May 18. 1867. N. 1238.

The Economist, 18. Mai 1867. S. 553/554.
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Many banks, in the great centres of industry, besonders im North, rediscount their bills in London. The amount of such discounts should be stated. Z.B. bei der Leeds Bank (diesem swindle) von £.2,650,300 liabilities, at the time when it failed, waren liabilities on endorsements (rediscount) of bills = £1,919,991 about 2/3 of the entire liability of the Bank to the public. Davon estimated 1,000,000 not to be paid at maturity.

An agricultural country cannot safely employ its own money. A good class of borrowers does not exist there in sufficient numbers to carry off the yearly savings of the district. On the other hand, there are single streets in some large towns where the whole deposits can be lent instantly and safely. No unemployed saving class lives there. Rediscounts best mode of bringing the money to the investment. A West country Bank sends its spare money to London, and leaves it with a billbroker; a Lancashire banker sends his bills to London and asks for money on them. That money when he gets it he takes down to Lancashire and discounts again. In this way trade and industry get the supplies they want, and quiet people are able to employ the money they save.

The Economist, 18. Mai 1867. S. 554/555.
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Causes of the Existing Depression.

First: At the present time, and for the last 9 months: Limitation of demand in almost every direction, and, consequently, falling prices, declining wages, accumulating stocks, debts difficult of collection, pressure on bankers for advances and accommodation, great diminution of the amount of bills in circulation, and exceeding discrimination on the part of dealers in money as regards the class of bills to be admitted by them at all.

Second: Enormous collapse on all sides of enterprises, which, during the Extension Mania of 1863–5, were in the highest vogue. In this list, Railways occupy the most prominent place.

Up to May, 1866, the nation had been running a career of desperate extravagance, i.e. for 3 or 4 years, it had been forestalling its savings in hundreds of ways.|


Dissipation of Capital, während der Extension Mania, almost as complete as a war expenditure. The Great Eastern, the London, Chatham and Dover, the North British, the Great Western and the Brighton did, during 1861–6, raise by debentures, preference shares, ordinary stocks, short loans in the open market, advances from bankers and others, scores of millions st., to be invested in extensions which, for the time, and, perhaps, for some year years to come, will not yield any net revenue. The money  Zusatz von Marx.
has been sunk in earthworks, bridges, stations, locomotives, rails, sleepers, carriages, trucks, and land, and the people who found the money have now to go without any income from it.

Ebenso a large part of the investments made during 1861–6 in joint stock cos. of all sorts – banking, finance, docks, ships, mines, buildings, trading, manufacturing, and the almost endless catalogue of miscellaneous purpose. The state of the Share List and the Liquidations proceeding in Chancery, are sufficient evidence that 9/10 of these cos have failed to make any profit, and, too, incurred losses so great as to extinguish most of the capital.

The prices of Stock Exchange securities, and the range of dealings in them, were kept up by the appearance of continual fresh bodies of purchasers, who brought into that market capital taken and to be taken from other employments, present and future. Demand of all kind was stimulated for the same reason, and so were Wages. It was a period of bold, sanguine, and experimental outlay. It was also a period of ostentatious expenditure. Large numbers of people seemed to get rich all at once, and, of course, they hastened to show how naturally their habits and tastes could rise with their fortunes. The panic of May, 1866, brought to a sudden end all this artificial prosperity. Ausserdem kam politische Unruhe, German War, Fenians, Cattle Plague, Cholera, dismal and rainy weather. The disorganisation of the India trade has extended throughout the last 12 months. The Railway Discredit occupied all the winter, and the strikes, and severe weather, prolonged to the end of April. Dann die preussisch-französischen Quängeleien.

It is quite certain that there has scarcely been any period when debts were so difficult to collect, and when the usual bills drawn by wholesale dealers on the retailers in country towns met with such irregular payment. The draper and grocer sells less because his customers have to meet the calls of some Railway, Banking, Finance, or Trade Co., either in or just out of the Court of Chancery, and hence are compelled to live in smaller houses and reduced style. The tradesman in the manufacturing town cannot pay because his working class supporters are earning 20% less wages, with uncertain employment, and are, besides, in large debt for goods obtained on credit during some recent strike or lock out.

Deposits and balances in banks are low, because hardly any one has any surplus means or income; and the rate of discount remains low for first-class bills, because but few such are in circulation.

The Economist, 18. Mai 1867. S. 557/558.
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The Clearing House Accounts. (communicated by W. Stanley Jevons).

Der Economist wunderte sich last week, daß Clearing House operations nur 3 × grösser in 1866 als in 1839, namentlich auch weil Export trade 31/2 grösser seit jener Zeit und the sphere of operations of Clearing House  Zusatz von Marx.
(durch Beitritt der Joint St. Banks, später der B.o.E. etc)
sehr enlarged.

Aber in early part of 1839 trade was very much inflated, and prices exceedingly high (higher in general than they have ever since been), and in March 1839, the climax of speculation (see Tooke ) was reached. The total amount of bills drawn (nach Newmarchs tables of the amount of inland bills 1830–53) in 1839 > than any previous year in the tables, or any year after until 1853. Although the amount drawn in 1840 was but little less, the bill circulation much reduced in 2nd qr. of 1841, und continued low until end of 1844.

On the other hand, in May 1867, year of collapse of speculation, which may well by this time have reduced the current amount of transactions. The comparison of May, 1866 mit March 1839 daher nicht conclusive.

Ferner: The Clearing House Transactions, including large part of the inland trade of the country, cannot increase as rapidly as the returns of our foreign trade, influenced by a complete reform of the Tariff. I am not aware that the returns of the income tax, corn sales, excise duties, assessed taxes, or any other available data lead us to |133 suppose the increase of inland trade to be at all so rapid as that of our foreign trade. … Lubbocks returns of the operations of his own Bank, („Statistical Journal, Sept. 1865“) show, in actual numbers, that the amount of currency afloat is no measure at all of the amount of transactions accomplished.

2) Crisis of 1866.

  • Figures on it (57, 58) Grounds for Confidence (61, 62)
  • Crisis of 1866 p. 73, 74, 82–84, 98.
  • Ten P.C. p. 73, 75, 76, 78, 82, 81, 88. (Profit et Interest)
  • Agra and Masterman’s Bank Failure (69, 70) Its Reaction on India (89)
  • Overend et Gurney (71, 72, 95, 100, 108, 109.)
  • Protection for Bankshares (70) Dealing in them (Bears) (76) Bulling and Bearing (81, 82) Bill for regulation sale in them (123) Low prices of Bankshares (171, 172)
  • Northcote and Gladstone on the Panic (90, 91)
  • Circulation of Banknotes since Panic (98)
  • Credit Mobilier and Finance Cos. (11, 12, 13, 14) (24, 25)
  • Finance Paper and Rate of Discount (48, 49)
  • First Interior of a Finance Co (107) Financing Details (177, 178)
  • Credit Foncier of England (158, 159)
  • Account of Joint Stock Banks (92–93) How a shareholder should watch its Co. (84)
  • Liquidation of Bank of London (113)
  • What to buy? (G – Gʹ Sich selbst verwerthender Werth) (112)
  • Failures (1866) 60, 61, 82, 107, 108. 1867 (p. 153)|


  • 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