July 21, 1866. N. 320.

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The Money Market Review, 21. Juli 1866. S. 68/69.
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The Bank Rate and Bank Act. Deputation to the Chancellor of the Exchequer.

Watkin moved address for the appointment of Royal Commission of Enquiry into the pressure, the 10% discount etc. Deputation from Glasgow Chambers of Commerce to Disraeli mit memorial, on 18 July. Sie sagen u.a. „Only last week £200,000 shipped to France. Here 10% rate, dort 4%.[“] Mr. Graham, one of the members for Glasgow said: „There was a widespread opinion that the present system favoured the monied interest rather than mercantile.“

Neither want of capital, nor want of currency, but want of credit.

Aus:
The Money Market Review, 21. Juli 1866. S. 69/70.
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The Gvt. Debt to the Bank of England a Legalised Fraud upon the Country.

The Bk. commenced its career as a „Government convenience“ by lending the whole of its capital, £1,200,000 to the State at 8% interest, with an allowance of £4000 yearly towards the cost of managing its own business. The Bank empowered to raise an equivalent amount of capital (to that lent to the State) to trade with, by the issue of B.o.E. notes, and the Gvt. contracted to pay in addition to the 8% interest on the loan, £4000 towards defraying the expenses attending the issue and management of the notes on which, in fact, the loan had been raised by the Bank. Such origin and first transaction of the B.o.E., and origin of the Gvt. Debt to the Bank, 170 years ago. This first advance has never been paid off; country, through all its vicissitudes, paying interest on that £1,200,000 to the present day and upon a number of other loans advanced from time to time by the Bank to the Gvt., together £11,015,100, the present amount of the Gvt. Debt to the Bank. Now all these advances or loans made by the Bk. to the Gvt. were raised and made by the issue of banknotes, which the Gvt. authorised and empowered the Bank to issue, and to the validity of which the credit of the Gvt. itself has always, virtually stood pledged. Without that Gvt. sanction and authorisation, and the monopoly of banking and metropolitan banknote issues, the Gvt. secured to the B.o.E., that establishment could not have raised those amounts and lent them to Gvt.

The Gvt. of the country was, therefore, really raising and borrowing money from its own people, and upon its own credit; but through the medium and instrumentality of a banker, from whom it nevertheless received it as a loan, to whom accordingly it acknowledged itself indebted, and to whom it has ever since paid interest upon the amount for periods varying from 170 to 50 years, the last advance having been made in 1816. The banknotes whereon the Bank raised the money which it advanced to the Gvt have never been paid, but remained outstanding in the hands of the public upon the credit of the Bank, but virtually endorsed and guaranteed by the Gvt, down to the present moment. The banknotes actually issued in the first instance, have, of course, come in for payment, but they have all been paid only by the issue of other banknotes for the like or other accounts, in perpetual succession, and have never in any other sense been paid or redeemed. The Bk.o.E. have, therefore, received 20s. in the |199 pound upon those notes; and the Gvt. is still liable to pay them 20s. in the pound upon the whole amount, to the extent of 11 mill. and upwards. The country wanted 11 mill. and upwards of currency beyond the „current coin of the realm.“ realm“ in circulation, and having obtained these B.o.E. notes, indirectly guaranteed by Gvt., they have constantly held and retained them in circulation, and not a single note in that amount has ever been paid off. The whole has remained in permanent circulation, in the hands of the public until the present moment. The B.o.E. receives the interest upon those 11 mill. of money to which it has no claim. The Bk. can only say that they did raise and pay over to the Gvt. 11 mill., in the sense as it would be true for a billbroker or commission agent to say that he had raised and paid over the amount of the bill he had negotiated for his principal. The credit of the Gvt. gave the B.o.E. notes its currency and provided for its payment … ensured its perpetual currency without payment. Zudem during 20 years Bank expressly relieved by Gvt from that liability to pay by a special law. Shortly after the B.o.E. note was made a legal tender. By this the notes placed upon a par with the current coin of the realm. This entirely superseded all question as to their payment or convertibility. From this moment they were the inconvertible notes of the Gvt. Schon hiedurch the „Gvt. Debt to the Bank“, if it had existed before, was cancelled. It is true, that the Bk. is still nominally liable to payment on demand. But even that nominal liability does not attach to the notes issued in respect of these 11 mill., because they never come to the Bk., and cannot come in for payment, for the most disastrous pressure has never reduced the circulation so low as 11 millions, not lower than 15 or 16. Why, therefore, still claims the B.o.E. to hold the Gvt. to be its debtor to 11 mill. and upwards? Of the whole of that sum the B.o.E. did not advance one single 6d. out of its own moneys. The whole of it was raised upon its bank or promissory notes, every one of which still remains, down to the present moment, wholly unpaid and unredeemed. But received interest from Gvt. upon them, as if it had really paid the whole of them. Its note circulation has never been less than the Gvt. debt, but, on the contrary, it has at all times been greater than that debt. The credit, which held them in continuous circulation and exempted them from payment, was the Gvt. credit; and of legislature Acts.

Aus:
The Money Market Review, 21. Juli 1866. S. 70/71.
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Bears.

Among the winners by panics the banking and money lending class, und that wary and wealthy fraternity who keep their resources at command when the storm threatens, and use them freely when the hurricane comes.

We have seen quite enough lately of the infamous prostitution of the Court of Chancery by nominal shareholders in joint stock Cos to feel certain that it has been abused, not in the interest of shareholders, but to swell the illgotten gains of gamblers upon falling markets at the cost or ruin of shareholders.

A real fright, cleverly contrived, can scarcely fail to bring down the most trustworthy joint stock bank under the existing system of time bargains.

The writer of ‚Profits of Panics‘ has substantially written the truth … there is no doubt whatever.

Aus:
The Money Market Review, 21. Juli 1866. S. 71/72.
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Joint Stock Co. Promoting and Financing. Bernard Salomon Bernard.

Lord Chief justice of the Queen’s Bench und Special Jury occupied 3 days in case, wo der plaintiff swindler. Bernard Salomon Bernard – his original name Salomon only – had heard of a certain iron mine, at St. Columb, in Cornwall, of which Carter, banker at St. Columb, was the principal owner. He had heard also of one Gill, supposed to be a gentleman „of great influence“ in certain quarters in London. He conceived the idea of introducing the one to the other, getting up a jointstock Co., and getting himself a handsome sum from the transaction. Bernard saw Gill, represented him |200 the mine especially rich in a species of iron called „spathose“, peculiarly adapted for making steel.

It does not appear whether Carter ever authorised or empowered him to sell the mine, but Bernard assured Gill that he could get a contract for the sale of it. Gill thereupon saw Captain Blakeley respecting it, and as Blakeley was largely invested in the making of steel guns, and as the one of this mine was adapted for the manufacture of steel by the Bessemer process, the captain readily agreed to become party to the acquisition of the mine with a view to forming a jointstock Co. and working it in connection with his Ordnance Company. Bernard entered into a contract to sell, as the agent of Carter, agreed to sell the property to himself and Gill for £75,000. According to Bernard, £60,000 was to be paid to Carter, and 15,000 was to belong to himself. A Co. was then to be formed, with a nominal capital of £250,000, and a working capital of £125,000, to which Co. the promoters were to resell the mine for £125,000, and thus realise a trifling profit of £50,000 for themselves. The names of Blakeley and Bessemer were relied upon to float the Co., a financial Co. would find the money, and, as the cost of raising the iron would be only £2 p. ton, which, when converted into Steel by the Bessemer process, would be worth £100 a ton, the profits of the shareholders must be ‚prodigious‘. But, when the lawyers come to look into the matter, small difficulty discovered. Carter not the sole owner, had not solely power to sell, had never empowered Bernard to enter into contract on his behalf, and there were other parties, some of them ladies, who had never been consulted on the matter. Fresh negotiations for the sale of the property by all the parties interested at £110,000. Bernard insisted now that the name of his brother Salomon should be inserted into the contract with that of Gill, which Gill would not consent to. Captain Blakeley and the Finance Co., it was said, would not have anything to do with the concern until wholly in Gill’s hands. Gill willing to bring out the Co. in 3 months upon 3 conditions. 1) that the contract for sale be made to him; 2) ditto the negotiations for resale through him; and 3) that „we shall share the profits in equal moieties – half to me and the other half to you“. To these terms Salomon, the brother of Bernard consented, but Bernard, the brother of Salomon, refused to assert, and therefore wrote to the Finance Co. to put a stop to the arrangement. Gill thereupon declined to have anything more to do with the matter. Nothing more of the contract of sale. Nevertheless, Bernard Salomon Bernard, the plaintiff, brought action against Carter to recover „the sum of £23,750 for services in connection with the Perron Iron Mines“. Das Vieh was of course non-suited. Er hatte nur acted in the character of a purchaser, nicht an agent for the seller. Im lezten case, sagte der Chief Justice „his conduct would have been scandalous in stipulating for a share of the profits on the resale of the mine, for in that case he would have a direct interest in keeping down the price, in order to increase the difference“.



26 Jan. 1867. N. 347.

Aus:
The Money Market Review, 26. Januar 1867. S. 99/100.
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Foreign and Colonial Loans.

Nach Disraeli the financial crisis of 1866 attributable to a want of capital. Now what is the fact? Russia applied to the money market the other day for a loan of 6 Mill. £. St., and immediately capitalists were to be found ready to supply Russia with the amount several times told. Chili demanded 2 millions; 17 were offered in the course of a few days. A small colonial railway – the Melbourne and Hobson’s Bay united – wanted 50,000£, immediately subscribed. Several other Colonial loans immediately supplied. Italy, Portugal, and the Danubian principalities ask for money … If Disraeli had said last August that there was a dearth of security instead of capital, he would have been right. … Colonial Loans the best securities. 6%. They have never failed to meet their engagements. Foreign war for them impossible. The money borrowed by them for railways, harbours, and other productive investments.

Aus:
The Money Market Review, 26. Januar 1867. S. 100/101.
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Overends. Before Court of Chancery.

„It is admitted“, said Vice-Chancellor Malins, „that the old firm of Overend etc was insolvent to the extent of 3 Mill. £, with private property, as a guarantee, upon which there was no lien. No man in his senses, if he had known that, would have taken a single share.“ The prospectus was prepared and put forth by the partners in the old firm, who knew the whole truth, and by the friends whom they had selected and appointed as their colleagues in the direction of the new Co. The future shareholders had no voice in the appointment of these directors, auditors, solicitors, or other officials, nor any opportunity to ascertain the statements of the prospectus. Malins stated: „If the true nature of the suspense amount account of 4 Mill. £ had been stated, one deed would have been sufficient;“ but, as the true nature of that suspense account was to be concealed, two deeds became necessary. „The first deed“, said the Attorney General (Advokat von Oakes, one of the parties who sought to have their names removed from the register of shareholders, and list of contributories in the liquidation) „raised no suspicion that the old firm was insolvent, whilst the second deed, known only to the members of the old firm and the directors of the limited Co., proved that the concern … had not made any profit for years, and was actually in a state of collapse.“ As to the private estates, they were put down as follows:

Landed Estate £.556,000; Personal Property, including chapels! Zusatz von Marx.
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£603,000. Reversionary Interests £92,000. Life interests under settlements: £97,000. Moneys in the Norwich Bank: £767,000. Share of goodwill of the Norwich Bank business: £300,000. Zusammen £2,425,000.

Aus:
The Money Market Review, 26. Januar 1867. S. 101/102.
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Consolidation of all Railways of Gr. Brit. under one management.

This suggested by Charles Baylis in a pamphlet, with the general objects of increased facilities for travelling, lower fares and tolls, increased profits, and consolidation of the various stocks and shares, with the view to negotiability.|

252

In the management of our railway system, there is a vast interest involved, conferring upon the managers large emoluments, and in order to break up and consolidate the existing system, many snug berths must be swept away, and much opposition encountered from the incumbents. The real labour of all railway directorates is performed by efficient officers, which the directors give to their business an occasional hour or two.

Aus:
The Money Market Review, 26. Januar 1867. S. 107.
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Bill Brokering and Money Dealing.

Bill brokering seems to have had its origin with the house of Overend, Gurney, et Co, or their predecessors, Richardson, Overend, et. et Co. (Samuel Gurney ✝ 1856). In later years the confidence in the Overend Gurney led to large accumulation of deposit money in their hands seeking employment from time to time. Money dealing or discounting on their own account, lending on securities or other modes of investment, being found to yield a larger profit than to be derived from simple brokerage business, their transactions gradually took the more lucrative shape, and bill brokering with them was continued only in name. It was their large money dealing business that brought to their doors the surplus funds of bankers and others in town and country, and laid the foundation of the £200,000 per annum they were able at one period to divide.

A broker … one who acts for another, a factor, agent, or intermediate party, who knows who wants to buy in the cheapest market, and who wants to sell in the dearest, any particular commodity, be it a bill or a bale; he concludes a bargain, and thus earns his commission or brokerage. In other words, he reconciles the conflicting interests of buyer and seller. Or he may, without direct communication with either party, as in the article of produce, offer what is to be disposed of to public competition. He is at the same time an irresponsible party, unless where, under exceptional circumstances, he guarantees payment for an extra commission. Bill brokering proper with its 1/8 or 1/4 commission does not admit of such colossal futures being made … As it is conducted at present, the principal part of the profit or discount goes to the bank supplying the money, which probably has a large amount from customers on current account, at little or no interest. The broker – who, by the way, is not strictly speaking a broker at all, but an intermediate discounter – comes in for only what he can make, over and above the rate of discount he has to pay. He does not work for a brokerage or commission upon the amount discounted, or passing from hand to hand, with freedom from responsibility, but is understood to guarantee payment of all bills he may rediscount, either by endorsement or otherwise.



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