73

[The Money Market Review, 12. Oktober bis Dezember 1867]

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The Money Market Review, 12. Oktober 1867. S. 375/376.
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10% Rate of Discount. Manufacturers, Producers, Trade. (Money Market Review 12 Oct. 1867)

Nach Overstone , Times, Hubbard , Fawcett : „there is no harm in a 10% rate, as it shows how profitable trade is, or they would not pay it.“ With pending engagements they must pay it, whether their trade is profitable or not. If they cannot pay it out of profits, they must pay it out of capital, as at such a rate is generally done. This soon eats up the capital of the small trader, and he speedily falls out of the ranks. It consumes more or less of the capital of the large trader also, but he struggles to hold on till better times come, and supplies with paper the place of the capital absorbed, and thus in too many cases commences a career which, unless he be enabled to retrieve his position in the mean time, may end at no distant time in Bankruptcy Court or deed of arrangement.



Aus:
The Money Market Review, 12. Oktober 1867. S. 378/379; 26. Oktober 1867. S. 429/430.
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The Caledonian Railway Co. (Money Market Review. 12 Oct. 1867)

Nach last halfyearly Accounts dividends maintained by means of charging to Capital various expenses which ought to be borne by the revenue. If made up according to true principles, the charges upon the 16 Millions of loans and preferences, combined mit cost of maintenance und renewals, would have absorbed bulk of available asset, and left comparatively little for dividend on ordinary stock. The directors have declared dividend of 51/4%. Net earnings, as stated on paper, were not over £97,000. 51/4 dividends p.a. auf den ordinary stock (Caledonian) of £4,734,000 would [require] £123,500 or £26,500 more than the directors pretend to have earned. They say, it comes from the Premium Account; i.e. a sum of money obtained through the premiums on the issue of shares. It amounted at beginning of the year to £150,000. Davon £30,000 taken on 31st Jan. to augment the dividend for 2nd halfyear 1866 und jezt £26,000 to raise the dividend for 1st halfyear 1867; so dwindled down von £150,000 in 12 months to £93,000. Will soon be all gone. The premiums arise out of transactions in which there are heavy losses as well as gains. The losses are all put to the debit of Capital; aber die gains nicht to credit of capital, sondern to small dividends, to keep up appearance of fictitious prosperity. And this premium account – apart from the losses credited to capital – has ceased to be an income to the Co. The directors acknowledge that they received only £2,272 for premiums in the past half year (1867) but take away from the fund £26,500 to augment the dividend; just 12 × the amount received in the same period. Vicious system of dividend manufacture. Selbst 4% dividend only arrived at by starving renewals in some cases, and charging them to capital, in others. It is said that the general manager obtains a commission on the alleged net earnings.  Zusammenfassung von Marx.
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Dieß explains much!
In der That haben die Auditors not certified the Accounts at all. Sie sagen z.B. „£75,013. 15s. 5d. charged for new plant placed on the line, or in course of construction, which, it is stated, is necessary for the working of new branches und extensions … Subject to these explanations … the accounts contain a true statement.“ The auditors protect themselves by these saving clause clauses, shirk the question. The bulk of the charge was for renewal of rolling stock, a charge of „wear and tear“ belonging to revenue as much as the wages of the Co’s servants. If this sum debited to Revenue, let alone other questions, small dividends und collapse of the Co’s credit. Colonel Salkeld chairman of this Co.  Zusatz von Marx. Im Folgenden Exzerpte aus: The Money Market Review, 26. Oktober 1867. S. 429/430.
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Nach Money Market Review of 26 Oct. 1867:
Caledonian Railway Stock was worth, not very long ago, in the market £130 for every 100, and within the last few days it has been as low as £85. 6 years ago Capital der Caledonian Railway Co 9 mill. St., now 21 Mill. £. Gross Revenue has kept pace; f.i. in halfyear ending 31 July 1861 it was £387,201, in halfyear ending 31 July, 1867: £872,576. But Preference charges risen from £135,636 to £393,843. Ebenso Premiums aufgegessen als Dividends. In halfyear ending 31 July, 1861, the capital expended £94,216, und in half year ending 31 July 1867 to £482,937, equal to 5 × the amount officially declared to have been earned for dividend. Was there any dividend at all?



Aus:
The Money Market Review, 2. November 1867. S. 451/452.
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2 November. 1867.
The Accidental and Marine Insurance Co.  Zusatz von Marx.
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(Revelations)

Just Report issued on that Co., which during last 12 months undergoing slow process of liquidation in the Winding-up Court. This Corporation was composed of several amalgamated Cos, including Accidental Death Insurance Co, founded in 1849, führte gut Geschäft for some years. In 1862, its capital being already to too small for its proper business, it commenced underwriting; 1865 discovered that its marine insurance business checked by its inappropriate name. Directors proposed to change title, remodel its constitution, obtain larger capital, und thus „Accidental and Marine Insurance Co.“ formed. Prospectus proposed to raise capital of 2 Mill. £, 80,000 shares, £25 eaof each, of which £20,000 were to be issued at first. At the head of the directors Stephen Cave (firm: Prescott, Grote, Cave et Co, the bankers, of Threadneedle street); Alfred Smee, F.R.S., Edward Solly F.R.S., und 2 others, as chairmen und directors. Then follow Tabor (described as a director of the Imperial Bank) und two others, described as chairmen und directors of Gresham Life Assurance Society. Next Frederick Doulton, M.P., member of the Metropolitan Board von Works, G. Smith und J. C. Tollemache Sinclair, declared recently by Disraeli (at Edinburgh) as his „most intimate and particular friend“. Bankers of the New Co. London and County Bank, its bankers Mullens, Marshall et Co, the Gvt. Bankers. Array of Names und Guarantees of Respectability. By the terms of the amalgamation the new corporation acquired the business of the Accidental Death Co by the allotment to the shareholders in that Co. of 10,000 shares in the new Co., the latter taking all the assets und liabilities including considerable amount of debenture debt of the former Co. Public took only 4,752 shares, so that altogether (mit den above 10,000) 14,752 shares actually issued out of the £40,000 to be issued. This happened in July 1865. Da aber die Directors 1 Mill. Capital |74 berechnen to be raised by subscribed capital of £40,000 shares, how could they attempt to carry it on with less than 15,000 shares, without that capital? 16. Oct. 1866 it became clear that they had lamentably failed. On that day the Co. passed into the Windingup Court. The charges now made against the directors refer to certain dealings und transactions with the shares of the Co. in the interval between July, 1865 und October 1866.

Co. has many creditors at Liverpool; diese appointed Committee of Investigation, of which A. B. Forward appointed chairman. In Report of Forward’s Statement: „On or about 16 March 1866, 6 members of the board of directors transferred 21,713 shares, standing in their respective names, from themselves to various persons, but principally to a mere clerk of the Co., leaving each of those directors the holder of 250 shares only. On the 21st of the same month (March), about 5 days after the last-mentioned shares had been so transferred, the Co. made a call of £5 per share.“ „On the 3d October (’66) the directors held a meeting at which 4 out of those 6 directors were present, and they forfeited, for the benefit of the company, the shares above referred to, in respect of which the call had not been paid. The total number of shares forfeited was 5,014, which included the shares before referred to as having been transferred by the six directors.“ „Prior to this meeting (on 3d Oct.) other shares had been transferred which were likewise forfeited; and out out of the 5,014 shares so forfeited 3,213 were shares standing in the name of the clerk of the Co before referred to.“ „On 16. Oct. (’66) the Co. passed into liquidation.[“] „Apart from the shares so forfeited, 3,353 other shares had been transferred from time to time, within 12 months prior to the winding up of the Co, the larger proportion being transfers from the directors and officials of the Co, and upon the greater portion of which the calls yet remain unpaid.“ The outstanding liabilities on these shares, which were improperly forfeited, und those transferred within 12 months more than £100,000. The Committee urged the liquidators to take steps against these parties, but liquidators object, except they be provided with funds for that purpose, because „they are advised“, they say, that „whatever liability attached to these shareholders in respect to these transactions would only be applicable to debts contracted prior to and at the dates of the respective transfers“. The fact that those assets would be applicable to the debts of a sanction of the creditors only, does, jedoch, not concern the liquidators. Besides, nearly the whole of those transactions took place within, or nearly within, 12 months of the date of the winding up order. Bei „legal frauds“ ausserdem date gleichgültig. Who are the 6 directors implicated, who the 5 not implicated?



Aus:
The Money Market Review, 16. November 1867. S. 504/505.
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Railway Finance and its mysteries. (Money Market Review 16 Nov. ’67)

Whitehead und Coles have just put forth statement of figures relating to 23 British Railways, chief part of our railway system, weil at midsummer last ihr aggregate Capital 365 Millions.

Ordinary Stock: 158 Millions. Preference Stock ⦗viz. debenture bond und stocks, guaranteed stock, Preference Stock⦘ 206 Millions.

During year ending last midsummer, the 23 Railway Cos spent nearly additional Capital of 28 Millions, 20% upon ordinary capital possessing no priority of claims upon Revenue. Nun Question: if this 20% upon the ordinary capital had not been raised und charged to Capital, would there be any dividend? Open Capital Account true source of the mystery.

Aus:
The Money Market Review, 23. November 1867. S. 531.
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B.o.E. Money Market Review 23 Nov. ’67

Demand for Gold Export lately made itself felt. Culminating point 18 Sept. 67: £24,498,447; this is £2,266,309 more than in any former plethora. Since Sept. 18 Abnahme of £2,262,219. On 18 Sept. Active Circulation £23,706,425; is now £23,899,915, increase of £193,420. Aber Total Reserve at the corresponding dates £15,792,002 und £13,336,313 resp., also decline of £2,455,709. Drain, as invariably the case, entirely upon the Reserves of Banking Department. B.o.E., as discounter, has for a long time withdrawn from the Market.

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The Money Market Review, 23. November 1867. S. 531/532.
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The Panic and its Extent. 23 Nov. ’67

What greatly operated to produce the Panic was the imitation from France of the Credit Mobilier System, and the perversion of Banking which ensued. Trafficking in Lloyd’s Bonds und debentures. A Lloyd’s Bonds, secured by the acceptance of a Contractor, no mercantile bill. Banks who held them, could not realise their depreciated bonds, and whatever they could sell they had to hold in reserve to meet the demands upon them consequent upon the suspicions to which they were subjected. Legitimate banking largely departed from by the banks connected mit foreign und colonial business, engaging directly and indirectly in mercantile operations, or fostering those of their directors und relatives. The mischiefs of crisis aggravated und its evil results propagated by the Bank Act. The panic of 1866 a noncommercial panic, brought about by the diversion from commerce of Bank funds. There was not the old plea about the Exchanges. How is it we have heard nothing for some time of the old recipe for winding up the Exchanges? Indeed, all the accustomed and consecrated Political Economy is out of gear just now; but it will be set going again.

One part of the measure of our loss in such an epoch the loss of labour to an enormous amount, at least of half million men in last year … Age of enlarged competition; China, India, Japan, containing perhaps half the population of globe, thrown open und new countries peopled on the shores of the Pacific. Enormous stimulus by railway, steam etc communication.|

75

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The Money Market Review, 30. November 1867. S. 559.
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Railway Dividends. Parliamentary Return down to 1865. Now issued. Money Market Review. 30 Nov. 67.

Now shown that the rates of dividend paid upon railway shares in 1865 were simply delusive. Nach dem Return Railway Capital Ende 1865, 4551/2 Mill. Aber Lloyds Bonds nicht included, sicher 50 Mill. more. Since that time, at the smallest estimate, 50 or 60 Mill. more spent, so bis jezt cost der Gr. Brit. und Ireland Railways to £550,000,000; wahrscheinlich mehr. Von den 4551/2 Millions said to have been spent at 31st Oct. 1865 2191/2 „Ordinary Capital“, i.e. possessing no priority over the remainder; 98 Millions in form of debenture bonds (terminable debentures, redeemable at fixed periods), debenture stock (funded debentures, only redeemable durch purchases on the Stock Exchange) diese 14 Millions stated. Next in order preference stock to 124 millions. Thus the sum total is made up, not including Lloyd’s Bonds und many millions in addition due to bankers, moneylenders, contractors, lawyer etc. Such state of the case nearly 2 years ago.



Aus:
The Money Market Review, 30. November 1867. S. 562.
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Speculation in Railway Shares. Money Market Review 30 Nov. ’66 ’67.

A buyer or holder in stock with real faith in its value, oft, ohne speculator zu sein, will take advantage of the backwardation offered by „Bears“. On the other hand, if it sought to sustain the price against the ordinary course of the market, artificial scarcity created by taking up stock in bankers’ names.



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The Money Market Review, 30. November 1867. S. 562/563.
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Great Eastern Railway. Director against Director. Money Market Review 30 Nov. ’66.  Zusatz von Marx.
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(Internecine War)

The Great Eastern quarrel is becoming quite sensational. Auf meeting (shareholders) 22 Nov. ’67 for the purpose of demanding the resignation of those members of the Board, who had not yet offered to resign unconditionally und for nomination of new Board. Resolution passed reducing the directors to 11, and ejecting from existing Board 4 of the Directors. Chairman des Meeting was Mr. Turner. Another Resolution passed: continuing the powers of the Committee of shareholders recently appointed, and giving that Committee authority to accept any resignation they may think proper, and apply to Parliament for powers to reconstruct the Board of Directors in what way they pleased. Major Jervis, whose ejectment is suggested and enforced, one of the dissentient directors has published a letter: that he had declined to sign a circular for making Watkin chairman of the reconstituted board, as Watkin’s time fully employed; that now intended to keep the present chairman in office, though proved incompetent; that the solicitor is not to be removed, obgleich „severely censured by the Chairman in the Dunmow transaction“. Certain Directors who had ostensibly resigned, had done so „on the understanding to be re-elected“ und „some who signed the late circular, protected themselves by a legal document against their own signatures“. Colonel Palmer, another dissentient Director, declines to relinquish his seat into the „hands of a packed committee“ one member of which is the present „chairman’s (Turner’s) hatter at Leads Leeds “. „Certain members“, he says, „of the board of directors of the Gr. Eastern Railway obtained in 1865 the position they now occupy by effrontery, intrigue, and imposition, making use of proxies surreptitiously obtained from a portion of the owners of 14 Mill. £. Stock, to whom they applied at the expense of you, the shareholders; and who are endeavouring now, by the same course, upon the plea that it is necessary that 1 Mill. £. Stock should be represented at the meeting, their real object being to maintain their pay and power.“ Josselyn, another director refusing to resign his seat, states: the Committee nominated on 8 Nov. was selected at a private meeting of a few shareholders at Manchester „with whom the present Chairman, Mr. Turner, was in communication“. Mr. Goodson, one of the remaining dissentient directors, is a director of 19 other Cos.



Aus:
The Money Market Review, 7. Dezember 1867. S. 589. Marx fasst die Angaben selbst zu einer Tabelle zusammen.
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Board of Trade Returns. Dec. 7 ’67.

Imports. Month of September: 1865: 213/4 Millions £ 1866: 181/2 Millions £ 1867: 201/2 Millions. £ (Computed or Real Value)
9 Months ending 30 Sept: 137 174 162
9 Months Sept. Wheat 6 9 17
Cotton 36 63 over 44 Mill. £
Imports ohne Wheat und Cotton: 95 102 101
Im September ’67 grössre Imports; hence withdrawal of gold from B.o.E.
Exports. October. 1865: £151/2 Mill. 1866: 17 151/2 Mill. £
10 Months ending 31 Oct. 135 159 153 (dießes declared value by the Exporters
Aus:
The Money Market Review, 14. Dezember 1867. S. 615/616.
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Railway Accounts. (14 Dec. ’67 Money Market Review)

 Zusammenfassung von Marx.
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Times macht als wenn Shareholders in Railway Cos had been altogether duped and misled.
Fact: sometimes one is willing to be duped when deception accords with one’s pockets and one’s interests, and this has been pretty much case mit Railway Shareholders. Shut their eyes to „principles of accounting“. The cooked accounts have given dividends und dividends have given market value. The idea of railway Co. not being able to raise capital was considered out of question. But panic of 1866. London, Chatham und Dover led the way to ruin, and could pay nobody. Then came Great Eastern , North British und Brighton and no one knows where it is to stop. False Reports may damage a Bank, as everyone knows, that banks owe at all times more than they can pay at a months notice. All the „Bears“ in England could not damage a railway permanently; if they sell stock they do not possess, they must buy it back again.|

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The Money Market Review, 14. Dezember 1867. S. 619.
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Cotton Price. (Money Market Review 14 Dec. 1867.[)]

12 months ago middling Orleans over 1s. 3d., now 8d. per lb. Decline in 12 months of nearly 1/2.

Computed Stock in London und Liverpool December: 1866: 720,000 bales. 1867 about 576,000. In Europe same dates ending November: 1866: 918,000. 1867 bls 918,000 654,000 und 1865 bls 456,000

Daher decline of  Gemeint ist der Baumwollpreis.
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cotton
nicht of the absolute quantity of supply erklärlich, aber Manchester is consuming much less cotton than 12 months ago. Consumer is becoming choked mit cotton manufacture.



Aus:
The Money Market Review, 21. Dezember 1867. S. 643.
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Railway. Wear and Tear. (Money Market Review 21. ’67)

 Von Marx übernommen in Manuskript II zum zweiten Buch des „Kapital“ (MEGA² II/11. S. 106.36–107.9).
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Nach Paper recently read by R. P. Williams, at Institution of Civil Engineers, „On the Maintenance and Renewal of Permanent Way“, the average cost p. mile p.a. of maintenance of way and works, and of station, has varied, for a period of years, wie folgt: London und Northwestern has charged to its Revenue Account for this special purpose £370 p. mile p.a., Northeastern £206, Midland 225, London und South Western 257, Great Northern 310, Lancashire et Yorkshire 377, the South Eastern 263, Brighton 266 und Sheffield 200. Dieß hauptsächlich difference of „Account“. The smaller charge is adopted because its adoption is necessary for a good dividend and the larger charge is put forward because it can be supported by reason of revenue being superior.

 Von Marx übernommen in Manuskript II zum zweiten Buch des „Kapital“ (MEGA² II/11. S. 107.9–14).
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The cost of maintaining the road does not depend so much upon the wear and tear of the traffic passing over it, as upon the quantity of wood, iron, and bricks, and mortar exposed to the atmosphere. A month of severe winter will do more damage to the road of a railway than a year’s traffick.



Aus:
The Money Market Review, 28. Dezember 1867. S. 672.
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Railway Reform. – Uniformity of Railway Accounts and Gvt Audit. (Money Market Review 28 Dec. 1867.)

Losses of the public have been enormous. But lately Caledonian Stock selling at £115, now only £71. Brighton Stock fell with rapidity von £120 to £50, the price at which it is now quoted. Shareholders deceived and heavily mulcted whilst the directors were frittering away their property, and the auditors – the humble servants of the directors – were looking on mit subservient humility. We must have a uniform system of exhibiting the Results of the Railway Accounts; halfyearly accounts und balance sheets subjected to searching judgment of auditors appointed by, and directly and solely responsible to the Gvt of the country. Present Accounts framed to conceal as much as possible, and to reveal as little as possible, and it has been found impossible to prevail upon directors or auditors to give any better. Daher nöthig daß some general form authoritatively settled und uniformly enforced in all cases by the Legislature.



Inhalt:

  • Termin und Wohnadresse
  • 1868.
  • Chemie.
  • Auszüge aus The Money Market Review, 19. Mai 1866 bis 28. Dezember 1867
  • Standard 4 December 1868
  • Register.