5, 1867. N. 1258.

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The Economist, 5. Oktober 1867. S. 1122/1123.
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Suggestion Introduction (by Mr. Hutton, at Belfast Social Congress) of Prussian Rentbanks into Ireland.  Zusatz von Marx.
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(Interest Bearing Currency)

The Prussian Rent Banks seem to us a rudimentary and infantine financial device … Stein had to buy out, on behalf of the peasant cultivators, the manorial Lord. The Rentbanks – no banks at all – were simply a Gvt. department charged with this peculiar financial arrangement. The Govt. valued the interest of the „lord“ at such and at such a sum, and issued to him bonds with 4% interest – bonds in every sort of sum from 30s. to 150l. – payable at the option of the Gvt., but not at the holder’s option. The landlord was compelled to take them, and the idea of issuing them in various sums was that he might keep them or pay them away – in every mode that he thought fit. These bonds were secured on the estate, and the tenant was obliged to pay a certain rent-charge annually for their liquidation. There was an annual „drawing“ (Ziehn wie bei Losen), according to the continental fashion, and the bonds „then drawn“ were discharged out of the sums so paid by the peasants. If the peasants did not pay their annual quota, the State took and used very ample powers of entry and confiscation. Der Lord forced to take these bonds. It is plainly a severe act of despotic finance. … In fact, no interest-bearing security is really suitable to currency purposes, because its value changes from day to day. The interest accrues de die in diem. It is one thing on the 1st Oct. and a greater on the 2nd Oct. A sum, therefore, has to be done whenever the bond changes hands, and no population has ever borne, or will ever bear, a kind of currency requiring so much labour … |169 Prussia may have much to teach us in other departments; but, surely money is our own subject; we understand that if we understand anything. And so it is.  Kommentar von Marx.
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(Herr Jesus!)



Inhalt:

  • 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