245

The Money Market Review. Jahrgang 1867.

5 January, 1867. N. 344.

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The Money Market Review, 5. Januar 1867. S. 5/6.
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Barned’s Bank etc. Public Official Audits.  Zusatz von Marx.
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(Overends und Times)

Professional Accountants make things pleasant to the people by whom they are employed. Overends’ case „typical“. With official accountants, it would have found it its way into the Bankruptcy Court. The liquidators, acting in concert with the partners and the solicitors of the old firm, and the new one, have hitherto contrived to baffle all the endeavours of the shareholders or others to obtain an insight into the real state of affairs past or present. A few weeks ago the partners of the old firm denounced in the leading type (by Justitia) of the Times, if not in the leading columns of the Times as criminals of the deepest dye, and the new directors as swindlers, who ought to be forthwith arraigned at the Old Bailey. But, a few days after, another writer in the leading columns of the Times, upon precisely the same state of facts and information, laboured to exculpate both the partners of the old firm and the directors of the new Co. from all moral imputation, and even from all legal responsibility. Still more recently – Times of 27. December 1866 – the City Editor of that Journal without any additional facts or information, not only exculpates all these parties, but this to show that the old firm was not insolvent at all at the time when the transfer took place. Es existiren immer noch no official figures as to the liability of the old firm. Times City editor says: Liabilities taken over were £4,199,000 and assets handed over £4,887,000.

Those assets, says City Editor:

Securities held against liabilities: £1,082,000
Private Estates: 2,320,000
Goodwill 500,000
Premises in Lombard street 45,000
Balances due to partners in books of the old firm 940,000
Total: £4,887,000

Der City Editor of the Times seeks to make out, daß danach nach dieser Rechnung die firm was not insolvent at the time of transfer; that „there was no insolvency of any kind“.

Woher dann »the present (undisputed) insolvency[«]? Not consequent upon losses or bad business of the new Co., for it is boasted that they made a profit on their legitimate business during their 9 or 10 months’ existence, of some £200,000. Aber the whole of the capital (of the new Co.) is gone, and there are still 5 Mill. £ St. unliquidated. Towards the liquidation of these, already call made upon the shareholders of 1 Mill. £, and two other calls of 1 Million each, are expected. How this, with the solvency of the old firm and 200 000£ profit of the new one? …|

246

As to the bills taken over, great number of them, which were taken as good, have been renewed from time to time, and were bad, and known to be bad, or at least doubtful at the time, and are still unpaid. The „goodwill“, as encumbered not only with the legitimate discount business, but with the bad business too, was a mere fiction. According to the examination of John Henry Gurney they were loosing year after year before the transfer. The „balance due to partners“, in the books of the old firm – a myth. This no mere question of bookkeeping. Of what was that £940,000 composed? Of undrawn profits, it is said. But, first, we were led to believe that this £940,000 were profits accumulated during the years following 1861, in which no profits were divided, but now we learn that no profits were made, and could, therefore, not accumulate. Again, it is said, these socalled profits are largely composed of nominal half-yearly additions of enormous rates of interest upon those millions of bad debts. If so, these profits as bad as the bad debts themselves.

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The Money Market Review, 5. Januar 1867. S. 7.
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The Cotton Circulars.

Decline in the prices of raw cotton in 1866 unusual, but not extraordinary.

Quotations 29 Dec. 1866. From Msrs Smith, Edwards, and Co’s Circular.
1865 1866
Orleans. Middling. 21.1/4d. 153/8d.
Brazil. – Peruvian 201/2d 15d.
Fair Dhollerah 171/2d. 123/8d.
Bengal. fair. 121/2d. 87/8d.
Stock of Raw Cotton in Ports of Great Britain, taken from Ellison and Heywood’s Circular.
31 December 1862 Bales 433,900 Bales
1863 Bales 327,500
1864 Bales 575,727
1865 Bales 405,488
1866 Bales 581,570
Imports into Great Britain. (Ellison and Heywood)
In 1862 1,445,000
1863 1,377,600
1864 1,606,390
1865 2,034,730
1866 2,436,394
British Imports and Exports of Raw Cotton. (Ellison et Heywood)
Imports: bales 1862: 1,445,000 1863: 1,377,600 1864: 1,606,390 1865: 2,034,730 1866: 2,436,394
Exports: bales: 1862: 564,900 1863: 661,000 1864: 732,480 1865: 890,830 1866: 1,136,565
Net Imports: 880,100 716,600 873,910 1,143,900 1,229,829 1,299,829

Decline of 1866 not so great as might have been expected. Gross and net import larger than in any of the 5 years. But cotton market still supported by rumours of very limited supply of the U. St.|

247

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The Money Market Review, 5. Januar 1867. S. 7.
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Separation of Acceptances from Deposits in Bank Balance Sheets.

With exception of a few Banks, like London and Westminster, these items thrown together in the public Bank accounts. Acceptances represent the liability of a Bank to be called up to pay that sum; deposits money actually deposited by the Public. The latter show the confidence of the Public in the Bank; the acceptances the confidence of the Bank in the issuers or guarantees of the Bills they accept. During the recent crisis, when Bankrate at 10%, the rates „out of doors“ for the very best Bankers bills varied often from 1 to 3% below the Threadneedlestreet minimum. This variation entirely owing to the respective amounts which each billbroker held of the bills of each bank.  Zusammenfassung von Marx in eigenen Worten.
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The bank, of whose acceptances his portfolio was full, had to pay more or [was] declined at all.

The worst features of the recent troubles may be traced to the undue facilities which existed for issuing and placing acceptances.

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The Money Market Review, 5. Januar 1867. S. 9/10.
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The Conservative Land Society.

 Zusammenfassung von Marx in eigenen Worten.
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Macht seit 15 Jahren sehr gute Geschäfte. Hauptzweck den Arbeitern Wohnung zu verschaffen und sie zu proprietors dieser Wohnung zu machen.
Hat gekauft bis 1866 (Ende) 67 estates in 26 different counties, besides assisting individual shareholders and depositors to leasehold and freehold houses and villas.  Zusammenfassung von Marx in zum Teil eigenen Worten.
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While paying 4% (yearly) to depositors, and 5% (nebst additional 1% bonus for the first year) annually to shareholders, enable workmen to acquire property at a cost little more than the rent they would otherwise have to pay year by year.

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The Money Market Review, 5. Januar 1867. S. 12.
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Overends.  Zusatz von Marx.
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(Friends of the Co.)

Thought the parties implicated did not themselves dare to do anything that might have betrayed a fatal consciousness of delinquency, yet their friends and confidants carried their deposits out almost at the same moment (9 May) at which Oppenheim was carrying his investment (15,000£) in.



12 January 1867. N. 345.

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The Money Market Review, 12. Januar 1867. S. 35/36.
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Proposed Expansive Clause in the Bank Act of 1844.

Economist,  Zusatz von Marx.
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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 principlethe 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.
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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.

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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.
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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.
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!

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The Money Market Review, 12. Januar 1867. S. 39/40.
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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.
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!

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:

Range of Prices in 1866 Middling Orleans, per lb. Fair Dhollerah. Per lb.
Highest, Jan. 5, the first prices of the year 21d. to 211/8d. 183/4d to 187/8d.
Lowest, May 25, when the stock at maximum 131/2d to 135/8 91/2d to 95/8d.
Last, Dec. 28 161/4 to 163/8d. 131/2d to 135/8d.

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:

United States: Bales: 1,156,130 British India. Bls: 1,847,739 Egypt bls: 167,451 Brazil. bls: 407,646 Smyrna bls. 32,770. Peru, Mexico, Westindies 111,820
Un. States: Cost: £35 35 Mill. £ St. India Cost: 33 Mill. £ St. Egypt et Levant. Cost 6,600,000£. Brazil. Cost: 5 Mill. £ St. Westindies etc 21/2 Mill. £ St.
Total Cost: £82,100,000

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

Imported lbs. Consumed at home lbs
 Marx verwendete die Angaben über die importierte Rohbaumwolle der Jahre 1860 und 1861 in Manuskript II zum zweiten Buch des „Kapital“ (MEGA² II/11. S. 67.38–39) als Indikator für die These, dass „[d]as Jahr 1860 und Theil des Jahrs 1861 [...] bekanntlich die Zenithjahre der englischen Baumwollindustrie [waren]“ (ebenda. S. 67.30–32).
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1860
1,429,697,450 1,068,727,600
 Marx verwendete die Angaben über die importierte Rohbaumwolle der Jahre 1860 und 1861 in Manuskript II zum zweiten Buch des „Kapital“ (MEGA² II/11. S. 67.38–39) als Indikator für die These, dass „[d]as Jahr 1860 und Theil des Jahrs 1861 [...] bekanntlich die Zenithjahre der englischen Baumwollindustrie [waren]“ (ebenda. S. 67.30–32).
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1861
1,359,823,120 988,051,900
1862 533,223,819 414,905,150
1863 703,306,968 467,183,800
1865 965,727,070 718,428,470
1866 1,356,952,389 915,748,679

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.

1866 2,341,747,710 Yards Piece Goods 126,000,000 Yarns. Lbs.
1865 1,805,814,998 94,000,000
1864 1,617,050,947 69,000,000
Liverpool stock of raw cotton at end of the last 7 years, except 1864. (Bales)
1860. 1861 1862 1863 1865 1866
594,400 bls 699,300 433,900 327,500 405,488 581,570.

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.

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The Money Market Review, 12. Januar 1867. S. 40/41.
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Thomson Hankey: (formerly Governor of B.o.E.)  Titel von Marx notiert in einem Exzerptheft 1878 (IISG, Marx-Engels-Nachlass, Sign. B 148).
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„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.
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Nichts brauchbar hierin als die explanation and description der organisation der different offices der B.o.E.
 Zusammenfassender Kommentar von Marx.
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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.


250

19 January, 1867. N. 346.

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The Money Market Review, 19. Januar 1867. S. 63/64.
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The Overends. Evidence of J. H. Gurney as to the Sale and Transfer of the Norwich Bank.

At time of transfer old firm handed to the new list of assets which were indeed bad debts, no less than £4,199,000. The management and liquidation of these debts was made the subject of a separate and special arrangement which was embodied in the private deed of arrangement so carefully concealed from the shareholders and the public. The loss losses upon those debts were said to be amply provided for by the so called guarantee of the partners and their private estates etc [.] (Sieh Seite 245 dieses Hefts) The Private estates were given at £2,320,000. But, so far as we can learn, there was, in fact, no conveyance or assignment of these private estates, nor any mortgage, trust, or charge upon them, which rendered them subject or liable to make good these losses. The partners, it is true, in the deed of arrangement, covenant to guarantee 20s. in the pound upon these assets, and they seem to have shown, on paper, that, besides the other items enumerated, they had private estates which they estimated or valued at £2,320,000, and it does not at present appear that they were ever called upon to do more. The properties appear to have been left in the hands of the owners to dispose of as they might think fit; and, as to one part at least, they have done it.

The sum of £2,320,000 is made up of several items, two of which relate to the Norwich Bank (with its 25 branches). The Norwich Bank estate figures for nearly half the aggregate amount of the private estates ⦗Goodwill: £300,000, Undrawn balances due to the respective partners £,767,000. Zusammen £1,067,000.⦘ Now the Norwich Bank and all its belongings had, by virtue of these transactions, become the equitable property of the new Co. until all the obligations of the old firm had been liquidated and discharged. But we now learn from the lips of John Henry Gurney that this property and interest in the Norwich Bank which had been thus pledged as a guarantee to the new Co. was on 1 March, 1866, actually sold and disposed of by the partners in the old firm to Henry Ford Barclay, one of the directors of the new Co., and to Samuel Gurney Buxton, who was one of the promoters of the new co., and signed the articles of association. In February 1866, it had become apparent, Mr. Gurney admitted, that there would be little or no surplus (!), as the losses would be more disastrous than they had led the new Co. to expect. And at that moment the partners in the old firm and their friends on the new direction were only intent to secure something for themselves. In the transfer of the Norwich Bank, Barclay and Buxton were only to pay the £300,000 for the goodwill on 1st March 1870; ditto the whole or a larger proportion of the £760,000 to be postponed until the same period; and the payment of either of them, even at that time, is to be contingent upon the business and the profits and losses of the concern in the meantime. These larger amounts are to be retained by Barclay and Buxton, as a „material guarantee“ against possible losses from any deficiency of assets of these Norwich Banks until March 1, 1870. And the unrealised portion of the other „private estates“ are, we believe, in like manner, pledged to the same parties, and for the same period, as a further guarantee on the part of the vendors, in favour of the purchasers of this Norwich Bank business. The partners in the old firm, after pledging this private estate to the depositors and creditors of the limited Co., had no right to sell and dispose it to a couple of their private friends and relatives. Nor had Barclay, one of the promoters and directors of the limited Co., and Buxton, one of its promoters, a right to purchase it for their own benefit. The liquidators, solicitors in „winding up“ etc hielten dieß willig geheim, denied all access to the books etc.

Aus:
The Money Market Review, 19. Januar 1867. S. 64/65.
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Joint Stock Discount Co. and its late managing Director, Wilkinson.

Wilkinson, the scapegoat of public virtue, for having fraudulently applied to his own use, property of the Co. (i.e. in diesem Fall cheques paid to stockbrokers in discharge of his own private debts) verurtheilt to 5 years penal servitude. Die Sache kam heraus beim winding up in chancery. James Freeling Wilkinson, formerly billbroker. 1863 a joint stock Co formed for taking over that business; he became its managing director mit minimum salary of £3000 a year. 80,000l. bills were abstracted from the billcase, and became utterly lost to the Co.

Kleman, a commission agent in the City, had many and large transactions with the Joint Stock Disc. Co. as well as other Cos in the city. Kleman has left the country without leaving any „address“, being heavily indebted to all of them.

According to Mr. Henry White, the director who had signed these fraudulent cheques, Wilkinson had power to grant loans, and to take securities which in ordinary transactions were not submitted to the directors. |251 Any special matter might be referred to the directors at their weekly meeting, „but that reference would depend upon Mr. Wilkinson making it“. „Each director“, says White, „attended a week in rotation at the bank“, and Wilkinson says that „ordinarily the director who was on the weekly rota for signing cheques, when he went to the office, would go up-stairs and sign a lot of cheques, and then go away.“ These were all blank cheques which Wilkinson could fill up and sign, and deliver to whomsoever he pleased“ pleased, and Wilkinson „believed that the cheques for the advances that appeared to Kleman’s debt in the loan ledger were signed in that manner.“ The advances on to Kleman increased from 30 000£ to £108,000 between 1st Jan. and 1st Feb. 1866, without any security. Further advance to Kleman of £12,000 on 3d of Febr. 1866, without security. Ebenso subsequent advances to Kleman, during the month of February, when the Co. was struggling in extremis, which raised the total amount of Kleman’s debt to £184,838? Wilkinson had a private account with Kleman, but declined to show it or say anything about it. Were there any other such private accounts?

Aus:
The Money Market Review, 19. Januar 1867. S. 70.
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The Overends.  Zusatz von Marx.
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(Swindlers) (Old firm in the new directorate)

In the board of 7, the 3 members of the private firm were sufficient to form a quorum, one of them, moreover, being chairman, and the 2 others being the managing directors.



26 Jan. 1867. N. 347.

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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.

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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.

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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.

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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.



February 2, 1867. N. 348.

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The Money Market Review, 2. Februar 1867. S. 136/137.
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Venial Offences and Convenient Scapegoats.

There is always something very curious to be observed in the  Zusatz von Marx.
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(so zu sagen criminal Revelation)
pages of commercial panic in the remarkable cleverness and facility with which some of the chief delinquents manage to escape, and the fatality with which some one or more of their comparatively innocent colleagues or instruments are made to „stand committed“. Directors misapply or otherwise squander the funds of the shareholders and destroy their property, and the unlucky manager or somebody else is put in the pillory, and the chief offenders are tarred and feathered by deputy. The scapegoat has carried away their sins, perhaps to bury them in the desert sands of a penal settlement, and „the law is satisfied“ and „justice is appeased“. Wilkinson is convicted of fraudulently misappropriating a cheque, but the director who signed the cheque, escapes unhurt … Peto auch scapegoat für die directors, solicitors, auditors, der Chatham etc railway Co. Bei der falschen Transaction der Co., bei dem issue der debentures (um zu prove that part of their sharecapital subscribed paid up). As none of that capital had been really subscribed, it was necessary that a sham subscription list should be made up, and sworn to before a magistrate, and this was done by an exchange of receipts between Peto et Betts and the Co, the Co. acknowledging the receipt of so much on account of so many shares, and Peto and Betts acknowledging the receipt of so much on account of their contracts. Thereupon two gentlemen, one from the office of Freshfield et Newman (solicitors), and the other from the office of Peto and Betts, appear before a magistrate, and depose to the bona fide subscription of a certain proportion of the capital. Gross Fraud upon the Legislature. But it is alleged that railway Cos. and their solicitors, however respectable, never regard this as an obligation to be strictly performed, and that for many years past almost every subscription list got up in compliance with it has been more or less a sham. Hence it seems to have been imagined that no great crime was committed by anyone in the transaction. But the committee of investigation bring this up as charge against the contractors, but not against the solicitors, one of whom must not only have had knowledge of it, but must have sanctioned and advised it.  Zusatz von Marx.
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O Freshfield, Freshfield!
Trotz dem verlogenen Brief  Zusatz von Marx.
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(in Times oder so)
, statement of 3 or 4 persons shows daß Dein partner Newman advised and sanctioned the transaction.|

253

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The Money Market Review, 2. Februar 1867. S. 137/138.
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Joint Stock Financing.

The International Financial Society, pioneer of the modern finance associations, first imitator of the Paris model, paid first 25% dividends, gradually less, is compelled at length to admit that there is nothing wherewith to pay any dividend. The accounts for 1866 are duly audited. All the securities valued at the lowest market price. There was a profit last Midsummer „brought forward“ which has been „absorbed“, and a loss of £23,934 incurred, which has been written off against the Reserve Fund reducing it to £4,846. At this time last year (1866) it was 10 × the amount, and at one time was more than that. Aber the severe financial pressure was met without a call upon the shareholders. Its capital seems intact. (of 3/4 of mill. £) It seems chiefly the possibility of calls that renders the 3/4 Mill. £ paid by the shareholders worth in the market only 10s. per £. The greater portion of the securities on which advances have been made by the London Financial Association represent railway property, u.a. on more than 20 completed British railways.



9 February, 1867. N. 349.

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The Money Market Review, 9. Februar 1867. S. 173/174.
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The National Freehold Land Society.

Building Societies have become a great institution. The National Freehold Land Society is 17 years old, originated from a desire to extend the electoral franchise. In 1856, in order to meet legal requirements, the property committee of the society was converted into the British Land Co. A separate capital was raised and a separate organisation established. From that period – Sept. 3 13, 1856 – the National Freehold Land Society’s sole business has been to receive deposits and to make advances on real security, and the British Land Co. has been its largest customer. Gute Geschäfte, high dividends, no losses incurred.

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The Money Market Review, 9. Februar 1867. S. 175.
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London, Chatham and Dover. (Peto)

Peto made speech in Bristol in October ’66; darin he read a letter from Mr. Morgan, the accountant of the Co, stating that he himself attended before the magistrate with a gentleman from office of Freshfield et Newman to make the necessary deposition. So it was on the oath of the official representative of Co., and of the representative of their legal advisers that the debentures were issued.



16 February 1866 1867 . N. 350.

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The Money Market Review, 16. Februar 1867. S. 203/204.
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Overend, Gurney et Co. Further Disclosures.  Zusatz von Marx.
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(Judgment of Malins.)

Sir Richard Malins, Vice chancellor, on 9 Feb. refused die motions of Oakes und Peck to have their names removed from the list of contributories. 7 directors in the Co und one gentleman who signed the articles of association for 600 shares, but did not become a director. Bei der formation der new Co., Barclay, Gibbs Gibb, Gordon and Rennie consented to become directors; the fullest disclosure was made to them of the actual state of the concern. They were told that the firm insolvent to 2–3 Mill. £. St. J. H. Gurney told them that from 1860 the total result of all the operations of the firm was a loss. There was a positive deficiency of at least £3,117,000. Malins declared that the conduct der 4 new directors „was a fraud“. Nebst all dem andern, den Lügen des Prospectus etc, they told the shareholders [„]that they could inspect the memorandum and articles of association and the deed of covenant, whereas there were really two deeds, only one of which was offered for inspection.“ The 9 members of the old firm conspired of course mit den 4 new directors in the false representations made to the public.

Debts: £5,250,000 (nach den liquidators) Uncalled capital of Shares 3,500,000. £.

Aus:
The Money Market Review, 16. Februar 1867. S. 206/207.
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Conviction of Greenland, late manager of the Leeds Bkg. Co.

Disastrous failure dieser Co in autumn of 1864; in Folge von frauds und forgeries, carried on for long time by Greenland (auch Frommer(?)), the manager, who made ciphers of the directors, and engrossed to himself the entire control of the business of the bank. Up to the time of its failure, the Bank paid 25% dividend p. an. The first call – nach stoppage – for 70l. p. share, the 2nd for 40. Widespread misery. In many cases sudden deaths from suicide or broken hearts. Einzige Cause: Greenland, and the knaves and forgers with whom he had associated himself. The forgers had escaped. A poor half witted clerk to one of them (Marsden) was prosecuted for forging an acceptance, and though it was proved that he did it by direction of his employer, and that both Greenland and the bankclerks knew that it was a forgery at the time when it was received, he [was] sentenced to 15 years’ penal servitude. At length, the |254 Leeds Chamber of Commerce, failing to obtain evidence of his many other crimes, discovered that Greenland had been in the habit of making false returns to the Gvt. in regard to the note issues of the Bank. Indicted and tried at the Central Criminal Court, the Leeds chamber of commerce being the prosecutors. He now sentenced to 15 months imprisonment with hard labour.  Es geht um das Alter von Greenland: Er ist beinahe 70 Jahre alt.
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Das Vieh ist verging upon 70.



23 February 1867. N. 351.

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The Money Market Review, 23. Februar 1867. S. 231/232.
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The Overends etc.  „1915“ ist das Pseudonym eines Verfassers einer Reihe von Leserbriefen an die „Money Market Review“.
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(1915)

Mr. Harry George Gordon, despite of motion of some shareholders, and City articles in Daily News remains Chairman of the Oriental Bank Corporation. (Obgleich on 9 Feb. Malins ihn cum aliis guilty of fraud erklärt.) He originally moulded the prospectus.



2 March 1867. N. 352.

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The Money Market Review, 23. Februar 1867. S. 237.
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The Joint Stock Co’s Directory for 1867. London. Charles Barker et Sons. 8, Birchin-lane.

The importance of directors as a body in the State has often been a subject of remark, and in some matters they absolutely rule the H.o.C. Their number in U. Kingd. 9,932.

Official Return of Cos under the Limited Liability Act: 1864: 992 Cos, with proposed capital 237,391,818£. 5 Cos. registered without nominal capital, total 997. 1865: 1,013 Cos. registered, proposed capital of £205,391,818; 20 Cos without nominal capital, total 1,033. 1866: 758 Cos registered, proposed capital £76,599,823; 10 Cos without nominal capital, – total 768.

Aus:
The Money Market Review, 2. März 1867. S. 263/264.
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Overends. Report of Liquidators and Report of Defence Committee.

Nach dem Report der Liquidators the liabilities, at the date of suspension, £18,000,000, now reduced to £3,640,655. Davon 1 mill. further ab für 1/2 Mill. already in hand, and other 1/2 produce of assets actually disposed of, but not yet paid for. Dann noch verschiedne respective Einnahmen berechnet für Payments on bills, proceeds of securities not yet realised etc.

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The Money Market Review, 2. März 1867. S. 265.
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Leeman’s Bill respecting Dealings in Bank Shares.

A clique or cliques of „speculators for the fall“ fastened upon certain Banks etc, in 1866, made to fail by the operation of these unscrupulous tricksters. Thus Agra and Masterman’s Bank. A telegram was sent out to India by the operator to a certain clique that it had failed. At that time not the smallest foundation for that rumour. Effect run upon the different branch banks in India (by depositors); London bank unable to meet them, chiefly owing to the great distance; result failure of the London bank. … dealings for time at Stock Exchange, i.e. speculators who have no shares allowed to make fictitious sales of shares they do not possess, for delivery at some remote date, upon the prospect of buying them at a lower price, in the interval. Before the said telegram was sent to India, a clique of speculators had sold the sales shares largely for future delivery, and this was one of the expedients resorted to in order to render those operations profitable. In order that these miscreants should pocket their illgotten gains, widows, orphans, and dependent persons have been ruined or brought to the verge of ruin. If, from any cause, as mit der Agra and Masterman’s Bank, there should be a sudden demand for all the money lodged by the depositors, while the money lent can only be recovered by instalments as they fall due, no bank could meet such pressure. In 1866 no less than 51,000 persons in England and Wales registered as the holders of shares in joint stock banks, including persons in every grade of life. Aber die number of depositors, 20, 30, perhaps 50 × greater. We do not want banknotes if we can keep banking accounts and make our payments by cheques.

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The Money Market Review, 2. März 1867. S. 266/267.
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Limited Liability. High Nominal Shares.

Small sum paid upon deposit. Few intended to be permanent investors. All thought that, if ever a period of adversity arrived, some one else would have to bear the brunt of it; besonders so long as premiums reigned. The experience of last crisis has shown that there is no market for shares of heavy nominal amount of which only a little is paid. The terror of coming calls has outweighed all intrinsic merit; £100 shares with £10 paid, were, and still are, unsaleable.|

255

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The Money Market Review, 2. März 1867. S. 268.
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London, Chatham and Dover Railway Co.  Zusatz von Marx.
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(faux frais)

Mit Bezug auf die Section called „The General Undertaking“: Of £6,710,000 capital issued, the enormous amount of £2,945,296 for interest, commission, and „loss on issue“; which means that, in paying away to contractors for work performed securities of the nominal value of £6,710,100, they were received by the contractors as only £3,763,804 in cash. There is one item of £1,500,000 of ordinary stock which is put down as issued at a loss of £1,113,663; that is, the 1 million and 1/2 of stock went for £386,337.

Aus:
The Money Market Review, 2. März 1867. S. 269.
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Plethora of money.

There is always a large amount of floating capital in the country which is never invested, so to speak, but only laid out from day to day, or, at all events, in the very shortest-dated securities. So long as trade is brisk, this money proves remunerative enough for the purpose for which it is intended … But although a good deal of our capital is not available for investment in permanent securities, there is still a very considerable amount kept out of employment by sheer distrust.

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The Money Market Review, 2. März 1867. S. 270/271.
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 „1915“ ist das Pseudonym eines Verfassers einer Reihe von Leserbriefen an die „Money Market Review“.
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1915
on Overends.  Zusatz von Marx.
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(David Barclay Chapman)

The fellow, redolent as he is of the history of 1853–58, macht ein enthusiastic revival of himself. Aber in fact, he secured upwards of £27,000 on 3. Aug. 1865 (out of the House)[.] The stigma on the „revered“ brows, that they had surreptitiously rescued all their connections and friends from bitter loss, and involved others in bitter loss, for the comfort of all their connections and friends.

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The Money Market Review, 2. März 1867. S. 271/272.
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London, Chatham et Dover  Zusatz von Marx.
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(Zusammensetzung des Investigation Committee) (Solicitors) (Scapegoats)

Dieß Committee speaks only of contractors, nicht of the directors, and still less of the solicitors. Now, auf dem first meeting in St. James Hall, „a cut and dried“ committee proposed by Cornelius Surgey, and enforced. (He intimated that he had many proxies.) This Surgey himself is or was the broker to Messrs. Freshfield and Newman; another member of the committee is a near relative of Surgey’s own partner; another most active member was for years a partner of Newman’s brother-in-law, Newman being the principal manager of the business of Freshfield and Newman. Ferner: the new board is composed of the members of this committee, with the addition of Lord Harris as a figure-head. The board remains practically Surgey’s committee. Then this Surgey, who professed in his long speeches at St. Martin’s Hall to know nothing of the Co. and its past management, turns now out to be the very man upon whose advice the board raised loans on the new stock created in 1864 rather than sell it to the proprietors and the public, when it could have been disposed at [a] far better price than it would have fetched since, viz. about £40 instead of which it was eventually sold for £27. 10s., after the Co. had paid enormous amounts for interest and commissions on temporary loans. … Within the last few years an amount closely approximating to 1/4 Mill. St. has been paid to the solicitors of the Co. for their own charges, not including amounts paid to other parities. If this amount was not paid for the purpose of keeping the Co. right in legal matters, what was it paid for?



9 March, 1867. N. 353.

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The Money Market Review, 9. März 1867. S. 295–297.
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Appointment of Parliamentary Committee on Limited Liability Acts and their Operation.  Zusatz von Marx.
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(Gerichtssporteln)

Dieß auf Watkin’s Vorschlag (motion). Er gab some statistics: There are now 2200 Joint Stock Cos. in this country, with capital of not less than 1000 millions £, 750,000 shareholders, 12,500 directors. Since the passing of the Limited Liability Act the Cos. formed under it nominal capital of 150 mill. £. St., paid up capital of 30 mill.; large proportion of this capital, nearly 1/3 , appertains to Cos. now in liquidation.|

256

The periodic recurrence of speculative manias, and their tendency to promote transactions either positively fraudulent or verging upon fraud, have become familiar historic facts.

There are now 4 Courts of primary jurisdiction engaged in winding up joint-stock Cos., their decisions often in striking conflict not only with each other, but with the decisions of the Courts of Appeal. The expenses of these proceeding proceedings enormous, a scandal and disgrace to the law and its administration. „The fees of the Chief Clerks“, said Watkin, „are high, but they are nothing compared with those of the official liquidators“; and he instanced the case of a Bk. Co. which had failed, but at the end of 5 months had been reopened. The claim of the official liquidator in that case, for 5 months’ work, during which he had employed 12 clerks, whilst he himself had been employed in a host of other concerns as well as the Co. in question, amounted to the modest sum of £38,000. Formerly, official liquidators were paid by a percentage, but latterly, they demand remuneration by the day, and, as Watkin stated, „many of them have been suddenly struck with the great importance of proceeding with due deliberation“. Mr. Morrison urged inquiry into the proceeding in voluntary liquidations without the supervision of the Court, „for he had heard of cases of extortion against Cos. which he should like to see brought to the test of truth“. Alderman Salomons said: „As to the liquidators, they were a public nuisance. They caused great delay, and no information could be obtained from them.

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The Money Market Review, 9. März 1867. S. 297/298.
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Leeman’s Bill. Vote of H.o.C. (5 March 1867)  Zusatz von Marx.
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(Stock Exchange)

By law there shall be no more „time“ dealings in bank shares.

Durch den Stockexchange pass at least 500 millions of other people’s money annually. The Stock Exchange close body, like a club; about 1000 members, governed by a committee of 30, annually elected. The admission of members vested in the Committee etc. The body consists of brokers and jobbers. A stockjobber is simply a stock or share merchant. No capital would suffice for him to hold a stock to meet the wants of the public at large, and so rapid are the fluctuations in the prices of securities that no man of sense, if he had the means, would lay in such a stock. The sharemerchant must therefore be prepared to sell to as well as buy of all comers. This necessity, and the extraordinary pressure of business, have originated a system unknown in any other market. The jobber ascertains the momentary value of a security, and, as it is called, „makes a price“. F.i., a holder of Great Western Railway Stock instructs his broker to sell £5000. The broker goes into the market, and asks a jobber to „make him a price in £5000 Great Westerns“. The latter, knowing that the stock has been recently dealt in at 50, „makes“ 493/4 to 501/4 – that is, he undertakes to give the former price for that amount of stock, or to sell it at the latter. If the business is concluded on these terms, the jobber’s only object – unless he happens to have sold the stock previously – is to turn it over at a profit. Of course, if sales preponderate, he may be unable to part with his purchase except at a loss, or may have to find the necessary capital to pay for it at the settling day. Looking at an isolated transaction in this matter, the risk would seem to be very great, but it is in reality less than it appears. So frequent and so enormous are the transactions of the Stock exchange (for all the share operations of the kingdom centre in it) that in most instances a moderate profit is easily realised. Besides, it is not only in London that a jobber deals, and, if unable to close a bargain here, he frequently succeeds in doing so by telegraphing to his correspondents on the various country Exchanges.

The jobbers take different „lines“; some deal in Consols, some in Foreign Stocks, some in Bankshares, other others in Indian railway securities, some in colonial bonds, some in the Northern, some in the Southern English lines, others in financial and miscellaneous undertakings. By habit and for convenience, a certain portion of the large room (forming the Stock Exchange) is occupied by the dealers in each different class of property, and a member knows at once that in one corner he will be able to deal in Consols and in another in mining shares. As a rule a jobber devotes himself, for the time, to one class of security, changing his market occasionally, as the business in one falls off or in another increases. Certain firms and individuals, however, possessed of unusually large capital, deal through their partners or authorised clerks (clerks whom they invest with special power to deal on their account) in nearly every class of security that is quoted; and there are a few jobbing millionaires who have correspondents all over the world, and transact business by telegraph in Paris, Vienna, and New York as well as London. The only possible mode of executing his client’s order expeditiously consists – for the broker – in the free market which the jobber creates. The dastardly plots (as against the Agra Bank) were formed outside, and entirely independent of the Stock Exchange, by bankrupt speculators in the City, by  The Money Market Review: desperate men
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desperadoes
who had nothing to lose, occasionally by haunters of West-end clubs, and in some cases they originated with directors themselves who, foreseeing the ruin from the information they possessed, sold freely, and even induced others to  |257 sell. The Stock Exchange only the unwitting instruments of their schemes.

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The Money Market Review, 9. März 1867. S. 299.
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Board of Trade Returns.  Zusatz von Marx.
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(their incompleteness)

They omit much that is exported and imported. F.i. in 1866 we were large importers of 5-20 Bonds, and other American Securities; we lent money to all our colonies, and to most of the world, against which we imported securities; those securities do not figure in the Return. Ebenso, the exports of foreign and colonial merchandise not manufactured – a very large proportion of our exports – are not valued by the Board of Trade. So impossible to strike any accurate „Balance of Trade“.

Imports of Articles Enumerated. Month ended 30 November.
1864 1865 1866
Computed Value £16,164,570 £.19,910,403 £17,841,738
Eleven Months ended 30th November.
Computed Value £197,448,426 £.180,820,357 £211,539,785
Deduct: Raw Cotton 66,991,418 49,294,092 70,665,438
£130,457,008 £131,526,265 £140,874,347
Deduct. Cereals 18,600,191 17,908,052 26,001,033
£111,856,817 £113,618,213 £114,873,314

Deducting raw cotton and cereals – the 2 great items of disturbance – Imports of the 11 months of the 3 years valued as nearly as possible alike.

Exports of British and Irish Produce. Month ended 31 Dec.
1864 1865 1866
Declared Value. £.12,095,437 £.15,030,088 £14,914,563
Year ended 31 Dec.
Declared Value. £.160,449,053 £.165,835,357 £.188,827,785
Deduct Cotton Manufactures 45,799,090 46,923,384 60,865,022
£.114,649,963 £.118,912,341 £127,962,763
Deduct Linen Manufactures. 8,172,813 9,156,990 9,576,163
£106,477,150 £109,755,351 £118,386,600

The reports from many quarters state that trade is bad, labour cannot find employment, factories are closed or worked short time; but there is nothing in these figures to illustrate this. Exports of 1866 valued at 189 mill. gegen 166 in 1865, and 1601/2 in 1864. Apart from export of linen and cotton fabrics, the value of the exports during the last 3 year years again singularly similar.



March 16, 1867. N. 354.

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The Money Market Review, 16. März 1867. S. 331/332.
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South Eastern Railway Dividend

An increase in the capital during the last 5 years from 121/2 to 18 mill., nearly the whole of which has been raised in some form of priority overriding the dividend, and at rates of interest exceeding the average rate of net earning upon the entire capital spent. The dividend has fallen nominally from 5% p.a. to 3; but the actual decline is more than this, and having regard to the altered method of accounts, questionable whether the dividend of 1867 is not almost a myth.|

258

Commercial Morality. (Overends)

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The Money Market Review, 9. März 1867. S. 306/307.
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Meeting of English and American Bank on 5 March, London Tavern, Chairman William Scholefield, M.P. (perhaps 100 leading commercial men present). He (Scholefield) said took the chair, because their chairman Gordon  Zusatz von Marx.
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(one of the Overend Swindlers)
became suddenly ill. „Mr. Gordon was extremely anxious to be present to-day, to state what he had done in reference to his connexion with this and other Cos.“ Der  Zusatz von Marx.
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grosse
Gordon „has, with the frankness and sincerity of purpose which always marked  Zusatz von Marx.
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(!)
him, placed himself entirely in the hands of the directors, to do what they please with respect to his resignation“. Sie werden aber take no steps „especially as our confidence in Mr. Gordon’s integrity is untouched in the slightest degree. I should mention to you, as a matter of some importance, that Mr. Gordon has taken the same course with other Cos with which he is connected that he has taken with regard to this, and in every instance the determination which has been come to by the directors interested has been that it is no part of their duty to take any steps whatever with reference to his resignation or the dissolution of his connexion with the Cos. (Cheers)“.  Zusammenfassung von Marx aus: The Money Market Review, 16. März 1867. S. 335.
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(Gordon had not given his resignation, but only declared his willingness to withdraw, if his co-directors etc should declare that he ought to do so.)

 Zusatz von Marx. „1915“ ist das Pseudonym eines Verfassers einer Reihe von Leserbriefen an die „Money Market Review“.
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Ueber diese Farce bemerkt 1915 u.a:

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The Money Market Review, 16. März 1867. S. 335/336.
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Vice Chancellor’s Malins charge of „fraud“ against the Directors in general of Overend, Gurney et. Co. (Lim.) involves this same Gordon. In the face of such a judgment, the „unabated and unbounded confidence“ – a very strong generality certainly under the special circumstances – can only rank as an illustrative certificate of character. Scholefield sagte that Gordon, but for „sudden and severe illness“ „was extremely anxious to be present to-day to answer any questions“, aber Scholefield afterwards added, that „Gordon’s official advisers have most strongly forbidden any action as matters at present stand“. How is the anxiety to speak to be reconciled with the prohibition of speaking? If Gordon, barring „sudden and severe illness“, be really eager to answer questions, he will enjoy the chance at the annual April meeting of the Oriental Bank Corporation. … Scholefield says that Gordon „has had no opportunity of saying a word in his own defence“.

On the 11 June (1866), when the only formal assemblage of the limited Co. took place, I  Zusatz von Marx. „1915“ ist das Pseudonym eines Verfassers einer Reihe von Leserbriefen an die „Money Market Review“.
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(1915)
asked the new directors, Barclay, Gibb, Gordon, and Rennie to explain their doings with respect to the transfer. Trotz 4 × Wiederholung der Frage no answer. Gordon, not only silent, but changed his seat. 6 Months afterwards, 11 December (1866) Justitia’s Letter in Times. Gordon might have endeavoured to refute the writing, or prosecuted the writer. He adopted neither alternative. He penned to Times a most „lame and impotent“ promise to purge by oath. Gegen Ende des above said meeting, Robinson, a shareholder, would save Gordon by representing him not as a decoy but as a dupe. This Gordon, however, was a party to the 2 documents – the delusive prospectus and the secret deed. Nay, as to the former, he was more deeply concerned than any one else having drafted it in a form too bold even for the consciences of his accomplices in the business. According to the crossexamination of John Henry Gurney this Gordon did all this with his eyes open. His rough sketch had referred to „profits so long earned“. Now there had been only loss; and Gurney said as witness Gordon must have had in mind the perior period anterior to 1861.

The assets (des Overend Concern) have been reduced since 10. May last by 21/4 mill. How, when, and where has this sum disappeared?



23 March. 1867. N. 355.

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The Money Market Review, 23. März 1867. S. 362.
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Commercial Morality. (Continued) (Overends)

 Zusatz von Marx. „1915“ ist das Pseudonym eines Verfassers einer Reihe von Leserbriefen an die „Money Market Review“.
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1915 sagt u.a:
As to Scholefield’s (member of Parliament for Birmingham) „unabated and unbounded confidence“ in Harry George Gordon, I might have reminded Scholefield how „unabated and unbounded confidence“ in a colossal delinquent had, not many years ago, dragged the Birmingham Bank, with which the same Scholefield connected, |259 to the very brink of ruin; and, to cite a more recent instance, the shareholders of the Bank of Australasia expelled a director for his „unabated and unbounded confidence“ in James Freeling Wilkinson, notwithstanding the „unabated and unbounded“ confidence of his colleagues, as distinguished from his constituents.

It was Gordon’s Position at the „Oriental Bk. Corporation“, as head of the foremost establishment of its class, which has procured to him a seat at so many boards, and more expressly at the board of Overend, Gurney et Co (lim.)[.] Nay, in the delusive prospectus itself, he stands stereotyped for ever, as challenging, in that capacity alone, the „unabated and unbounded confidence“ of the public. To many, the Oriental Bank Corporation became so the finger-post that marked the road to ruin. Hence special duty dieser Corporation den Gordon herauszuschmeissen.



30 March 1867. N. 356.

Commercial Morality. (Continued) (The Overends.)

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The Money Market Review, 30. März 1867. S. 387/388.
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The comments of some of the London newspapers on this Overend affair, and the no-comments of others are equally significant. The Times City luminary, and others, denounce generally (declamiren gegen) all new Cos., legitimate or illegitimate. That „sort of thing“ easy. Aber in this case of one of the most gigantic and unmitigated frauds ever recorded in our mercantile history, Times all soft sawder. No mitigation in judgment possible for the 3 new directors. Never was a clearer case of deliberate misrepresentation so indubitably brought home to any parties. Times and Economist are continually discussing this as a common and ordinary case of misadventure or miscalculation only for which nobody ought to be blamed or punished. They constantly and vehemently denounce the shareholders in not submitting with proper resignation to a further process of fleecing (and allowing Kerls like Oppenheim to win by a legal fraud), whilst depreciating any further investigation into the mysteries of the affair. They do their utmost to slur over its iniquity, and to whitewash and rehabilitate the delinquent directors. The Economist, last week (23 March) emphatically explains that it „does not mean to impute to the new directors or the old partners the slightest formed intention to deceive the public“. Unformed intention perhaps? „The sellers“, he says, „thought they were selling a good thing; the buyers thought they were buying one; and both joined in telling the world what they thought.“ Most outrageous perversion of truth! Neither the sellers (old firm) nor the buyers (new firm) thought any such thing; both of them knew the contrary, and, therefore, instead of „both joining to tell the world what they thought“, they both joined in executing a secret deed to conceal from the world what they knew, and that fact reveals to us what they really thought. Economist again repeats that it „does not mean to impute a hint at conscious fraud, in the minds of either the new directors who bought or the old partners who sold“. Unconscious fraud? And, therefore, the evident consciousness of the necessity for concealment? Poor perversions, shifty arguments, shallow sophistries. Speech of Scholefield (at the meeting of English and American Bank) asinine. If the new directors were men of ordinary business capacity, they were not deceived, also fraudulent. If they were deceived, how fit to be directors as utterly wanting in ordinary business capacity.

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The Money Market Review, 30. März 1867. S. 393/394.
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 Zusatz von Marx. „1915“ ist das Pseudonym eines Verfassers einer Reihe von Leserbriefen an die „Money Market Review“.
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1915 sagt u.a.:
Scholefield and 7 Confederate Boards endeavour to save their protégé. Gordon had no deposit in the concern nor any shares beyond his bare qualification as official recipient of £500 a year. He was a party to the secret deed of arrangement by which the separate estates were to fill the gap of insolvency by 31 Dec. 1868 at the latest. He was subsequently privy to the sale of the Norwich Bank, whereby its goodwill and assets, besides being payable only on certain conditions, were not to be realised before 1 March 1870, 14 months beyond the stipulated time for final adjustment as between private firm and limited Co. He knew that, in connexion with the sale which thus virtually annihilated nearly 1/2 of the separate estates, the remaining portion of the same was assigned as a guarantee to the purchasers of the Norwich Bank, just as it had been previously assigned to the limited Co. At or about |260 the sale of the Norwich Bk. Gordon sanctioned an exceptional loan of £150,000 to the private firm beyond even the requirements of the secret deed of arrangement. In his affidavit (November 1866) Gordon constantly recognised Mr. William Rennie alone among the directors as his associate in the negotiations and investigations, which led to the transfer of the business from the private firm to the limited Co.



April 6. 1867. N. 357.

Commercial Morality. (Overends) (Continued)

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The Money Market Review, 6. April 1867. S. 424/425.
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The total number of creditors of Overend etc about 1500, old and new, about 1000, or 2/3 creditors of the old Co., at the time of the transfer. Old Co. carried on their business until 31 July 1865, the new Co commenced business on the following day, 1st August 1865. But according to the recitals in the deeds, the New. Co New Co. formed, and „established and incorporated on and from 12. July, under a memorandum of association with articles thereunto annexed, pursuant to the Cos.’ Act of 1862“, and this was 19 days or nearly 3 weeks before the actual transfer and the commencement of business took place. On 12 July ditto all the terms of arrangements as to the transfer of the old firm to the new Co. definitely arranged. At that time the promoters, who had constituted themselves the directors of the new Co., had become fully aware of the actual state and condition of the old firm. The fraud was complete and entire, on 12 July 1865, before one single shareholder had joined the Co., and before one single application had been made for shares. Whilst the applications for shares, on the false and fraudulent prospectus, were flowing in, the promoters and directors were occupied in maturing the documents by which the fraudulent compact was to be carried out. Darin activ Messrs Young, Jones, Vallings, and Roberts, the solicitors of the old firms, who also acted as the solicitors of the new Co. The prospectus, dated 12 July (and issued on that day) stated that „the deed of covenant in relation to the transfer of the business could be inspected at the offices of the solicitors of the Co.“, but that deed was only executed on July 27. Hitherto believed that although the secret deed was not offered to inspection at all, the deed of covenant was so, whereas it now appears that neither of these deeds executed, also existing, before July 27. Diese deeds, however, bound nobody except the partners of the old firm and promoters and directors of the new Co. On the same 12 July, notices were sent by the partners in the old firm and the promoters and directors of the new Co., in their corporate capacity, apprising the creditors of the old firm of the proposed transfer, and asking their assent to it, and to that transfer they assented. By that assent they released the old firm, and accepted as their debtors the new Co. as then incorporated. In the meantime they fished for shares by false prospectus, but no shares were allotted to any of these applicants until 31 July 1865, and the letters of allotment were not issued to them until 3d August, and the scrip certificates not until about a month after that. The register of shareholders would not be completed for a further period, and the share certificates were not issued until February, 1866. To whom then were the creditors giving credit during all this interval? Not to the socalled shareholders, but to the members incorporated on 12 July.

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The Money Market Review, 6. April 1867. S. 435.
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 „1915“ ist das Pseudonym eines Verfassers einer Reihe von Leserbriefen an die „Money Market Review“.
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1915
remarks that Gordon nun eliminated von 2 aus 7 Cos., nämlich Ebbw Vale Co. und Société Financière d’Egypte. Henry Edmund Gurney is 1 director und 2 trustees; sein Bruder, Samuel Gurney, in virtue of his seniority in the family, is one president, 2 trustees, 9 directors. Is this not pretty well for 2 individuals, who, as hopelessly insolvent debtors at once in Overend etc (Lim.) und Norwich Bank, and many more concerns besides, cannot creditably hold one farthing of the requisite qualification in any of the cases cited?


261

13 April 1867. N. 358.

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The Money Market Review, 13. April 1867. S. 448/449.
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Commercial Morality. (Overends) (Continued)Progress of Railway Dilemma.  Zusatz von Marx.
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(Directors)

9 March meeting of shareholders of Brighton Railway Co at London Tavern; decided to appoint a defence committee of large shareholders. Sir Charles Jackson pointed out that in July 1865, the Directors in their Report said that the Surrey and Sussexline was promoted by an independent Co, that it was a useful scheme, and that they had accordingly entered into a working arrangement with the promoters. Then, at the next meeting, it appeared that the whole capital for this railway was to be provided by the Brighton Co alone upon the plea that it was to make a third main line from London to Brighton. The same story appears to apply to the other lines in question, and Sir Ch. Jackson stated that the directors intended not only taking over these 3 undertakings, but all their liabilities at par. As to their ever paying a fair rate of interest for the money expended, out of question. „He feared that the directors were interested in those lines, that they were directors’ lines, and that they wanted the Co. to invest their money in them.“

London and Northwestern Railway Co is prosecuting a new line to Sheffield. Dazu meeting for to-day (13 April) berufen. Notices of the meeting (aber without its purpose) reached the shareholders on 2nd instant, and prior to that there had been a canvass for the proxies of the larger shareholders – in some cases by directors themselves. Most expensive undertaking which, as it has to compete with the line already in operation, without possibility of paying working expenses. Who is to gain by this new line at the cost of dividends? At all events, not the shareholders. Ebenso Midland Railway Co. Large extensions proposed. Chairman (at meeting of 15 Febr. Derby) did his best to commit the Co. to this expenditure of millions, and amalgamations; and positively declined to put the amendments. Based this decision of what he regarded as a „show of hands“; when poll demanded, he took no notice of it. Mr. Shepherd states in Daily News that within the last 2 years the Midland Co. have spent capital to nearly 41/2 mill.; at the end of 1862, the capital applied to all purposes, 181/2 mill., and since that time (i.e. in course of 4 Parliament sessions) the directors have raised, or obtained power to raise, 10 mill. more. The Acts obtained in last session alone involve outlay of £3,600,000; and upon the works thus authorised there is at this moment not one shilling expended. – In all cases excessive expenditure of capital beyond the growth of revenue. Railway directors, from one cause or other, are eager beyond all reason for an unlimited expenditure of capital, in utter disregard of the interests of shareholders. Manifest antagonism between the administrative body and the proprietary.

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The Money Market Review, 13. April 1867. S. 450/451.
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North British Railway.

The new board have issued circular to shareholders, proposing the creation of nearly 2 millions pre-preference stock, to override every existing priority.

Humber Iron Works Co. (Limit.)  Zusatz von Marx.
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(E. Watkin, M.P.)

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The Money Market Review, 30. März 1867. S. 408–410.
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Meeting of shareholders 22 March, Guildhall Tavern: Chairman, C. H. Knight said that the Defence Association thought, good case against the directors. Mr. Jacomb reported für die Defence Association. Some 14 months ago circular of the directors, calling meeting of shareholders for resolution to wind up Co., and dispose of the work, for the purchase of which, it was stated, a proposition was made to the directors. Dieß meeting held 20 Jan. 1866. Mr. Jacomb showed at this meeting (of 20 Jan.) that it was illegal, because of non-compliance with the articles of association. Solicitor der Co. pooh-poohed him. E. Watkin (M.P., late chairman of the Co, who was not chairman of the |262 meeting, meeting) produced a statement of accounts showing that, subject to a deduction of £60,615, the whole capital of the Co. was intact. Some shareholders forced out of the directors the admission that the reason for winding up was not the sale stated in the circular, but the financial difficulties of the Co. It was known, in fact, that the negotiations for the sale of the undertaking had fallen through before meeting was held. Directors knew that the concern on the verge of bankruptcy. Watkin was the principal spokesman of the directors, and produced this account. Watkin (M.P.) had transferred the last of his shares the day before the meeting, so that it now turned out he was not even a shareholder, and had no right to be present. The resolution for the winding up of the Co. passed. But 1 or 2 days afterwards the solicitor of the Co. found Jacomb’s view correct, so

New meeting called for 3d February. Chairman said that they were only £10,000 worse than in preceding May, and the before mentioned acount account showing deficiency of only £60,615 again produced. Jacomb said that if the account correct, no reason for winding up Co; if such reason, the account false. Wanted correct balance sheet to be prepared; moved resolution to that effect, but the proxies in the hands of directors were sufficient to neutralise any attempt at investigation. Jacomb objected also to Child being appointed as liquidator, because that man was the auditor of the accounts which would be impeached, and also the negotiator for Msrs Pile in reference for the sale of concern.

Meeting on 20 Febr. Jacomb took the same course, but the power of the directors was too great, and Child’s appointment as liquidator was confirmed.

Some time after petition presented to Court of Chancery for winding up the Co. On his application to the Court Child was removed.

In July 1866 call made by the new liquidator; a certain number of shareholders formed Defence Association, the first under Limited Liability Act of 1862. Jacomb instructed to attend before chief clerk on the making of the call by the liquidator. Produced Watkin’s account in meeting of 20 Jan. showing deficiency only of £60,615, und stated that if accurate, there could be no necessity for call; da angeblich Cos’. Co’s. property intact. The official Liquidator, on examining the account, declared it fallacious, and wrote that word and his initials on the account.  The Money Market Review: Under those circumstances he (Mr. Jacomb) could no longer offer any opposition to the call that occurred in July last year.
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Jacomb paid then call.

31 Oct. 1866 official liquidator summoned meeting of shareholders, produced true statement. Statt 60,615, Deficit of £259,000; deducting £130,000, reduction in the value of assets, as estimated in both accounts, blieb balance of £69,000 unaccounted for by the directors. Ferner liquidator showed that since the resolution to windup the Co. the trading had been carried on at a profit. Hence the further loss of £69,000 must have taken place before 20 Jan. The Committee of Defence Association found out that 25,000£ had been paid to the vendors for the property in excess of the amount agreed to. The first communication made by the Directors report for extraordinary meeting on July 13, 1864. In that report they stated that shareholders would have early opportunity of examining the works of the Co. That was followed by invitation to the shareholders to go to Hull to witness the launch of the ship „Annie“. A great flourish of trumpets made about that vessel, but what had since transpired? Why the Annie mortgaged for £10,000 by the vendors at the time when sold to the Co. Directors knew it. Not a word of it came out before meeting of 30 May 1865. The Annie cost £12,000, and a lot of litigation, and was sold for £8,500. At the time the Co. was started the shareholders were led to believe that they purchased a property, but it turned out that they only bought an equity of redemption, and that there were mortgages to the extent of £88,000, including the 10,000 on the Annie. So the Co. had never a good title to the property, and when they got into difficulties they were unable to take it into the market and raise money on it to relieve them from their embarrassments. Many other instances of mismanagement and misrepresentation. The Co. was born in concealment and fraud. That system was carried on throughout the whole history of the undertaking. They proposed proceedings against the directors, in accordance with the opinion received from counsel. Dagegen spricht Morris (shareholder und solicitor.) Jacomb zeigt daß dieser Kerl had been connected with the Co. in 6 different capacities. Viele Statements in Prospectus flagrantly untrue, f.i. that 10,000 shares had been allotted, that a railroad ran into the yard, that contracts for 300 000£ had been entered into at remunerative prices, upon which dividend of 20% was confidently anticipated. No such contracts existed, except on paper. Uebrigens not 3 of the directors worth 500£. Some of them completely ruined by their connection mit this and other Cos.|

263

 Zusatz von Marx.
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Ein Correspondent bemerkt in der Money Market Review über dieß meeting:

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The Money Market Review, 13. April 1867. S. 455.
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No better evidence before the Committee of the H.o.C. of the manner in which the Limited Liability Act of ’62 used to decoy the public into those fictitious schemes which have resulted in such wide-spread ruin and misery, no better evidence than E. Watkin, M.P. This man who spoke so pathetically in his oration at Sheffield of the „fatherless and the widows“ – played prominent part in the formation and management of the Humber Iron Works (of which he was chairman) up to the time of its disastrous collapse.



April 20, 1867. N. 359.

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The Money Market Review, 20. April 1867. S. 473.
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The Panic about „Calls“.

The fear about calls has become almost a panic. Question with shareholder now, not what profits may accrue upon his investment, but, as a measure of the extent of his losses, what calls he may have to pay upon his shares. Z.B. City Offices Co. (Limited) possesses already an annual income of 26,000£ a year, which will increase. Concern well managed; and yet the £20 paid is worth only now £5 or 6. But these shares are of the nominal amount of £50 each.

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The Money Market Review, 20. April 1867. S. 479.
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The Directors of Overend, Gurney, and Co. (lim.)

Henry Edmund Gurney (Lombard Street); John Henry Gurney (St. James square and Norwich); Robert Birbeck Birkbeck (Lombardstreet) Henry Ford Barclay (Woodford, Essex); Thomas A. Gibb (Msrs T. A. Gibb et Co) (Old Broad Street) Harry G. Gordon (Chairman of the Oriental Bank Corporation); William Rennie (Mssrs Cavan, Lubbock et Co., Leadenhallstreet.) (This list given in the Co’s Prospectus, published end of July, 1865)

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The Money Market Review, 20. April 1867. S. 481.
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The Bears of Bank Shares.

Leman’s Leeman’s bill will probably break up entirely the trade of panic-mongering so far as this particular branch is concerned. (Daily News)

[April 27, 1867. N. 360.]

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The Money Market Review, 27. April 1867. S. 499/500.
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Commercial Morality (Continued) (Overend)

For 9 whole months the concocters of this fraudulent scheme had carried the business, in pursuance of the original and fraudulent compact, without any knowledge, sanction etc of the shareholders … By prematurely assenting to the transfer, the creditors of the old firm enabled the concocters of the firm to complete their fraud, of which those creditors now eager to reap the fruits.



May 4, 1867. N. 361.

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The Money Market Review, 4. Mai 1867. S. 530/531.
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Railway Directors. in H.o.C.

179 railway Directors in H.o.C., about 27% of the whole House.



11 May 1867. N. 362.

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The Money Market Review, 11. Mai 1867. S. 560.
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Liquidators.

Nach Act von 1862 „any person or persons“ may be appointed to the job. Practically the nomination  The Money Market Review: of liquidators
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dieser Kerls
emanates from those who have rendered liquidation necessary.



25 May. 1867. N. 364.

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The Money Market Review, 25. Mai 1867. S. 607/608.
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Excessive Liability of Limited Liability Cos Shares  Zusatz von Marx.
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(Overstone) (Watkin)
.

Milner Gibson, as President of Board Trade, pressed and passed a Bill through H.o.C. to enable Cos, without diminishing their capitals, to divide those capitals into a greater number of shares. The Bill thrown out by Lord Overstone und Earl Grey (mit  The Money Market Review: 16 noble
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14 dummy
Lords als followers.) E. Watkin proposed the Limited Liability Co.’s Committee.

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The Money Market Review, 25. Mai 1867. S. 609/610.
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Statistics of the London Clearing House.  Zusatz von Marx.
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(Inland Bills.)

The Committee of Bankers decided to issue weekly Returns, simultaneously mit B.o.E., on the transactions of the Clearing House. This due to Sir John Lubbock. 4th each month – the principal day of settlement for Inland Bills – will give an indication of the relative activity of our inland trade. The 4th of month may also be occasionally a |264 „heavy day“ for foreign and colonial as well as for inland bills. Cheques are often multiplied even for one and the same transaction. F.e., the import and export trade of London is almost entirely done through agents or brokers, and as a consequence, each sale or purchase, when settled, necessitates 2 cheques; therefore the operation is represented by double the amount of money in cheques at the Clearing House. Again, the transactions in discounts and loans, such as are negotiated through brokers, always require at least 2 cheques, while a purchase on the Stock Exchange, through a broker, invariably involves the drawing of cheques by 3 separate parties, and sometimes 4, owing to the intervention of the jobber between the buying and the selling brokers. Thus a single transaction may be represented at the Clearing House by a quadruple amount in cheques. F.i. the buyer of stock pays a crossed cheque to the his broker, the broker a second cheque to the jobber, the latter a third cheque to the selling broker, who then hands a fourth cheque to the original seller.

The institution founded on very exclusive principles in 1775, by a committee of private bankers; joint stock bankers only admitted 1854; erst in 1864 the B.o.E. jointed the association.

Until 1854, when the joint-stock banks joined the Clearing House, the balances or differences were settled in banknotes; and in 1839, the only year for which statistics are given – the total cheques and bills passing through the house amounted to £954,401,600, to settle which banknotes to the extent of £66,275,600, or not quite 7% of the total amount wanted.

Since 1854 the differences settled by cheques on B.o.E., so that banknotes still further economised, and the bulk of the vast transactions of the metropolis settled by transfer of balances standing in the books of the B.o.E. to the credit of the clearing bankers. Average daily clearance in 1839: £3,066,700 und in May 1867: £9,803,790, progress of 220%.

In 1839 total Exports of English und Irish products: £52,701,509, in 1866: £188,827,785, increase of 258%; i.e. each 100£ of exports in 1839 has become £358 in 1866. Imports of 1839: £60,346,066, of 1866: £238,714,094, advance of 296%. Aggregate imports and exports of U. Kingd. 1839: £113,047,575 und 1866: £427,541,879; showing the growth of commerce, between the 2 periods, 278% or 58% more than increase in the Clearing House amounts.

Total balances held by London et Westminster, London Joint Stock, London et County, Union Bank of London at the close of 1839: £3,030,963 und on 31 Dec. 1866: £71,788,555 – increase of 2,268% since 1839.

The total amount of clearances does not embrace all the transactions in London. A few bankers do not clear; large settlements are made with notes and coin; and numerous payments are made between persons keeping accounts at the same bank, which are settled by a mere transfer of balances. On the other hand, a large amount of country cheques and drafts pass through the Clearing House.

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The Money Market Review, 25. Mai 1867. S. 614.
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The City Offices Co. (Lim.)  Zusatz von Marx.
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(Directors)

Wieder call von 5£ über die 20£ paid. Only one dividend, 5s. per share last year; harassed with calls; quotable value of shares reduced to vanishing point, while our directors have been in hot haste to commit us to a wholesale and simultaneous expenditure of money, and been revelling in the pay and patronage of their position. They and their friends hold most of the stock of the Co. I wonder how much of it is at par, and should like to know the average at which it stands them in.


265

June 8, 1867. N. 366.

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The Money Market Review, 8. Juni 1867. S. 665.
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London and Westminster Bank.  Zusatz von Marx.
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(Liability and Security)
(Communicated)

Issues new shares. In der That diese most successful Bank, has only become so by incurring £22,672,559 of liability, whilst the share capital and reserve fund were together less than 11/2 millions. Is this not enormous overtrading such as has not been afforded hitherto by any Bank in the Kingdom? The system of creating new shares at a premium, so readily adopted by joint-stock banks, in order avowedly to raise a factitious reserve fund – for reserve funds are not such unless created out of profits – is becoming so general as to suggest an unpleasant comparison of the position of jointstockbanks with that of railway Cos., which latter have gone on creating new shares and borrowing money etc … So long as the deposits continue to increase in amount, and new shares can be issued at a premium, dividends may be declared of 10 to 100% p.a. All goes well as long as the joint-stock banks can increase their indebtedness to the public.



15 June. 1867. N. 367.

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The Money Market Review, 15. Juni 1867. S. 699.
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The Years’ Fall of Railway Property.

During the last 12 months – shutting out from consideration all the previous depreciation – several descriptions have fallen 20%, and some of these are in the best credit. Great Northern Stock fell 7%, but the A stock of the Co. 23%; Caledonian 18%, London and Southwestern 19%. These Cos. have apparently only suffered from the prevailing disquietude. London, Brighton and South Coast fell 40%, North British 19, Cumbrian 17, Manchester, Sheffield and Lincolnshire 111/2, Bristol and Exeter , Great Eastern and North London, 10%, South Eastern 9, Glasgow and Southwestern , London, Chatham, and Dover, and the Metropolitan 8, North Eastern 6, Lancashire and Yorkshire , and London and Northwestern 4 each.



22 June 1867. N. 368.

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The Money Market Review, 22. Juni 1867. S. 722.
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The Gellivara Co. (limit.)  Zusatz von Marx.
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(Directors.)

On 14 August 1866 the directors stated: (Report): £130,640 received in deposits and calls, £130,640 £139,640 of debentures due June 1867; and £50,747 due on mortgage. Total: £320,807. The chairman further stated that £288,000 required to complete the works, less £50,000 already expended. What has been done with the difference between 50,000 expended, and the £320,807 obtained from shareholders, or borrowed at their cost? Has this 270,807 been paid for the mine? Who were the owners of this mine? Were any of our projectors or directors proprietors of the mine? If so, they were vendors for themselves and purchasers for us,  The Money Market Review: a peculiarly perilous position for themselves morally, and a peculiarly perilous position for us financially
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a position for themselves morally, and for us financially perilous position
. The mine useless, unless upwards of 1/4 mill. l. St. laid out in forming a communication between it and the coast.



29 June. 1867. N. 369.

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The Money Market Review, 29. Juni 1867. S. 746.
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City Offices. Co. (Lim.)  Zusatz von Marx.
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(Directors)

Before seeing almost the shadow of a dividend, we had to pay, the present call included, 500,000£. Meanwhile the directors thriving. All this has been going on while the directors have had accorded to them and their friends fine opportunities to buy cheap our shares. The directors and their friends now hold the largest stock in the concern.



July 6. 1867. N. 370.

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The Money Market Review, 6. Juli 1867. S. 6/7.
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Barned’s Banking Co. (Lim.)

Infamous swindling. The private Bank of Israel Barned et Co, oldestablished, wellknown private bank, since 1809. 1865 Prospectus for formation of Limited Liability Co. with 2 Mill. £. Capital, 40,000 shares, 50£ p. share, for the purchase of this business and to organise it on a broader basis. 160,000£ purchase money, payable by instalments in 2 years, guarantee by the Barneds of the assets taken over, „a moderate payment for a lucrative business“. Dieß alles im Prospect. The assets taken over were utterly rotten, the guarantee utterly worthless. At that moment the firm Barned consisted of Mr. Charles Mozley and Mr. Lewin Barned Mozley. It had then been recently discovered that the Bank defrauded by more than 100,000£ by a relative of one of the partners. To repair these losses Lewin Barned Mozley brought a further capital of £20,000 into the Bank, |266 and Charles Mozley £100,000. But this latter sum, as afterwards transpired, borrowed from the Bk. o. Engd. on the guarantee of 10 Liverpool merchants, who had taken a mortgage on Charles Mozley’s property for that amount. The business, instead of being, as represented, „a large and continually increasing business“, had for some time previously been carried on without profit, if not on annual loss. The profits were variously stated at different times, but the representations always gross misrepresentations. The profits stated 60 or 70, or 50, or 40,000£ a year. But when more closely looked into – there were no profits at all for the last 3 years. Closely pressed, Mozley said that from the balance sheet prepared in 1865 he was not prepared to say that they had lost money, although he could not say that they had made any profit. At the time of transfer the old firm had lost more than all its capital; carrying on business for several years without any profit; it was under advances to several Liverpool firms, all of whom have since failed to £700,000; and their private property deeply mortgaged to provide the means of keeping the bank afloat. Yet these partners presented their profits at sums varying from 40 to 70,000£ a year. Lewin Barned Mozley said „he had just looked into the thing, and found that 20 000£ would cover the losses of the last 3 years[“]. When Mr. Bencke, one of the directors, evinced a disposition also „just to look into the thing“, he was told by Ch. Mozley that „in transactions of that kind it was unusual and highly improper to ask to see private books of accounts“. „The directors of Barned’s Bk. Co.“, says Ch. Mozley, „never made any inquiry into the private property of the partners in the firm of I. Barned et Co. They had confidence in the position they held, and the property which was patent to the town at large.“ So die new directors duped. The scheme was elaborately planned and cunningly worked out. Of the 40,000 shares, 20,000 or one half, representing 1 Mill. St., were subscribed for, in pursuance of a previous and secret arrangement, by 2 Cos. – Contract Corporation and Joint Stock Discount Co – which had no legal power to subscribe, since then became insolvent, and incapable of performing their engagements. The whole of the debts of this socalled Co, therefore fall upon a limited number of bona fide holders of shares, caught by these gross and fraudulent misrepresentations. Hitherto contributions of enormous amount levied upon these shareholders, until the whole of those placed upon the list of contributories exhausted or utterly ruined, and still the creditors have only received a fraction of their demand. Liquidators wollen nun die packen, die ihre shares verkauft haben within 12 months prior to the winding up order. (aber diese nur liable für debts contracted at the time when they were shareholders.)



July 13. 1867. N. 371.

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The Money Market Review, 13. Juli 1867. S. 31/32.
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 Titel von Marx notiert in „Heft 3. 1868“ der „Hefte zur Agrikultur“ (MEGA² IV/18. S. 728.13–14) und einem Exzerptheft 1878 (IISG, Marx-Engels-Nachlass, Sign. B 148).
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„The Financial Lessons of 1866.“ A letter addressed (by permission) to the R. H. E. W. W. E. Gladstone. By a City Manager. London 1867. (Smith, Elder, and Co. Cornhill)

He denounces certain corrupt practices which seem to have prevailed for some time past between the promoters and directors of Joint Stock schemes, and the managers of the Joint Stock Banks and financial associations of this City. He avows: the key to so much bad business having been done in the way of joint-stock-Cos. is to be found in the fact that „it has been made the interest of those to whom was confided the management of other people’s money (i.e. the bankers of the City) to do the bad business“. He says, „he is not making a hasty, vague, and indefinite charge which can only be true in a few exceptional cases“; he vouches for it as a fact within his own personal knowledge and experience that this charge is true in the vast majority of cases. „The giving of bribes“, he says, „to the chairman, deputy-chairman, manager, secretary, confidential legal adviser, or whoever the important man or men may be, in the conduct of the business of the bank from which the money is to be borrowed for a Co. already in existence, or to be introduced to the public, is a regular, established usage and custom in the City of London.“ The cases in which this charge not true constitute »a most insignificant minority«. So general have these corrupt and scandalous practices become, that they seem to be regarded as legitimate by men of ordinary commercial repute, und diese bribes selbst made for legitimate business.  Zusatz von Marx.
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Die Money Market Review remarks dazu:
 |267 [»]The honest man who refuses such overtures is in many respects at a great disadvantage as compared with the man who accepts them; for, while the former remains poor, and has no financial power, the other acquires financial power and strength, which he uses occasionally for the apparent benefit of his Co., and by which he also earns the repute of talent and success, and, consequently, the increasing confidence of his shareholders – until the bubble bursts.«

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The Money Market Review, 13. Juli 1867. S. 38.
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Barned’s Bank. (lim.)

9 July the Master of the Rolls said „this Co. (Barned’s) was got up in June, 1865, in promoting which the Corporation Co. was very active. It was puffed in various ways, and great efforts were made by the Corporation Co. and its friends to raise it in the estimation of the world. They encouraged others to join the concern, and now, when the winding up came, they turned round etc.[“]



July 20, 1867. N. 372.

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The Money Market Review, 20. Juli 1867. S. 56/57.
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The Financial Lessons of 1866. etc[.] By the City Manager.“ Continued.

Recent disclosures have shown that half of the Railway Cos. in the kingdom have been under the management of grossly incompetent or corrupt boards of directors, whose jobbing and speculations have brought the properties of the shareholders and the securities of their creditors to the verge of extinction. The records of our banking and finance Cos. tell the same story; either the shareholders or the creditors must be ruined; and the question which it shall be, is the knotty question, which the winding up courts are now vainly endeavouring to determine.

The „city manager“ does not seem to recognise that the party who consider considers the Bank Act of 1844 „a monument of human wisdom“ is constituted of a small but active and influential minority of the commercial world, in whose favour, as capitalists and dealers in money, the Act operates most beneficially at the very time when it is operating most disastrously upon the other party, who are dealers in merchandise and manufactures, and constitute the great majority of the commercial community. The „suspension“ of the Bank Act. produced more serious results in 1866, than in 1857 and 1847, because there was a far greater amount of foreign money on deposit in this country. And this amount is yearly increasing.  Kommentar von Marx.
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⦗Dieß neuer Beweis für Carey, daß das Geld den Punkt sucht, wo rate of interest am niedrigsten. Er war am höchsten in England in den letzten Jahren.

Der „City Manager“ says: The deposits „on call“ or at short notice in the banks of the U.K. amount to 350 Millions £, whilst the total amount of sovereigns in the country estimated at only 120 millions. Nach Returns published by Sir John Lubbock „out of each million of nominal money which passes through the London Bankers Clearing House only £27,710 consists of legal currency; and of this small percentage only the paltry sum of £6,210 consists of coin – the balance, or £21,500, being B.o.E. notes. Thus, of the cheques and other promises to pay which pass through the Clearing House, 2% are represented by the promises to pay of the B.o.E.; and, of all the vast sums of ‚money‘ for which credit is thus daily given and taken, only the fabulously small fractional percentage of six-tenths (of a pound) (also 6/10%) has any real existence. Upon this slender foundation of 12s. for every 100£ St. is the huge fabric of credit built up.[“]

„City Manager“ wants a large increase in the gold Reserves of the B.o.E., wegen den proportionately large drains which must occasionally occur to meet the temporary balances of international indebtedness. Bank soll statt den Gvt. Securities 15 Millions mehr Gold halten.



July 27. 1867. N. 373. August 3. 1867. N. 374.

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The Money Market Review, 3. August 1867. S. 113/114.
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The Leeds Banking Frauds. Pardon and Release of Convict Manager Greenland.

Leeds astonished über diese release.

The Leeds Banking Co was old and prosperous concern of 30 years standing; Greenland for 20 years |268 its manager, it stopped payment in autumn 1864. The legitimate business of the Bank good, to the last it paid 25% to its shareholders. Cause of failure: fraudulent conduct et proceedings of Greenland, who had allowed the most extraordinary credit facilities to a number of persons of notorious bad repute. Many of the bills discounted for these persons were forgeries of the most transparent character, as Greenland knew, when discounting them. All these illegitimate and fraudulent transactions were concealed from the directors and kept in secret books, to which they were denied all access. The annual statements and reports were false and fraudulent concoctions, and, at the time the Bank stopped, the directors were engaged in making a further issue of shares amongst their shareholders at a high premium, all of which eagerly taken up on the strength of the false balance-sheets and 25% dividends. Trotz alledem das Schwein nicht prosecuted. Shareholders dazu zu poor, creditors too anxious to be paid, official liquidators would not take upon themselves responsibility, no public prosecutor. Wenn discovered, daß Greenland was in habit of making false returns to the Board of Inland revenue of yearly note issues of the Bank, and swearing to them as true, Gvt ought to have prosecuted, did not, Leeds Bank of Commerce did, Mr. Darnton Lupton, in his address to the Chamber of Commerce said: „he held in his hand list of the shareholders in the Leeds Banking Co; a melancholy list, for there were not two of them consecutively who were not now reduced to wretchedness or misery or were dead. At the time of the stoppage of the Bank 243 shareholders, of whom there remained only 51; but there were about 20 estates of deceased shareholders. 25 died, directly or indirectly, of the losses; 2 or 3 had committed suicide … there were the widows and orphans, aged clergy and lonely females, who lost their all by these frauds, and now objects of wretchedness and misery.“ Dieß beast also pardoned. Chamber of Commerce (Leeds) petitions House of Commons on reasons of this pardon. The conduct of Gvt. only the more extraordinary when compared with its conduct in another case. In the prison, from which Greenland released, there was and is still another convict, named Skaife. He was a poor half-witted young fellow, clerk to one Marsden, one of the swindlers and forgers to whom Greenland advanced 100ds of 1000ds of £, the moneys of the Bank. When the Bank failed, Marsden escaped to America. Poor Skaife remained and frankly confessed that bills to £20 or 30,000£, found in the Bank, had been signed by him by Marsden’s direction. He knew they were forgeries, but said Marsden knew it, and Greenland knew it, and he had done it solely at his master’s instigation, and derived no profit whatever from it. Poor knave was tried for forgery, and convicted, partly on Greenland’s evidence, and was sentenced not to 15 months imprisonment but to 15 years penal servitude. It now appears, from a letter of Beekroft Beecroft , M.P. for Leeds, that some time ago he presented a memorial to Gaw. Hardy (Home minister) for remission of sentence upon Skaife, but refused by Hardy. Skaife, therefore, remains in Armley Goal Gaol , while Greenland, but for whom he would never have been forger or felon, set free.



[August 10. 1867. N. 375.]

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The Money Market Review, 10. August 1867. S. 139/140.
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Edward Greenland’s Pardon. H.o.C. Continued. (Money Market Review 10 Aug., 1867)

It is an undeniable fact, that there has of late years been a great deal of very lax morality prevalent amongst the managers and directors of joint stock Banks and other Cos., much of it very closely bordering upon crime, and much of it actually overstepping the line which divides mere immorality from positive criminality … The successful operators in these transactions become objects of envy and examples for imitation to numerous other coveters of wealth and aspirants for fame, and the ranks of our mercantile classes have become thickly studded with men who have gone through these desperate ventures with more or less success, or who are ready to plunge into them when opportunities offer. Hence we have the downright frauds and scandalous robberies which are now almost daily exposed in the winding up courts. … It must be admitted that the law has almost lost all its influence as a deterrent, and for the plain reason that it is almost useless for the prevention or detection of these joint-stock and commercial frauds. In many cases where the fraud is undeniable a prosecution, it is said, „would not hold“; in other cases, where a prosecution might be sustained, there being no public prosecutor, no one else is willing to undertake the invidious task; and, even where a prosecution has been instituted and succeeded, ends of justice may subsequently be defeated by the capricious intervention |269 of an incompetent Secretary of State, as in the present case.

Lord Frederick Cavendish, one of the M.P. für North-West Riding of Yorkshire, sprach über Greenland case in H.o.C. „Greenland had been prosecuted for perjury in reference to the banknotes issues“ and „when the Board of Inland Revenue were applied to“ durch Leeds Chamber of Commerce, „and urged to prosecute, they declined, but stated that they would afford assistance to any persons who chose to undertake the prosecution“, viz. at their own expense. „The judge at the trial had expressed its his surprise that the prosecution of such a case had fallen upon private persons.“ Lord F. Cavendish continued: „When Greenland was taken to prison, he was placed in the hospital, where he remained for 3 months, but, in consequence of the report to the visiting justices, he was removed to one of the cells. The visiting justices were therefore greatly astonished when they afterwards received intelligence that Greenland had obtained a free pardon.“ That pardon was obtained by Greenland’s solicitor, upon the strength of a memorial which he addressed to the Home Secretary and came up to London to present in person. Lord Cavendish said: „Doubts would arise whether, in the administration of justice, distinctions were not made between different classes. It was difficult to believe that a poor man who had no solicitor would have received a remission of the greater part of his sentence because he was in a state of health which, in the opinion of the (prison) surgeon, would not justify his removal to the hospital of the prison.[“] Hardy said im trial „the Jury had recommended Greenland to mercy on account of his age etc.“ Mr. Hardy, „with the report of the trial at the Central Criminal Court before him“, knew perfectly well that the recommendation of the jury was to the mercy of the judge, and that the judge had given effect to it by giving the dog only 15 months imprisonment instead of 15 years penal servitude. W. Morrison drew the attention of the House „to the fact that the perjury of which this old man had been convicted had extended for a period of nearly 20 years“. »If Greenland had had not an able solicitor and wealthy and influential friends, he would have been permitted to serve out the remainder of his short sentence.« Other criminals, who have committed only one single act of perjury, are sentenced to penal servitude, and unless they happen to have made money enough by their frauds to retain a clever attorney, are compelled to undergo their allotted sentence. … The plea of humanity and mercy becomes mere cant in solchem Fall. It is an hypocritical abuse to apply them to the wealthier of the criminal classes alone, whilst in effect denying them to the poorer. During the past week (ending August 3, 1867) an inquest was held on the body of a pauper in one of our metropolitan workhouses who, at the age of 80, had been compelled to turn out and work at drawing a dust-cart, in a drenching rain. The poor wretch was seized with cold shivers and died, and before he died he was wicked and ungrateful enough to declare that „that cart and that rain had killed him“, and that the brutal officer who had compelled him to the task was guilty of his death. That man’s only crimes were poverty and old age – great crimes no doubt in a human and Christian county – but still the old man could not very well help either. If that old man had lived a riotous and extravagant life, committing frauds et perjuries during a period of 20 years, to the utter ruin or impoverishment of a 1000 innocent victims, and had thus made himself a well-to-do criminal instead of a beggarly pauper, humanity would have taken much more interest in him and „much better care of him[“].


270

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The Money Market Review, 10. August 1867. S. 141/142.
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Limited Liability Act of 1867. (for amendment of Act of 1862)

Enthält no clause whatever to afford additional protection against fraud or misrepresentation on the part of the promoters of new Cos.

August 17, 1867. N. 376.

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The Money Market Review, 17. August 1867. S. 167/168.
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Overend, Gurney et Co.  Zusatz von Marx.
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(Judgment of H. o. Lords für creditors gegen shareholders)

On 15 August this judgment der Lords on the appeals. Das judgment gefällt im Sinne des Vice Chancellor Sir R. Malins durch die 3 alten Esel (law lords) Lord Chancellor (Chelmsford), Lord Cranworth und Lord Colonsay, the Scotch judge. Lord Westbury, Lord Romilly, and Lord Justice Cairns, also law lords, each of whom had previously given or concurred in judgments in equity in conflict with that [of] Malins, neither of them was present.

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The Money Market Review, 17. August 1867. S. 172/173.
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Credit Foncier of England (limit.)

Those undertakings obstructed and thwarted by a condition of panic, followed by a state of chronic distrust. The present stage is that of a slow revival, held to some extent in check by the caution and timidity that constitute the natural reaction from the recent experiences. Credit Foncier balance for past half year of £62,000, of which the directors propose £30,000 to distribution of profit, or 3s. per share, free of income tax, and to carry over the remainder. The following are 6 of the principal investments of the Co. as they now stand in the books:

City of Milan Improvements Co. £: 243,615
Varna and Rustchuck Railway 196,467
Belgian Public Works 107,279
Irrigation Co of France 282,740
Imperial Land Co of Marseilles 225,666
Millwall Docks 145,526.


August 31, 1867. N. 378.

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The Money Market Review, 31. August 1867. S. 223/224.
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The New Act (1867) to amend „The Companies Act“ 1862.

 Zusammenfassender Kommentar von Marx.
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Dieser miserable bungling act erlaubt keiner Co. ihr ihre nominellen shares herabzusetzen, ohne durch Chancery Court (Winding up) zu gehn. Dank dem Lord Overstone, as leader of a knot of 16 lords, verwarf das Oberhaus 1866 Milner Gibson’s (then President of Board of Trade) rationelles Amendment, wodurch die ganze Sache ohne Kosten etc mit Board of Trade abgemacht werden konnte.

 Zusatz von Marx.
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Zweitens, was fraudulenten Schwindelcharakter betrifft, enthält nur den silly Paragraph,
daß die „dates and names of parties to any contract be entered into prospectus, or the promoters, directors, or trustees thereof, before the issue of such prospectus or notice.“ It does not require that the subject matter of the contract should be stated, nor that the subject matter should have any relation to the business or purpose of the Co., or its undertaking.  Zusatz von Marx.
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Ferner heißts in dieser Klausel:
„and any prospectus or notice not specifying the same (names and dates) shall be deemed fraudulent on the part of the promoters, directors, and officers of the Co. knowingly issuing the same, as regards any person taking shares in the Co. on the faith of such prospectus, unless he shall have had notice of such contract.“

Secretaries, clerks, or officers may know that there are such contracts, but not know the dates or names of the parties. Ferner, what is to constitute, für die shareholders, |271 notice of such contracts? The only notice of such contracts which the statute requires is notice of their dates and the names of the parties to them, without any knowledge of their substance or contents.  Kommentar von Marx.
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Silly nonsense!



The Judgment of the Lords in the Overends Case (für die Creditors) (Money Market Review Aug. 31, 1867)

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The Money Market Review, 31. August 1867. S. 232.
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Consecrates fraud. The argument that shareholders under such circumstances must be held liable is tantamount to saying that a man must pay a cheque stolen from him because a creditor of the thief should plead that he parted with property of on the strength of the drawer’s name, and that therefore the drawer had no right to stop payment at the bank it was drawn upon.

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The Money Market Review, 31. August 1867. S. 232.
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Das motive der lordships was fear – the fear of consequences – the fear that the joint-stock system could not bear the test of justice, but that, like Satan at the touch of the angel’s spear, it must appear in all its corrupt deformity, and that creditors – that terrible bugbear at which justice itself turns pale – must be satisfied at all cost. Truly, Englishmen may well deserve the title of a money-getting race, in the most offensive sense of the term, when the socalled rights of creditors are assisted to ride rough-shod over every other equities by the highest judicial tribunal in the land. Aber ihr Lordships „rewarded by the almost unanimous recommendations of the press“.

 Kommentar von Marx.
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Der Case war sehr simple. Nach dem Limited Liability Act of 1862 hat der creditor no hold on the personal shareholder, sondern nur auf den corporate body, die Co. Nun sagten die shareholders – dieß war die question – sie seien nicht members dieser fraudulenten Co, die ursprünglich nur aus den 7 Directoren bestand. Die shareholders hatten keinen Ertrag erhalten, die creditors ihr eingezahltes Kapital bereits gefressen. Die Co. war bankrott, bei ihrem Beginn (eh shareholders drin waren) July 1865 so gut wie May 1866. Mit ganz wenigen Ausnahmen alle Creditors waren die identical creditors der old firm. Sie wurden also durch den fraud – nach dem Judgment erst des Malins, dann der Lords, bezahlt, und steckten vielleicht mit in dem Hokus Pokus! Die Presse war fast ganz gekauft, Times und Economist an der Spitze, durch die creditors. Dieß Urtheil zugleich gegen die durch die Lords selbst anerkannten Precedents!


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The Money Market Review, 31. August 1867. S. 227.
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Diese 4 law lords have decided that contracts induced by fraud are binding obligations upon the party defrauded. Dieß war absichtliche perversion, kept up im judgment durch deliberate perversion of facts and cases, garbled quotations of previous decisions, and the wholesale suppression of adverse judgments, sogar in derselben Parlamentssitzung gefällt von denselben Lords und andern.


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The Money Market Review, 7. September 1867. S. 262/263.
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Untainted Creditors had no place in the record; at all events, the liquidators had not proved a single claim as being extraneous to the fraud itself; neither creditors nor liquidators had alleged that Mr. Oakes’s £1250 on his 25 shares, or even Mr. Peek’s £100,000 on his 2,000 shares, would be required for paying to Oppenheim and others 20s. in the pound, with interest.  Zusatz von Marx.
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Oakes und Peeks Peek waren die 2 contributories, welche die Sache vor Gericht bis zum Last Appellate Court der Lords brachten.


272

14 September. 1867. N. 380.

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The Money Market Review, 14. September 1867. S. 275/276.
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The (1867) Act for the Amendment of Cos. Act. Act of 1862, and the Merchant Bank Co of London (lim.)

 Zusammenfassung von Marx in eigenen Worten.
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This sehr well to do Co, has weathered panic at all.
Aber its shares at present £100 each with 25 paid, and liability of £75. Directors und Shareholders (General Meeting Sept. ’67) wünschen daher reduction in nominal amount of their capital, and subdivision of their shares. Aber nun der neue Akt; came into Operation 1st Sept. ’67. Chairman said: „Impossible to act upon the Act. First the whole thing must go into Chancery Court, and this utter ruin for a Co. depending on its credit. Their creditors spread over the whole world, and their debtors also, and impossible to do what required by the Act. That Act greatly complicated the previous law upon the subject.“ It is a burlesque upon commercial legislation. But Graves, one of the commercial members for Liverpool, seriously told Liverpool Chamber of Commerce, it was „the one Act“ „next to the Reform Act“. Times outstrips him in eulogy of Act and Gvt. which passed it, says, it was carried through Parliament almost „without discussion and without alteration“. Fact is that the Bill had been completely gutted in its transit, all those clauses empowering the Board of Trade to effect the reduction of the Capital of Cos. being entirely expunged, and all those clauses handing the Cos. over to the winding up Courts in Chancery, of which nobody had ever heard anything before, being substituted in their place. This was passing the Bill without discussion certainly, but scarcely without alteration! The Economist equally lavish in its encomiums upon this miserable abortion of an Act.



21 September, 1867. N. 381.

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The Money Market Review, 21. September 1867. S. 301/302.
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Overend, Gurney et Co. (lim.)  Zusatz von Marx.
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(English Legislation gegen grosse Schwindler)

By Statute 24 und 25 Vict. cap. 96, section 89, enacted daß directors, managers or public officers of any corporate body or public Co. die circulate, publish, or concur drin „any written statement or account which he shall know to be false in any material particular, with intent to deceive or defraud any member, shareholder, or creditor of such body corporate or Public Co., or with intent to induce any person to become a shareholder, or partner therein, or to intrust or advance any property to such body corporate or public Co., or to enter into any security for the benefit thereof, shall be liable etc to penal servitude for 7 years.“ Danach also die Overends etc faßbar. Aber nach Sect. 85 desselben Act „no person shall be liable to be convicted of any of the misdemeanours in any of the said sections mentioned, by any evidence whatever of any act done by him (vor irgend einem Gericht), if he shall at any time previously to his being charged with such offence have first disclosed such act on oath, in consequence of any compulsory process of any Court of law or equity, in any action, suit, or proceeding which shall have been bona fide instituted by any party aggrieved; or if he shall have first disclosed the same in any compulsory examination or deposition before any Court upon the hearing of any matter in bankruptcy or insolvency“. The Legislature  Zusatz von Marx. Siehe S. 263 des vorliegenden Exzerpthefts.
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(composed of swindlers)
appears to have considered it of far greater importance to obtain full disclosures of such transactions than to prosecute and punish the actors in them. It, therefore, denies them the privilege of pleading that they are not bound to answer because their answers may tend to criminate themselves, and, at the same time, tempts them to a full confession by the offer of a plenary pardon. This law is a standing incitation to even the most culpable of mercantile delinquents to come and confess and be absolved without the infliction of any penalties. Dieß rettet Overend et Co Directors, puts them out of criminal proceedings. Aber law absolves sie nicht of their civil liabilities. Sie sind liable to each shareholder for all the money they have paid, and all the damage sustained in consequence of the fraud. Some of the directors are said to be ruined|273 but it is certain that this is not the case with all of them. It is now pretty certain that these latter parties realised very large sums in the shape of the premiums on the shares which were allotted to them and their nominees, and these large sums they still retain. It certainly seems to be a hard case and a shameful thing that, whilst so many of the unfortunate shareholders reduced to absolute beggary and destitution to liquidate the debts thus fraudulently imposed upon them, the parties by whom they have been defrauded should still be permitted to retain unchallenged the profits they made by the scheme.

Down to the present moment the shareholders, the members of the Co., have never been permitted to know who their creditors are, or in what right, or what their respective claims amount to.

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The Money Market Review, 21. September 1867. S. 305.
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Credit Mobilier Co. of Paris.

In its difficulty, B.o.F. appealed for for 3 Mill. £ St., but B.o.F. giebt nur Hälfte, und has exacted all the security that was offered in the first instance. Immediate Cause of Breakdown des Credit Mobilier arises from its large advances to Compagnie Immobilière, one of the many affiliations sprung up from the original present establishment. The Co’s funds locked up in „inconvertible securities“ or „inoperative accounts“. This was always the weak point in the constitution of the concern.

Credit Mobilier und Credit Foncier were the 2 grand financial „idées Napoleoniennes“, and they were coeval mit dem Empire itself. Decree of authorisation für Credit Mobilier: Nov. 18, 1852; Credit Foncier, of same date. One of the projects rejected by the Council of State, the other seriously opposed in same quarter, Emperor put down all objection. Credit Foncier had an even and profitable career.

Credit Mobilier a grand experiment in the St. Simonian school of finance, the principles of which have been given by a friendly hand as „in contradistinction to those of the old school, not to extort money from governments and individuals, but, whilst enriching the authors, to augment to an incalculable degree the public and private fortunes. Their object is to lower as much as possible the interest on capital, and to place credit within the reach of all industrious men“. With such a programme the Credit Mobilier started at a time when it was the custom of the country to hoard money, and transact all kinds of business in a petty and peddling fashion. British capital and labour had already been imported to make the first great network of railways that was constructed. The new school of financiers,  The Money Market Review: the Emperor
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Badinguet
amongst the number, conceived that these enterprises were quite within the power of the French people themselves, and Credit Mobilier founded to propagate »this doctrine« Zusatz von Marx.
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(!!)
This revolution now complete. Paris has become a financial centre, competing often successfully with the wealth and prestige of London itself. Frankfort and Amsterdam have, to a certain extent, given way, and the influence of French finance is coextensive with the Continent; indeed, it has spread to Egypt and beyond the Indies. Paris capitalists are now amongst the boldest operators of the world. The commercial classes of France have vastly increased in wealth and numbers; people develop previously unknown activity of trade and industry. The Credit Mobilier was the prime mover in this great change. Its capital £2,400,000 in shares and an equal amount in bonds. Its deposits generally figured of late years for about £4,000,000.|

274

28 September, 1867. N. 382.

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The Money Market Review, 28. September 1867. S. 324/325.
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Gold mines of Victoria. (Kitto: „The Goldminers of Victoria.“ Lond. ’67)  Von Marx aus Platzgründen neben die Überschrift „28 September, 1867. N. 382.“ geschrieben, bezieht sich aber auf die vorliegenden Exzerpte.
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Expropriation of Individual Labour. (Property)

Kitto was 11 years a miner and manager of mines in Victoria, 7 years a Gvt mining surveyor. His conviction: The occupation of the mere digger is drawing to an end, while that of the practised miner is being rapidly developed under large profits already achieved. Goldmining in Australia no longer a fortuitous game, to be played by adventurers possessed of a pick-ax pick-axe and a pan, but a sound business-capital and skilled labour. One third of the gold yielded by Victoria during 1866 was the result of quartz-crushing. Nach Official „Mineral Statistics of Victoria for 1866“ quartz crushed (1866) 861,468 tons, and the average yield of gold per ton: 10 dwt. 16.2 gr. The price paid for treating the quartz von 4s. to £1. 10s. per ton. (Dieß jedoch nur exceptional Minimum und Maximum limits[.]) The average cost of treating the Quartz, which embraces of course much more than the cost of crushing, nach T. Eyre, manager of the Catharine Reef Co.: „For the 6 months ending Febr. 28, 1867, the average cost of raising and crushing, including all charges in the mine, 13s. 3d. per ton, and for the 6 months previously 12s. 11d per ton, or 13s. 1d for the last 12 months.“ This statement coincides with that given by the manager of the Port Phillip and Colonial Gold Mining Co, the best conducted property in the Colony. Says that 13s. p. ton. They crushed 4,654 tons during June 1867 which yielded average of 12 dwts. 5 grs. per ton. The pennyweight of gold in mining arithmetic is equivalent to 4 shillings, so that 31/4 dwts. is the average cost of treating the quartz. Kitto gives an estimate based on an outlay of £25,000 for a mining and quartz-crushing establishment, and that only 7 dwts. or 28 shilling per ton on average are obtained. Allowing £10,900 for contingencies, such as loss of time through accidents to machinery etc, dennoch clear profit of £12,500 or 50% would accrue to the shareholders. As Kitto says: „In a few years individual mining, as it is called, will be no more known; the quartz mines and deep leads will become the property of the capitalist, and will be worked with science and skill; … and once more the social system will be properly regulated.“ Im Anfang glaubte man, daß die alluvial goldfields in which the gold had been deposited, broken off from the mother rock by the operations of nature carried on during countless ages, were the only localities worth the attention of the gold-seeker; and that, once ransacked and made to yield up their spoil, nothing would be left on which to rear a permanent industry. A Commission of the Victorian Gvt., 1856, to report on the state of the mines, declared that mining for gold to great depths in quartz reefs would be unprofitable; useless, they said, to go below 10 miner’s fathoms or 60 feet. Dieß theory false, as proved in California and Australia. A Californian mine is now being worked at a depth of 1,250 feet from the surface, and is producing better ore than ever. Kitto gives a long list of quartz reefs in Victoria varying worked at depths varying from 200 to 600 feet, where result in all cases very profitable. In one instance 105 tons of stone, obtained from depth of 500 feet, yielded average of more than 141/2 oz. gold to the ton. Selwyn, the Government (i.e. Victoria Gvt) geologist, asserts that there is in Victoria an area of 30,348 □ miles, „in any part of which there is a possibility of remunerative gold deposits being found“. Of this vast extent only 870 □ miles, or about 1/33 have been mined upon, and of this 1/33 only 1/6, or about 1/1200 1/200 of the entire auriferous distinct, was occupied at the end of last year (1866). Kitto, from personal knowledge, states that at least 2 × the area in present occupation of miners is quite as valuable for gold as any now claimed and worked. As a Capital, the mining property at the colony now estimated at 22 mill. £.



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The Money Market Review, 28. September 1867. S. 327/328.
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Public Debt of Russia. Consul Michell’s Report.

Michell friendly to Russia, partly appointed Consul there by influence of Russian Gvt.

Between 1832 and 1852 annual deficits more than 4 Millions £ a year, von 1852 to 1856, time of Crimean war, annual deficit of nearly 28 Mill. £, represents, says Michell, far less than the additional cost to the Empire of that war. Increase of Revenue during the whole period, total in 1852 being 44% more than in 1832, but in the same interval Rate of Expenditure increased at least 97%. Nach Michell Russia owed in 1866 Public Debt of 1,810 Millions of roubles (£286,604,000), annual charge upon this debt: £10,961,142. Of this total the Foreign Loans, in round numbers, 520 Millions of roubles, and the internal debt to the residue, or nearly 1,300 millions roubles.

A work on Budget of 1866, attributed to Senator Hagemeister, states increase of expenditure zwischen 1845 and 1866 as follows:

1) Army. Increase: 70%. 2) Navy: 70%. 3) Home Office: 100%. 4) Public Instruction 150%. 5) Foreign Office 10%. 6) Justice 100%. 7) Church 90%. 8) Pensions 130% 9) Grants of Land. 10%

During this same interval, 1845–1866, liabilities of the Russian Treasury increased 172% und mit dem second lottery loan, 193%. The issue of paper money, now practically inconvertible, during the same period, 300%. In the same 20 years Increase of Population 11%, and of Ordinary Revenue 75% (from 197 to 345 Millions Roubles). In the same 20 years „the foreign trade of the country almost remained stationary“. The Budgets of the Russian Finance Ministers invariably anticipate a deficit, but fall always short of its amount. In the 5 years von 1862–1866 (incl.), the deficits, were estimated at nearly 141 millions roubles, turned out about 501 Millions, as indicated by the „Extraordinary Resources“ or loans raised to meet the deficiency in revenue for the requirements of the Gvt.|

275
The Foreign Debt of the Russian Empire is thus condensed:
Original Amount. Annual Interest in 1866. Annual Repayment of Principal in 1866. Capital Outstanding Jan. 1, 1866
In £ St. £35,937,800 £1,499,432 334,950 33,792,800
Florins 140,533,000 3,752,275 1,981,000 75,535,000
Roubles 290,000,000 10,568,282 6,711,889 208,661,660

To this to be added the Internal Debt of 1,290,490,321 Roubles. Total: 1,810,132,823 Roubles (£286,604,363, nämlich 519,642,502 Roubles Foreign Debt und Roubles 1,290,490,321 Internal Debt.) Rates of interest on Foreign Debt von 3 to 5 %, und the annual sinking funds from 1 to 21/2%; on Internal Debt from 4 to 6%, and the annual sinking funds from 1/2 to 5% p.a.



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The Money Market Review, 28. September 1867. S. 328.
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 Titel von Marx notiert in „Heft 3. 1868“ der „Hefte zur Agrikultur“ (MEGA² IV/18. S. 729.7–8), einem Exzerptheft 1878 (IISG, Marx-Engels-Nachlass, Sign. B 148) und im Notizbuch 1878/1879 (IISG, Marx-Engels-Nachlass, Sign. B 152).
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Robert Knight: Letter to the Right. Right Honourable Sir Stafford Northcote on the Present Condition of Bombay. Lond. 1867.

Collapse (Commercial) at Bombay. Scarcely anticipated the degree of prostration in this „city of millionaires“.

India cotton Exports etc in Folge des American Civil War. Bombay was the centre and outlet of the cotton growing districts of Western India, the chief port from which England drew its supply. Darauf based huge speculation. Raw cotton, which in Interior of Bombay presidency had been worth 80 rupees per candy before the American war, rose to 600 rupees afterwards. For a time gains to producers and middlemen – i.e. merchants and brokers of Bombay – prodigious. This sudden accession of wealth produced insatiable desire for more; Result wie gewöhnlich Time Bargains. Finance Cos., oder, wie sie in Bombay heissen „joint-stockery“, in every form. Some for useful projects; but the common ruin enveloped legitimate enterprise mit bubble Cos. Bombay built upon island too small for its population and commerce. Harbour magnificent, by position and other natural advantages, greatest port for Ocean communication between India and Europe. Large tract of land around the city covered only by a few feet of water, leicht to reclaim, Joint Stock Co, während des Schwindels, formed to this purpose. Large portion of the work has been done; but, up to the present time, obgleich millions sunk upon these works, not a shilling of the outlay has yet been rendered available. Not a single house or warehouse can be erected upon the halffinished work, except that small portion whereon stands the terminus of the Great Indian Peninsula Railway. The Gvt. of India, by its contract with that Co., had to provide a terminus 50 acres in extent for goods traffick. Bombay Island alone could not supply the land wanted, hence „Elphinstone Co“ formed to effect the object in view. Performed substantial work, for which it paid hard cash. It required reclaimed the whole site required for the terminus, and also a large area of land on the harbour shore. In Bombay a perfect glut of shares, some quite valueless on demerits, the aggregate amount far beyond the capacity of the place for legitimate business. Hence Elphinstone Co. Shares find no buyers oder at ruinous prices for the holders. No bank in India will advance a farthing on them. No capitalists want them, because, mit 400 rupees paid on them, there is a further liability of 600 rupees upon each share. Several Cos were (während dem Schwindel) formed for reclamation of land around the island of Bombay, but majority have failed, nur 2 have spent much money – the „Elphinstone“ und die „United Victoria“.



Aus:
The Money Market Review, 28. September 1867. S. 329/330.
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Limited Liability Cos formed since 1865.

Part of them to establish new businesses, and the other to prosecute old businesses with greater means and wider connections.



5 October. 1867. N. 383.

Joint Stock Cos. Management.

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The Money Market Review, 5. Oktober 1867. S. 351/352.
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Good et successful management have been exception. We have a natural propensity for blundering, muddling and bungling. Shareholders in general have elected as directors men with „handles to their names“, oder any undertaking men in quite different line of business, merchants and manufacturers as directors for banking, financial, railway Cos und bankers und successful speculators for mercantile und manufacturing undertaking. Such men eagerly sought and solicited by the promoters of Cos. Shareholders thought the more of them the better, obgleich numerous directorates nuisances. The most plausible speaker  Zusammenfassung von Marx in einem eigenen Wort. The Money Market Review: Men who knew that they had been sought for their names only gave their names, but did not feel bound, therefore, to give their time and their talents also, and would consequently content themselves with dropping in regularly to take their fees, and occasionally to take part in the business of the company.
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elected chairman, oder noble as head-figure. Shareholders complain that directors who ought to be their servants are their masters. Their own fault. Give absolute power to the directors and absolutely defer to it. Statt 3 oder 4 in most Cos. 6 or 8, or even 11 10 or 12 directors. Efficient management mainly dependent upon efficiency of the manager. He should be more responsible to them, less to the directors. As an instance of numerous directorate City Offices Co. At their last halfyearly meeting shareholders demanded that number und pay der 8 directors should be reduced. Die directors deigned, weil Hon. J. St. Wortley had given demission, not to fill up the vacancy, and reduce remuneration by 1/8, and, in event of further vacancy occurring, not fill it up, until remuneration brought down to 1500£ a year. One shareholder thinks 800£ mit 200£ extra für directors would do. Another shareholder, adverting to the heavy payments of directors, points out that salaries only 900£, also staff insufficient und underpaid. Nach dem neuen liability Amendment Act (1867) können die shareholders insist upon the liability unlimited unlimited liability der directors, or manager, or managing directors.|

276

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The Money Market Review, 5. Oktober 1867. S. 352/353.
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We want the issue of shares to bearer which are not fully paid up. In France shares mostly of smaller amount than in England, and the Cos may issue them to bearer when 2/5 of nominal amount paid. Amount called up in France generally bears much larger proportion to nominal amount. Thus increased facilities for transfer of shares. In true spirit of landocracy our Legislature provided that the stamp duty payment on transfer of shares same as on transfer of land. Shares as many times bought and sold in days as land in years. Dann stampduty levied upon nominal value of shares etc[.] This is the way in which our landlords facilitate the economical transfer of shares issued to bearer. The first person to whom the share warrant are issued will have to pay 3 times the amount of a most exorbitant stampduty, and all the subsequent transferees will go duty free.  Kommentar von Marx.
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(Diese Geschichte mit dem warrant wegen des häufigen Wechsels der tranfer transfer of shares.)



Money Market Review. 12 Oct. 1867.

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The Money Market Review, 12. Oktober 1867. S. 377.
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Shares.  Zusatz von Marx.
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(Paid to Vendors etc)

It is a very common practice on the formation of a Jointstock Co. for the purchase of a concession or contract, or the goodwill and stock of an existing business, or of a patent-right, for the vendor to agree to take either the whole or a portion of the purchase money in the shares of the intended Co., either fully paidup or with £5 or £10 or other sum per share paid thereon.



19 October 1867. N. 385.

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The Money Market Review, 19. Oktober 1867. S. 403/404.
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Fall in Value of Gold, Rise in Price of Commodities.

M. Chevalier predicted that „the transition (from fall of gold value) would be an interval painful to pass, and would be marked by innumerable shocks and sufferings“. The value of all properties, he said, „would be subjected to a painful uncertainty and injurious fluctuations. It would be still worse for persons whose incomes consisted of a sum of money fixed in advance. They would live in a perpetual state of trouble, anxiety, and uneasiness“. Er unterstellt stets that gold would fall to half of its recognised value. The fixed income man „would be flung headlong, without rule or measure, down to a lower station, and without the chance of preparation, as it was of the very essence of changes of this kind, subject to so many opposing influences, to pursue an irregular and disorderly course“. His assumption und reasoning equally absurd. Change nothwendig slow und very gradual. Die opposing influences could not but produce compensating circumstances.

The general rise in prices since 1853 is indisputable and now almost universal, and the inference of a corresponding fall of gold is inevitable. If increased supplies of gold accompanied by a corresponding increase in the demand for gold, there would have been no disparity between demand et supply. There would have been no relative increase, no excess of supply over demand. The excess from California and Australia was absorbed in new fields by the enlarged commerce of England, America, and other countries. Then American Civil War. The war expenditure absorbed the greenbacks. Sobald England gold received from Australia et California, passed over to France und other countries, in exchange for silver, transmitted to India in payment for cotton und other commodities. Durch dieß enlargement of trade rise in wages und dadurch allmählig in prices of commodities.

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The Money Market Review, 19. Oktober 1867. S. 404/405.
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The Chambers of Commerce of Rouen and Liverpool on Commercial Crise.  Zusatz von Marx.
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(Conversion of productive Capital in Bankers Capital)

The Rouen Chamber of Commerce anxious about the commercial crisis which for some time past pressing upon industry of great part of France. Its President wrote to President of the Liverpool Chamber of Commerce, on their opinions. Rawlins, the President, answers in name der Liverpooler Handelskammer: (10 Oct. 1867): Common Causes in France und England, nach Rawlinson Rawlins: 1) American War, 2) Protective duties of U. St. 3) Disorganisation in Southern parts of U. St. 4) Unsettled State of Europe, annual cost of armies about 80 mill. £ St. jährlich. Unter den spezifisch englischen Ursachen führt Rawlins an: 1) Premature investment von 1862–1866 in railway enterprises, not now, nor probably für many years, giving revenues to shareholders; 2) Excessive Speculation and Overtrading, especially of late years. Traders who conduct their business disproportionately on borrowed capital are, in the event of a small depreciation in prices or pressure in the money market, compelled to suspend payment. 3) Reckless investment of Capital in Jt. Stock Cos. 4) Collapse of several Banks. 5) These causes aggravated by 2 deficient harvests, enhancing price of wheat by 50% over average of the three previous years. Those who conduct their business disproportionately on borrowed capital, sagt Money Market Review , »constitute the great mass of English traders, manufacturers, shopkeepers[«]. Three months of 10% Discount Minimum, for them 20 or 30%, equal to 2, 3, or 4 × the profits they were making, hat diese Hände ruinirt. Viele dieser Kerls so ruinirt. All their accumulated wealth has been converted into money capital, and is in the hands of the banker, bill discounter, or other moneyed capitalist. Henceforth the latter is the owner and possessor of it; but he is willing to lend if the former classes are willing to borrow, and to become „traders upon borrowed capital“. On the first hint of distrust, capital seeks to fly back to its owner und dann new ruin unter jenen Traders und creation, for next period, of more traders upon borrowed capital.|

277

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The Money Market Review, 19. Oktober 1867. S. 407/408.
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 Titel von Marx notiert in „Heft 3. 1868“ der „Hefte zur Agrikultur“ (MEGA² IV/18. S. 588.9–10).
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A. King: „Smith, Knight et Co. lim.“ Lond. 1867.

Late Co. of Smith, Knight, et Co, insolvent, with unlimited prospect before them of insolvency, formed this limited Co., in the first instance, to extricate themselves, und, in the second, to pay their creditors Zusatz von Marx.
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!
The prospectus stated that business valuable, that the vendors required bonus as the selling value, including plant, of £230,000 in cash und shares, und that capital required to conduct the business of 2 Mill. £. St., in a first issue of 40,000 shares of £50 each. Shares came out at premium, i.e. demand for these 40,000 shares seemed larger than their supply. For a time this alleged value seemed real. In Nov. 1864 first dividend of 5% paid on account, d.h. ohne Rechnungsablage. April, 1865, statement of profit und loss rendered, und dividend declared of 8% p.a. (mit Abzug der „on account“ gezahlten 5%.) Zugleich aber call for £5 per share. Price der shares fell to something like nil, even mit der addition of £5 paid on them. Shareholders appointed Committee of Investigation; this Committee reported in Oct. 1865 that the good will etc, for which £230,000 paid in cash und shares, was of no value, that the contracts were burdensome rather than profitable. Directors gave flat contradiction. Contracts taken over showed all „an estimated profit“; the only contract then completed exhibited profit of 15%; they could, however, not obtain payment for work performed and materials supplied for the Royal Sardinian Railway, dieß chief cause des call £5 (additional). But concern, they said, promising. At meeting November 1865 embarrassment officially admitted; new directors were appointed, darunter 2 members of Parliament. February, 1866, 2 further calls announced – viz. £5 p. share, payable on April 10, und £2 in July – making in all £17 p. share paid. March 1866 officially notified that the £2 call coming due in July would be the last call made. May 1866, directors issued a Report stating that the Co. had undertaken no new works, and contracts in hand were approaching completion; bonds received from the Royal Sardinian Railway Co had been offered to the Creditors, assets and liabilities were alike, about £800,000 etc. In Oct. 1866 A. J. King filed a bill in Chancery against the Directors, and at meeting of shareholders in Nov. 1866 a Defence Committee formed.

Another call of £5 ordered by the Liquidators of the Co, making 25£ p. share, or one million called up on the 40,000 shares. King states, that prior to this call, only £367,000 were paid up, that the present call will make the total £400,000 instead of a million. In brief, it comes to this, that the majority of the shareholders cannot or will not pay calls, and that minority will have to pay all. Trotzdem creditors have only been paid 2sh. in £. King adds that there were claims of creditors in Sept. 1865 which, with interest, amounting to £376,947 would represent now nearly the same sum. So bulk of £50 p. share will be called upon by the liquidators, so that shareholders will lose every farthing of their money, and even the creditors not fully paid. No farthing left for the shareholders.

King asserts that the register (of shareholders[)] is rotten, and that 5/6 of the names enrolled are owned by men of straw who are merely nominees of the vendors and the Syndicate, nämlich a number of persons interested to combine in order to support the price of the shares in the market, subscribing a common fund for the purpose; hence the money said to be paid by the shareholders never paid at all. This proved by the nonpayment of calls. He alleges that no less than £72,000 spent as „secret service money“ostensibly given as commission on certain contracts. King gives the names of some of these recipients. Entries in the books, or in the dates of the invoices, falsified by a clerk who was discharged; dieser jedoch mere tool, acted simply at the direction of his employers.

October 27 26, 1867. N. 386

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The Money Market Review, 26. Oktober 1867. S. 428/429.
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Royal Bank of Liverpool.  Zusatz von Marx.
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(Illimited Liability)

On October 22 (’67) Stoppage officially announced.

Shareholders not numerous, but wealthy. Unlimited Liability. This Bank founded 1836. Suspended during Railway Panic of 1847, in consequence of reckless advances to a large amount to a few individuals. Reopened on 1 Dec. 1847. In Directors Report to 31st Dec. 1866 stated that despite „an extraordinary series of banking and commercial disasters“ on the operations of year ending Dec. 31, 1866, gross credit balance of £83,809. 3s. 11d, and a net profit, after various deductions, u.a. 7% interest on the preference Capital, of £50,546. 15s. 7d. H. A. Withers had a penchant for „large accounts“. Financing. Upwards of £300,000 advanced and locked up in ships of about 40,000 tons, now trading to various parts of the world; large sums said to have been advanced upon cotton bills. The acceptances of this Bank, 12 months ago, reached 2 Millions. One of the shareholders on meeting of Oct. 23 said: „Taking in consideration the interest he had been getting for many years in connection mit der Bank, he could afford to lose the capital invested in it. People looked upon property of this sort as though it was as secure, so far as income goes, as if it were land; but it was not so.“ etc. It is the immense greedy of the shareholders which directors und shareholders pander to. Speculative und gambling business daher, besonders by Liverpool Banks.

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The Money Market Review, 26. Oktober 1867. S. 430/431.
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Re-establishment of 6 months’ Sight Usance in Indian Trade.

 Von Marx verwendet in Manuskript II zum zweiten Buch des „Kapital“ (MEGA² II/11. S. 212.29–30).
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Almost unanimously accepted by the Indian Banks.

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The Money Market Review, 26. Oktober 1867. S. 431.
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Failure of the Commercial Bank of Canada

Announced during last days. Involved by lock up in railway securities.|

278

9 November, 1867. N. 388

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The Money Market Review, 9. November 1867. S. 476/477.
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 Titel von Marx notiert in „Heft 3. 1868“ der „Hefte zur Agrikultur“ (MEGA² IV/18. S. 588.11), einem Exzerptheft 1878 (IISG, Marx-Engels-Nachlass, Sign. B 148) und im Notizbuch 1878/1879 (IISG, Marx-Engels-Nachlass, Sign. B 152) sowie exzerpiert im Heft Dezember 1878 bis Januar 1879 (IISG, Marx-Engels-Nachlass, Sign. B 151).
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Gassiot: Monetary Panics and the Remedy (1867)
(Dieser Gassiot merchant in City of long experience, and director of oldest and largest Jt. Stock Bank in London)

„At any time after 12 o’clock on 11 May 1866“ (says Gassiot, when it was confidently reported that Gladstone had declined to suspend or interfere mit dem Bank Act) [„]there was probably no price for which the B.o.E., or other banks or bankers, could have obtained B.o.E. Notes for any amount of Gvt. Stock.“ Hoarding had commenced, because of fear that no more banknotes could be obtained. Ohne die legal limitation des Note supply, nobody would have dreamt of hoarding. The suspension of Act produced immediate relief. „High rates of interest“ – so Gladstone’s 10% Mr.(?) Rate – „entail distress“, says Gassiot, „on the merchant, trader and manufacturer, but more particularly on those employers of labour who require large sums of money to pay weekly wages, and whose only safety from ruin, when money is raised to an exorbitant rate, too often rests on discharging large masses of the hardworking industrious mechanics employed in their extensive works.“ In proof and illustration of this, he refers to the record of the Mansion-house Committee, the closing of the workshops on Bank of Thames, and the multitudes throughout Kingdom even now without employment, and driven to the utmost privation.

Suspensions of the Bank Act, says Gassiot, „have ever resulted in obtaining enormous profits for every description of money-dealers, from the proprietors of B.o.E. Stock, and bankers of all descriptions, down to the petty usurer who discount discounts the bills of those whose necessities compel them in such times to obtain money at the rate of 20 and 30% p.a.“ Mentions that B.o.E. paid in October 1866 13% p.a. on Capital of £14,533,000, whilst in previous halfyear ending April 1866 nur 101/2 und in corresponding half year of 1865 10%.

The object of the Bank Directors was to avail themselves of the exorbitant rate of 10%, for their own benefit, without exceeding the limits of their fixed issues for the benefit of commerce. In case they exceeded the limits, the profits, nach Gladstone’s letter, of overissue went to Gvt; if not exceeded, the whole profit of the 10% rate went into their pockets. J. B. Smith stated in the H.o.C.: „They (the Bank of England) sent to their customers and borrowed banknotes from them, in order to prevent the infringement of the Act, and the Act was therefore not infringed.“ Frazer’s Magazine (August 1866) says: „The letter of the law was only saved by the London bankers responding to an appeal from the Bank o. E. Court to pay every night to the banking department all the notes which, under ordinary circumstances, would have remained in the tills of the bankers themselves.“ So the directors secured to their proprietors all the advantage of the high rate. With all these means, the credit of the Bank Act could not be saved. „On the 30th May“, says Gassiot, „its Reserve was reduced to £415,865, and at that time the Bank was entirely dependent upon the nightly assistance of the London bankers, and on the forbearance of its depositors, to avoid the use of the Gvt. letter.“ The principle of the Act as much violated by such reduction of Reserve, as if the limits of issue exceeded by millions.

The Times in leading Article of 13 Nov. 1857, on the panic of that year, said: „Yesterday the commercial public received the news that the Bk. Charter Act had been suspended. The commercial interests of the country should not be submitted to a system by which a law is obeyed so long as obedience is easy, and temporarily swept away as often as pressure or panic intervenes. The houses which in 1847 and 1857 have stopped payment before the relaxation of the law, may well complain that, whilst they have been crushed by the operation of the Bk. Charter Act, others not more solvent or of higher standing than themselves have been saved by the suspension of the Act … . The defenders of the present system will have to face the fact that the Act has been twice suspended in two successive Panics.“

Aus:
The Money Market Review, 9. November 1867. S. 477–479.
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Annual Losses of Fire Assurance. Incendiary Fires.

Extraordinary increase of fires of late in London und Counties, und other countries ausser England. Buildings now generally constructed of less combustible materials. In London 1840 number of fires 681, 1 to 2,800 inhabitants, und 1 to every 379 houses; 1850 868 fires, 1 to 2,673 inhabitants und 1 to every 347 houses. In 1860 number of fires 1,056, 1 to every 2,613 inhabitants und 1 to every 335 houses. In 1865 1502 fires, 1 to every 1900 inhabitants und 1 to every 250 houses. In 33 Jahren von 1833 to 1865 recorded fires in London 29,069 und Capt. Shaw has compiled a table showing the causes of those fires. Candles caused 11%, Curtains nearly 10%, Gas nearly 8%, Flues nearly 8%, Sparks from Pipes 41/2%, Children playing mit fire 11/2%, Lucifer matches 11/2%, Smoking Tobacco 11/2%, Stoves 11/2%, Spontaneous Ignition nearly 1%, und other known causes 191/2, while the unknown causes were 33%. But the proportion in London fires, of unknown causes has increased from 25% in 1850 to 41% in 1860 und 44% in 1860 1866. Of the 589 fires from unknown causes in London, 1866, no less than 480 were on property insured against loss or damage by fire in one or other of the insurance offices. The latter know not how many of them willfully caused, but more than 1 /3 of all the fires in London are regarded by the insurance offices und der fire brigade as involved in suspicion. … The idea that in any civilised  Zusatz von Marx.
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(!)
country there could be wretches so abandoned as to trade in fire, to contrive and design the letting loose of an agent so uncontrollable and so destructive in its ravages for the infamous purpose of making a profit by it, is a fearful idea to contemplate; yet considerable number of such wretches amongst us. Besides a number of employees who, having committed frauds und depredations upon the property of their employers, afterwards set fire to the premises to conceal their crimes, there are |279 organised gangs of fraudulent persons who get their living by incendiarism and frauds upon insurance offices. „Their stocks“, it is said, „consist principally of dummies or imitation goods made of plaster of Paris, of half tubs of butter, of rolls of cloth made up of straw of parcels filled with sawdust, of bottles of coloured water and the like.“ These being duly insured, are duly set fire to afterwards, and the insurance office is called upon to pay, not the real value of the property destroyed, but the highest value the felonious incendiary is able to put upon it. These losses did not enter into the calculations of the Cos. when they fixed their insurance premiums. Sie finden nun, daß daher considerable addition to their rates necessary. They do not like to prosecute; they do not like to object to pay; gets them bad name und Prosecution very hazardous thing. Difficult to get legal evidence. Numbers of these claims therefore are paid trotz moral conviction des Office.



16 November 1867. N. 389.

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The Money Market Review, 16. November 1867. S. 503/504.
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Royal Bank of Liverpool. „Hushing up of Commercial Delinquencies.“

Entire loss of capital (paid up) und Reserves. Ausserdem Estimated Deficiency of £382,470. Interest und Expenses will make this £100,000 more. Call made of £10 per share. One Lady mit 900 shares will have to pay 90,000£. Ruin brought about by grossest mismanagement; besonders manager, submanager und managing director, und culpable neglect der other directors. Large sums advanced upon shipping. Much of this shipping was actually in the hands of the directors, and they were working it under agreements mit den owners, to whom they had made advances upon it. In the case of one of these shipowners, „the directors had entered into an agreement with him for the working of his estate und property for 5 years upon certain terms, and that agreement is still subsisting, and the debtor claims to have it carried out.“ In addition to such advances upon such securities as these, the Bank have for some time past been gambling in their own shares, and lost £46,000 upon those transactions. Original shares to the number of 1280 have been purchased since May 1860, besides preference shares to the number of 264, which the Bank have acquired by purchase or otherwise since 1858. These dealings in their own shares rendered legal by a special clause in the Co’s Deed. But most scandalous transactions of the Bank those with their own officers und directors. The manager is debtor to the Bank to £6,000, balance due upon 1000 shares which he had been allowed to take up, and for which he had paid only £2,850, the original debt having been £10,700. Submanager debtor to amount of £500, on account of 50 shares which he had bought. Of the directors, Bibby and Rae never indebted to the Bank; Holm indebted to the Bank for an old account in connection with McCormack, for which they held securities; Shand, another director, besides being a holder of 4000 shares, indebted to the Bank on his business account; Hutchinson, the managing director, besides being holder of 200 shares, considerable debt on business account. By him, Banner said, Bank would sustain heavy loss. Said ferner: „The agreements before alluded to were executed early in 1860; did not come before the general board; Bibby, Holme und Rae heard only of them after the stoppage of the Bank; they were carried out by the management, did not come upon the minutes of the general board.“ Banner said: It would be asked, what had become of the money? „He had the full particulars of the losses, and the names of these through whom they had been sustained, but it could do no good to publish them.“ „They could not blow up these debtors without doing an injury to themselves.“ He recommended, therefore, „the avoidance of all ill feeling and recrimination … he recommended a voluntary in preference to a compulsory winding up, because by the former they would avoid publicity being given to their documents und affairs.“ Shocking und Banner one of the most respectable men in Liverpool, und so his audience too Zusatz von Marx.
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Nach dem law it is a criminal offence to compound a felony. Banner’s arguments have been used, and with fatal effect, for many years past by many boards of railway directors, and, under cover of it, (thus to get more out of the debtors) the duped and quiescent shareholders and debenture holders have been defrauded of millions invested in those undertakings. The same sort of thing has been practised in most of the recent Bank and other failures, and under cover of it the delinquent directors, the causes of those disasters, have escaped without a scratch. The same disposition „to make things smooth“, to „hush up“ observable amongst traders in bankruptcy courts, und still more outside these courts, where merchants und traders annually mulcted of millions of money, the loss of which they are content to put up with, in order to avoid publicity. All this has a most corrupting und pernicious influence. Bankmanagers und Bankdirectors, und traders who get into the confidence of banks with view and for the purpose of swindling them, und managers und directors of other Jt Stock Cos, all know und tempted to calculate upon on this disposition of the shareholders, liquidators, und creditors to hush up. They are told that the larger their transactions the stronger will be the disposition to cloak und cover them, to avoid publicity. Times of 13 Nov. (67) says: „These unscrupulous operators upon the banks [know] that if they can but get heavily into debt to a bank, the bank, when a certain stage of peril has been reached, will not dare to allow them to drop, and that when the final crash comes they may count upon the strenuous efforts of all the sufferers, not merely to palliate their proceedings, but to uphold them. Hence, amidst all the desolation they have caused, they not only escape reproach, but are usually favoured mit complimentary expressions of confidence, and not unfrequently the consequence is that when the storm has passed, they reappear, backed, in some cases, by advantageous family settlements made in previous times, as influential merchants or directors of new enterprises.[“]


280

23 November 1867. N. 390

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The Money Market Review, 23. November 1867. S. 533/534.
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London and Mediterranean Bank. Extraordinary Report of Liquidator to Shareholders.

Shareholders und Creditors of this concern in a „fix“ between shareholders und creditors of 2 other unfortunate concerns, the Continental Bank Corporation und die London, Bombay, and Mediterranean Bank. The London und Mediterranean Bank first agreed to take over and absorb the Continental Bank, and then the London und Bombay Bank agreed to take over and absorb them both. But, except as to Assets, assimilation imperfectly performed in both cases. Hence the appearance of the trio in the winding up court. Continental Bank Corporation founded Jan. 1863, 5000 shares of £100 each, subsequently increased to 10,000 shares of like amount, thus making a capital of 1 Mill. £, wholly subscribed. On the first 5000 shares £25 p. share called up, on the second 5000 shares £15 p. share. Bank had thus paid up capital of £200,000. Within 2 years, viz. by the early part of 1865, this Bank had lost the whole of its capital, and was considerably in debt besides; yet, at that moment, the directors in their Report to shareholders, with a most pretentious affectation of candour, regretted that they had sustained considerable losses, „deemed it their duty to make the shareholders acquired with the precise condition of their affairs, and to exhibit the whole losses incurred“, and then confessed that „the total loss amounted to £19,500“. It amounted [to] über £200,000. In order to meet these difficulties, the London und Mediterranean Bank was formed April, 1865, mit capital of 2 mill., in 100,000 shares of £20 each, of which it was stated in prospectus that „80,000 shares had been already subscribed“. Object of the Co. to take over the business of Continental Bk., converting its 100£ shares into £20 ones; and also to take over the banking business of Messrs. Landau et Co., of Alexandria, „and to facilitate commercial and financial transactions between this Country, Continent, and Egypt“. But statement that 80,000 shares subscribed, utterly false. The bona fide applications for the new shares only 1800 shares in number. Yet the promoters obtained a nominal quotation of the shares at a considerable premium. To obtain a settlement on the Stock Exchange, „the fictitious issue of a large number of shares“ was resorted to, in order to make up the requisite proportion of their capital, and, as a necessary adjunct to this, „the parties engaged in this scheme did not hesitate to manufacture a book, purporting to be a banker’s pass book, in order to carry out the pretence of payments of deposits on the fictitious subscription of shares.“ The report further shows that „a large sum, nearly approaching £40,000, was lost out of the assets of the Continental Bank Corporation in the purchase of its own shares [“]. Trotzdem no settlement, scheme broke down. Landau et Co. discovered that „there was no real substance in the new Bank“, and, although they had received no less than £60,000 to carry on the business, they ultimately obtained an abrogation of the agreement. That transaction mit Messrs. Landau resulted in direct loss of £22,000 to the shareholders, beyond loss of £40,000 on the purchase on of the shares in the Continental Bank, making a total loss of over £60,000 on the Landau purchase. But the transfer to the London und Mediterranean Bank of the business und liabilities of the Continental Bank had been so far carried out, that in the course of time the whole of the obligations of the Continental Bank were actually paid or turned into liabilities of the Mediterranean Bank, to the exoneration der Continental Bank, except a claim of London und County Bank, of which £30,000 und interest still undischarged. The liquidation of the Continental Bank entrusted to Maxwell, Cargill, Routh, and Cumming, all of whom had been directors; und diese gentlemen, notwithstanding the resolution to windup from 1st of May had still carried on business till 31 Aug. 1865; und zwar in such a way, that when at the latter date they actually handed over the Continental Bk. Estate to the Mediterranean Bank, it was £64,000 [worse] than on 1st May, when it ought to have been handed over. But, inasmuch as the liquidators of the Continental Bk. were also the liquidators of the Mediterranean Bk., and the shareholders in both Cos. were nobodies, that small addition to their liabilities was of no account. Bank N. 2 having thus failed the purpose of raising new capital, the promoters looked out for some Co. with the requisite Capital already raised with which they might amalgamate. This they found in „London and Bombay Bank and General Financial and Insurance Agency Corporation. Limited“, which had „paid up Capital of 150,000£ nearly untouched“. This bank fought at first rather shy of their would-be partners, but in the end consented to „take over“ the business of the Mediterranean Bank und on Sept. 7, 1865 agreement executed between the 2 Banks for that purpose. Between Sept. 1865 und April, 1866, the whole of the Capital of the London and Bombay Bank applied in meeting the pressing demands of the Continental Bk., or of the London and Mediterranean Bank, in respect of the original obligations of the Continental Bank. This process of pumping commenced „immediately after the agreement of 7. Sept“. [„]The same cause that brought about the destruction of the Mediterranean – the obligations of the Continental Bank, accumulated by the mismanagement of its liquidation, soon brought about the failure of the London and Bombay Bank, which went into liquidation July, 1866.“|

281

The European Bank (Lim.) Meeting of Shareholders 19 Nov. (67) Appointment of Committee of Investigation.

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The Money Market Review, 23. November 1867. S. 534/535.
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Bk. o. Europe stopped payment 19 May, ’66. It was first known, for brief period, als „Union Bank of England and France“. Its prospectus appeared November 1862, and it proposed to raise a capital of 1 Mill. £ in 10,000 shares of 100£ each, in order to meet „the growing wants“ of the extended trade between England und France expected to arise out of the commercial treaty with France. Schon its birth shows extraordinary disposition to appropriate or „take over“ other people’s businesses instead of minding its own, by „taking over“ an existing business which had been established for several months. After carrying on business mit moderate success for about 7 months, this Union Bk. o. E. and F. contemplated another union, found in the „English, Belgian, and Netherlands Bank“ a mate in every way worthy of its alliance. This latter lady was somewhat younger than the intended spouse, its prospectus having only appeared in March 1863. It was first the „English and Belgian Bank“ only, but agreed to embrace the Netherlands also; with Capital of 1 Mill. £, in 20,000 shares of £50 each. Before it had organised commencement of its business, invited to alliance mit der Union Bank, Sept. 1863 definitively amalgamated. Henceforth the 2 wedded Cos took the title of European Bank, mit united Capital of £2,000,000, in 40,000 shares of 50£ each, of which 20,000 had been subscribed, £10 p. share paid upon them, zusammen £200,000. The amalgamated Co. had commenced business in October 1863 und in May 1864 they concluded an arrangement for the amalgamation with them of the „English and Irish Bank“. This Bk. established in Nov. 1862, Capital 2 Mill. £, in 20,000 shares of £100 each, of which 7,282 shares had been subscribed. Board composed of Sir Robert Walter Carden , chairman, Alderman Rose, then Lord Mayor, and a number of other city men of commercial repute. Had for some time some success, very moderate too. Concern now „European Bank“, nominal capital of 2 Mill. £, of which 34,443 shares subscribed, and £10 p. share paid thereon, making paid up capital of £344,420. Now amalgamation arranged mit London, Birmingham, and South Staffordshire Bank – a Co. started in Dec. 1862 mit Capital of 1 Mill. £, in shares of £100 each, had commenced business in Cheapside in early part of 1863 mit paid up capital of £120,000. Result of this last operation: Nominal Capital of the European raised to 42,966 shares, 15£ p. share paid, paid up Capital of £644,490. Accounts of June 30, 1865 show that the Bk. was then doing a considerable business, deposits über £780,000 und bills payable über £844,000. On 31 Dec. 1865 balance sheet showed deposits to £1,138,319 und bills payable £974,520. In June 1865 dividend paid 5%, in December ’65 3%, zusammen 8% p.a. und Reserve of £45,000. Shares, nevertheless, fell to heavy discount in 1866, und in Folge von call of £5 per share still lower; 19th May 1866 Bank stopped payment. Now what has become of the large paid up Capital of the Co. and its Reservefund? Mr.  Conrybeare Conybeare at the meeting of 19 Nov. ’67 said: „the manner in which this Bank had been conducted, was a disgrace to the mercantile community.“ Liquidation had gone on for 12 months, creditors had only yet received 5s. in £. Sir R. W. Carden , he said, one of the directors, ought to be removed from the liquidation. Mr. Kintrea (also a shareholder) said: In the last balance sheet said that the concern was paying 10%, and was in a position to pay other 10%, „but that document“, inducing many to buy shares, „one of the grossest illusions perpetrated. He, for one, desired to bring the directors to a court of justice, to compel them to repay him“. Charges against the directors, besonders the chairman und Sir R. Carden of the gravest character. Mr. Finley said that at the very last meeting of the Co. he was advised by the directors to buy more shares. The chairman of the meeting said that „he had called upon Sir R. Carden on the day before the day on which the Bk. stopped payment, and that Carden had then assured him, on the honour of a gentleman, that the Bank was perfectly sound“.

Mr. Hoskins, another shareholder said that in 1866 Charles Bye Colchester, the Chairman of the Bank, had stated that „the Bk. was in such a prosperous condition that he would recommend anyone who, as a trustee, had funds to invest, to invest them in this Bank“. On his question to Colchester what their liabilities were on Foreign Securities, he stated them to be between £70 and 80,000, whereas it now appeared that they were at the time £280,000.

Aus:
The Money Market Review, 23. November 1867. S. 546/547.
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At the meeting der shareholders (19 Nov.) chairman Potter said: Carden had told them they would have von £7 to 10£ per share of their capital returned to them. Stattdessen they were called upon for instalment of £2. 10s. to meet their liabilities, other calls would follow in quick succession. Oliver says: all the original directors of the European Bank , who were so at the time of the amalgamation, had all withdrawn, except Thompson. They had also, at different periods, got rid of their shares. The „English und Irish Bank“, when they absorbed it (June 1864) had up to that time paid no dividend but incurred losses etc. At last meeting, March 1866, Sir W. Carden presided, made highly favourable statement, dividend 6%, Reserve fund 13–14,000£. A retired colonel bought 100 shares on Carden’s Representations. Harding und Morgan, their auditors, at same meeting told, that they were doing profitable business. It was necessary to investigate the transactions with M. Lafitte et Co und namentlich mit der St. Nazaire Co. Die original proprietors der St. Nazaire Co were 8 men, seven of whom held 1 share each; und advance of £120,000 made to it before it was registered. It now appears that another Co. puts in a claim to the land assigned to the Bk. as a security for the advance in question, und die St. Nazaire Co., instead |282 of aiding the Bk. to realise that property, turned round and said they considered they were freed from all liability, since the suspension of the European Bank had led to their embarrassments. … Since it became known that a call of £2. 10s. was about to be made, a great many shares had been transferred to men of straw. There were 2 or 3 clerks in the office whose names now on the register for a large number of shares. One held 200, another 250 (a nephew to Colchester who never held a share while the Bank was a going concern, diese 250 shares). Colchester selbst (der chairman) »who held 2,467 shares, does not hold a single share nowKintrea (shareholder) says: „Colchester the high priest of the sacrifice of the Bank; was it true that for getting the advance made to the St. Nazaire Co. he obtained 600 paid up shares in that Co … During the whole time the shareholders were being propitiated by high dividends und deluded by favourable statements, they made loss after loss. There was so much rottenness und foul play going on in the management of the concern that it was questionable if a criminal court was not the proper tribunal to inquire into what had taken place.“



7 December 1867. N. 392.

Aus:
The Money Market Review, 7. Dezember 1867. S. 589–591.
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Incendiary fires. Blue Books of Parliamentary Committee of Inquiry, published in last Session. (1867[)]

P. M. Dove, manager und actuary of the Royal Insurance Co, says in his Evidence: had in 1865–66: 3,036 fires; causes ascertained 1,732 cases, oder 57%, but in 1176 or 38% „causes unknown or unsatisfactory“, great proportion of them suspicious. Amount paid on policies, where causes satisfactorily explained, nur 24%, auf andre 61%. Many of these fires their „frightful source“ in deliberate design of warehousemen or servants, to conceal robberies perpetrated upon their employers. In Liverpool, says Dove, [„]viele solche fires durch warehousemen; when the time came to take stock, best method of getting rid of the difficulty, to fire the premises. One of those men tried, confessed his crime, sentenced to 10 years’ penal servitude.“ In other case: Culprit of 4 brothers, who seem to have devoted themselves to the business of insurance and incendiarism as trade to live und thrive by. „One of the brothers has had 2 fires in 1 town; another 1 fire in another town; the third 1 fire in another town, all of which were insured in other Cos, and 4th brother had an insurance with the Royal.“

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The Money Market Review, 7. Dezember 1867. S. 591.
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Bank Shares. Recent Variations in prices. Dividends.

National Provincial Bank of England announces dividend und bonus of 20% p.a. for current half year, 22% in corresponding period last year. Die London and County Bank have all the advantages of London Banks as regards obtaining deposits on the lowest terms that prevail und can avail themselves of the higher rates charged in the agricultural districts for accommodation, which, even in times as the present, rarely descend much, if at all, below the old orthodox 5% p.a., with the usual commissions.

W. Abbott in seiner Stock Exchange monthly price list, gives dividends last paid (first half year 1867) und Prices of stocks und shares. Dividends varying zwischen 43/8 und 113/8% p.a. ⦗reckoned on present prices⦘, the average return from 31 foreign and colonial banks: 7£. 16s. 3d. %. On the quotations of 1st July ’67 the Return would average about £7, 15s. 10d %, at Dec. 1 1866 average £8. 13s. %, on 2 July ’66 £8, 10s. 8d %, on Dec. 1. 1865 £7, 12s. 6d %. Shares of London und Westminster before issue of the new shares £96, now £100. Shares of London Joint Stock Bank on June 1 £46, on 1st Dec. 67 £371/2 ex the new shares, or, with 1/9 of the present premium on the new shares, at £381/2. London and County Bank shares on 1st June 61, 1st Dec. 54; Union Bank at corresponding dates £46 und £35 respectively. The variations in these 4 Banks as follows: London und Westminster advanced 41/8%, the others declined, London et County 111/2%, London Jt. Stock Bank 181/2%, Union Bank 24%. This decline in great measure due to prevailing despondency in the markets for all Joint Stock Bank undertakings. Shares have been brought to market to provide for calls in other Cos.



21 Dec. 1867. N. 394.

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The Money Market Review, 21. Dezember 1867. S. 646/647.
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President’s (Andrew Johnson’s) Message on American Currency and Finance.  Zusatz von Marx.
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(Ursprüngliche Accumulation at Publick Expense.)

Sagt u.a: „It is well and publicly known that enormous frauds have been perpetrated on the Treasury, and that colossal fortunes have been made at the public expense. This species of corruption has increased, is increasing, and, if not diminished, will soon bring us into total ruin and disgrace.“ „Some of the taxes are so laid as to present irresistible temptation to evade payment. The great sums which officers may win by connivance at fraud.“ He complains that, by the present system of finance, the metallic currency, when collected, is reserved for one class of Gvt. creditors only, who, holding its bonds, receive their interest in coin from the national treasury. „Our circulation now embraces: 1) Notes of the National Banks, receivable for all dues to the Gvt., and by all its creditors, excepting in payment of interest upon its bonds and securities themselves; 2) Legal tender-notes issued by the U. St., and legally to be received as well in payment of all debts between citizens as of all Gvt. dues, excepting imposts; 3) Gold and Silver.“|

283

At the beginning of the Rebellion 200,000,000$ banknote circulation of the country; jezt circulation of National Banknotes und Legal-tender Notes $700,000,000. Compared with Gold und Silver, nach Johnson, diese $700,000,000 Notes nur werth 350,000,000$, also depreciated by 50%. He then shows that the Production of the Precious Metals in U. States von 1849 to 1867 (incl.) = $1,174,000, amount of specie coined during the same period $874,000,000. The net exports of specie (1849-’67) only $741,000,000, leaving an Excess of Production over Exports of $433,000,000. Then, taking the amount of coin in Treasury, and estimating the amount in National and other banks – in all about $160,000,000 –, and also taking into account the specie in the country prior to 1849, he says there are more than $300,000,000 not accounted for by Exportation, and therefore may yet remain in the country.



28 December 1867. N. 395.

Aus:
The Money Market Review, 28. Dezember 1867. S. 671/672.
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Winding up of Joint Stock Cos. in Courts of Chancery. Scandal and Waste attending it.

About 1846 was started a Railway Project called the Warwick and Worcester Railway Co., did not succeed in raising its capital, came never to anything except being wound up in the Court of Chancery. May 1849, order made to wind it up, and it is not quite wound up yet. After nearly 19 years of protracted and costly litigation, a circular issued this month, December 1867, announcing the payment of a first and last dividend. Dieß durchaus keine Exception. Many cases, originally of the simplest character, have lasted 1/4, 1/2 oder 1 whole century. Another Joint Stock Co. – the Agriculturist Cattle Insurance Co – was also started about 1846, fell into the jaws of this insatiate Court, not yet wound up, without any nearer prospect of that most desirable end than when it first entered. Of all the tribunals of the Country, Chancery Court least adapted for winding up Joint Stock Cos. Yet, in spite of all this, und trotz experience of the utter incapacity of the Bankruptcy Courts, which were modified Courts of Chancery, to administer the simple estates of ordinary traders, the Legislature committed the far more complicated estates of Jt. St. Cos. to the Courts of Chancery. Have no officers for such administrative duties. Can only act through official liquidators und their attornies, their counsel and their witnesses, so that every step in the process of winding up is encumbered and embarrassed by the needless forms and ceremonials of the Court, and the costly array of its adjuncts, both in 19 cases out of 20, nothing but expensive, dilatory, and wasteful impediments. Public at this moment experiencing, to their heavy cost, the result of this legislative folly and judicial blundering. Cos. are being continually drawn within the vortex of the Court of Chancery, where engulphed, hopeless for either shareholders or creditors to expect a final release. These torments and delay, calls and costs, and dread of them, verlängern our present financial paralysis. London, Chatham und Dover Railway Beispiel of extent to which the assets are likely to be squandered in actions at law and suits in equity, in preposterous conflicts on technical grounds between the various opposing parties. As City Editor in Times remarks: „every writer on the subject correctly points to the trade which a certain set of accountants and attorneys are enjoying upon the general ruin.“ The liquidators are encouraged to place themselves, and their clients, and the estate, in the hands of the attornies. The attornies very naturally relieve themselves from all responsibility by „taking the opinion of counsel“, and counsel, quite as naturally, are continually advising bills and petitions and motions and applications to the Court which, if not wholly unnecessary, might be avoided. In this way liquidators are constantly occupied in embroiling their clients in litigious proceedings, and involving the estate in the cost of it. Year after year the various Chambers of Commerce have been clamouring for an Act to confer upon the creditors and their official nominee the right and the power to administer themselves the estates of their bankrupt debtors, but their object always frustrated and postponed. There is a „lawyer power“ in Parliament which is wholly inimical to the „commercial influence“ there. Hence the difficulties in obtaining either a bankrupt law or Jt. St. Co. Law at all adapted to mercantile requirements.

Aus:
The Money Market Review, 28. Dezember 1867. S. 674/675.
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Joint Stock Co. Law. Misrepresentation in Prospectus. Sir Edmund Lacon’s Case.

„Great Yarmouth Royal Hotel Co.“ (Lim.) promoted und got up by a certain Hawes, Febr. 1865, for the purchase, „upon very advantageous terms“ of most valuable properties on the Esplanade at Great Yarmouth, including the „Royal Hotel which for many years had been so well conducted by Mrs. Sizeland“. Capital £25,000 in 2,500 shares of £10 each; defendant named in the prospectus as one of the directors. Hawes was to receive £2,500 for promotion money, out of which, by arrangement mit den directors, he was to pay the first directors’ qualification in the shape of 10 fully paidup shares each, the qualification of the subsequent directors being stated in the articles at 30 shares. It was not „a bubble“. There was a good and bona fide business, but not successful; on 24 Febr. 1866 a winding up order was made. Present proceedings originated in Bill filed by Rev. Mr. Henderson, against Sir. E. Lacon et the other directors, to have his name removed from the list of contributories, and his allotment and deposit money repaid to him, on ground of misrepresentation in prospect, and through the subsequent stages of the Co’s career. Case came before Vice Chancellor Sir W. Page Wood. Wood decided for the plaintiff against Lacon et other directors.

[»]The prospectus represented that the directors had „concluded an agreement“ for the purchase of the properties; that the Co. would enter into full possession of the hotel „early in the ensuing spring“; that the house, „prior to the ensuing season“, would be remodeled and enlarged; and that „the directors and their friends had subscribed a large portion of the capital“, and offered the remaining shares to the public.« Henderson darauf applied for 50 shares, on 15 March 1865 |284 allotted to him. But May 1865, from circumstances which came to his knowledge, Henderson began to doubt the bona fides and prospectus of the Co.; and having found upon inquiry that only 762 shares had been allotted and only about 430 more agreed to be taken; that the directors were not duly qualified, and that such shares as had been taken had not been subscribed for by the directors and their friends, he wrote, July 1865, for return of his allotment und deposit money, which was refused. On 25 July (65), therefore, he had failed filed this bill. It appeared by the evidence that „the agreement for purchase“, so far from having been „concluded“ in February, was not concluded until August, and that the business of the Co in the hotel did not commence until July. As to the other statements, Wood, the Vice Chancellor, said it was clear that there had been a misrepresentation in the prospectus as to the „directors and their friends having subscribed a large portion of the capital“. In fact, at the time when the plaintiff made his application no one of the directors had subscribed for shares in any sense of the word, and the friends of the directors, i.e. their business connections, consisted of no more than one firm at Norwich. Wood said „it surprised him that gentlemen of position should consent to authorise what in their private affairs they never would have consented to permit – namely, that their names should be used in this way to carry out a speculation of this kind … it was their plain duty when, on 15 March, they heard of the plaintiff’s application, to have returned to him his proposal, which they must have known had been made upon misrepresentation.“

Mercantile men frequently permit themselves to do, or participate in the doing of things, in their corporate capacity, which they would shrink from in their individual or personal capacity. This is the foulest blot, und the most pernicious und fatal drawback upon the progress and success of Joint Stock Enterprise in this country.

Aus:
The Money Market Review, 28. Dezember 1867. S. 677.
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Limited Liability. Joint Stock Cos. Parliamentary Return. (66’–67’) (1 June ’66 to 31 May 67)

Danach: von June 1, 1866 to May 31, 1867 (12 months since Panic ’66): England registered as limited 469, unlimited 5, 474 Cos, dazu 6, which existed prior to passing of Act of 1862, but subsequently registered under the Act as Limited. Nominal Capital about: £35,000,00 £35,000,000.

Scotland: limited Cos. registered 22, nominal Capital £897,800; Ireland 22, nominal Capital £400,400, thus making the total number of the Cos. registered under limited liability in U. Kingdom 524. Dazu 13 Cos. for working mines within jurisdiction of the Stannaries’ Court, nominal Capital of £221,000.

There is no longer any doubt that the principle of combination applied to the development of industrial wealth is far more powerful in its influence upon the progress of nations than that of mere individual enterprise. But, when exercised without any legitimate restraint, may be used for the worst of purposes. Under limited liability the nation has, during the last few years, been intoxicated with visions of rapidly acquired wealth. The eagerness, with which a number of speculative persons have sought to enrich themselves at the cost of others has carried with it the seeds of self-destruction, which only required time to develop their fatal results.



Register Money Market Review Jahrgänge 1866 und 1867

1) Banking et Currency.

  • Bank Act of ’44. p. 189, 194, 195, 198. (Bankrate of 10%) (200. 213–14. 216.[)] „Debats“ on the Act. (244 224) 244. Expansive Clause (247–8) 249. Profits of Panic to Bk.o.E. 216. Govt Debt to Bank o. Engld. a legalised Fraud. (198), (199)
  • Economy of Banknotes (191) Separation of Acceptances from Deposits (247) Abuse and Use of Bank Deposits (216, 217)
  • Bill brokering et Money dealing (252) Limited Liability applied to Banking (224, 225) Rate of Interest (L. Levi) (212–13) Clearing Houses for Banking. 209, 210, 263–4. Demand for Money and Demand for Capital (203)
  • Influence of Weather on Money Market. (230)
  • Commercial Credit and Commercial Debt Insurance (220, 221) Bills of Lading (Schwindel) (241, 242)
  • Fall in Gold, Rise in Prices of Commodities (276)
  • Joint-Stock Banks. London und Westminster. Liabilities und Securities (265)

2) Crisis of 1866. 
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  • A) Bank o. England und Act of 44.
    • Reserve of B.o.E. (187) Act Suspension (187, 188) Panic and its Remedy (188) B.o.E. und London Bankers in the Panic (191–2) Times on the Panic (189) Clarendon on the Panic (192)
    • Reduction Bankrate to 8% (Aug. 66) (210–11) to 41/2%. (27 Sept. ’66) (217) Watkin’s Motion, 31 July 66. (203–208) Count out (208) Ministerial Opposition (208–9)
  • B.) Theory of Panic.
    • p. 195, 196, 236, 238–40, 266–7, 267, 278. Glasgow Chamber of Commerce on Banking (Aug. ’66) (p. 210.) Manchester Chamber of Commerce Dec. ’66 (p. 243) Rouen und Liverpool Chambers of Commerce (p. 276, 277)
  • C) Securities (Investments) und Panic:
    • Losses. (193) Pressure and Securities (197)
    • Investor Losses from „Bear“ Frights (190) Bears (197, 198, 199) Bears: Leeman’s Bill (254) Stockexchange 256, 263.
    • Stockmarkets: Week ending May 19, ’66 (190) Week ending 26. May ’66 (193) Losses week ending 29 Sept. ’66 (218, 219)
    • Shares and Dividends (1867) (282) Panic about calls (’67 April.) (263)
    • Foreign Loans and Panic (229) Russian Loan. Nov. ’66 (234–5) Colonial Loans (251)
  • D) Joint Stock Banking und other Cos. Schwindel seit 1865 etc. (respective seit 62).
    • Prospectus und Articles: „Russian Iron Works[“] (lim.) (197) Promoting und Financing. Bernard Salomon Bernard (199, 200) „Humber Iron Works“ (E. Watkin) (126 261–63) City Offices Co. (264) Smith, Knight et Co (lim.) [(]p. 277) Misrepresentation (211) Estates Investments Co (234) Great Yarmouth Railway Hotel Co. (283, 4)
    • Bankrupt Private Concerns converted into Limited Liability Cos. Losses by Shares in Liquidation (217, 218) Directors (194, 195) (Fees 233–4) 254. Railway Dilemma Directors (261) Directors in H. o. Commons (263) Directors und Gellivara Co. (265) Venial Offences und Scapegoats (252)|
    • 286
    • Joint Stock Financing (253)
    • Ditto Management (275, 276) Shares paid to Vendor (276)
    • Increase and Employment of Capital (212)
    • Limited Liability Cos formed since 1865 (275) since May 1866 – about May 67 (284)
    • Drain of Capital for new investments (July ’66). (201)
    • Credit Mobilier of Paris (270 273) Credit Foncier of England (273 270)
    • Joint Stock Banks Transfer of Bank of London to Consolidated Bank (192) Failure of Consolidated Bk. (196)
    • Asiatic Bk. Co et. (lim.) (191)
    • English Joint Stock Bk. (lim) Disclosures (219, 220); ditto Scandals (226, 227)
    • Agra and Masterman (215) Joint Stock Discount Co. 232. (Wilkinson) (250–51)
    • Overend et Gurney (224, 225, 229, 233. (Commercial Morality) 235, 237–38, 242, 243–4) Evidence of J. H. Gurney (248) 250, 251, 253, 254, 255, 258, 259, 260. Directors dieses swindling Concern 
      Schließen
      (263) Commercial Morality, 263. H. o. Lords 270, 271, 272–3
    • Barned’s Bank (245–46, 265–6, 267.)
    • Leeds Banking Co. Conviction of Greenland (253–54) His pardon (267–9)
    • Royal Bank of Liverpool (277, 279)
    • London et Mediterranean Bank (280)
    • European Bk. (281, 282)
  • E.) Railways.
    • Dont pay. (191) Debentures (211, 212) North British (Hudson) (230, 231) (261) Great Eastern (231) Cardigan et Carmarthen (232) Difficulties (232) Lloyd’s Bonds (241) Act of 1866 (244) Consolidation (251–2) London Chatham und Dover (253, 255) Zusammensetzung des Investigation Cosmittees Committees (255)
    • South Eastern Directors (257) Years’ (June ’67) Fall of Railway Property (265)|
    287
  • F) Plethora of Money.
    • How to be Employed? (230) Plethora. (255)
  • G.) Limited Liability Act. of 1862
    • (p. 190, 191)
    • Gerichtssporteln. Parliamentary Committee of Inquiry (255, 256) Liquidators (263) New Act (Amending) of 1867 (270, 270–1, 272) Winding up in Chancery Courts (283)
    • Large uncalled capital in limited liability Cos (232, 254, 263)
    • English Capacity und Blundering (214)

3) Board of Trade Returns.

  • Week ending June 2, ’66 (196) Their Incompleteness (Week ending Nov. ’66 etc (257) Food Supply Nov. ’66. (232)

4) Cotton Trade.

  • Sept. 66 (215) Dec. ’66 (236) Jan. ’67 Circulars (246) Past and Present of Cotton Market Jan. ’67 (248–9)

5) India.

  • Indian Banks and Banking (221–24) Gain to India by Cotton Famine (227–28)

6) U. States.

  • American Exchanges and Grain Trade (June ’66) (196, 197) U. States Trade (July ’66) (p. 197) American Money Matters (202) U. States Bonds (214, 215) American Railways (228–9) American Currency et Finance (282–3) What is a Five-Twenty Bond? (193) Annual Circular of American Commercial Agency (194)

7) Miscellaneous.

  • Insurance and Incendiarism (p. 211. 278–9. 282)
  • Public Debt of Russia (Michell) (274, 275)
  • Goldmines of Victoria (Kitto) (274)
  • Ebbw Co. (Industrial, und Territorial Magnate) (237)
  • Conservative Land Society (247) National Freehold Land Society (253)

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