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Title: Heft „1869 I Heft“. II. Money Market Review 1868, Januar–März
Description: Marx’ Exzerpte aus der „Money Market Review“ vom 4. Januar bis 7. März 1868, im „1869 I Heft“.
Author: Karl Marx
Date: 1869
URL: https://marxismo.school/archivo/marx-engels/originales/1869%20Heft%20%E2%80%9E1869%20I%20Heft%E2%80%9C.%20II.%20Money%20Market%20Review%201868%2C%20Januar%E2%80%93M%C3%A4rz
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*Nach der Handschrift, MEGAdigital (MEGA² IV/19).[^lic] [Traducción al español](https://marxismo.school/archivo/marx-engels/1869%20Cuaderno%20%C2%AB1869%20I%20Heft%C2%BB.%20II.%20La%20Money%20Market%20Review%20de%201868%2C%20enero-marzo)*

## Money Market Review. Jahrgang 1868.

### January 4, 1868.

#### The Year 1867 in its Commercial and Financial Aspect.

Most prominent amongst the disasters of 1867: the *breakdown of the system of direction of joint stock Cos*. Most conspicuous this *in railways*. First *London, Chatham and Dover Co* ; dann *London*, *Brighton*, and *South Coast Railway* ; the embarrassments of that Co. increased gloom and depression in railway market during whole of April. Then followed disclosure of similar breakdown, from the like causes, of *North Brit. Co* ; the open calling in question of the soundness of the *Caledonian* ; the urgent needs and equivocal expedients of the *Great Western Co* . The cumulative effect of these successive exposures has been most disastrous upon railway property. Total Depreciation of *14 Mill. £ on* the ordinary stocks of those railways alone. That enormous sum does not represent ½ the total amount of loss sustained by the holders of railway stocks and shares. The whole loss mainly due to the unskilful, injudicious and reckless mismanagement of the resp. boards of directors.

*Money market:* On *1st Jan. 1867* amount of bullion in Bank o. E. £19,274,859, in *Bank o. F.* £28,580,000; minimum rate of discount in England 3½, in France 3%. On *7 February* B.o.E. rate reduced von 3½ to 3%, on *30. May* to 2½, on *25. July* to 2%, at which it continued for the remainder of the year. On *18 Sept.* bullion in B.o.E. £24,493,447, highest point ever reached, reduced to £21,941,047 on *20 December*, whilst £40,600,000 on that day treasure of B. o. France, highest amount that Bank ever held.

With such plethora of money, for which no profitable use to be found in commerce, *Foreign Gvt Loans*, aber nicht so viel zu erwarten (dieß erst 1868); nämlich: *January 1867*, at 81½ *Chilian Loan* of 2 Mill. £ in 6% Stock. (17 mill. £ applications for that loan) *February:* *Queensland loan* of £550,000 in 6% Debentures at 81, and the *Danubian Loan* of £1,264,420 at 71. In *March* loan of £250,000 sought on Debentures of *Ceylon Gvt.* at 102, but only £90,000 taken, ab *30 November* £100,000 subscribed at £108. 13s. 6d. In *May* Gvt. of *New South Wales* loan of £832,000, subscribed at 85½, has since shown profit of about 13% to the subscribers. *June:* loan of 2 Mill. £ in 5 P.Ct. guaranteed Bonds of the Russian Orel and Vitebsk Railway , *few subscriptions*. *June*, ditto, new *Chilian loan*, at 7%, taken at 89¼, of £1,120,920. In *August* Russian 4% Railway loan of £12 Mill., very few subscriptions. In *November*, *Egyptian* 9% Loan for 2,009,200 at 90; and a *New Zealand* 6% loan for £470,000, subscribed at 104¼. Finally, in *December*, Nova Scotia 6% Bonds for £225,900 subscribed at par; a South Australian Gvt. 6% loan on Bonds for £140,500, at and above £107; and *Portugese* 3% Loan of 5,500,000£, at 38½, of which £3,750,000 offered for subscription.

*Trade and Manufacturing Industry* in a depressed and comparatively profitless state throughout the year.

| Exports for first 11. months: | 1865: | £150,832,344. | 1866: | 173,913,222. | 1867: | 167,931,378. | Decr. nearly 6 mill. as compared mit 1866. |
|---|---|---|---|---|---|---|---|
| Imports for first 10 months: |  | £160,506,818 |  | 193,699,380 |  | 181,370,314, | falling off of about 12 mill. compared mit 1866. |

Revenue Returns show decrease of £800,000 for the quarter (last quarter of 1867)

#### Commercial Morality.

*Edward Greenland* , set at liberty by Hardy, absconded to Genoa, refused to come and give evidence, to further the ends of justice, in regard to transactions of large amount etc.

*Wilkinson* , of Joint Stock Discount Co, rightly convicted; released upon extraordinary memorial got up and signed by many of the leading bankers and merchants of the City, countenanced by *Times*, now asking in dolorous accents: „What is to be done to resuscitate, not commercial credit, but commercial morality?“

#### B. o. England Rate of Discount.

| 6 months ending June 30. | 1867: | £3, 0, 3 | against 1866: | £7. 17. 2 |
|---|---|---|---|---|
| 〃 〃 Dec. 31 |  | 2. 1. 3½ |  | 5. 16. 5 |
| For the year: |  | 2. 10. 8½ |  | 6. 16. 7½ |

#### Stock and Share Market during 1867.

Besonders distinguished durch Panic in railway Stocks und collapse of a false system of accounts wodurch many railway Cos. have long been paying dividends out of capital.

Alterations in the values of the funds during 1867:

| Stock. | Amount outstanding March 31, 1867. | Price 31. Dec. 1866 | Price 31. Dec. 1867 | Rise. | Increase in Value in Amount of Stock. |
|---|---|---|---|---|---|
| 3% Consols. | 397,896,594£. | £90⅛ | 92⅛ | 2 | £7,957,931 |
| 3% Reduced. | 106,857,504 | 89¼ | 92 | 2¾ | 2,938,581 |
| New 3%. | 222,104,705 | 89¼ | 92 | 2¾ | 6,107,879 |
| Total Increase in value. |  |  |  |  | 17,004,391 |

Alterations in Values of Railway Stocks during 1867. (Ordinary or original Stocks of Leading Cos.)

| Railways. | Amount of Ordinary Stock. | Prices, Dec. 31. 1866. | Prices 31 Dec. 1867. | Rise in 1867. | Fall in 1867. | Amount of Depreciation in 1867. |  |
|---|---|---|---|---|---|---|---|
| Bristol and Exeter | £2,022,000 | £88 | £84 | ― | £4 | £80,880 |  |
| Caledonian | 4,734,000 | 124 | 71¾ | ― | 52¼ | 2,473,500 |  |
| Glasgow and Southwestern | 3,132,000 | 118 | 97 | ― | 21 | 657,720 |  |
| Great Eastern | 8,336,000 | 29 | 31½ | 2½ | ― | a) |  |
| Great Northern. Ordinary | 4,468,000 | 120 | 109 | ― | 11 | 491,480 |  |
| Dto. A. | 1,159,000 | 128½ | 109½ | ― | 19 | 220,210 |  |
| Dto. B. | 1,159,000 | 129 | 125 | ― | 4 | 46,360 |  |
| Great Western | 8,181,000 | 54¾ | 44¼ | ― | 10½ | 859,005 |  |
| Lancashire and Yorkshire | 12,694,000 | 129¼ | 123½ | ― | 5¾ | 729,905 |  |
| London, Brighton, and Southcoast | 5,373,000 | 87 | 48½ | ― | 38½ | 2,068,605 |  |
| London, Chatham and Dover | 3,000,000 | 16½ | 18¼ | 1¾ | ― | b) |  |
| London and North Western | 29,830,000 | 121 | 114½ | ― | 6½ | 1,938,950 |  |
| London and South Western | 7,734,000 | 84 | 77 | ― | 7 | 541,380 |  |
| Manchester, Sheffield et Lincoln | 4,393,000 | 53 | 45½ | ― | 7½ | 319,475 |  |
| Metropolitan | 1,800,000 | 127 | 116½ | ― | 10½ | 189,000 |  |
| Do. Extention | 1,900,000 | 107½ | 103½ | ― | 4 | 76,000 |  |
| Midland | 11,356,000 | 123½ | 104 | ― | 19½ | 2,214,420 |  |
| North British | 2,759,000 | 38 | 34½ | ― | 3½ | 96,565 |  |
| North Eastern. Berwick | 7,973,000 | 108½ | 99 | ― | 9½ | 757,435 |  |
| Do. Leeds. | 1,394,000 | 67 | 61 | ― | 6 | 83,640 |  |
| Do. York | 3,220,000 | 101 | 93 | ― | 8½ | 273,700 |  |
| North London | 1,525,000 | 120 | 115 | ― | 5 | 76,250 |  |
| North Staffordshire | 3,230,000 | 74 | 61 | ― | 13 | 419,900 |  |
| South Eastern. | 7,688,000 | 67½ | 67 | ― | ½ | 38,190 |  |
| Total Depreciation. |  |  |  |  |  | £14,652,570 |  |
| Less total increase in value of Grt. Eastern | a) |  |  |  |  | less 208,400 | zusammen less 260,900 |
| Less Total Incr. in Value of Lond. Chath. Dover. | b) |  |  |  |  | less 52,500 |  |
| Resultat: |  |  |  |  |  | £14,391,670 |  |

Dieß nur die closing prices of each year, aber die fluctuations during the year show a much wider range. The actual depreciation on the whole of the lines enumerated £14,391,670 = 10⅓ P.Ct. on the aggregate Capital stated, the total amount of which is £139,010,000.

#### Prices of Foreign and Colonial Loans contracted in 1867.

| Foreign Loans: | Nominal Amount | £:26,894,540. | Contract Value: | £17,406,068. | Difference zw. Nomin. Amount und Contract Prices: | £9,488,000 = 35% issued below par. |
|---|---|---|---|---|---|---|
| Colonial Loans: |  | £2,267,500 |  | £2,139,880. | Difference | £127,620 or equal to 5% below par. |

#### Joint Stock Banks and their Reserve Funds.

Z.B. *London Joint Stock Banks* invest their socalled Reserve Funds in current business. Three of the leading joint stock banks of London have lately issued fresh capital, and taken the opportunity of adding to the reserve funds by charging a premium for the new shares. These premiums are to be paid in the course of the next 14 months. The reserve funds will then have attained, irrespective of any additions in the mean time for interest, viz: *London und Westminster* 1 Mill. £, *London und County* ½ Mill. £, *London Joint-Stock* £417,849. If we add hinzu the „rest“ of the National Bank (£461,593) und of the National Provincial Bank of England (£250,386), die total reserve dieser 5 Banks = £2,629,818.

#### Indian Exchanges. Past and Present.

Nominal Sterling value of the „Company’s Rupee“ in India fixed at 2sh. If below 2s. in exchange for a rupee on India in favour of England, against India; if above 2s. against England, in favour of India. Less than 2s. st. drawn by India on England against India, in favour of England, above 2s. against England, in favour of India.

The fluctuations in Indian Exchanges, and their wide range, in some respects periodical. During prevalence of the southwest monsoon or the rainy season, when little produce exported, and business of all kinds comparatively at a standstill, oft difficult to work a profitable operation in exchange unless durch some indirect or circuitous channel.

All legitimate exchange transactions founded in something to be exchanged, or passing between one place and another, or one country and another. That something must be goods, produce, money, or securities for money invested. Suppose British manufactures wanted in India. Shipper of them may want his money or part of it, without waiting for returns from India. If the goods sent known to be saleable, and have been indented for or ordered by his correspondent on the spot, and the shipper and the party on whom he draws respectable, it is the business of a bank on this side to give *money for bills against such goods*, duly hypothecated or made over to it, either to a proportionate extent of the market value of such goods, at the place where they are to be sold, or, in the case of parties of undoubted responsibility as drawer and drawee, to the full amount of invoice, provided nothing is charged therein but actual cost, freight, insurance, and other expenses. Such transaction not speculative. It involves merely a change of ownership in the goods, until the bills drawn against them are paid on the other side. But often foreign markets over supplied by consignments for which there is no immediate demand. In a similar way produce shipped from India to England, and drawn against the banks becoming the purchasers of the bills, under hypothecation of the produce, with this difference, however, that the bulk of the produce is more on consignment for sale, on shippers account, than in execution of orders. Außer China, Un. Kingdom Hauptmarket for India. The excess of exports from India to Un. Kingd. over and above imports gives rise to larger dealings in commercial bills of exchange than take place from England to India, which, allowing even for the difference of usance, are, generally speaking, negotiated on less favourable terms to the exporter than bills drawn from this side.

At particular seasons money is in demand for remittance to India, more especially silver, to enable the banks to avail themselves of exchange purchases. (Not for last 12 months to any extent.) Large exports of silver to India, partly weil its currency almost exclusively silver rupees ⦗a gold currency now recommended by the Indian Currency Commission⦘, partly weil balance of trade, commercially speaking, largely in favour of India. The price per ounce, English standard, at which bar silver is purchased in London, varies according to demand and the supplies received from the West Indies and South America, or that may be obtainable on the Continent. That price seldom falls below 5s. 0⅜d. per ounce, or exceeds 5s. 1½d. Under exceptional circumstances it may reach 5s. 2d. or 5s. 2½d. per oz., but only under the powerful action of a short supply and great demand, the prevalence of an exchange in India greatly against England, and a scarcity of money in India.

Dieser par 2s. = 1 Rupee selbst illusorisch, aber convenient central or fixed point round which rates of exchange may fluctuate. Two shillings =  1/10£. By cutting off the right hand figure of a sum in rupees, if a cipher, a sum in pounds st. remains. By adding a figure to a sum in pounds st. if a cipher, a sum in rupees is obtained.

The *Scotch* banks, some few years ago, were in the practice of considering the par of exchange on London 21 days’ date. Their drawing rate is now 10 days’ date.

If in exchange dealings with India exorbitant profits are sometimes obtained, the reaction will assuredly be the greater in a contrary direction, and either the producer, merchant, or consumer will be the sufferer. The banks (though there are few left now) have of course a great deal in their power in rendering exchange transactions favourable or unfavourable for themselves. … In proof of the uncertainty attending applications for India Council Bills, at the last bidding on the 4. inst. no allotment was made, the Gvt. having unexpectedly decided upon minimum rate of 2% on Calcutta, and 3% on Bombay, in advance of former rates.

#### Dates. of 1867.

*Jan. 7.* Resuscitation of Agra Bank. *March 25* Strike of Engine drivers on Brighton Railway ; terminated on the following day. *June 19* Broadhead disclosures. *October 2:* Panic on Paris Bourse from apprehension of war, Garibaldian movement at Rome, forced liquidation of Credit Mobilier etc. *25 October:* News of stoppage of the Commercial Bank of Canada. *21 October* Stoppage of *Royal Bank of Liverpool* mit *liabilities* for £1,650,000. *8 November:* Colliery explosion at Rhondda valley, near Cardiff, 178 lives lost.

* * *

### January 11, 1868.

#### Railways und State Control.

*„Economist“* at last reluctantly admits: „sole remedy for the present discredit in the railway market is an independent audit of the accounts of railway Cos by official auditors appointed by the State.“ „The Govt is the only uniform authenticator possible.“ Review bemerkt: the audit ought not to be *optional* (wie Economist will) but *compulsory* upon every Railway Co.

#### Caledonian Railway. (Report of Committ. of Investigation)

Ihre accounts enthalten all frauds possible. Directors gentlemen without business experience. Rely only upon their *officials, 17 of whom were paid salaries in proportion to the dividend declared*. The dividend declared July 1867 was nearly 6% p.a. Then erschien challenging statement, daß sie nur etwas über 4%. Committee now states it (noch zu hoch) etwas unter 3%. In den 2 last financial years expenditure of capital £1,982,765, dividends for same period in ordinary stock £556,726, little more than ¼ of the sum borrowed.

#### Contract Corporation (Lim.) (Chancery in)

Shares 100£. Haben nun ganz to be paid. Shareholders ruined. Mit alle dem erhalten Creditors nur 2s. 6d. in the pound.

#### Insurance Cos. Their Getting up and Winding up (Workingmen beschissen).

Failure of Insurance Cos. very calamitous for those immediately interested in them. Strangely got up and launched. *Illustration:* One concern (Insurance Co) started about 2 years ago, with a capital of £500,000; but only £150,000, or less than ⅓ of this capital, was subscribed for £10,000, payable under the articles of association for promotion money, was, in fact, payable to the *manager*, he having assumed another name for the occasion. This, we suppose, was *money advanced to purchase the directors*, for, by means of this same purchase money the interest of nearly every director in the Co. was made to appear as fully paid up. In 18 months, which was the utmost extent of its career, the Co. did much mischief. First, it became the focus of 5 several amalgamations mit other Cos; and thus acquired nearly 400 shareholders, now liable as contributories, but prepared to contest it. None of the directors in any of these amalgamating concerns took any share or interest in the Co. to which they thus handed over their own shareholders. And these projects, we may presume, had been got up upon the same liberal and philanthropical principles, and pure und disinterested motives, as the Co. in question. In one instance there were special provisions for annuities in favour of such of the directors as were not to receive any of the emoluments to be distributed amongst the members of the new board, and of their widows after them! They were evidently prudent, farseeing man, these directors of the amalgamating Cos! *Zweitens*, the directors of the Co in question had granted insurances to some 150,000 insurers, most of whom were making weekly or monthly payments, in accordance mit den terms of their policies, also workingmen in victims. *Drittens:* They had appointed, before the scheme collapsed, about 700 agents in the U. Kingd., from whom balances appear to be due upwards of £25,000; but all or almost all of these agents repudiate their liability. Court has, therefore, resorted to the extraordinary expedient of appointing a special commission to take evidence in relation to them in London, in Manchester, and 3 other principal towns. Trotzdem, not more than 1% has still been recovered. Sobald dieß Co. nicht länger could go on, shareholders’ meeting held mit view to wind it up voluntarily. Resolution to this effect carried und liquidator appointed – Niemand anders als Mr. Manager who had got up the Co! The object of such winding up and such Liquidator, of course, to avoid the disclosures of an official liquidator! Aber mißlang. Da voluntary liquidator superseded durch official one who makes these preliminary revelations. Up to the time at which he wrote, the official liquidator had received upwards of 1000 claims upon the Co. Amongst these claims one for £1,600 on the *part of the manager* and previous liquidator, und, of this claim, £600 made upon an unpaid cheque on account of salary. Drawn when there were cheques already issued to £1,300 more than the balance at the Co’s bankers. The remainder was for an alleged deposit by the manager, who, through his assignee, claimed £2,600 for unpaid salary. This gent, not content with the £10,000 he obtained for getting up the Co., wants £2,600 for bringing it to ruin in the Winding-up Court. The Co which this manager mismanaged never issued but one balance-sheet, and that was entirely false and fraudulent. Two balance sheets were prepared, „both of the same date, but materially differing in nearly every line; one corresponding with the books, the other corresponding with them in scarcely very single item“; the one was suppressed, the false one issued. During the 18 months’ existence of the Co. this manager managed to bring into use some 850 books, exclusive of those at the 700 agencies, and exclusive of those handed over by the amalgamated Cos, making probably more than 2000 books; and, although some 30 clerks were employed by the Co., their salaries were all in arrear, and there was a gap in the account books for 4 months out of the 18, which can only be filled up from a heap of loose and disorderly papers.

#### Silk in 1867. (Annual Circular of Durant et Co.)

*Total importation* scarcely 10% in excess of 1866, *deliveries* almost identical. Prices for all, but the best classes (always small proportion of the whole) so to 20 to 25 P.Ct. below those of the commencement of the year. Manufacturers have kept their stocks at the lowest possible point, thus escaping serious mischief.

#### Agricultural Implements. 1867. (Annual Circular of Burgess and Key.)

Great increase in the demand for agricultural implements, besonders for reaping and mowing machines. Mainly from the necessity for machinery which the increasing deficiency of agricultural labourers creates, besonders in all that relates to the securing of crops.

* * *

### January 18, ’68.

#### 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. (Competition of Railways)

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 219½ Mill. Nach diesem Parliamentary Return the average rates of dividend upon this unguaranteed capital were, in 1865, in England und Wales over 5¼%, in Scotland 4¾, in Ireland 3½%, thus making average nearly 5¼%. 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.

The competition encouraged by Parliament has had this effect that it has brought many of our railways to the verge of bankruptcy, and now the only method to maintain the public service, is to cast aside the theory, or ruin the railways.

#### 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 ⅓. Jedoch die average B.o.E. rate of discount in 1866: £6. 16s. 7½d. und in 1867: £2. 10s. 8½d. Thus banking profits, although much affected, do not diminish in an equal proportion to the fall in the value of money.

#### U. States Currency.

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

* * *

### 25. January 1868.

#### The Stock and Share Markets during 1867.

Alterations in values of shares of Joint Stock Banks of London in 1867.

|  | Amount paid. | Prices Dec. 31. 1866 | Prices Dec. 31. 1867 | Rise in ’67 | Fall in ’67 | Amount of increased Value. | Amount of Depreciation |
|---|---|---|---|---|---|---|---|
| Alliance (lim.) | £25 | £19 | 14 | ― | 5 | ― | £200,000 |
| B. o. England. | Stock | 249 | 239 | ― | 10 | ― | 1,445,300 |
| City. | 10 | 15 | 12 | ― | 3 | ― | 150,000 |
| Consolidated (Lim.) | 4 | 4¾ | 4¼ | ― | ½ | ― | 75,000 |
| Do. (New) | 2 | ¾ dsct | ¼ pm. | ½ | ― | 25,000 | ― |
| East London. (lim.) | 5 | 3 | 3 | ― | ― | ― | ― |
| Imperial (lim.) | 20 | 26 | 18 | ― | 8 | ― | 160,000 |
| London and County. | 20 | 64 | 59 | ― | 5 | ― | 187,500 |
| London Joint Stock. | 15 | 44 | 36 | ― | 8 | ― | 576,000 |
| London and Westminster | 20 | 97 | 97 | ― | ― | ― | ― |
| National Provincial | 42 | 137 | 135 | ― | 2 | ― | 20,000 |
| Do. (2nd et 3d issues) | 12 | 39 | 38½ | ― | ½ | ― | 27,500 |
| National | 30 | 68 | 62 | ― | 6 | ― | 240,000 |
| Union of London | 15 | 45 | 36½ | ― | 8½ | ― | 680,000 |
| Totals |  |  |  |  |  | £25,000 | £3,771,300 |

The reductions for the year, calculated on the prices of Dec. 31, 1866, are as follows: Imperial Bank 30¾ P.Ct., Alliance 26 P.Ct., City 20 P.C. Union, 19 p.ct., London Joint Stock, 18 P.Ct. National 8¾ PCt. London and County 7¾%.

Alterations in values of Miscellaneous Shares (most important) during 1867.

|  | Amount paid. | Prices 31. Dec. 1866 | Prices 31. Dec. 1867 | Rise during 1867 | Fall during 1867 | Amount of increased value | Amount of Depreciation |
|---|---|---|---|---|---|---|---|
| Anglo-American (Lim.) | £10 | £15¾ | £19½ | £3¾ | ― | £225,000 | £ ― |
| Atlantic Telegraph | Stock | 34½ | 52½ | 18 | ― | 108,000 | ― |
| - - 8 P.C. | Stock | 72½ | 94½ | 22 | ― | 132,000 | ― |
| Credit Foncier of Engl. (Lim.) | 10 | 5 | 3¼ | ― | 1¾ | ― | 350,000 |
| General Credit et Discount (Lim.) | 7½ | 5 | 5⅛ | ⅛ | ― | 25,000 | ― |
| Hudson’s Bay. | 20 | 16⅜ | 14¾ | ― | 1⅝ | ― | 162,500 |
| Internat. Financ. Soc. (lim.) | 5 | 3 | 2¾ | ― | ¼ | ― | 37,500 |
| London Financ. Assurance (lim.) | 30 | 14½ | 7½ | ― | 7 | ― | 280,000 |
| London and Provincial Marine (lim.) | 2 | 2 | 1½ | ― | ½ | ― | 32,250 |
| National Discount CO. (Lim.) | 5 | 14¾ | 11 | ― | 3¾ | ― | 600,000 |
| Ocean Marine Insurance Co. | 5 | 20½ | 20½ | ― | ― | ― | ― |
| Peninsular and Oriental Steam | 50 | 63 | 55 | ― | 8 | ― | 320,000 |
| Thames and Mersey Marine (lim.) | 2 | 5¾ | 4¾ | ― | 1 | ― | 100,000 |
| Universal Marine | 5 | 2 | 4½ | 2½ | ― | 125,000 | ― |
| Royal Mail Steam | 60 | 96½ | 62 | ― | 34½ | ― | 517,500 |
| Totals |  |  |  |  |  | £615,000 | £2,399,750 |

Aggregate Results of movement of principal stocks in 1867.

| Home Funds | improved in the year |  | £17,004,391 |
|---|---|---|---|
| Indian Gvt Securities | dtto |  | 2,490,008 |
| Colonial Bonds etc | dtto |  | 2,887,659 |
| Foreign and Colonial Banks | dtto |  | 202,148 |
| Total improvement |  |  | £22,584,206 |
| Less depreciation in | Engl. Railw. (Ordinary Stock.) | £14,391,670 |  |
|  | London banks | 3,746,300 |  |
|  | Miscellan. Cos. | 1,784,750 |  |
| Total Depreciation |  |  | £19,922,720 |
| Net Improvement |  |  | £2,661,486. |

(Rechnet man Depreciation auf Railways 30 Mill. (andre als ordinary stock *included*), so bleibt grosse Depreciation, selbst von all other not enumerated concerns abgesehn.)

#### Italian Deficits.

| Deficit | in 1864 | £12,640,000 |
|---|---|---|
|  | in 1865 (Estimate) | 8,280,000 |
|  | in 1866 (Estimate) | 4,000,000 |
| At the beginning of 1867 total debt about (estimate) |  | 240,000,000 |
| Add deficit of 1866–67 (ascertained) |  | 32,800,000 |
| Add deficit of 1867–68 (not ascertained) |  | 25,200,000 |
| *Summa* |  | £298,000,000 or about 300 Mill. £. St. at close of 1867. |

Hereupon Victor Emmanuel lays violent hands upon the property of the Church, and decrees that the priest shall pay for the soldier.

#### Midland Railway. (Börsenmogelei und Directors.)

Special meeting last week. Nämlich in December (’67) hatten die directors circular erlassen, worin proposed to raise 5 Mill. St. for completing works etc. Darauf fiel value of stock sehre. But, apart from this, there were circumstances connected with the issue of the circular convening the meeting of last week which aroused grave suspicions of unfairness. The circular was dated 14. December, and did not reach its destination until 3 days after, during which interval heavy sales of stock were made, and the decline in market price was singularly rapid. Hence reasonably inferred that these sales, pressed at that particular moment, indicated that priority of information used by some persons behind the scenes.

#### Caledonian Railway. (Ersatz des Verschleisses.)

Committee of Investigation … Captain *Fitzmaurice* , auditor of the Grt. Northern and Brighton says: „Revenue should be charged for *maintenance of way* at the rate of £300 for quadruple, £200 for double, and £150 for single line *half yearly*. A fixed charge of *not less than 12½ P.Ct. on locomotive engines and tenders*, and *9 P.Ct.* on *carriages and waggons*, calculated on their original cost as they stand in the Co’s books, should be made annually for depreciation, renewals, and repairs.“ Dagegen Caledonian Account keeping: In the last 3 half-years not one penny has been charged to revenue for replacement of 524 engines belonging to the Co. In the last 2 half-years nothing has been charged to revenue for replacement of carriages; but, on the contrary, all that had been so charged to revenue for 4 half-years previously, about £8,000, was written back to the credit of revenue and charged to capital, so that for *6 half-years* nothing whatever is charged to revenue for replacement of carriages. For the last 2 half-years nothing whatever is charged to revenue for renewal of waggons. Meantime, for the 2 years under review, £450,000 is charged to capital for new rolling stock, although the traffic of the line now considerably lower than 2 years ago. The engineer employed to inspect the rolling stock shows that a large number of the engines are nearly done, and that no less than 100 must be replaced out of revenue in the next 5 years. … Besides neglecting *replacement*, the Caledonian kept down even the *repairs* by employing a large proportion of new stock, and throwing the old on easy work … From the experience of the Caledonian and Scottish North-Eastern it is clear that none of its stock lasts even 20 years. Mr. Clark thinks that with very good upholding and an excellence and suitability in the stock of engines which those of the Caledonian do not possess, a maximum of 25 years may be reached. Full allowance, average of 22½ years. Estimate the old materials at ⅕ of the new cost. The total cost of the Caledonian rolling stock stands in its books at 2,600,000£, of which about £1,400,000 value of 524 engines, and £1,200,000 as cost of carriages and waggons. Taking, then, ⅕ from £2,600,000, we have £2,080,000 divided by 22½ as the annual charge for replacements alone, so as to uphold the stock fairly. This gives 92,500£ as annual charge for the renewal, or £185,000 for the 2 years instead of the £7,000 charged by the Caledonian, complacently assumed as correct by the auditors … Graham, the Co’s Engineer, stated that „his instructions were to charge to capital every expenditure in the nature of additions to previously existing works, such as additional siding accommodation, lengthening of station platforms, enlargement of stations, sheds, and workshops, and additional buildings of every description, and that, in charging to capital the cost of such additional works, no deduction was to be made of any previously existing works of which they might be in substitution.“

The only sound way is to charge each year’s revenue with the depreciation necessarily suffered to earn the revenue, whether the amount is actually spent or not. As long as shareholders are „drugged with dividends“ they will sanction everything directors put before them.

#### Banks and Railway Cos.

Exposures in railway affairs have shown that many of the leading banks have been ministering to the profligacy of railway directors. Lent money to railway Cos. which have no parliamentary power to borrow. Every such loan illegal. The Union Bank lent the Brighton Railway Co. thus £500,000. Laing forced the Bank, because its been illegal, into taking preference stocks that rank below all pre-existing preference issues. A Scotch Bank figures amongst the creditors of the Brighton Railway Co. Scotch Bank have encouraged Scotch railways in their course of illegality. They lent the Caledonian £500,000 on floating loans.

#### Overend, Gurney et Co. (lim.) Report of the Liquidators.

Report of Liquidators, showing result of liabilities (outstanding) and assets on 31. Dec. ’67.

Contributories (omitting the members of the late firm, who held 8,323 shares) about *2,219*, holding in the aggregate 91,667 shares. Two calls of £10 each made and the total amount paid by the shareholders so auf 1½ mill. £ St., davon upwards of 1 mill. paid during the past year.

Liabilities at date of suspension on 10. May, 1866 = £18,727,915. On 25. Febr. 1867 reduced by £15,087,259, leaving at that date £3,640,655. The indebtedness, during 1867, further reduced by the realisation of securities etc and dividends paid, by £2,449,800, leaving £1,190,855 only. The calls already made have impoverished and beggared many shareholders and family. First call of £10 p. share paid in full by 1,864 persons, holding 77,658 shares, and is in course of payment by 43 others, holding 3,658 shares. There are 238 other persons, holding 7,752 shares, who cannot pay that call in full, and 116 others, holding 4,174 shares, who will not be able to pay any portion of it. With any additional call, an additional number of the contributories will be pressed out of the paying rank and must fall into the category of the utterly insolvent and ruined. The shareholders already lost all their capital = 1½ mill. £, and contributed besides über 1½ mill. £ as contributories.

#### Capital of Railways in U. Kingd. Board of Trade Return. (für 1866)

Capital authorised to be raised to end of 1866 on railways in U.K. = £466,151,633 on shares, und £154,412,773 by loans. Total = £620,564,406 showing, as compared mit 1865, increase of capital authorised in Session of 1866, of £44,272,743. Total amount paid up on ordinary shares was £228,245,629, being increase of £8,647,433 in 1866. The amount paidup on preferential shares and stock £134,455,098, increase of £10,191,623. Amount raised on *debenture stock* £14,105,594, increase of £310,219, and on *debentures* £105,065,863, increase of £7,244,766, making the total amount of capital paid up to 31 Dec., 1866, £481,872,184, increase of £26,394,041, as compared with amount paid on Dec. 31, 1865.

#### Lawyers and railways

In the 6 years 1861–66 the railway Cos of the U.K. paid £1,378,167 for legal and Parliamentary expenses. It exceeds £19,000 a month.

#### Railway Trains (1866)

In 1866 in England and Wales railway trains run distance of 117,313,154 miles, or 22 Mill. miles more than distance of earth from sun. In 1866 the Scotch railway trains run 17,680,579 miles, und the Irish 7,814,120 miles. Zusammen U.K.: 142,807,853 miles, as compared with 139,527,127 miles in 1866. Increase in 1866 of 3,280,726 miles. Of the 142,807,853 miles in 1866, passenger trains contributed 73,383,356 miles und goods trains 69,424,497 miles, showing an increase in 1866, gegen 1865, of 2,176,538 miles in the distance run by passenger trains, and 1,104,188 miles by goods trains.

#### Causes of Commercial Depression. (Eingesandt von G. Townend . Mincing Lane.)

One of the reasons *excessive competition amongst Joint Stock Banks*. It is part of the business system of these banks in the East and elsewhere to advance to shippers on the security of goods shipped. It was formerly their custom to advance only to the extent of ⅔ of the value, but of late years, and till very recently, so great has been the competition and so eager the anxiety to do business, that advances have been made to the full cost value of the goods. Men of small means, aware that they are trading with the capital of a bank, have thus been induced to make speculative shipments. The demand thus occasioned for the productions of the countries where the banks may be located, has been immense; prices have risen enormously, and production been stimulated accordingly. Wealthy firms have first looked on in astonishment, but gradually become the most eager shippers, the most tenacious holders and ultimately the heaviest sufferers. Consumers on this side, alarmed at the largeness of supplies, purchase only for immediate wants; prices fall considerably; the goods continuously arrive, are sold at a great loss, and after a time – *crisis*.

The fraudulent system for railway construction. A contractor tenders for the construction of a line, for which he is to be paid in the stock of the Co; the tender being based upon the price at which the stock is disposable. In other words, if the contractor finds he can only realise the stock at 70 or 50 P.Ct. discount, he will only do £30 or £50 of work for every £100 stock he receives. Therefore it is evident that stock so issued ceases to be stock except in name; it is in reality a £30 or £50 share; and the public who are deluded into purchasing under the impression that they are buying £100 fully paid up are deceived and ensnared. And this acts as a tax upon the people, as a dividend is expected to be earned upon the apparent stock, and fares are charged accordingly. Besides, the mischievous impression gets abroad that the construction of railways is not remunerative.

Recent disclosures have endlich shown that some Cos. are founded only for the benefit of promoters; and others with entirely fraudulent intentions.

* * *

### 1 February, 1868.

#### Brighton Railway und Manchester, Sheffield, and Lincolnshire Railway Co. (Verschleiß of steamers)

Nach den last reports die new directors *der Brighton R.* stated in plain terms that all till now told about the finance of the Brighton Co. is simply false. Dividends at the rate of 6% p.a. were regularly paid, and we are now told that there never was any dividend at all earned on the ordinary stock. The capital, in the course of a few years has been doubled without any corresponding addition to the net profit.

Was die Manchester, Sheffield etc angeht No depreciation fund has been made for the steamers, which stand in the books at £161,000. Mr. Watkin treats this jauntily as a small matter. Aber: die lowest practical estimate of the cost of maintaining and replacing steamboat property is 15% p.a. The rate allowed by the Gvt to the Peninsular and Oriental Co. is 16%.

#### A Joint Stock Discount Syndicate and its Doings.

Dieß history findet sich in report of some proceedings in the Rolls Court on 25 Jan. ’68. In November, 1865, when shares of *Joint Stock Disc. Co.* fallen to a considerable discount, Wilkinson, the managing director, together with another director and 2 shareholders, Fox and Stafford, and some other parties, formed themselves into a „syndicate“ or club, for the purpose of forcing up the market price of the shares. Plan of the syndicate to „earwig“ some of the largest shareholders in the concern, and induce them to enter into written agreements not to sell any shares without the permission of the syndicate, whilst the syndicate themselves were to *purchase 5,000 shares*, to be apportioned amongst them. Carrying out of this scheme entrusted to Stafford who was to receive £1000 when he should have got the price up to £1 discount, and another £1000 when it should reach £1 premium, and a final sum of £2000 when it should have risen to £2 premium. The syndicate held regular meetings, and kept a minute book of their proceedings. But where was the money to come from to pay the £5000?

It was arranged that the money for the purchases should be provided out of the funds of the Co. The persons concerned in the purchases accepted bills for the amount, and those bills being discounted by Wilkinson, on behalf of the Co., the proceeds were paid away for the shares. In carrying out the scheme it was necessary, to disguise the transaction, that some of the shares should be bought in the names of other persons than those of members of the syndicate. Dazu Fox introduced his friend Gledstanes, to Mr. Stafford, as a person to whom 500 of the shares to be purchased might be transferred. Mr Fox, to satisfy the scruples of Gledstanes, undertook that the shares should not remain in his name, but be at once transferred to a nominee of the Co., and that Gledstanes should not be called upon to pay anything or incur any liability in respect of them. Relying upon this undertaking, Gled. accepted and executed transfers to him from several persons to the number of 500 shares, and at the same time executed transfers of these same shares *in blank*, leaving Stafford to fill in the name of the Co’s nominees. Gled. for some time heard no more of the matter; but, in mean time, shares fell, despite the purchases of the syndicate. This, it is said in the published report, was „in consequence of *sales to the amount of 2000 shares by the chairman of the Co*.“ The shares continuing to fall, the syndicate, on the 27. Jan. 1866, caused the transfers to Gled. to be registered, but did not fill up and register the transfers he had executed in blank, as they had agreed to do; and, consequently, when the Co. failed shortly afterwards, Gled. found upon register and put upon list of contributories. Gled. contended that his name ought to be taken off that list; that the *whole scheme was known to* and *approved by the directors* (was den Chairman nicht verhinderte to sell on his account 2000 shares); that the transfers he had executed to some nominee of the Co. ought to have been registered also. This well between Gled. and his friends of the syndicate; but as between him and the creditors of the Co., the Master of the Rolls „could not see it“. The syndicate purchased some 5000 shares and *„let in“ all the friends* in whose names they caused them to be registered.

#### Steel and Iron Rails (from Circular of W. Bird et Co.)

The scientific demonstration of the worthlessness of iron rails as compared mit steel does not practically affect trade. The former are still ordered largely, even for countries where steel rails could be delivered at little additional cost. Small proportion, do., of Bessemer steel rails purchased by home lines. The high price of steel rails enhances greatly the difficulty in extending their use and introduction, and as now iron rails can be had at £2 to £2. 10s. per ton in exchange for old rails (weight for weight), iron seems likely to maintain its footing for some time. Wrought iron rails are still in existence which have lasted 20 years and upwards, even on main lines, and it is therefore not impossible to make them of good quality. Deteriorations introduced partly due to the wretched quality of the mode of payment proffered in exchange. However bad the iron rails, yet exceeded in many instances where they are now complained of by the paper money which paid for them. The steel trade in its infancy, and some of the new methods of producing first class cheap steel will become more formidable competitors in the rail trade of this country then hitherto the Bessemer.

#### U. States Finances on 1st. January 1868 (Monthly Statement of M.Culloch , Secretary of Treasury)

On 1st Jan. 1868: Debt bearing interest in coin. *Dollars* 1,890,102,091: 80 Cents. Debt bearing interest in paper: $328,491,230. Debt on which interest has ceased $15,871,640. cts 83. Debt without interest $407,851,290. ct.85. Total Debt Jan. 1: $2,642,316,253. ct. 48. During the month of December the debt was increased $2,943,680. 80c., but total debt for Jan. 1, 1867 was $2,675,062,505 c.43, showing reduction, during the past year, of $32,736,251. c.95. McCulloch continues his policy of funding the various obligations of the Gvt. into 5-20’s, and in this way, during december, increased the coin interest debt nearly 50 mill. The total issue of 5-20’s now $1,373,804,750. There was no contraction of currency during December.

### 8 February 1868.

#### Aus R. Dudley Baxter: „National Income of the U. Kingd. 1868.“ (Macmillan et Co)

Nach Baxter folgende dimension of Population:

|  |  | *Persons* |
|---|---|---|
| A) Upper and middle class | 1) With independent incomes. | 2,759,000 |
|  | 2) Those dependent. | 3,859,000 |
| Total |  | 6,618,000 |
| B) Manual labor classes | 1) With independent incomes | 10,961,000 |
|  | 2) Those dependent | 12,130,000 |
| Total |  | 23,091,000 |
| Total Estimated Population: |  | 29,709,000 |

Nach demselben Baxter folgende Vertheilung amongst the various classes of the population:

| Class A. Incomes (Annual) |  | Persons | Amount. £. St. |
|---|---|---|---|
| 1) Great fortunes | £5000 to £50,000 and upwards | 8,048 | £127,692,860 |
| 2) Moderate fortunes | £1000 to £5000 | 47,228 | 84,284,210 |
| 3) Middle incomes | £800 to £1000 | 173,036 | 88,730,580 |
| 4) Small Incomes | a) £100 to £800 | 995,688 | 112,246,350 |
|  | b) under £100 (below income Tax) | 1,535,000 | 83,780,000 |
| Totals: |  | 2,799,000 | £496,734,000 |
| (Manual Labor) Class B. Incomes. (Annual) |  | Persons. | Amount. £. St. |
| 5) Higher skilled labour and manufactures |  | 1,345,044 | £66,352,814 |
| 6) Lower skilled labour and manufactures |  | 5,087,921 | 160,652,345 |
| 7) Agriculture and unskilled labour |  | 4,528,720 | 97,639,481 |
| Totals |  | 10,961,685 | £324,644,640 |
| Grand Totals |  | 13,720,685 | £821,378,640 |

| Average Income for each Person of independent means: | Ireland | Scotland | England |
|---|---|---|---|
|  | £31 | £53 | 68 |
| For each person of the whole estimated population | 14 | 23½ | 32 |

Ireland, remarks der weise Baxter, „presents the singular phenomenon of a *decreasing population* and an *increasing income*“. Its population diminished von 8 mill. in 1841 to 6½ Mill. in 1851 (nearly 20%), and again in 1861 to 5¾ mill. (nearly 12%). Estimated that it has further declined in 1867 by 4%; yet the property charged to income tax has risen from 21 mill. in 1855 to 24½ mill. in 1865, being increase of 16%.

Enormous disproportion of unskilled to skilled labor; 10 millions of Persons against 1,345,044. Ireland für sich genommen ist natürlich disproportion still greater.

In the *East of London*, sagt Baxter: „the dock labourers earn, in full work 15s. a week, but so great is the competition that even in ordinary years they are employed but little more than half their time. During the past year (1867) 5s. a week has been considered tolerably fortunate.“ The Silk weavers have been for years in a chronic state of distress. The men’s nominal wages are 12s. but their real earnings do not average more than 6s. a week. The cabinet makers of the Kingdom are set down as earning 30s. a week, but those at the East End of London, a very numerous body, are in the „slop trade“, and are ground down by the Jew dealers, who own what are called the „slaughter-houses“, in which advantage is taken of the necessities of the small „garret masters“, many of whom are not earning more than 7s. 6d. per week. „None but those who have examined the facts“, sagt Baxter, „can have any idea of the precariousness of employment in our large cities, and of the large proportion of their time in which they are out of work, or of the loss of time in many well paid trades from drinking habits.“ Those drinking habits are a fearful evil, … but, sagt die Money Market Revue , we have a strong impression that much of this evil arises partly from overwork and underfeeding, and partly from the bad ventilation and bad drainage of the localities in which they are compelled to reside.

Do all these figures and details, sagt Money Market Review, furnish us with what they profess to give – namely an account of our national income as a nation? We are bound to say that they do not. „We are“, says *Times* , „all living upon one another, and each income is spent in making up a number of other incomes, and every shilling of each passes through 50 other incomes and contributes to swell them in the course of 1 year.“ To add up all these several incomes into a grand total, and call it the total or gross income of the nation, is merely to foster a delusion. A landowner with £5,000 a year might just as well add up the wages of his steward and household, the rents of his tenantry, and the profits of his tradespeople to make up an income of £20,000 a year. The net actual income of an individual shown by the total amount of his receipts after deducting all the necessary outgoings for keeping up the estate or source of his income. And the net annual income or wealth of a nation shown by the net amount in hand after deducting all the necessary outgoings for the maintenance of its State and the sustenance of its people. Dazu other facts to be considered, returns of exports und imports, amount invested of our surplus income in foreign loans and securities etc.

#### *R. H. Patterson. „Railway Finance.“ (1868)*

In past years the question was raised as to whether the State ought not to buy up the railways as a means of increasing its revenue. Now the question has changed its complexion, and the interference of the State is demanded chiefly in the interest of the railway Cos themselves, as a method of relief from pressing embarrassments.

#### U. States Currency.

*Washington. Feb. 4.* The Anti-Contraction Bill, suspending M’Culloch’s authority to contract the currency, finally agreed by both Houses of Congress, and is now law.

#### Manchester Trade. (Circular of B. Barbour and Brother .)

Month opened with better feeling, continued with few intermissions to its close. Aggregate business very large, not only clearing out stocks, but placing producers, particularly of the better qualities, under contract for the next 2 months. Operations *mainly* in the good adapted for India and China. Shipments thither continue in excess of 1866. These operations entered into, not so much for immediate as in anticipation of future demand for these quarters. Largely of a speculative character, through which prices unduly forced up, affording the speculator a later prospect of resale at a profit. Effect of such transactions to distract our market and to disarrange all ordinary calculations; they force spinners into the Liverpool cotton market to cover their contracts, stimulating an unhealthy action on prices there, at a time when the most reliable accounts from America promise an abundant supply.

* * *

### 15 February, 1868.

#### Saturday Review. Defender of fictitious Accounts and Railway Management.

„The conduct of the directors“, says *Saturday Revue* , „in paying interest on their extension stock out of capital, although it appears to have been illegal, was a prudent and reasonable act.“ Vice Chancellor Wood said that „the *permanent* holders of the stock and shares of the Co. would (his decision against the Metropolitan Co.) derive benefit and advantage from the refusal of the Court to permit the declaration of a doubtful dividend.“ But, says *S. R.* , „it had not proved beneficial to *speculative* holders merely holding on until *doubtful* dividends should enable them to sell at speculative prices.“ *S. R.* wants an „elastic discretion“ der managers, meaning a dishonest discretion. „Justice is blind“, says *S. R.*, „and sometimes she is proud of her blindness; and it is unfortunate for all when matters which require the exercise of this *elastic discretion* are brought under her stern cognizance.“ Was ever anything more rankly immoral thus openly and unblushingly propounded in the pages of a public journal?

#### Railway Accounts. By H. E. Bird. Accountant. London (Effingham Wilson 1868).

389 Cos., of which Board of Trade treats, had raised *489. Mill.* Capital at 30. June 1867. „Lloyds’ Bonds“ not included; *260 Mill. in some form of priority* (davon wieder 127½ mill. in form of debentures, loans and debenture stock, the whole of which is terminable or to be liquidated in full at fixed dates, except the debenture stock, amounting to about 14½ millions, which is permanent or fixed debt.) Remaining 229 Mill. are ordinary stock.

Capital raised by 389 Railway Cos. in Grt. Brit. and Ireland. 30 June ’67.

| 1) Debenture Loans | £.110,558,698 | (Davon £76,591,473 p.a. interest £4. 8s. 9½d.) |
|---|---|---|
| 2) Debenture Stock. | 14,620,656 | Davon: £11,026,565 bore interest 4% or under, £3,594,091 of 5%. |
| 3) Temporary Loans. | 2,480,766 | interest not given. |
| 4) Preference Capital | 132,202,712 | Davon 23½ Mill. at 4%, 30¾ at 4½, 53 at 5, nearly 2 at 5½, rather more than 17 at 6%, nearly 6 mill. at 6½ p.a. |
| 5) Ordinary Capital | 229,197,867 | Average dividend not given. |
| 6) Total | £489,060,699 |  |

Contrast of „priority“ and ordinary capitals as it stood at 30 June 1867. of 24 of the 389 Rail. Cos. referred to.

| *Priority Capital:* £270,585,760. *Ordinary Capital:* 164,250,146. *Total:* £434,835,906. |
|---|

While there was paid in dividends on the „ordinary“ stocks of 16 leading railway Cos. in the 3 half years from 31. Dec. 1865, to 30. June 1867, a sum of £9,431,024, the amount charged to capital during the same 18 months on the lines „in operation“, and exclusive of the new lines and branches, was no less than £10,511,220.

#### Caledonian Railway Meeting (at Glasgow 13 Feb. ’68)

Break up of the directorate and falling foul of each other. No dividends upon the ordinary stock (wie dito bei *Brighton Railway* ) for some time to come. Yet its price stands at 78 – some 5% higher than South Eastern with bona fide dividend of 4%. The price artificial one. No secret that the market has been *„rigged“*. It was the last card of Colonel Salkeld (the chairman) to keep up the price. A new direction must cancel all fictitious purchases; and the sooner this selling, the better. *Price, Holyland, and Waterhouse* , official accountants, say that „if all proper charges to revenue had been made, not only no surplus available for dividends upon the ordinary stock of the Co., but balance on debit side.“

#### The Cotton Trade. Prices.

| Price of Cotton | End of 1866 | End of 1867 |
|---|---|---|
| Middling Orleans | 15⅜d. | 7⅜d. |
| Pernambuco | 15¾ | 7⅜d. |
| Singapore | 12d. | 9⅛d. |
| Fair Dhollera | 12d. | 8⅞d. |
| Bengal | 8⅞d. | 6⅞d. |
| Ejyptian | 20d. | 13⅜d. |

Comparative Import of Raw Cotton into Europe. (Ellison and Haywood.)

|  | 1866 | 1867 | 1868 |
|---|---|---|---|
|  | Actual Bales | Actual Bales | Estimate Bales |
| America | 1,163,000 | 1,226,000 | 1,400,000 |
| Brazil | 407,000 | 437,000 | 540,000 |
| Egypt and Turkey | 200,000 | 198,000 | 220,000 |
| Westindies etc | 112,000 | 129,000 | 130,000 |
| East Indies etc | 1,867,000 | 1,511,000 | 1,300,000 |
| Total. | 3,749,000 | 3,501,000 | 3,590,000 |

Price of middling Orleans at beginning January (68ʼ) 7¼d per lb, end of January 8⅛d. Demand for the moment very large. In the first 4 weeks of this year „taken by trade“ 313,200 bales of cotton against 136,080 in corresponding 4 weeks of 1867; „taken for export“ in first 4 weeks of ’68 bales 74,210 against 37,480 in 1867; „taken for speculation“ 38,050 in ’68 gegen 19,880 in 1867; while the imports of first 4 weeks of ’68 bales 298,565 against 190,676 in 1867. The demand has thus exceeded the supply.

### 22 February 1868.

#### Railways. Paying Weight and Dead Weight. (Wear and Tear.) (Permanent Way.)

On the Metropolitan engines and carriages now in use heavier and more expensive than on any line in U. Kingd. except the North London Railway . Consequent upon this, the permanent way is *more expensive in first cost*, and it *suffers more from wear and tear*. The Metropolitan engines weigh 42 tons: of this weight 32 tons are placed on 4 wheels, being at rate of 16 tons per pair of wheels. On the London and North Western line the most powerful engines weigh considerably *under 30 tons*, which are distributed over 6 wheels, being less than 10 tons per pair of wheels. Again, the Metropolitan passenger carriages weigh 16 tons empty, and they carry 48 first class and 70 second and third class passengers. Taking 2 of the second and third class carriages to 1 of the former, average about 63 passengers to each carriage weighing 16 tons. On the North Western, the Brighton, and some other lines, the passenger carriages weigh about 6 tons and carry 24 first class, 40 second class, and 50 third class passengers. This gives average of 38 passengers to 6 tons of weight, or 6.33 passengers per ton, as compared with 63 passengers to 16 tons, or less than 4 passengers per ton in the carriages of the Metropolitan. Taking the number of passengers actually carried on the Metropolitan, rate of *dead weight* hauled as against *paying load* is as 8 to 1 or 87½ p.c. In other words, 8 tons of dead non-paying load is carried to 1 ton of passenger paying load. If the weight of the engine were included in the calculations, dead-weight equal to 12 tons for every single ton of passengers. A London omnibus, which has to travel over all kinds of roads, bad and good, carries 2 tons of passengers and 1 ton of dead weight. No mechanical reason why, allowing extra weight for increased speed, the proportion of paying to dead weight should not be vastly increased.

Twenty years ago Mr. Samuel, the then engineer of the Eastern Counties Railway, called the attention of the directors to importance of the question involved between dead and paying weight. He demonstrated by actual experiments, carried on for 18 months, that the problem could be solved of assimilating the proportions of dead and paying weights at speeds varying from 30 to 50 miles per hour. He did this by his celebrated light engine, *„the Enfield“*. Was disregarded by the Board. Mechanical invention has gone no further in that direction.

That the dead weight carried by the Metropolitan is destructive to the permanent way is obvious from the facts. The way first laid with iron rails case-hardened. Before long they were so worn that deemed expedient to alter the quality, and steel railways for renewals were obtained from John Brown et Co, Sheffield. These also gave way; other rails for renewals obtained from Ch. Cammell et Co, Sheffield. All this in 5 years, 3 renewals in 5 years over the heaviest portions.

#### Net Profits and Dividends of London Joint Stock Bks., last half year (’67)

*London and Westminster:* *dividend* 32. *Lond. and County* 18. *London Joint Stock* 12½. *Union* 15; *City,* 7. *Alliance* 0. *Lond. et South Western* 5, *Consolidated,* 5, *East London,* 5. *Metropolitan* 5%.

#### Decline in Trade with Un. States.

Nach commercial advices from New York the *imports of dry goods* (comprising all manufactures of wool, cotton, silk, flax) during *January ’68* only £1,020,000 less than ½ amount in corresponding month of 1867, und about £700,000 less than average importation of same month during last 19 years.

* * *

### 29. February 1868.

#### The Caledonian Railway. (Old Hudsons’s Maxim)

Latest Phase: Shareholders so infatuated or demoralised as to entrust to the chairman and old board such a mass of proxies as has overridden the decision of the general meeting, and practically re-delegated the reins of power to them. After this, who can believe for one moment in the genuineness of a Caledonian railway dividend? The accountants (to Committee of Inquiry) set forth dividend as very small; majority of shareholders would like to make them and the market value very high. (per xxx or xxxxx).

Up to this moment there has ruled that famous principle in railway accounting enunciated by old Hudson, when chairman of the Eastern Counties Railway, that „expenses should be made to square with the dividend, and not the dividend with the expenses.“

#### Board of Trade Returns.

A) Imports. Computed Value of Principal Articles.

|  | Month ended Nov. 30. |  |  |
|---|---|---|---|
|  | 1865 | 1866 | 1867 |
| Totals enumerated: | £19,910,403 | £17,841,738 | £15,514,473 |
|  | 11 months ended November 30. |  |  |
| Totals enumerated | £180,417,221 | £211,541,118 | £196,884,787 |
| Deduct. Wheat | 8,573,672 | 11,214,682 | 22,102,884 |
|  | £171,843,549 | £200,326,436 | £174,781,903 |
| Deduct raw cotton | 49,294,092 | 70,665,438 | 48,338,241 |
|  | £122,549,457 | £129,660,998 | £126,443,662 |

B) Exports Declared Value of All Articles of British and Irish Produce.

|  | Month ended December 31 |  |  |
|---|---|---|---|
|  | 1865 | 1866 | 1867 |
| All articles | £15,030,088 | £14,914,563 | £13,252,593 |
|  | 12 months ended December 31 |  |  |
|  | £165,835,725 | £188,917,536 | £181,183,971. |

### 7. March. 1868.

#### Profits of the Bank of England.

|  | Rate of dividend for the half year. |
|---|---|
| Half year ending Sept. 5 1866 | 6½ |
| March 6 1867 | 5½ |
| Sept. 4 1867 | 4½ |
| March 5 1868 | 4 |

#### Board of Trade Returns.

|  | 1865 | 1866 | 1867 |
|---|---|---|---|
| Imports year ended 31. Dec. Computed Value of Articles enumerated: | £219,393,987 | 238,773,192 | 220,862,585 |
| Exports ditto. Declared Value. British und Irish Produce und Manufacture | 165,835,725 | 188,917,536 | 181,183,971 |

Import Trade

|  | Month ended December 31 |  |  |
|---|---|---|---|
|  | 1865 | 1866 | 1867 |
| Totals enumerated | £38,930,967 | 27,174,309 | 23,977,798 |
|  | Year ended December 31. |  |  |
| Totals enumerated | £219,393,987 | 238,773,192 | 220,862,585 |
| Deduct wheat | £9,775,616 | 12,983,090 | 24,985,096 |
|  | £209,618,371 | 225,790,102 | 195,877,489 |
| Deduct raw cotton | 66,032,193 | 77,521,406 | 51,997,766 |
|  | £143,586,178 | 148,268,696 | 143,879,723 |

Raw Cotton Imported

| Quantities cwts: | 1865: | 8,731,949 | 1866: | cwts 12,295,803 | 1867: | cwts: 11,272,651 |
|---|---|---|---|---|---|---|
| Computed value: |  | £66,032,193 |  | £77,521,406 |  | £:51,997,766 |

|  | A) Exports January | B) Imports. | B) Imports December |
|---|---|---|---|
| January 1866 | £14,354,748 | December 1865 | £38,930,067 |
| 1867 | 12,768,842 | 1866 | 27,174,309 |
| 1868 | 12,252,688 | 1867 | 23,977,798. |

#### Railway Finance (Inserted)

If placed to capital (irrationelle Ausgaben), there will be a perpetual reduction of *future dividends* of shareholders (common stock); if charged to revenue, that course would be ruinous to his present income. (Aber die Gegenwart ihm die Hauptsache)

#### Import of Cotton in 1867.

| U. States: | cwt 4,715,733 | First year since 1861 in which cotton Import from U. St. > import from British India. |
|---|---|---|
| British India: | 4,449,259 |  |
| Ejypt | 1,127,541 |  |
| Brazil | 628,761 |  |
| Turkey | 57,024 |  |
| Bahamas und Bermuda | 10,623 |  |
| China | 4,707 |  |
| Mexico | 22 cwts |  |
| Other Countries | 278,981 |  |
| Total | cwt 11,272,651. |  |

Quantity Exported from U. Kingd. in 1867 cwts 3,130,593, leaving 8,142,058 cwt, excess of imports over exports, quantity 4 times exceeded, in 1859, 1860, 1861 und 1866.

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[^lic]: Text nach MEGAdigital (Berlin-Brandenburgische Akademie der Wissenschaften), MEGA² IV/19, Lizenz CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/); der editorische Apparat der MEGA ist nicht wiedergegeben.