January 18, ’68.

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The Money Market Review, 18. Januar 1868. S. 59/60
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Causes of Present Commercial Depression.

Depression in industry, falling off in Exports and Imports and in the Revenue, enormous accumulation of unused gold in B.o.E., large proportion of people only partially employed, or unable to earn an income adequate to meet their expenditure. … Distrust of Joint Stock Cos. und want of confidence in Railway Directors one of the reasons. Aber Hauptsache: Falsch that the losses sustained by certain members of the community have been the gains of other members, and, that, therefore, the public in its totality has sustained no loss. But the difference between the gains of one class and the losses of the other has been enormous.

Those losses have been the natural result of excesses which prevailed during the 2 or 3 years of enterprise and speculation which immediately preceded the panic of 1866. During that period an immense amount of property so called – i.e. property which was nominally and apparently real, but in fact fictitious – was created, and bought and sold according to its nominal value. A joint-stock Co. put forth its prospectus, proposing to raise a nominal capital of 1 Mill. St., on which one 10th, or £100,000 was to be paid. The one million being subscribed, and the £100,000 paid, the shares rose to a premium, and the value of the £100,000 became £500,000, and at that value £500,000 of hard cash, let us say, was invested in them. The purchasers or owners believed that they were in actual possession of bona fide property to that amount, and, on the faith of that assurance, they bought and sold other property, and entered into other contracts and engagements, and launched out, and lived, and consumed, and expended accordingly. But when the panic came the £400,000 which had been created in the shape of premium gradually melted away. As the depression resulting from the panic continued, the £100,000, the amount originally paid also disappeared. The whole became worth nothing at all. After a time this not the whole loss. The Co. being in the winding up court, there were numerous debts to be paid, and the calls of the liquidators to meet. These are eating into and consuming whatever property the hapless holders of the shares had reserved to themselves. They have been compelled to abandon or withdraw from the contracts they had entered into on the faith of this property, so called, and to curtail their expenditure, and to lessen their business transactions, if not utterly to abandon them, in order that they may have the means to meet the calls. This occurred not in one but in 100 Cos. The number of traders, investors, and other individuals thus involved and impoverished many thousands. The number of those who have become indirectly compromised in their failure must be greater still. The share property of those persons entirely vanished. Nun kam hinzu 10% discount enforced during 3 months after the Panic. Impossible to estimate the loss this inflicted. Hence the general distrust. No manufacturer or merchant or trader can be certain that a man with whom he deals has not been seriously „hit“ in some Co., or may not be seriously compromised by his transactions with somebody who has been so „hit“; and every one is therefore suspicious and distrustful of those with whom he may come into commercial contact.

The melancholy exposures of the mismanagement of railway boards have of course enormously added to the evil, though they had perhaps not much to do with it originally. Losses der holders of ordinary stock in 1867 zwischen 15 und 17 Mill. St., and the losses upon the whole of the railway stock would probably be at least double that amount. All these things act or react with more or less severity upon ever widening circles. The halfyearly dividends, upon due receipt of which numbers of families were mainly, or, perhaps, wholly dependent for subsistence, most materially reduced or vanished altogether. In all such cases the friends of such families must have become sufferers with them. Shares, bonds, and other securities have been unsaleable, or saleable only at a fearful sacrifice; and, in most cases where that sacrifice, from urgent necessity, has been submitted to, the produce of the sales by the necessity which compelled the sale. The money in those cases has not come upon the market for re-investment, for, if not so absorbed and consumed, it would rather seek safety and comparative unproductiveness in the banks. Hence one source of the enormous accumulations of money in the hands of bankers. Distrust, want of confidence, sends it there and keeps it there. All classes made directly or indirectly partakers in these losses. Everybody has been „pulling up“, reducing his establishment, or economising his expenditure, from want or prudence. Equivocal state of politics in Europe, and consequently unsettled state of commerce all over the Continent, as well as the not satisfactory aspect of things in America, has something to do with the prolongation of this condition of trade, but not much, in comparison with the principal causes. We have enormous accumulations of money in banks, because merchants and traders have no adequate amount of legitimate trade in which to employ it. Commerce contracted in its operations, trade dull, demand slack, credit at a low ebb, confidence checked, because such large numbers of our population reduced and impoverished by enormous losses, which, affecting in the first instance only particular classes, have now in natural course of things, extended to and involved the whole community.

Railway Profits. Delusive Government figures.  Zusatz von Marx.
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(Competition of Railways)

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The Money Market Review, 18. Januar 1868. S. 61.
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Nach supplementary statement about railways recently published by Board of Trade, „ordinary capital“ paid up at end of 1865 in England und Wales, in round numbers, 187 Mill., in Scotland over 8 Mill., in Ireland 14 Mill. Total of ordinary capital, possessing no priority, thus 2191/2 Mill. Nach diesem Parliamentary Return the average rates of dividend upon this unguaranteed capital were, in 1865, in England und Wales over 51/4%, in Scotland 43/4, in Ireland 31/2%, thus making average nearly 51/4%. Now this quite delusive. In 1865, when these figures were rendered to the Board of Trade, the whole thing was a fiction from beginning to end.

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The Money Market Review, 18. Januar 1868. S. 61/62.
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The competition encouraged by Parliament has had this effect that it has brought many of our railways to the merge verge of bankruptcy, and now the only method to maintain the public service, is to cast aside the theory, or ruin the railways.|

23

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The Money Market Review, 18. Januar 1868. S. 61.
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Joint Stock Banks Profits. Banking Profits und Rate of Discount.

Reports issued during present week. Except London und Westminster Bank, considerable falling off in amount of profits for past 6 months, as compared with the 6 months ending June last.

Auch profits of Lond. und Westm. vermindert, vgl. mit 1866. In 1866 its net profits £463,685, in 1867 £293,712, the decline £169,973. Für die 3 Banks (London und Westminster, London Joint Stock Bank und Union Bank net profits in 1866: £983,046, in 1867: £669,629; difference = £313,417, equal to nearly 1/3. Jedoch die average B.o.E. rate of discount in 1866: £6. 16s. 71/2d. und in 1867: £2. 10s. 81/2d. Thus banking profits, although much affected, do not diminish in an equal proportion to the fall in the value of money.

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The Money Market Review, 18. Januar 1868. S. 64.
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U. States Currency.

Washington Jan. 16. Senate passed the Bill repealing Mr. MacCulloch’s authority to contract the currency.



Inhalt:

  • Inhaltsverzeichnis von Friedrich Engels
  • 1869 I Heft
  • Money Market. 1868.
  • Money Market Review. Jahrgang 1868.
  • The Economist. Jahrgang 1868. Nachträge
    • The Economist. Jahrgang 1868.
    • Inhaltsregister für 1868 Jahrgang. („Money Market Review“ und „Economist“.)
    • Kommentar zu George Joachim Goschen
      • George J. Goschen: The Theory of the Foreign Exchange. 7th edit. London 1866.
      • Friedrich Ernst Feller, Carl Gustav Odermann: Das Ganze der kaufmännischen Arithmetik
      • Inhalt.