Aus:
The Money Market Review. 26. Mai 1866. S. 688/689.
Schließen

The Bank of England and the London Bankers in the Panic.

Friends of the Bankact of 1844: If it has been suspended, it has not failed; if it has failed, it was good, very good, that it should have failed; and that it fails as beautifully and beneficently as it operates. Economist selbst muß aber sagen: „Indeed if it had not been broken this month it must have been repealed next month. The panic took the matter in its own hands.“

In the letter of the Governor and Deputy Governor of the Bank to the Chancellor of Exchequer , on the 11. May, they have the impudence to state: „We commenced this morning with a reserve of £5,727,000, which had been drawn upon so largely that we cannot calculate upon having so much as 3 Mill. £. St. this evening, making a fair allowance for what may be remaining at the branches, and unless the money taken from the Bank is entirely withdrawn from circulation there is no |192 reason to suppose that this reserve is insufficient.“ Dieß als »Troops of bankers were coming up from all parts of the country in order to provide themselves with gold and banknotes.[«] The balances of the London Bankers, lodged in the B.o.E., usually from 3 to 5 Mill., and it was clear that, had the Bank Act not been suspended, they would have been compelled to withdraw every 6d. of those balances to meet a tremendous „run“. All those balances must have come out of the Bank reserve of 3 Mill. £.

The Deputy Governor of the Bank was exceedingly reluctant at the conference with Gladstone to admit that there was any necessity whatever for the suspension of the Act, until he was curtly reminded by one of the joint-stock bank directors present that „they could draw a couple of cheques to-morrow morning, which would compel the B.o.E. to close its doors“. Gladstone interposed, „but you will not do it“.

Aus:
The Money Market Review, 26. Mai 1866. S. 689/690.
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Lord Clarendon on the Panic.

The panic of 1866 possesses one essential characteristic which did not belong to its predecessors. Continental capitalists have in this instance become alarmed, and, contrary to all precedent, on the seeming verge of a colossal European war, withdraw their money from London as a measure of security, instead of sending it to London for safety, as in previous periods of convulsion. Clarendon , on the morning after the issue of the Gvt. letter, indited his circular to the British embassies and legations throughout Europe, with the view of staying undue panic on the Continent as to British solvency.

We have been taught to think that the withdrawal of a million or two of bullion from the Bank of England is a very serious affair, and that the addition of a million or 2 is the occasion for national congratulation. … The precious metals always have and always will flow backwards and forwards from one country to another, and all law is powerless to stem this natural course … Clarendon tells Europe that long-continued prosperity in commercial affairs and the general wealth consequent on it have produced their ordinary results in encouraging speculation, especially of a monetary and financial character, and in fostering hopes of acquiring wealth by more speedy means than are presented by ordinary methods of commercial industry. …

Aus:
The Money Market Review, 26. Mai 1866. S. 690/691.
Schließen

Transfer of Business of the Bank of London to the Consolidated Bk.

The London Bank Reserve Fund in its last balance-sheet upwards of £300,000. In April 1864 it paid dividends at the rate of 15% p. annum, price of its shares £122, or £72 premium und damals addition of £200,000 made to the capital by the creation and issue of 2000 new shares. These shares issued to the then existing shareholders at premium of £70 p. share, and the £140,000 realised by these premiums was carried to the reserve funds. At its last half yearly meeting paid dividend of 20%.  Zusammenfassung von Marx in eigenen Worten.
Schließen Came to deadlock by  The Money Market Review: dealing
Schließen dabbling in financial transactions.  Zusatz von Marx. The Money Market Review: Such an arrangement is somewhat novel and curious, but, under the circumstances, it is perhaps the best that could have been made.
Schließen Dummes arrangement mit der Consolidated Bank. Transfer ihr 22 May, evening, the current and deposit accounts of their customers mit ample assets to cover them. Consolidated Bk. undertook the charge of these accounts, but assumed no responsibility für die acceptances der B. o. London. Diese daher unpaid return.  Kommentar von Marx. The Money Market Review: it must be owned that some very nice legal points might be raised in regard to this arrangement, were it worth the while of any party to raise them.
Schließen ⦗Dieß ungesetzlich; giving one creditor privilege gegen den other.⦘ Der Fehler to invest Banking Funds, which may be any day withdrawn, upon Railway Contracts or Lloyds Bonds, or other securities based on public works in a progressive but unfinished state. These works may be long in progress, the capital to complete them may not be readily obtainable, the works may never be finished. Until their completion all such securities not only liable to great fluctuation in value, but extremely difficult to deal with as available securities, even if they can be dealt with, as such, at all.

It is the business of a financial association to lend money, or lend its credit for the raising of money, upon securities not immediately convertible, and repayable at longer dates than those at which a banker justified in lending his money. The financial association, lending at longer dates, and on less marketable securities, incurs therefore greater risk, and obtains therefore larger profits than the banker. If the business well managed, higher profits cover the larger possible losses, and enable it to pay higher interest and dividends to the shareholders. But the financial association ought not to take deposits repayable on demand, or at short notice, because their investments not immediately convertible, in case of emergency for the repayment of these deposits. The mischiefs of intermingling the system of the Banking institution mit financial operations lamentably illustrated in the cases of the Joint Stock Discount Co. and the Bk. of London, the London Financial and the Imperial Mercantile Credit Associations.|

Aus:
The Money Market Review, 26. Mai 1866. S. 690/691.
Schließen

Loss in Investments since beginning of 1866 – May 26.

The recent failures and the general depreciation in the value of joint stock investments, since the commencement of the present year, has involved loss at 130 mill. £. St.

Aus:
The Money Market Review, 26. Mai 1866, S. 692/693.
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The Stock Markets of the Week.

A steady drain of bullion to the Continent continues, partly to pay for the stock with which Continental holders have lately loaded our market, and partly because the machinery of the Foreign Exchanges is out of gear. Consols are weaker, but only to a trifling extent.

The speculators for a fall have altogether had a good harvest the this week. Individuals or cliques sell in combination large quantities of shares in an undertaking whose very existence depends upon its credit, and then comment on the depreciation in price which they have caused, in a way to bring the credit of such concern into question, and cap the whole proceeding by circulating false and defamatory reports. It is said that men of high standing in the City of London are not ashamed to pocket the profits of these transactions. Such men pick out a high priced bank as their next victim, and repurchase with glee the stock out of which they have frightened timid shareholders.

With the exception of Italian, which seems to have fallen as low as it well can go, Foreign Stocks are all weaker. The fall in Railway Stocks very severe. London and Northwestern have been the greatest sufferers.

The great interest of the week has centered in the market for Bankshares, where the fluctuations have been terrible. The crisis under which India is still suffering afforded a pretext for heavy sales of Agra and Masterman[’]s shares, touched at one time 10l. per share, or 15 discount; but a great rebound has taken place, and they close at £20.

Persons who have locked up their property in their cash-boxes can so invest mit immense profits.

Aus:
The Money Market Review, 26. Mai 1866. S. 694/695.
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What is a Five-Twenty Bond?  Zusatz von Marx.
Schließen (Neue Art Convertibility for paper currency)

The Gvt of the U. States have the option of redeeming this part of their debt at par, or 100, after 5 years from the date of issue, and at any period between 5 years and 20 [years] from the date of issue; but, at the expiration of the 20 years, the holder of five-twenty bonds can claim the principal or par value. Similar condition für die ten-forty Bonds, the option of the State continuing in this case after the first 10 years up to 40 years. On both these kinds of bonds the interest is payable in gold, on the former at 6, on the latter at 5% p. annum.

Seventy-thirty Bonds: Interest on them payable in greenbacks, at the rate of 73/10% p. an. (say 7$ 30 cents p. 100 dollars). These bonds exchangeable, at the option of the holder, after 3 years from the date of issue, into five-twenty bonds. By the last advices the relative prices of five-twenty and ten-forty bonds in New York were 102 und 96. Before long – das scheme schon brought forward by McCulloch, the Gvt. will issue a 5% stock at par, and thus exercise the option they have of paying off the five-twenty 6% or substituting a 5% in their place. Chase gave the holders of „greenbacks“ the option of conversion into five-twenties. He could not make his „greenbacks“ equal in value to gold, but to five-twenties, and that he did; and so he paid for the greatest and the most costly war the world ever knew. This is a form of convertibility for paper currency never before devised. But the money was raised at war rates. A „greenback“ issued in payment for cannon and gunpowder when gold was at 100% premium was, when converted into five-twenties, virtually raised at 12%. The purchase-power of the „greenback“ was only 50 p. 100, and upon that 100 6% interest was payable p. annum. Um später dieß to correct hielt Chase dem Staat die option der Rückzahlung etc vor. Mr. Chase’s option of redemption in 5 or 10 years, will be found supremely economical; in the course of a few years we may see a 41/2 or 5% stock substituted for the existing 6% five-twenties and ten-forties.|

Aus:
The Money Market Review, 26. Mai 1866. S. 695/696.
Schließen

The Annual Circular of the American Commercial Agency.  Zusatz von Marx.
Schließen (Vehmgericht)

Issued from New York. The American Commercial Agency erstreckt sich nicht nur auf U. States, sondern auch British North American Provinces. The review takes the form of an everyday ledger account, the substance of what is known in favour of and against all large merchants and shopkeepers being regularly entered up. This Agency has long proved a terror to mercantile evil doers. In no large American town is it possible for anyone to embark in business without receiving an early call from a representative of the Agency, who puts questions about the previous place of business of the members of the firm, their capital, and their expectations. Into the ledger of the Agency the answers are duly posted, and beneath them such corroboration as the Agency may think proper to obtain. All the entries, in the name of any firm, are accessible to the other firms connected with the Agency, but inaccessible to the firm concerned. (Der Economist hat aus diesem Annual Circular Zahlen über die American failures genommen.) The considerable increase of failures in 1865, compared mit 63’ und 64’, is chiefly to be accounted for by the depreciation of the Currency.

The circulation, in England, as in New York, of a kind of Lloyd’s register of the seaworthiness of firms, would provoke proceedings in the Courts of Law. But as long as we resist the supervision of the Agency, and America submits to it, wir haben keinen Grund für our aspersions on American credit.

In diesem Augenblick great Consignments von Liverpool to New York. Diese consignments are stored in the bonded warehouses, for payment of duties; and the large amount of those duties keeps the market itself bare of stocks. Where realisations are demanded, such consignments take precedence of other sales, and a slight advantage in price – i.e., a moderate discount – universally attracts the jobbers. It is absolutely prejudicial to the standing of a firm to realise on terms of sacrifice; and no house of respectability will obey such instructions. Das Circular sagt u.a: „From all points of view, the prospect warrants the conclusion that the entire production in the U. States in 1866 will be nearly, if not quite double that of 1865.“ Dießmal, nach Ende des Kriegs, very few „drummers“ (commercial travelers) have been sent from the North to the South, sondern der South has gone to the North. Southern buyers have revisited the North, and made their own proposals to sellers. To New new and unknown men sales have chiefly taken the form of cash or produce, or collateral security of some kind – the assignment of planters’ notes, or mortgages, or of merchants’ notes, or mortgages. Old and known men well received, when they appeared with proposals for immediate or partial liquidation of old claims; but there has been no pressing of sales, as in former days.

The opening words of the Annual Circular state that last year (1865) was one of remarkable success in all commercial pursuits, or that seldom or ever has the increase in the surplus of merchants been so considerable or so universal.

Aus:
The Money Market Review, 26. Mai 1866. S. 697.
Schließen

Act of 1844 and Bank of England.

Our trade £500,000,000 p.a., und amount of capital held on deposit in Bank, payable at demand, not less than 400 Mill. £. St. Surely of greater moment that convertibility should be preserved for such a mass of capital than £7,000,000 should be locked up in the B.o.E. as security for the note.

Nach der Theory des Acts von 1844 the value of money should fluctuate and depend on the variations in the currency. 2 August 1865 Bankreserve £6,461,318, rate of discount 4%. On 9 May 1866 Bankreserve £5,811,745, rate of discount 8%, showing a reduction of £649,573 in the amount of reserve, and an advance of 100% in the value of money. The theory, therefore, of regulating the value of money by the amount of reserve admits of the most capricious exercise.

Aus:
The Money Market Review, 26. Mai 1866. S. 697.
Schließen

A Pluralist Director.

Thomas Dakin, alderman of the City of London, is a director und auditor in some 20 or 30 Cos, was a druggist, but left that to go to the directories, derives some 1000£ a year from it.|

Aus:
The Money Market Review, 26. Mai 1866. S. 697.
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The Directors of failed Cos.

The bears may make a dead set at the shares of the Bank of London and the Agra and Masterman, but they know that some of the directors of both these banks are directors of the Imperial Mercantile Credit Association , who managed in January last to carry forward a supposed sum of £100,000 undivided profit; in April to make a call equal in amount to the paid-up capital; and in May to wreck the Co.

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Aus:
The Money Market Review, 12. Januar 1867. S. 35/36.
Schließen

Proposed Expansive Clause in the Bank Act of 1844.

Economist,  Zusatz von Marx.
Schließen under J. Wilson , antagonist des Bank Act. Then, it „ratted“, became its supporter. Latterly, again backsliding. Globe, after supporting the Act for more than 20 years, has turned against it, demands its repeal. Economist, less courageous, demands expansive clause (so daß minister Chancellor of Exchequer by law ihn suspendiren können). Wants, therefore, partial abrogation of the Act. J. Mills (Manchester) (at meeting of Social Science Congress und Fowler „The Crisis of 1866“ verlangen dasselbe. Beide Kerls affirm, that there would be nothing inconsistent with the Act in the existence of a permanent power to abrogate it! in a specific provision for the violation of its principle! Economist says „that power is not contrary to principle unless the suspensions of the Act are so“. A suspension of the law by Ministers is a violation of the law by sufferance, which the Economist himself elsewhere designated as a misdemeanour, although an excusable one. The Bankact has only one essential principle – the limitation of the bankissues to 14 (now 15) millions, except against gold. The „crisis clause“ would abrogate this „sound“ |248 principle in the only case where it can come into play. Ausserdem: The power (known to exist on 11 May 1866, and not preventing the panic) would never be exercised except at the last moment, just to prevent the worst effects of a panic. Nach J. St. Mill die theory und practical arrangements des Bank Act adapted  Zusatz von Marx.
Schließen nur to the case where drain of gold originates in a rise of prices produced by an undue expansion of the currency or credit, but in no other case.

Aus:
The Money Market Review, 12. Januar 1867. S. 38/39.
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Evidence of John Henry Gurney and Mr. Robert Birnbeck Birkbeck before Vice-Chancellor Malins.

 Zusatz von Marx.
Schließen Dieser meek und pious swindler, J. H. Gurney, admitted vor Gericht, in his evidence the damning fact, viz: that during the whole period von 1861 to the time of transfer no profits whatever were made by the old firm, but, on the contrary, large losses. Practice, nach dieser evidence, of the firm für years, in making up their annual accounts, to add interests upon all debts owing to the firm, bad as well as good good debts. After 1863 this practice discontinued. Balance sheet for 1864 exhibits dead loss of £348,000. This ratio of loss increased in 1865 down to the moment of transfer to the new Co. In 7 months von January to July 1865 (inclusive), balance of losses £295,000, being at the rate of £506,000 p. annum. In this period of 19 months, therefore, the firm was receiving and wasting or sinking irrecoverably the money of their depositors to £643,000. All this elicited during the examination of John Henry Gurney. And 500,000£ goodwill paid by the new firm for this business Zusatz von Marx.
Schließen !

Aus:
The Money Market Review, 12. Januar 1867. S. 39/40.
Schließen

Cotton Market. Past and Present.

Import value of cotton landed last year at Liverpool estimated at more than 80 Mill. £, larger than in any previous year; quantity of cotton manufactured (1866) larger than in any previous year, auch its export. With an import value of more than 80 Mill. £, there were fluctuations in the market price, in the course of a few months, von 40 to 50%, und prices at close of 1866, though firm for the moment, 20 25 to 30% lower than at beginning of 1866. Hence, during that year, prodigious losses und gains of cotton sellers Zusatz von Marx.
Schließen !

Mssrs. Leech, Harrison, and Forwood’s Review of cotton trade in 1866 shows that that year commenced with stock of raw cotton at Liverpool of 402,630 bales, which declined, on 16 March, to 340,250 bales, the minimum of the year, then rose, on 25 May, to 1,205,330 bls, the maximum of the year, and closed at 516,770 bales on 28 Dec. 1866. The course of market values thus described in outline:

Quantity of Cotton imported in U. Kingd. in 1866: bales 3,749,041, or 1,556,952,589 lbs, against 2,755,321 bls. in 1865. The increase in 1866 thus about 32%. Of this imported quantity supplied, at a cost to this country, as under:

Home consumption, or quantity of raw cotton delivered from the port of Liverpool to consumers, i.e. manufacturers, in 1866 was 2,436,444 2,436,344 bales, or 46,853 bales per week, against 39,129 in 1865, and 30,822 bales in 1864.

Contrasted, quantities of cotton imported and used for home consumption during the last 7 years (but that of 1864 is omitted, for reasons not given,) stands thus: |249

One prominent feature in this year: the large export of raw cotton to the Continent. In 1866: 1,136,565 bales, or a weekly average of 21,850 bales, against 890,830 bls in 1865, or 17,100 bls per week on the average.

Exports of manufactured cotton goods from the Un. Kingd. during first 11 months of last 3 years nach den Board of Trade Returns.

Most of our spinners have adopted their machinery to the use of Indian cotton, and not altered it, will not alter it, until the supply of American cotton is proved certain and abundant.

Increasing consumption of raw cotton on Continent. Owing to the low wages there current, continental manufactures enabled to compete successfully with ours, it is said, in many of the coarser classes of cotton goods. Introduce also English machinery on extensive scale into their manufactories, so that feared as competitors in all classes of cotton goods unless „a great change takes place in our labour market“.

The tendency in this country is, and will be, towards dearer labour. The Prices of food, house rent, and indeed of all the necessaries of life increase in this country year by year, and must continue to increase so long as the present rate of production of the precious metals goes on, and so long also as we possess such vast colonial dependencies which, together with the U. St., are bidding treble or double the value for labour which in this country we can afford to pay.

Aus:
The Money Market Review, 12. Januar 1867. S. 40/41.
Schließen

Thomson Hankey: (formerly Governor of B.o.E.)  Titel von Marx notiert in einem Exzerptheft 1878 (IISG, Marx-Engels-Nachlass, Sign. B 148).
Schließen „The Principles of Banking, its Utility and Economy; with Remarks on the the Working and Management of the Bank of England[“]. Lond. 1867.

 Kommentar von Marx.
Schließen Nichts brauchbar hierin als die explanation and description der organisation der different offices der B.o.E.  Zusammenfassender Kommentar von Marx.
Schließen Im Uebrigen Peel man. He considers Act of ’44 as „perfectly successful“.

Bill and mortgage, sagt Money Market Review, both promises to pay at fixed dates, and both are transferable, though by different modes of transfer. In the one case the debt always attaches to the property or commodity mortgaged, and need not necessarily to be paid at the time fixed; whilst, in case of bill of exchange, the debt is transferred from person to person, though each still remains liable to pay it, at the fixed date.

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