Heft „1869 I Heft“. IV. Money Market Review, November–Dezember 1868; Economist 1868, Januar–Mai

Nach der Handschrift, MEGAdigital (MEGA² IV/19).¹ Traducción al español

November 21. 1868.

Money Market. Rise in Bankrate of Discount.

From 2%, fixed on 25 July 1867, raised to 2½% on 19 Nov. 1867. Anlaß dazu: The unprecedented withdrawal of 1 Million £ in gold for shipment to Russia.

A 2% Rate has now existed at 3 different Periods:

Rate of 2% und Dauer derselben.

This 2% rate (25 Jul. 1867 – 19 Nov. 1868) has lasted longer than any other Bankrate since Act of 1844:

Discount Rates since Act of 1844 lasting without interruption for more than One Year:

The higher the rate is carried and the longer it is maintained in that position, the surer reaction to the other extreme, and the longer it must prevail:

Crisis Rates and Reaction and lasting of Reaction Rate.

Vergleichen wir Bank o. England mit Bank o. France this week, so finden wir:

Bank o. England.

Es ist hier Increase des Verleihns von Kapital und Decrease in active Circulation; Notes withdrawn for gold for Export.

Bank of France.

Die Increase der Notes in Circulation der B.o.F. trotz Decrease of Bullion und Decrease des Discount Business, erklärt durch Decrease of Private Deposits und Treasury Balance, as seen by:

U. Kingd. National Income and its Resources.

A.) Customs.

B) Excise Duties or Inland Revenues.

C.) Stamps.

D.) Taxes.

Aggregate Amount of Inland Revenue.

The East India Irrigation and Canal Co.

The alternative: Government takes the Orissa undertaking (see p. 50) oder die shareholders müssen verdammt blechen.

The Indian Gvt. has been forced by public opinion to give a great expansion to the practice of irrigation. As a rule better that the Gvt. should be the direct seller of the water, because it can adapt the price to the charge made for the land in such modes that the cultivator will be obliged to take the water. It was clumsy contrivance that Cos. with unguaranteed capital should first sell the water to the Gvt., and then the Gvt. to the cultivator. In the event of a failure of crops from want of irrigation, the Gvt. thus escaped its responsibilities. The Gvt. policy not always consistent in the matter of the Orissa works. At their commencement, and for some time afterwards, the Co. received the cooperation of the Gvt., which was cordially rendered. But, whether from the growth of conviction that irrigation ought to be the sole work of the Gvt., or from the feelings excited in consequence of the failures in the crops having produced famine, this cooperation began to be given in a perfunctory way, and at the present time it cannot be calculated upon. The East India Irrigation Co. has a right to complain of this change. But, on the other hand, the Gvt. complain of the delay which has occurred in the execution of some of the works undertaken by the Co., and forming part of their whole scheme; because, after all, the ultimate responsibility of disaster from the state of crops falls upon the executive. Before matters arrived to this point (wo Gvt. offers to undertake the whole) the directors reported to the proprietors that the completion of the several sections of the Orissa works would cost £1,500,000. But early in the present month the chief Engineer in India reported that £420,000 must be added to this estimate. The capital of the Co. being £1,000,000, it follows that £920,000 more required before the works undertaken can be completed. Though an area of acres 700,000 would be irrigated by this expenditure, the works could not be completed without the money, and, meanwhile, the call for their completion is urgent, under a sort of pressure impossible to resist. The directors applied to the shareholders to supply new capital, but subscriptions little more than £70,000, the payment of which extended over 4 years, while the balance of unexpended capital in England had been reduced to £33,000. Demonstrated by this fact that further share capital not to be raised.

The Board of Trade Returns and the Trade of the Country. Sept. ’68.

The Board of Trade Returns show improvement in September ’68, as compared with same month ’67 and ’66, but the great bulk of our export trade, consisting chiefly of the staples of Lancashire, is not only not flourishing, but the reverse. It has been so ever since the great fall in values, since the termination of the American war. There has been no continued healthy trade with our Eastern markets since the Indian mutiny. The profits realised during the American war were spasmodic and unnatural, and the immense fortunes then accumulated, have since all been more than lost, and have been succeeded in Lancashire by a period of reverses unknown even during the cotton famine. Estimating all the charges upon shipments to our Eastern markets upon the most economical scale, and they are favoured by the low rates of freights now ruling, the prices obtainable at all the ports show a considerable loss of shipments now made, and there is no experience to show that the present is a less favourable time for ventures than any previous time of this year.

The present position of manufacturers is almost ruinous, as a profit upon production is rendered impossible from the high rates current for the raw material; and so hopeless seems the prospect of relief by a real improvement in the demand that shorttime working is universally admitted to be the only means of bettering their condition, an alternative never necessary in ordinary times, and only resorted to at the last extremity.

Question: If the trade is an unsound one, why are the returns not only kept up, but increased? The answer is: Chiefly for financial purposes. There being no healthy demand for consumption, the new and increased exports are for the purpose of providing for previous engagements falling due. A good portion of the trade is also contributed by producers, who, being unable to find a market for the whole of their production, and being too poor to hold, consign the remainder, upon which they are accommodated with partial advances through the commission agent or intermediate man, who knows that someone must suffer, and provides on the contingency not falling upon himself.

Import of Corn.

The Board of Trade now add to their usual monthly return a table showing the quantity of corn and wheat flower imported into the U. Kingdom between harvest and harvest, viz. in the 12 months, from 1st September to 31st August.

Import of Wheat was:

The Foreign Settlements on the London Stock Exchange.

Twice a month a settlement of the previous fortnight is made upon the Stock Exchange. On those days securities to the nominal value of at least 40 millions are handed about. „Handed about“ is indeed too mild a term to describe the treatment to which, in the pressure of an „account“, the property represented by foreign bonds is subjected. The whole settlement has to be „got through“ before half past 2 in the afternoon. By Stock Exchange law a buyer is bound to pay for all bonds delivered to him up to that time, and when the half-hour has struck the seller can make no further claim for payment during the day.

Money Market Review citirt Pamphlet (1868) eines Stockbroker’s über diesen diabolischen settling day:

„The enormous increase in the number of foreign loans recently negotiated or introduced in this country, and the small denomination of the bonds into which it is the modern practice to divide them, have multiplied the inconvenience and risk attending the present mode of settlement to so great an extent that it is believed no time should be lost in devising an adequate remedy. At present, after the clerks have reduced the account as much as possible in the limited space they have at their disposal, the balances remaining open are settled by delivery from A to B, from B to C, and so on, till the ultimate buyer is reached, so that the same bond frequently passes through 30, 40, or even 50 hands. To prove that this is no exaggeration we have only to look in busy times at the names on the back of a ticket in Consols, or in any of the principal Railways. These will be found frequently with 50 names on them. One result is that transactions, which could probably be adjusted by the passing of cheques to the amount of perhaps 2 or 3 millions £, involve now settlements to the average amount of 13 millions, as the figures of the Clearing House show. This value of 13 millions, however, represents but a portion of the total values passed under the present system; each of the leading jobbers’ office is, in itself, a small clearing house; a large delivery of Turks, f.e., made to him on the one hand, might and is often compensated, by a counter delivery of Italians on the other side. It is impossible to arrive at the amount of stock actually passed on the settling day, but the experience of the writer’s own office shows that the nominal amount of stock passed exceeds, by 3 or 4 ×, the cash balances adjusted.“

The hurry and confusion which attach to this system are therefore due to the fact that all bargains are adjusted between each actual buyer and seller, although the same bonds may have changed ownership many times during the „account“. Common sense would suggest that this cumberous plan might be obviated, as is done in the transfer of registered securities, by placing the original seller and the ultimate buyer in immediate communication. But in the Stock Exchange, as in all other businesses, the credit of individuals differs largely, and the broker who deals readily with one firm in £100,000 stock might be chary of dealing with others in £100. Brokers who transact large operations naturally object, therefore, to forego the security they have in dealing with first class firms, and do not care to accept payment instead from individuals of whose standing they are ignorant. This difficulty might be avoided by adopting the ordinary course of procedure in bill transactions – viz, rendering each endorser personally liable. Such rule once established, the first broker on the Stock Exchange could have no objection to accept the „name“ or „ticket“ of any member, knowing that in case of default of the ultimate buyer, he would have immediate redress from the parties to whom he originally sold, and with whose endorsements he accepted the ticket.

28 November 1868.

The recent Advance in the Money Market.

In Bezug auf diesen lausigen Vorfall giebt die Money Market Review folgende Zusammenstellung:

Bank of England discount

5 December 1868.

East India Irrigation and Canal Co.

Auf meeting der shareholders (London, 28 Nov. ’68) sale of the transfer of the Orissa undertaking to the Indian Gvt. beschlossen (cf. p. 52)

Money Market. Fresh rise in the Bank Discount Rate von 2½ to 3%. (Dec. 3. 1868)

Stets, after a lengthened period of monetary ease, the first movement upwards, particularly when limited to ½%, is insufficient.

1852–53 … 37 weeks of 2% followed by 2½, which, at this time, lasted only for a fortnight, when advance to 3%.

1862 … after 14 weeks of 2% the directors of the Bank moved to 3% at once

1857: Reaction in the value after 10% carried the minimum down to 2½%, for 5 months: then 3½%, for 1 week; then 4½%

1866, at beginning, after 27 weeks of 2½%, rise to 3%, followed in 12 days by further movement to 4%.

After the reaction during the first 6 months of 1865, the advance from 3 to 3½% was succeeded in a week by 4%.

The fact is, that no sooner is the monetary „screw“ turned, than merchants and others under engagements become still more anxious, as a matter of caution, to place themselves in funds. Hence the upward movement receives a further temporary impetus. Ferner: At this time of the year, the tendency of the rates of discount at the present period of the year is always almost towards firmness. Some of the banks help the market up by following the very absurd practice of restricting advances in order to show large reserves in their forthcoming reports. Customers also assist the movement by seeking discounts for the mere purpose of increasing their balances at the close of the year.

Financial Affairs (U. States) (Circular of H. Clews et Co. New York)

Our produce exports continue to fall below those of last year, while our current imports exceed those of that period (1867). The importers have to a very unusual extent deferred their payments, so that remittances for the next few weeks must be heavy, and the more so as 12 Mill. $ to 14 Mill. $ have to be remitted against the coupons of foreign bondholders. Our foreign merchants are extensively „short“ in gold, having sold in anticipation of a decline to follow the elections and the active forwarding of the cotton crop. Advices from Europe indicate the probability of higher rates of interest at the Banks of England and France; which would check the demand for our securities abroad, and tend to attract gold in that direction. It may be owing to that tendency that so few of our bonds are going out in return for the November coupons.

12 December 1868.

Bessemer versus Heaton.

Bessemer attacks Heaton in Money Article of Times of 2nd Dec. On 5 Dec. testing at Kirkaldy’s, when half inch bars of steel made from N. 4 Middlesborough pig stood an average of strain of 53 tons to the □ inch.

19 December 1868.

Shareholders. (Frauds of Directors in voluntary „Windings’ up“.)

During the last 3 or 4 years shareholders in Railway and other Jt. Stock Cos. robbed and defrauded to extent of many Mill. £. St. In a great number of cases the robberies and frauds unequivocal and indubitable. The fleeced victims have been able to discern, in the light of subsequent events, how the frauds were perpetrated and who were the perpetrators. They have not only known how much they have lost, but also who has got it. They have seen many of the persons by whom they have been defrauded suddenly becoming rich, and madly rushing into all sorts of questionable speculations … The money thus transferred from the unfortunate class of shareholders to the more fortunate class of promoters and directors, has been so transferred in too many instances by fraud and falsehood, by deceit and misrepresentation, and the means by which the fraudulent transfer has been effected are equally well known. But where are the laws that define the crimes and award the punishment? where the prosecutors who should enforce the laws? … With regard to the numerous frauds upon Jt. Stock Co. Shareholders which the events of the last 3 years have brought to light, and which involved many 100ds of delinquents, only some 3 or 4 prosecutions have taken place, and only 3 or 4 of the culprits have been convicted, while of those convicted two were speedily released from further deserved punishment by the Queen’s Pardon. Even her Majesty, who never dreams of pardoning a thief or burglar, or common swindler, is made to seem to sympathise with the sufferings of culprits whose crime is swindling and defrauding 100ds or 1000ds of hapless shareholders.

Individual shareholders standing alone are but individual units – helpless and defenceless, as regards any combination that may be formed against them. Promoters and directors know this; and, knowing it, combine together to take advantage of it – and invariably succeed. The Joint Stock Co. shareholder is essentially a selfish animal. … The number of Cos. now undergoing the process of winding up, under the fostering but fatal care of the Court of Chancery – many of the liquidations being in the hands of the very persons who originated the Cos. and conducted them to ruin – imperatively requires that some means should be devised for protecting the unfortunate shareholders against calls and demands which, in too many instances, are both unreasonable and unlawful. In many cases where Cos. are winding up under compulsory orders, the proceedings are being procrastinated and the costs of winding up increased to an enormous and ruinous extent. In other cases which are being wound up „voluntarily“, … frauds of the most outrageous and unmitigated character are being perpetrated by quondam directors, who are now officiating as liquidators. In one recent case, property of the value of £5,000 has been sold and disposed of by the liquidator for £150. In other cases frauds of a similar or varied kind are being perpetrated, without question or hinderance, simply because individual shareholders feel themselves powerless to act alone, or can only act alone at great cost and risk, and have no means of acting in combination with their fellow sufferers. An organised combination of shareholders for their mutual protection now intended. ⦗Meeting deßwegen, Resolutions etc⦘

The Railway Returns of the Board of Trade. (Published end 1868)

Umfaßt 18 Jahre.

Number of miles in Operation.

Heaton’s Iron and Steel.

As one of the points of opposition, asserted that the strength of the iron and steel produced may prove inferior to those produced by other processes, such as Bessemer’s. Facts most decisively contradict this. (d.h. the recent experiments.)

Heaton’s process uses the poorest ores, Bessemer’s only the richest ones. The majority of the ores in the iron bearing districts are poor – that is, they contain phosphorus and sulphur in abundance; and neither puddling nor any mechanical process yet discovered can remove these deteriorating ingredients. The admission of atmospheric air is powerless against them; otherwise Bessemer would have been able to extend his process indefinitely. Chemistry alone supplies the means of neutralising and removing them. The plant needful to carry out Heaton’s process is absolutely inexpensive. The smallest ironmaster may command it; but only the greatest ironmasters can command the capital and appliances requisite for the pneumatic process. 8 Advantages of Heatons system: It deals with cheapest raw material; it produces steel direct from pig iron; the plant is inexpensive; the cost of maintenance of the plant is insignificant; the waste of material in conversion is almost nil; puddling is dispensed with; the process of conversion is simple, rapid and, certain; the results are remarkable for their uniformity. No preceding invention connected with the manufacture has offered such a combination of advantages. … Will strongly tend to revolutionise the iron manufacture.

Collieries in U. Kingd. Insurance.

Existirt bis jezt keine Insurance gegen Collieries’ Accidents. Capital in Collieries 100–150 Mill. £. St. mit net income of £30,000,000, besides giving wages to upwards of 300,000 men.

Times 21. Dec. 1866 Mr. Lonsdale Bradley made propositions, as to Insurance. Hat für Jahre diesen Gegenstand verfolgt. Apparent difficulty to discover a sufficient average against loss, so as to ascertain the exact risks of the Assurers. Prosecuting his inquiries during long period, and carefully examining all the conditions that lead to loss of life and property in coal mines, he ascertained that such a recurrence of accidents prevailed as indicated the operation of a law uniform in its action when spread over a long period. Though apparently capricious and irregular, colliery accidents, when examined over a long period, are found subject to averages exactly as vital [as] statistics are; and, assured of this, they certainly ought to be provided against in the same way. Bradley further discovered, that from all causes there are annually not less than 900 accidents involving the loss of life, and that about 1000 colliers are killed every year. With great labour, but within very small limits of error, the costs of accidents from explosions, fires, fall of roofs, inundations, and breaking of machinery, have also been ascertained. In 1865 there were 3,268 collieries in U. Kingd., employing 307,542 miners, who produced 98,150,587 tons of coal, valued at the pit’s mouth, at £24,537,646. Small premium upon either of these large quantities would be sufficient to produce an income to defray the costs of accidents to property, and to support the widows and children of the miners killed until in situation to provide for themselves. … In collieries, the supervision exercised by an Insurance Co. would be an addition to the means of providing against accidents.

Cotton Trade. (Stokes, Mc Haffie, et Co.) (New York)

With every prospect of free receipts at the ports caused by present high prices, and with a visible supply of cotton, only about 7½ P.Ct. below last year (1867), our prices are 45 P.Ct. above the same date in 1867.

The Currency of Sovereigns and Half Sovereigns in India.

Notification of Financial Department, Simla, October 28, 1868: In modification of the notification of 23 Nov. 1864, vor und after this new notification, sovereigns and half sovereigns coined at any authorised royal mint in England and Australia of current weight shall be received in all Treasuries of British India and its dependencies in payment of sums due to the Gvt., as equivalent of 10 Rupees and 4 Annas, and 5 Rupees and 2 Annas, respectively. They shall, whenever available at any Gvt. treasury, be paid at the same rates to any persons willing to receive them in payment of claims against the Gvt. The gold pieces stated in Sect. 13 of Act 17 of 1835 will also henceforth be received as above according to the values stated in that Act. Gazette of India, Oct. 31.

Nachtrag zu November 14. 1868.

The Troubles of Shareholders in Banking and other Jt. Stock Cos.

Mr. William White, a banker of 40 years standing, has published in one Manchester paper, about this subject. Nach ihm viele Banks „are buying their own shares to keep up the price, as case with Birmingham Banking Co. and Royal Bank of Liverpool .“

The banks which buy up their own shares will generally take care to have them registered in the name of nominees, so that the transaction may not appear upon the register.

Limited banks are required by law to exhibit at their head office a statement of their assets and liabilities according to a prescribed form „or as near thereto as circumstances will permit.“; and some avail themselves of this liberty to vary the form thus as to conceal the amount of their overdrawn accounts by blending them into one item with bills of exchange, or by merely stating the whole of their assets in one sum. In either case the real position of the bank not seen. Uniformity of accounts is as much required in other joint stock banks as in Railway Cos. Sir William Hutt’s bill would have given us this uniformity; but that Bill, instead of being supported by Board of Trade with all the weight of Government, was opposed by that Board, and consequently withdrawn.

The great vice of „Lancashire banking“, White says, „is making large advances to customers on overdrawn accounts, thereby locking up the capital of the banks, and jeopardising their very existence.“ And the auditing of some of the banks accounts seems to be equally lax and perilous. „I have now lying before me“, says White, „the reports of 2 banks, in one of which two of the directors have kindly audited their own accounts; whilst in the other case the balance sheet does not balance by a difference of nearly half a million. Yet in this latter case the auditors certified the balance-sheet as ‚examined and found correct‘, and the report was received and adopted.“ He also mentions two other bank reports „in which the rebate on bills on hand is deducted from the amount of such bills, instead of from profit and loss account.“ Such things could not occur in the midst of a great mercantile community like Lancashire, if the leading members of that community were prompt to expose and denounce them. Even White does not name the banks he denounces. The sickly and sentimental delicacy (!) with which these things are regarded by mercantile men, otherwise men of probity and honour, is a great social evil.

26 December 1868.

Overend, Gurney, et Co. Prosecution of the Directors for Conspiracy to defraud.

Times , Money Article, of 21 Dec. denounces the prosecutor. (Dr. Thom) Calls it „a party movement“, „an attack upon the individuals in whose entire good faith the belief in the City has been so repeatedly expressed and is still so strong“; says that the proceeding „will be viewed with a feeling of reprehensions“, and that in certain eventualities the authors of this proceeding must be prepared for „proportionate censure“. In spätren leaders calls it „an equitable fraud“, kein criminal one. Economist in same strain.

Cotton in U. St.

Average Annual Value of Cotton Produced in South of U. St.

A City of Tents. (Town of Ballarat, Victoria)

18 years ago the spot on which stands the now daily growing City of Ballarat was literally a desert; 10 years ago a city of tents – a host of golddiggers then peopling the former solitude, housed under canvas. Now a town of stately buildings, with a railway station that alone cost £60,000. Theatre, Alfred Hall, churches, chapels, townhalls and other public buildings. It forms the centre of, perhaps, the most productive agricultural district in the colony of Victoria, and the very dust of its streets may be said to have at one time teemed with gold.

From underneath the soil of Ballarat gold to amount of £40,000,000 was extracted. From one little plot, a little over 600 yards in breadth, now situate in the very centre of the town, with several streets crossing it, £750,000 rewarded the diggers’ search. This is going on to the present day, only that shafts have taken the place of „holes“, and expensive machinery been substituted for the pick and washpan of the first explorers. The operations of the various Cos. which have worked on Ballarat ground have had the effect of distinctly marking out the track which the main lead of gold and its various tributaries have taken. In certain directions, indeed, the houses would have spread faster were it not for the almost certainty that gold lies beneath the surface, for which shafts must be sunk and machinery be erected before the space is encumbered with buildings. In a plot of ground on the western side of Ballarat, into which the very main stream of gold is found to run, dipping to a considerable depth, on which operations have been already commenced, it has therefore been decided to mine on a scale hitherto not attempted in the colony of Victoria, so that the gold may be brought to the surface in the shortest possible time, and the ground revert to agricultural or building purpose. Land is too valuable close to Ballarat to be hampered with mining operations longer than is absolutely necessary. This undertaking will require larger instant outlay than the locality can well manage; very early in 1869 John Bull’s Packet will be applied to.

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Fires and Incendiarism. Economist. 11 January. 1868.

The evidence given before the Select Committee on Fire Protection startling. After carefully weighing the evidence presented to it, the committee reports that apparently ⅓ of the fires which occur in England are intentional. … There is such a competition for business among the various offices, that it is better worth their while to pay fraudulent claims than to alienate new insurers. „The sympathy of the jury, and of the Court, is always against the office“, says the Imperial Fire Assurance Office. – Insurance office which prosecute are supposed to do so with an eye to personal advantage – and that the verdict of guilty for which they strive, is in reality a verdict for the amount of the policy. … The assessor to the County Fire Office gives as a list of the classes with whom fires are most frequent: „small shopkeepers on the verge of bankruptcy; foreigners principally of the Hebrew Persuasion, Germans or Poles; the stock of these persons consists principally of dummies or imitation goods made of plaster of Paris; cheesemongers and chandler-shop keepers have half-tubs of butter, sides of bacon, bladders of lard, cheeses; grocers have loaves of sugar, chests of tea, and reams of paper; tobacconists have cigars in bundles; tailors and linendrapers, rolls of cloth made of straw, and parcels filled with sawdust; publicans, wine merchants, and perfumers, the contents of bottles are coloured water.“

The insurance offices remark that whenever one branch of trade is depressed, fires are sure to happen among their votaries.

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January 18. 1868. Mr. Fawcett on „Freetrade in Land.“

All free trade would do for him (the wealthy buyer of land) would be indefinitely to increase the security of his investment, by removing all difficulties about title; by enabling him to grant any kind of lease he pleased, whether wasteful or not; and by facilitating sale whenever he wanted his money, or part of his money, back again. … Land might be raised in price, doubtless would be, but the richest would get, just as in open market they get everything else. The poor might as well compete with them for coals. Even with perfect freetrade, the dealer always prefers „a large order“, and a visibly solvent customer … It is conceivable, that if the labourers desired the land energetically, a class of land pawnbrokers would spring up as in India and Southern France, who would buy for the labourers, and exact, in the form of interest on mortgages, an excessive rental from the cultivator … In Yorkshire agricultural labourers are greatly in advance of wages in the South, owing to the competition of other modes of livelihood.

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The Economist . Jahrgang 1868.

January 4, 1868.

Money Market. (Notes Reserves mit Country Banks.)

Der „Economist “ meint, daß die increase of 2½ Mill. in the outstanding notes tells significantly of the larger Actual Note Reserves kept by Country Bankers.

The Alleged Degeneration of England in Commercial Morality.

Spectator (chorus of lamentation over the pitiable condition of commercial morality in this country) affirms „that dishonesty is the besetting sin of the middle class.“ Aber Frage: „whether the commercial class of to-day is positively less honest than the commercial class of the last generation?“ … Not at all … Seine doctrin: Die „latent immorality“ gleich groß. Besondre Umstände develop sie nur oder besondre temptation. ⦗Der Esel sagt das indeß alles zur Vertheidigung der present Commercial Morality.⦘ Great openings for safe fraud suddenly presented … What is it which really tries commercial morality in its most delicate essence? Clearly, a widely ramified system of credit. It is no great moral achievement not to cheat in a ready-money transaction … No national character for commercial honesty can … be fairly established at all, until thoroughly tried and tested by an extensive system of credit. Aber credit never developed in any age of the world, or country at the present time, wie recently in England und U. States. Man kann daher nicht compare the England or America of 1867 (in Bezug auf entwikeltes Creditsystem) mit France or Germany of 1867, or even mit England und America of 1837 or 1847. Und dann, nützlicher to compare a commercial morality exposed to the newest, most complicated, and heaviest possible trials, with a commercial morality exposed to very much less complicated and much lighter trials, and trials of a kind to which it had already become inured. Take Railways. Englisch Railways nicht subject to State Control, wie die meisten Foreign ones. Die Vergleichung fails again. … England nur zu vergleichen mit U. States, und da der comparison is not disgraceful to England.

Considerable Fall in Prices. Seit 1866.

A) Wholesale Prices. London 1st January of 1868, 1867 und 1866.

During the same time, the wages in all the trades dependent on these raw materials have fallen from 20 to 30%. The cost of producing most of the great articles of export composing our foreign trade has been reduced ⅓ during the last 2 years. Suffering and distress inflicted by this gigantic revulsion was inevitable. Terrible penalty entailed by the infatuated notions of the Prosperity years. Export Trade feels (!) schon the effect of this Cheapness.

B) 1867, 1866, 1865. Eleven Months end. November. Exports of Manufactures. Value and Quantities.

French Companies. (From „Le Finance“. 1866.)

In 1866 Calls made in France for French Cos. 496,000,000 (round figures) und für Foreign Cos. 514,000,000f. Davon waren:

In: French Companies: Comptoir d’Escompte (30 Mill. fc.) Société Générale (30 Mill. fc.) The Fives-Lille (6,150,000f.) Railways 300 Mls. fc.

In Foreign Undertakings: Suez Canal (100 Mill. f.) Austrian Credit Foncier (115 Mill. f.) Nagares of the Span. Gvt. (47,500,000f.) Conversion of Spanish Debt (2,500,000f. Tunisian Loan (31,500,000f.) Russian loan (89,500,000f.) Danub. Princip. (31,500,000) Austrian Railways: 33,750,000f.

Annual Rate of Mortality in 1867 per 1000 persons living in great cities of U. Kingd.

London, 23, Bristol, 23, Birmingham, 24, Sheffield, 25, Hull, 25, Leeds, 27, Edinburgh 27, Dublin 27, Salford 29, Glasgow, 29, Liverpool 30, Manchester 31, Newcastle-on-Tyne, 31. Decrease in almost all the towns upon the rates of 1866.

11 January 1868.

The Succession Duties.

In 1796 Pitt’s proposal to apply Legacy Duties, without distinction, to Real and Personal Estates, defeated by the Country and Landed Interest, as to tax to Real Estate. Von 1796 to 1853 duties at the rate of 1% to children, 3% to brothers, 5% to uncles, and 10% to strangers in blood, have been assessed on all Legacies of Personal property, including in that definition leasehold and copyhold estates. Successions to Real Estate and the inheritance of fortunes secured by settlement were wholly exempt from Legacy Duties, und auch Real Property exempt from Probate Duties, first imposed in 1694, and augmented from time to time till the last revision in 1815. These Probate Duties amount to 2¼% on sums up to 1,000£, 2% from £1000 to 10,000, 1½% (!) in the higher accounts, so that the smallest fortunes pay the heaviest rates.

Gladston measure of 1853: (The Succession Duty Act of 1853 (16 and 17 Vict. cap. 51)) did not touch the Probate Duties at all. Jezt noch Probate Duties nicht applicable to Real Estate. The Act (of 1853) so far extended the Legacy Duties to Real Estates as to provide that the rates of duty already named should apply to the capitalised value of the life interest of any successor – say A – according to his age at the time of his succession to the estate. F.e. A, in his capacity of brother to a testator, succeeds at age of 50 to a landed property worth 10,000l., producing say 300£ of income (annual). Then, according to tables appended to the Act, A pays Succession Duty of 111l., or 3% on 3,716l. – the calculated value of 300l. p.a. at age 50.

A bequest of the same value, £10,000, but in Personal Property, to a second brother B would be subject to –

Rent of Land und Value of Land and Taxes etc

A Tenant hiring a farm frames his offer of rent on the produce of the land as diminished by taxes and all other outgoings, and any one who buys the fee simple of the farm, buys it on the basis of such net income – that is, he deducts, as against the seller, the incidence of the local taxes. If, therefore, the State should make any special exemption to landholders on the ground of Local taxes, it would be simply paying them twice over.

Bad Trade and Short Employment in the U. States. (Times. New York Correspondent New York. 16 Dec. 1867)

Harvest and Cotton Crop of 1867 most favourable throughout U. St. ⦗Economist meint, damit habe auch zu thun growing pressure on debtors as paper gradual approaches towards par.⦘

Times Correspondent says: „Too much misfortune in business and too many unemployed workmen. … Between Christmas 1866, und Christmas 1867, the sharpest contrast. Men in successful business then now bankrupt; Trades Unions then planning strikes for higher wages now willing to work for any wages at all … even breadriots apprehended. … The New York World declares that at present 50000 men out of employment in New York; that there is a complete stagnation in all trades, general poverty and destitution among the labouring classes. Armies of the unemployed crowd the docks and wharves, fill the employment offices, flock to the few situations that offer. Of the 4,000 jewellers in New York, 1500 unable to find work; 1,000 out of 2,500 jewelry boxmakers, and 300 out of 500 diamond setters are idle; of the 3000 others employed in the different branches of the jewelry trade, nearly 2,000 are adrift. 900 engravers in New York seek employment, only 200 can get it. 6,000 carpenters, of whom 500 idle, und 1000 working for half wages. Masons and bricklayers almost all employed, but only half their time. The 10,000 people in the hat trades are employed from 1 to 3 days in the week for small wages, the employers thinking this better than discharge ½ or ⅓ of them. The iron trades employ but ⅕ of their force a year ago, 5000 iron workers idle; in shipbuilding dulness supreme; shipcarpenters, in despair, have long since sought other employment; ½ of the 8000 cigarmakers without employment; of 6,000 stevedores or navvies 4,200 without regular work; among the clerks and other assistants in business houses and retail shops sorrowful destitution, at least 5000 of them wandering idle over the streets; of house servants, a class constantly reinforced by immigration, 3000 want places.“ (Alles dieß, wie die folgenden Citate aus der New York World, die der Times Correspondent excerpirt.)

„Philadelphia, the leading manufacturing city, has 25,000 idle working people. From Baltimore, Boston, Chicago, Cincinnati, St. Louis, similar reports. Ebenso im South jezt kein work für die Blacks. In the agricultural regions of the North not the same destitution as in Cities, chance for procuring labour, so that the unemployed of the city are urged to go to the Country. They will starve if they remain. This sad state of affairs produced by the great stagnation of trade. Retail dealers in New York complain that they are not doing anything like the holyday average business.“ The New Haven Register , in Connecticut, says: „More men are out of employment to-day in New Haven than at any previous time in last 10 years. Our manufacturers are reducing, or have reduced, their forces, and it is a difficult matter for a mechanic or working man to obtain employment of any kind. In this city, not less than 1,500 working men unemployed.“ The New Bedford Standard , the organ of the whale oil business, says: „There has not been a transaction in oil or bone from first hands in this market for about a month.“ The Pittsburg Dispatch report that a general lock out imminent in the glass and iron works of that city, as the employers have resolved to close them to compel a reduction of wages.

The great Rensselaer Ironworks at Troy, New York, have stopped, thrown large body of men out of employment. The „Louisville“, Kentucky, Journal reports more unemployed people than at any time within its knowledge.

A correspondent of the Boston Journal writes from Portland that, ‘go where you may in Maine, business will be found crippled, and the cry of dull times goes up on every hand. Never before our manufacturing interests in such languishing state.“ The Manchester Journal, in New Hampshire, says this gloomy report is true of all New England. Along the lakes the shipyards are idle, and their owners cannot get contracts. Dazu a sudden „cold snap“ has frozen up all our rivers and most of the harbours, before the cities and towns on them and in the interior had procured their winter’s supply of coals. This has raised the cost of fuel to – very high rates.

25 January. 1868.

Le „Crédit Mobilier“. Paris. 23 Jan. (68)

Some of the shareholders of the Credit Mobilier have commenced an action at law against the directors of 1866, to obtain from them restitution of the 516 fcs per share paid to double the capital. Their demand founded on the ground that the directors in various reports and notably in that in which an augmentation of capital was stated to be necessary, grossly misrepresented the true situation of the company.

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1 February, 1868.

French Budget.

L. Bonaparte has borrowed upwards of £100,000,000, or at the rate of about 6 Mill. £ a year for every year of the Empire … On 27. Jan. (’68) Magne announces new loan of 440 Mill. fcs (nearly 18 Mill. £ St.) to be raised by open loan, in instalments spread over 20 months, and to involve at the price of the day an addition of 25 or 26 Mill. £ to the National Debt. … The Emperor’s system of open loans has produced one very remarkable effect unknown … except in France. The worse the price of Rentes, the more readily money comes into a loan. The real subscribers under this system are the better off peasantry and small bourgeoisie, who scarcely recognise any forms of permanent investment except land and Rentes; who look to interest rather than to the principal, and consider that a low price is „very liberal of the Emperor.“ Just as in England a fall of Consols below a certain point, z.B. 87 – is always the signal for a rush of bona fide purchasers; so in France, an open loan under 70 will be far more rapidly taken up than one above it. An Englishman would think it less secure, but that is not the French peasant’s mode of calculating.

Liverpool on Commercial Morality.

Liverpool Chamber of Commerce met on 23 Jan. 1868 to discuss this „Liverpool“ fact.

The Nature and Law of Commercial Crises. (John Mills.)

Nach Mills Commercial Crises essentially of mental origin. Tendency in commercial mind to be at times elated, and at times depressed. ⦗Dieser Esel glaubt eine besondre Entdeckung gemacht zu haben, indem er die Schwierigkeit „ins Gewissen“ schiebt und die Periodicität der „realen“ Bewegung in eine Periodicität des „commercial mind“ verwandelt. Asinus. Aber die Periodicität selbst sicher keine Entdeckung von John Mills.⦘

Nach Economist no great crisis in den 14 years 1825–1839; the violence of the collapse (er meint 1839) discounted by the minor pressure of 1836–37. Russian War dagegen 1854–56 did not prevent punctual recurrence of collapse in 1857. Failure of Overend anticipated by a year the normal occurrence of crisis. Mills thinks that in 10 years the personnel of most commercial firms and establishments must become greatly changed: Aber diese new men cannot so soon rise into commanding positions. Those who guide commercial affairs are Seniors, whose recollections run over 2 decades. Aber no profiting by experience. Those who possess foresight and experience rather use it to gain a profit at the expense of the incautious, than to moderate their infatuation. The part of a knowing man of business 2 or 3 years ago, was not to abstain from dealing in limited liability Cos, but to back out of them before the exposé which was inevitable. Panics have occurred under every kind of monetary regime. 1815–16, with inconvertible paper currency; 1825 with convertible currency and free issues; 1836–9 with the additional institution of jointstock issuing banks; 1847 und 1857 under the Bank Act; 1866, with the free creation of every kind of banking and financial institution on the limited principle. In Holland crisis on purely metallic basis; United States in a system of universal freedom of issue. Prior to the creation of Bank o. Eng., in 1683, a well marked instance of speculative mania. The Bank o. England, the Bank of Scotland, the first Insurance Co. (the Hand-in Hand) and others of our most important institutions, were really the creations of the speculative mania of 1694–96, the forerunner of the bubble of 1720.

Wages and prices now reduced. Circumstances favourable to real profitable investment, but Public opinion set against it. Hence abundance of ready money capital, small demand for it, consequent slack employment for artisans.

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February 8, 1868.

Peasantry Proprietors.

The sphere of this system in U. States, Australia, colonies generally, where farm of 40 acres of finest land to be had at nominal price, und, with the aid of minimum of capital, the owner’s labour may raise crops from the virgin fertility of the soil. Anders in old und densely populated countries like England. First obstacle: Rent of Land, partly the pure rent due to the limited quantity of cultivable land, partly the interest of capital invested in fences, drainage, approaches, or other improvements. … It is the part of a statesman to detect those tendencies which have not developed their full effects, so that the future may be more surely anticipated. But the supporters of peasant proprietorship in the present day display as little consciousness of the future as if they had ½ century ago urged their fellow countrymen to leave the mill for the spinning wheel. And now they urge us to recur to spade cultivation, or something very little better, when farming is already a matter of science, capital, organisation, and steam power. There are tendencies of so high an import and so irresistible a character, that the more quickly we yield to them the more we show our sense, let them bring what apparent ills they may. … The „magic of property“ can do much, but it can hardly enable the labourer by his spade, to compete with the united forces of science, mechanism, and steam power …

Exports and Imports.

In den folgenden Tabellen 3 Ziffern (000) ausgelassen. Also z.B. 140,000 = 140,000,000.

A) Value of Imports during 10 Months ended with October.

B) Value and Quantity of Raw Cotton. Imp. into U. Kingd. during 10 Months ended with October.

C) Value of British Exports during 11 Months ended with November.

D) Value and Quantity of Cotton Manufactures. Exported from U. Kingd. during 11 Months ended with November.

February 15, 1868.

Report of Mr. Wells, the Special Revenue Comissioner on American Finance.

Durch Inland Revenue raised in Financial Year ending 30. June, 1867: £,31,000,000 (£ hier angenommen = $3). Nach Wells only 50% of what the taxpayer ought to pay reaches the National Treasury; of every 2$ which ought to come in, 1$ either not collected at all, or stolen or wasted before it reaches the Exchequer. Vor dem Civil War the Federal Gvt. subsisted upon the Customs’ duties and the public lands.

Die present production of Distilled Spirits in U. States wenigstens 50 Millions of proof gallons per annum. Present tax: $2 p. gallon. The largest amount of revenue collected in any one year, since imposition of present tax, 29,482,078$ in 1866, und 29,164,409$ in 1867. Thus the Gvt. has collected the tax on somewhat less than 1 gallon of proof spirits to every 3 gallons that has been manufactured. Das enhancement of price in Folge der tax has given to the illicit dealers aggregate profit of at least 30 Mlns $. Daher great agitation in spirit trade for the spirit duty. Sound financiers like Wells, want to reduce it. But the lobbyers prevent them. The higher the duty, the greater its uncollected half.

Ebenso mit dem nächst important duty, on Tobacco. Wells giebt Masse Methoden des Betrugs gegen den Staat etc.

February 22. 1868.

France: Imports and Exports of Precious Metals during 1867.

29 February. 1868.

Trade of France. 1866.

Trade with England and British Possessions.

March 7, 1868.

Money Market. Rate of Discount.

The deposits in the hands of billbrokers and bankers in London are our „Loan Power.“ Our Private Banks do not publish any account. Much of the deposits with B.o.E., London and Westminster Bank, and other strong Banks, used to be kept at Overends: other money transferred from the weaker to those stronger Banks. Trade of the Country by far not so profitable as formerly. Does therefore afford less means of saving. Therefore, no large increase from this source in the Deposits of Lombard Street.

The Liabilities of the Bank o. E. much augmented. Therefore Reserve must be proportionally augmented.

Liabilities of Bank o. E. On 25 Febr. 1868.

Its reserve should be = ⅖ of liabil. = 10 Mill. £. This neutralises the result of the increase of loanable capital which augmentation of Private Deposits seem to indicate.

Bullion: By last account in Febr. Reserve in Banking Department in Notes und Coin £13,231,939. If 10 Mill. Reserve necessary, this not much to be diminished. In England increase of liabilities is in Deposits, in France in Notes Circulation – the first and most elementary type of credit.

Bank o. France subject to no Peel act. It keeps some proportion of bullion etc against all its liabilities, and gives no special favour to one sort of Liabilities, the Notes.

Credit: Low State. Worse than after 1847 or 1857. Credit is the effectual demand for capital. When credit is good, discounters will discount many bills readily; when credit is bad, they discount fewer bills, and with qualms. The difference is between a brisk high market and a stagnant low one.

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March 14. 1868.

Sir Morton Peto’s Examination in Bankruptcy.

Has begun during 2 days, as to the claim of the London, Chatham, and Dover Railway against his firm.

Bankrupts are debited mit £4,403,442 cash paid by the Railway Co to them or on their account, und mit £11,594,557 of stocks and debentures taken and realised by them; on the other hand credited mit 2 sums of £2,171,336 und £4,171,450 received in cash from them and the public, und mit £2,993,264 for work done, leaving a balance of £6,661,941, exclusive of interest, for which the present claim is made. Sir M. P. bis jezt examined is mainly that portion of the claim arising out of the Metropolitan Extension, so far as concern certain A and B shares and debentures; the inquiry of the C shares and subsequent proceedings having only commenced. The Nominal Capital dealt with £1,650,000 for shares, und 550,000£ for debentures, on which account the Co claims £962,500 – the difference between the par value and the sums they actually got.

Metropolitan Extension Act passed 1860. Sofort die arrangements made. Peto’s firm were to be the contractors. They should accept payment in Shares at par less a Commission of 25%. They were also to advance money, apparently for the purchase of land, on shares and stocks, which they were to place at their option for a similar commission. In short, out of £2,200,000 they were to get 550,000. Yet, while arranging to make this large deduction, Peto did not know that the works authorised could be completed even by the capital to be raised, though he knew in 3 or 4 months afterwards that the amount would not be sufficient.

The formal proposal to carry out this understanding or plan made in September, 1860, but in the agreements of 1. und 5. October, actually signed on Octob. 30, there were one or 2 material alterations. The contract prices were „somewhat“ (Peto’s expression) higher. The rate per mile for the permanent way, f.i., was increased from £5,107 to £6,180, a rise of 20 P.Ct. More important still, the provision that the Co. were to take the shares at par was omitted from the signed contract, an omission for which Peto cannot give any reason. There was another point in the agreement. The contractors were to pay a guaranteed interest of 6 P.Ct. on the B shares, half the total number, during the construction of the line, though Peto could not say whether he was aware at the time that the Act prohibited „the payment of interest or dividend out of money raised or borrowed.“ The Legislature never authorised a certain capital on the understanding that 25 P.Ct. would be absorbed in discounts for placing the shares and debentures.

An important part of the plan was the „placing“ of the shares and debentures, which necessarily brought in the general public. Without their aid the combination must have failed, for the contractors never contemplated being the holders of the line they made. Peto says he was not responsible for the Prospectus issued to the public. He „only“ „revised it to see that his interests were protected.“

The first offer to the public was of B Shares, on which there was a guaranteed interest, and the Prospectus told them that the A Shares were all taken. In fact, the A shares had not been taken, but only subscribed for. So the B shares and debentures were all got rid of at par. At one place, Peto speaks vaguely of the changes incidental to placing so large an amount of capital, and he also describes an arrangement with Knight and Coleman , the Co’s brokers, who were „associated with a large number of brokers“, by which they were to get 10 P.Ct. for their share in the business of „placing“. Business succeeded, money was got. Deceit of the public, misinformed as to the A. shares, paid interest on B shares so as to induce them to take them up, not cognisant of the Discount arrangements.

What became of the A Shares? They could hardly be disposed of at all. In July, 1862, Peto proposed that he should get a rebate of 50 P.Ct. on account of their „postponement“. Ultimately they were purchased at 37£ 10s. Peto explains, he was to have a commission of 25 P.Ct. on the whole capital, and the purchase of the A shares at 37l. 10s. „would make the commission larger, the nominal capital on these shares being £850,000“. Although he only gets 37l. 10s., Peto still deducts 25£., his commission being on the „whole capital“. In other words, whatever the sum of cash got, his commission remains the same, and it must have amount on the Ashares to more than 50 P.Ct. The upshot was, that out of the total authorised capital of £2,200,000 only £1,237,500 remained to carry on the works. Difference of £550,000 taken by Peto, according to his own confession, less £190,000 which he states to have been the broker’s Discount on the B shares, debentures, and works.

The most marvellous part of transaction that Peto never met with any difficulty. The contract prices were raised 20 P.Ct. above the original proposal, on the mere „suggestion of Mr. Betts“. When Peto applied for a rebate of 50% on the A shares, at once conceded. One of the most formidable difficulties was the necessity of a subscription contract, in order to use the compulsory powers of the Act. Got over by the simple expedient of Peto et Co. subscribing the contract themselves, and paying £206,000 into the Union Bank as the first deposit on 82,000 shares. But whence came the money? On the same day, on which he paid the money, he got from the Railway Directors 100,000l., and on the following day 51,000l als Commission on the deposit of shares. Peto pays a deposit on certain shares, but gets back most of the cash he parts with in the name of commission, so that the deposit became a mere form.

Negotiation of Foreign Bills of Exchange in London.

At present, Foreign Bills of Exchange, drawn in this country on places abroad, are mostly negotiated in the following Manner:

The seller or manufacturer of the goods – say A – at Bradford draws, as per agreement, on his customer, – say X – at Lisbon, and hands the set of Bills to B, a local banker at Bradford, who endorses them over to C, a Banking House in London, acting as B’s agent. C sells them through a broker on the Royal Exchange on some Tuesday or Friday – the 2 days set apart by long custom for the market for Foreign Bills. The buyer of the Bills – say D – is drawn upon by C for the proceeds, and the draft is payable on the following „Post Day“ – that is, Friday or Tuesday. In other words, the Buyer D gets possession of the Bills in time to be sent abroad on Tuesday evening; and he does not pay for them for 3 days. This gratuitous credit wünscht Bradford Chamber of Commerce abgeschafft.

For all practical purposes the Tuesday and Friday „Changes“ are quite sufficient, and more advantageous to Sellers, because they collect on the same spot at the same time all the important buyers, and, therefore, establish a real quotation.

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21 March. 1868.

Horn: Le Bilan de l’Empire .

1852–56 added to Expenses: fc.166,000,000

1857–61 exceeded 1852–66 by fc.570,000,000

1862–66 exceeded 1857–62 by fc.921,000,000 und die Difference of 1862–66 und 1852–56: 1,491,030,643 fcs.

Adding the 3 quinquennial Epochs of Empire gives fcs: 30,992,348,701 and Annual Average of 2,066,165,580

15 Years of Louis Philippe … fcs 19,083,000,000, nearly 12,000,000,000f. more than same period of Louis Phil., i.e. 800 Mill. fcs a year (32 Mill. £)

Charge on Population, for last 5 years, 240 fcs p. family.

Indian Cotton in American one. (Wichtigkeit der espèce des Samens)

Seine Konkurrenz mit amerikanischer depends on substituting the cultivation of American for indigenous varieties in the Indian cotton districts. After many years of opposition and incredulity, A. N. Shaw, of Bombay Civil Service, succeeded in proving that New Orleans seed, acclimatised in Dharwar, produced cotton which yielded much more per acre, and sold or a higher price per lb., than the indigenous kinds. It was stated that there were then 214,000 acres in Dharwar sown with New Orleans cotton, which yielded this valuable return to the cultivator; and that that cotton, when made up in Lancashire, produced more yarn than ordinary New Orleans.

Nach 1862, the Bombay Gvt. endorsed the mistaken views of Cassels, their Cotton Commissioner, and declared all attempts to substitute American for Indians als mischievous delusion.

In Report published 30 November, 1867 , stated:

„In addition to what is described above ⦗extensive sowings in Dharwar⦘ (Dharwar district of Bombay) large sowings of New Orleans exotic have been made in the Ahmedabad, Khandeish, Ahmednuggur, Sholapoor, Sattara, and Broach district in the Bombay Presidency, as well as in other parts of India out of the administration of the Bombay Government, such as Central India, Punjaub, Coorg etc … The New Orleans variety is the most productive of any. At a rough computation, the yield of this description 20 P.Ct. in excess of most other superior varieties, und probably 40 P.Ct over some of the inferior kind.“ Four years ago 214,000 acres in Dharwar sown with American Cotton. 1867 dagegen acres 300,398 in that district sown with the same description und 465,086 acres in other districts of Bombay. See „Cotton Supply Reporter“, 1. Febr. und 2nd March 1868.

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28 March 1868.

Influence of Price of Articles on Money Market.

„High prices make dear money.“ I.e. the amount of money borrowed in times when Prices high larger than when they are cheap. The amount borrowed to hold the raw material is larger. Amount required for the discount of bills larger, because the bills are drawn for larger amounts. A rise in the price of all articles has a most sensible effect on the value of money. A rise in the price of a single article, especially when it promotes transactions, has sometimes some effect.

Return of Income Tax etc (England and Wales)

Annual Surplus in Sheep and Cattle. Australia.

August 1867 it was stated that means sought to utilise the large annual surplus available after supplying all the requirements of the people; and that at meeting of owners of live stock it had been decided to erect on the Murrumbidgee River an apparatus capable of rendering into tallow 10,000 sheep per week. Nach Advices to 31 January, 1868: such establishments were in full work at Port Augusta und Guichen Bay (South Australia) at Echuca, Geelong, Ballarat, Portland Bay, und Melbourne; and also on many sheep farms in Victoria, for the sole use of their owners. Estimated that fully 60,000 sheeps boiled down per week in the 2 colonies of Victoria and South Australia. The average net proceeds of this method of disposing of sheep did not exceed 3s. 6d. or 4s. per sheep, except at Ballarat, Melbourne, and Geelong, where the hind legs could be sold for 7d. each, while at the other places they were simply wasted, as no population to consume them, and the excessive heat of the climate prevented their being cured for shipment to Europe.

Yield of goldmines, Victoria, 1867.

1,493,831 Ounces. Average number of miners employed 65,857, their average earnings s.35 per week. The goldmining Cos. in the colony paid 1867 dividends to more than £820,000 > whole number of population, recking £’s und heads. Ausserdem profits of Private Mining undertakings und of Cos. not publishing yields and dividends.

Preliminary Meeting of the Iron Masters of South Staffordshire district, at Birmingham.

Large Attendance. Resolution passed by inconsiderable majority to reduce the price of finished iron 10s. p. ton, making bars £7; and reduce puddlers’ wages 1s. p. ton (10%), all other wages in the trade in proportion, 14 days’ notice to be given to the men on Saturday next. Minority will abide by the decision arrived at.

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April 4. 1868.

French Taxation.

Nach Einhorn fällt 10£ nearly on family ⦗da: Average Expenditure of Gvt. 88 Mill. l. p. an. und the number of families – counting 2 persons living solitary, as one family is, in round numbers, £9,327,000.⦘ Nur few von den 4,600,000 families, consisting of small proprietors, farmers, métayers, agricultural day labourers, clear a net revenue of £40 a year. Even in manufacturing industry, such an income not the lot of the large majority. Only the „privileged minority“ even in Paris, can make £60 a year. Smaller sum safely taken as income of the vast majority in France. Dann: Communal and departmental expenditure – the „budget des dépenses sur ressources spéciales“ – amounts to 11 Mill. £ St. p.a. Dann die „municipal budgets“, in Paris alone £10,000,000, only ⅕ of which supplied by the Imperial Government; the other great towns in France follow suit. Moderately calculated, the total taxation in Paris per family £24 p. annum.

Larger part of French Taxes on Consumption, or are the price of services which the State is supposed to render. The license tax heaviest for small trader. Stamp duties, Registration Duties, Duties generally on the transmission of property, heaviest in proportion on small dealings, inverse progressive rate. Still more true of taxes on articles of consumption. „Petit bleu“, which poisons the workman, bears same duty as „Chateau Margeau“, quaffed by the Master; the same with fish, viands, liquors. Besides, the expenses affected by such taxes form a larger proportion of the budget of the garret than the budget of the first floor. 20% added to the price of his articles of living absorbs ⅕ of a workman’s income, only  1/20 of his richer neighbourʼs.

Nach Einhorn the aggregate Income (Annual) der French Population: 373 Mill. £; nach A. Cochut, 640 Mill. £.

French Economists reckon that the taxe Foncier alone takes  1/10 of the net produce of the soil. In fact, die French Gvt. takes ⅕, if not ¼, from those least able to pay.

Besides, many French taxes are clogs to industry. Patent, or licence tax, impedes every shopkeeper; duties on liquors, from their number und complexity, besonders troublesome to trade. Their Expense of collection 10% of receipts.

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April 11. 1868.

American Finance.

Internal Revenue Act von 1864 , besides income tax, heavy series of stamp duties, excise on spirits and tobacco, tax on cotton, tax of 6% on all sorts of manufactures.

Under this Act 39,700,000l. raised in Year ending 30. June 1867, wovon 21,900,000 „industrial“ taxe … Jezt (March ’68) bill introduced, repealing all the „Industrial“ sections of the Revenue Act, except those affecting petroleum, wines, manufactured tobacco, and a few other articles. The bill, however, imposes on those who sell more than $5000 worth yearly of any manufactured commodity a tax of 2$ p. 1000 on the excess over $5,000 – which is equivalent to a tax of 4s. P.Ct. on every one who sells more than £750 of goods annually. Against this bill letter of MCulloch (the Treasury Secretary) d.d. March 16, 1868. Bill has passed the House, now before the Senate.

Es würde sein Diminution of Taxes: £18,000,000 ⦗Cotton Tax Repealed £3,000,000 und Loss by proposed Repeal of Industrial Taxes £15,000,000.⦘

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April 18. 1868.

Coal Export from Belgium. (Nearly the whole goes to France.)

Coal Export from Belgium to France

April 25. 1868.

Average Corn Prices.

May 2, 1868.

The Late Bank of Bombay.

Commission just appointed to inquire into collapse of Bank of Bombay. Failed despite its connection with the British Gvt.

In Folge des Gold influx wegen Cotton Schwindel. Bubble Cos ripe at Bombay in 1863. The commercial directors of the Bank o. Bombay went deep into the prevalent speculation. „One of them was the Chairman of the Victoria Land and Press Co., the chairman of the Scott Press Co., the director of the Mofussil Cotton Press Co., director of the Bombay Landing and Shipping Co, partner in business with a director of the Frere Press Co., partner in business with a director of the Elphinstone Land and Press Co., director of the Goa Coffee Co., director of the Western India Hotel Co, director of the Port Canning Co, one of the local committee of the Asiatic Banking Co, director of the Bombay Reclamation or Back Bay Co, also member of the mercantile firm that were secretaries and treasurers to the Victoria Land and Press Co, the Scott Press Co, the Bombay Shipping Co, the Port Canning Co, and the Bombay Reclamation or Back Bay Co.“, and others, though not engaged in quite so many Cos., still engaged in many.

The analogous Banks of Bengal and Madras prohibited by their Charter from lending on the shares of „Public Companies“. Bombay Bank not so restricted, lent freely. The Bank was ready to promote every sort of bad local Co. And the persons to whom it lent were as bad as the securities. Previous to April 1865, sagt official Report, nicht only firms und individuals of mercantile position credited weit über ihre means, sondern auch „persons not even engaged in any ostensible commercial pursuits were accommodated with large sums of money, which could only have been required for purposes of share speculation.“ Out of its capital stock of 2,090,000l. it has lost nearly 2,000,000.

(Ireland) Emigration, Wages, and Land. (Eingesandt von T. E. Cliffe, Leslie.)

The Edinburgh Review , ascribing the rise of money wages in Ireland to emigration adds: „We utterly reject the sentimental nonsense, which classes emigration among the misfortunes of Ireland. It is a blessing to the country. Nothing is more to be desired for the welfare of Ireland than that this emigration should be large and continuous.“

1. facts: Cairnes stated 2½ years ago in the Economist: „We fail to perceive any solid improvement, scarcely any sensible improvement, in the present day labourers of Ireland as compared with their predecessors 20 years ago. Wages, no doubt, have risen in money, probably, on an average of the whole island, from 30 to 40 Pct. But potatoes have also risen, and in far more than this proportion. Indian corn is a new resource, but is by no means as cheap as potatoes formerly were. Tea and sugar have declined, but, on the other hands, whiskey has risen. As for butchers’ meat, it is of course as far as ever from the wildest dreams of the Irish peasant.“

Rise in wages is to a large extent nominal. Und die advocates of Emigration ascribe to it all the effects upon prices and commerce of roads, railways, proximity to English markets, increased demand in those markets, the equalisation of prices and the new gold mines. If Emigration were the chief cause of rise in the price of labour, it would have continued to rise with „large and continuous emigration“. For 9 years the money rate has remained stationary throughout the greater part of the island, and looking at the price of food, the real rate has considerably fallen in the last 2 years, while for some important kinds of labour wages have ceased altogether. See Fraser’s Magazine (May 1868) In many cases Emigration consequence of a fall of wages instead of the cause of a rise; in most cases, it has been the consequence of their continuing wretchedly low.

2. Stupid theory, that Emigration must have raised wages by diminishing the number of labourers.

Der ganze Blödsinn mit den Aggregate Wages Funds. »The result has been mistaken for the cause; and instead of causing wages in each particular case to be what they are, the aggregate amount of wages is the mere consequence of wages being what they are in particular cases, and amounting in the aggregate to what they do.« If only one labourer were left in the island, would he receive the whole of that „aggregate wages-fund“, the ratio of which to the number of labourers is said to determine the price of labour? Is it not possible that he might earn even less? … Is it impossible that employers may do without labour, or find substitutes for it, instead of raising its price as it grows scarce? Have employers not in point of fact dispensed with labour extensively in Ireland? where more than ½ million of acres have gone out of cultivation since 1860, where little more than ¼ of an island especially adapted to root crops remains under crops, and where a startling decline has taken place in the produce of agriculture. … The economists (like the scholastic realists) imagine that wages in particular cases are made what they are by participation in a general fund called wages in general, which inheres in every individual labourer’s wages.

3. Zweck von all diesem Geschwätz to divert attention from the real causes of Irish emigration, and to leave things as they are … Man hat sogar zu diesem Behuf gesagt, that Irish tenants farm all the worse for security und daß the worst farmed part of the island is  1/13 under lease. Humbuggery! … At this moment in contemplation to introduce locomotive flax scutching machines for the small farmers in Ulster.

May 16, 1868.

The Cotton Statistics Bill. (Sthaatseinmischung.)

No one can have watched the course of recent controversies without observing a considerable change; formerly the great object of commercial reformers was to exclude the Government from trade; now their object is to get it back into trade. And the persons who used to object to State aid are now the persons who invoke it. … The more exactly a merchant can know what is required, the more exactly he can regulate his operations; and Government can augment that knowledge by finding out what is the present supply in the world.

This is the principle of the „Cotton Statistics Bill“. To give dealers in cotton best account possible from time to time of the amount of cotton in the market. It requires all „warehousers“ of cotton (a term which is defined, as every person and Corporation having cotton in his or their possession at any port in the U. Kingd.) to make a return of 1st July of every year of the quantity of cotton in their possession; and every „forwarder“ of cotton – i.e. „every person and Corporation who carries or forwards cotton for toll or other consideration“ is required to make a return monthly of all cotton „forwarded or received“ by him within the preceding month. The effect of the Act, therefore, is, that on 1st next July authentic account of cotton now at hand at Liverpool and the other ports and by a similar account we shall also know how much is monthly subtracted from that store and how much is added to it. We shall have a certified amount to begin with, and be sure of all the changes.

These accounts are „compulsory“. If any „warehouser“ or „forwarder“ fails to make them, he is to be liable to fine for each neglect. Some objection is taking to this as rendering trade no longer free. But free trade means free bargains; it does not mean ignorant bargains.

Paris. 14 May. ’68. Credit Mobilier.

Judgment of Tribunal de Commerce condemns the directors of Credit Mobilier in the early part of 1866 to restore the sum the shareholders were made to pay for doubling the capital – the restoration being ordered on the ground that irregularities were committed and misrepresentations made.

The report of the acting directors of the Credit Mobilier, presented in the recent meeting of shareholders, states that the losses at the end of 1867 were 40,547,788 fc, composed principally of a loss brought forward von 1866, and of depreciation in the value of securities held.

Pauper Expenditure in Metropolis since 1863. (Annual Poor Rate Returns. Official)

Number of Paupers

May 23. 1868.

The French „Credit Mobilier“.

It issued new shares upon a flourishing prospectus and a good account of profits, being all the while in difficulties and having hardly cash to pay its way. At two meetings, on 12. Febr. 1866 und 1st March, 1866, the Credit Mobilier doubled its capital; at these meetings a Report was read exhibiting large profits and declaring a good dividend. These meetings were informal und packed. The Co on the 1st. Febr. was insecure and dangerous. Unless out of the new capital it could pay no dividend upon the old capital. Court decides in this sense.

It is a bank which did the business of a Finance Co. It had deposits to amount of £4,783,074, of which all but insignificant part on demand. Its Assets, exclusive of Railway and other shares upon which advances had been obtained, were:

But the Court says that the cash was mostly wanted to pay a Dividend due; that of the advances to sundry debtors hardly any could be easily called in, and of some the repayment was dubious; and out of 2,158,000l set down as advanced to Public Cos. more than 2 Mill. £ were advanced, without a security, to a single Co., the Compagnie Immobilière, which was insolvent. So scarcely any real cash in hand, and no means of getting it. The Court has decided that the directors must reimburse the new shareholders. The new capital of the Credit Mobilier is 2,400,000£.

The Bonus System in Paying Workmen.

Evidence received by Trades Unions’ Commissioners on limited liability firm: „ Msrs Briggs , of Whitwood and Methley Junction Collieries, near Normanton“, into which a number of workmen have been admitted as shareholders, while all have divided among them in bonus half the profits of the firm above 10% on their capital. The same mixed system of association and bonus tried with success by Greening and Son , Manchester.

A Co (in the case of Briggs) was formed on 1st May, 1865, with shares of 15£ each, of which 10£ paid up. The number of original shares was 9,000; but 1000 more since created, the whole being allotted as follows:

6,450 or above ⅔ to the old partners of Msrs Briggs, 1,068 to customers; 1,874 to the public, 114 to non resident agents, and 264 to workmen; 230 not allotted of the last issue of 1,000 shares being reserved to the workmen. The actual number of shares held by the workmen is 178 – the remaining 86 counted to them being held by 9 managers, clerks etc; and of these 178 shares, 94 are held by 83 miners, and 84 by 61 top hands, 6 being the largest number held by one individual. As there are 989 workmen employed – 785 miners and 204 surface hands – this gives a proportion of 1 shareholder out of every 9½ miners, and 1 out of every 3⅓ surface hands. Two years have now elapsed – and it is the practice – there is no condition in the articles of association – to divide the profits above 10% between the workmen and the firm, the shareholding workmen getting both the bonus and the dividends on their shares.

During the first year, the profits amounted to 14 P.Ct. on the capital, of which, according to the arrangement, shareholders got 12%, and 2% went for bonus. During the second year, the profits were 16 P.Ct., the shareholders getting 13 P.Ct., and the bonus being 3 P.Ct. The actual amount divided in bonus was in the 1st year 1,800l. und in the second 2,700l. And these sums were sufficient to add 10 P.Ct. and 12 P.Ct. to the earnings of working shareholders, and 5 P.Ct. and 8 P.Ct. to the earnings of nonworking shareholders. The two classes have not received alike, the working shareholders receiving in the first year double what was paid to their fellow workmen, and in the 2nd year one half more.

The average bonus of the whole workmen, top and bottom, was in the 1st year 3l. 9s. 2d.; 2nd year: 3l. 3s. 2d.; and the highest sums got by any single workman, 10l. 18s. 10½d. and 9l. 17s. 10d. The payment of the bonus was made conditional on the workmen taking out a pass book, in which the amounts of their wages were to be entered, the pass book costing 1d; and in the 1st year only 30% qualified, but in the 2nd 80%.

The proprietors are satisfied, because formerly, with disputes, waste, and loss of time, they never got 10% on their capital, but have now been getting 12 and 13 P.Ct. The bulk of the men are satisfied, though some are „not sure about it“. In the open market, the shares quoted at 4l. 5s. to 4l. 10s. Premium.

The Briggs had quarrels mit their workmen since 1853 „off and on“, but with violent crises in the dispute in 1853, 1858, and 1863. In 1858 there was a deal of rioting, and some of the men were sentenced to imprisonment. Briggs received letter, that he would be shot in 13 days. In 1863 the dispute was very bitter. The distrust shown by the neglect of the men to take out the passbooks so as to ensure the bonus. They were utterly incredulous that any bonus would be paid. … Calmness with which a late reduction of wages was accepted. … Formerly the Briggs had endless wranglings about weighing, and the men voted themselves frequent play days – a very serious matter, as the daily expenses for pumping etc 120l., whether the men work or not. Scheme still in an experimental stage. Und difficulty in adjusting matters between shareholding and nonworking shareholders in regard to the Bonus.

Circumstances hitherto favourable to the experiment. Business was profitable. In the 2nd year, besides making all necessary allowances for wear and tear etc, the dividend 16 P.Ct., but in addition 8,000£ was carried to a general reserve fund, so that a profit of upwards of 20 P.Ct. made. Failure of similar experiment by Fox, Head, et Co in the Iron Trade, through business being unprofitable. … A distinction cannot be made between stores required for repairs and new works…

Briggs explains that in a business where 70 P.Ct. of the annual outgoings is for wages, it is essential to have the workmen on the capitalist’s side and bestowing extra care on the work. They had the power to throw away nearly all the profits by carelessness and indifference.

Among the miners, the most numerous and important class, the proportion of shareholders only 1 to 9½. A good many of the men still keep subscribing to their Trades Union. The second qualification to the success is the difficulty about the bonus. First of all, it is not secured in any way. The firm can do each year what they please about it, and for all practical purposes the Briggs are the firm – the public and the workmen do not count.

The Briggs wish to make the bonus of all equal; it is to the bonus chiefly that they trust – and not to the shareholding – for extra care. The workmen shareholders on the other hand are anxious to make the holding of shares a real part of the programme, desire to keep nonshareholders from an equal bonus.

Even if the workmen become all shareholders, the substantial character of the whole undertaking – the grant by a capitalist of a bonus to his workmen terminable at pleasure – will not be altered. … It will [be] a long time, the more enthusiastic of the men believe, before a miners’ cooperative association can do what is done in cotton spinning in Rochdale.

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May 30. 1868.

Are Trades Unions really insolvent?

In der Evidence vor der London Commission on Trades Unions’, Mr. Finlaison, of the national debt office, beweist daß „Engineers“ und „Amalgamated Carpenters“ Unions must die out within certain time from ineradicable insolvency. Gesezt er habe Recht. So beweist das nach ihm selbst, daß die Contribution zu niedrig, 50% höher anzusetzen ist. Dieß geht das Wesen der Sache nicht an. Der Theil, den die Unions als benefit societies, [super] annuation societies, etc auszugeben haben – also der nicht Strike Theil – ist leicht zu berechnen, wie bei jeder andern Insurance Society. Und Inquiry beweist nur, daß die Unions bei Fixirung ihrer Beiträge sich von professional accountants diese Sache berechnen lassen müssen.

The Bill for abolishing Houses unfit for Human Habitation.

The „Artisans’ and Labourers’ Dwellings Bill“ is the first of a series which is likely to be a long one. … The price of houseroom in the great cities, and more especially in London, has increased with the increase of their population, until the poorer sort of labourers, the men who earn from 12s. to 18s. a week, are wholly unable to pay the sum demanded for lodgings of any decent kind. That sum is usually ⅓ of their incomes, and if the family is large even more, and the labourer is tempted to reduce it by every possible device. Either he retreats to a room so unsafe, illprovided, or unhealthy, that it is let cheap, or he takes in lodgers who pay a portion of his landlord’s demand … The consequence in great cities is that small, rotten, or otherwise cheap houses, near the centres of work, are found crammed to the roofs with families who set all sanitary rules, etc and live, as Lord Chelmsford said, like animals, or, as the Bishop of London still more forcibly put it, like vermin. The landlords or lessees of such houses, very often poor men, spend as little as possible on repairs, dig no cesspools, open no drains, supply no water, and leave as few openings for light and air as they possibly can, windows being conveniences which will break. Such houses become of course centres of disease, depôts where certain forms of fever are storedup to await the first hot day, when they spread far beyond the „rookery“ where they were originally generated.

It is essential that the State, as guardian of the lives of its subjects, should abolish these pest houses, and expedient that it should so far as possible compel a more civilised mode of life. No landlord can have a moral right to let a house in a state unfit for human habitation any more than he can have to sell poison at his own discretion, because it is profitable. He is bound to see that the article he sells either is innoxious to the community, or to abstain from selling it, and can no more plead his right of property against the Legislature than a chemist could plead his right of property in arsenic or prussic acid. He is bound to obey the laws regulating the public health, and is bound also to take heed that his conduct does not lower the general level of morality.

Under this Bill, whenever a house is condemned by competent medical authority as unfit for human habitation, the „local authority“ – that is the Board of Health, or Commission, or Town Council, or Vestry – may direct the owner to make the necessary improvements. If he declines, the local authority may order the House to be closed, or may purchase it on a valuation and rebuild, or may delegate its right of so doing to a speculator in houses. This is the main provision, that a landlord may be compelled to choose between allowing his tenantry habitable accommodation and selling his property to some one who will. Difficulties of the detail. Unless they are removed the Act may prove almost a dead letter. In the first place, the Bill gives no security that the „local authority“ will not be entirely in the hands of petty landlords – the class, which of all others, seeks most for municipal office. In that case the Act either inoperative, or will be used to secure high prices for worthless property. In the second place, the Act provides no fund for the work beyond a 2d. rate, which will be insufficient and unpopular, and compel the local authorities either to delegate their right to a builder, or to exert their alternative power of closing the houses altogether. In the former case the builder is pretty certain to look to profit, and put up rooms a little too good for the poor, thus increasing the overcrowding elsewhere; and in the second, the population must be expelled very often by sheer force. Again, the Bill does not in any way prevent overcrowding, for a house may be in a perfectly habitable state for 4 people, and quite uninhabitable for 14. We fear the Act will lead to very little except a few considerable clearances, which will intensify the surrounding misery and disease. The suffering produced by such clearances for the benefit of railways has been already considerable, and threatened once or twice to breed formidable riots.

The evil to be met is a huge one, namely, the inability of London to hold its population until it is raised higher into the air. Way out of the difficulty is an extension of 2 measures already sanctioned by Parliament – the Lodging House Act, and the Act offering loans of money to the builders of houses for the poor. If a properly constituted Authority were allowed to condemn small districts one at a time as unfit for human habitation, and such districts were then cleared by the Dwelling-House Associations, and covered with their lofty dwellings out of capital lent by the State, the gradual relief would no doubt be very great – as great, that we might in a few years carry the Lodging House Act to its logical conclusion, and absolutely prohibit overcrowding beyond the limit of health, viz., 500 cubic feet of air to each sleeper. Problem: to house decently in a space already overcrowded the 80,000 immigrants who add themselves every year to the population of London. The present Bill may work well for Liverpool, Manchester, or Norwich, where local authority strong, and possible to extend the area to be built on.

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1. 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. ↩