The Sun.
London, England, 1867-01-04 00:00:00

SPIRT OF T.llO PUBLAJ JO CIRI‘TALS.

TIMES.—OnIy just now, after eight months of
continuous depression, have the ordinary securities
of the Share Market begun to show symptoms of
recovery from the collapse of last spring. In this
one feature the panic of 1866 is confessed to be with-
out precedent or parallel. On former occasions the
reaction has been prompt and effectual, whereas the
distrust created by the catastrophes of May survives
in scarcely diminished force to this hour. Strange,
too, above all other incidents of the convulsion, is
the fact that, while adventures more or less specu-
lative were utterly discredited, investments of abso-
lute security were scarcely in greater favour. It
might have been thought that the stoppage of other
outlets would have turned a flood of money into the
funds, but it was only a few weeks ago that Consols
began to rise, and they are barely above 90 even now.
Yet it is quite certain that capital is accumulating
all this while, for the trade of the country has no-
toriously been large beyond example. How, then,
is the enigma to be explained ? We think a solution
of every one of the questions involved can be offered
without much difficulty, and, to begin with the most
perplexing, let us take the state of the English
Funds. Consols are 5 per cent. lower than they
were after the New Year's Day speech of the Em-
peror Napoleon's had prepared us for the perils of
European war in 1859. What does that mean ? It
means that, though people have learnt that money
is not worth 30 per cent., they cannot yet persuade
themselves that it is only worth three. With the
introduction of limited liability and the application
of that principle to banks and finance companies,
the subsidence of the Funds set in, and it was argued
by men of eminent commercial information that
these securities would be permanently depressed by
the competition of the more lucrative investments
apparently established in public favour. Seven per
cent. was talked of as the interest of the future, and
even that estimate was left far behind by the new
companies. It was a poor prospectus which did"
not offer at least 10 per cent. to subscribers, and
twice or thrice that profit was commonly antici-
pated. For twoyeatrhseyorremalolyre
otbhleitseeraitmedprebssy theions
prevailed, nor were
catastrophe which ultimately occurred. It had been
shown once more that good interest was only another
name for bad security, but, though people had learnt
to distrust the security, they had not learnt to resign
the interest. They still wanted something better
than three per cent. for their money, and so, though
there was nothing else before them, they would not
take up with Consols. For the time they waited
and did nothing, bent upon getting good interest for
their capital, but not knowing where to look for it.
Just at this conjuncture came the Russian Loan, and
showed how things were going. It offered fair
interest, with equally fair security, and was, conse-
quently, snapped up in a moment. In fact, the
Emperor might have had twice as much if he had
asked for it, and more cheaply too. At that time a
correspondent in writing to us expressed his deep
regret that these millions should have been sent' out
of the country instead of being employed to revive
industry and remunerative labour at home. It was
an unfortunate diversion, no doubt, but it can be no
matter of surprise. These great industrial works
were the very investments which had proved so
ruinous. Banks and Finance Companies failed be-
cause they had made unlimited advances to establish-
ments from which they could get no return, and so
borrowers and lenders came down together, and
with them the unlucky contributors whose subscrip-
tions had provided the money. What, indeed, are
the investments in which, at this moment,the public
can be reasonably expected to confide ? Railway de-
bentures? These were certainly securities thought as
good as mortgages, but look at the case of the Lon-
don, Chatham, and Dover Company. A debentnre-
holder in that concern is not yet sure that he is any
safer than a shareholder. He thought his claim repre-
sented a " first charge" on the property, and so no
doubt it does, but as he is now told that there are
fifty other claims pressing for settlement, and that it
may actually be for his own interest to give prece-
dence to a new class of creditors. Perhaps the argu-
ment may be sound enough, but exactly in propor-
tion as it is so must a debenture fall in public esti-
mation as a desirable security. If a claim to priority
cannot or must not be enforced, what is the use
of it? But other companies, it is said, are not in
this condition. Of course not, but the mischief is
that nobody can see through railway accounts or
convince hinAlf that the whole truth of the case is
put before him. 'And if debentures and preference
Shares go unpaid, what chance have ordinary pro-
prietors ? The extraordinary evil of the last panic
consisted in the variety of enterprises which it dis-
credited together. It threw a cloud of suspicion
not only upon Financial Companies, but upon all
those numerous undertakings which the finance
houses had called into being. The collapse of these
houses last spring only expressed the previous col-
lapse of the speculations which had been supported
out of their funds, and the public, therefore, is na-•
turally afraid either to lend money to actual traders
or' to bankers who will lend it for them. That is
why this panic has been so lasting. Twenty years
ego the only things damagedin credit were railways;
now it would be hard to say what things have not
been damaged. Under tha influence of limited lia-
bility, a thousand new investments sprang into exis-
tence. When they became discredited, almost all
the means of employing money became discredited ;
and when, after all, the liability of contributors was
found to be practically unlimitietadho,etthnhoeeeceeeaaoxlsaftireotmnuhi of the
shock.
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oe p
eh
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n rwt
extent of s pahtetihrieec
have now probably been fifty.
was lavished
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oocrno
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had
throughT thhe coapPeirt aa
ti i whs
cohf
bean
subscriberscontributed w bh yo
thethousands Finance
would never have ventured upon a speculation
twenty years ago. All these concerns, too, were
flourishing'aud prosperous, according to their own
statements, up to the last minute, and were declar-
ing, or had recently declared, satisfactory divi-
dends. The same may be said of certain Railway
Companies, and that is the featureobstinacy
the which j most accountable for the o
pwrheseieinitt
imistrust.sunkn 0
wnWwhle
tta the
Who can beis -bor.oignt?a,clyAoft -exp.oec e to buy
same time, we think a glimpse of encouragement
may be obtained from the very fact which we
placA at the head of our remarks. if people
are not content with the interest ;if Consols, they
must recur sooner or later to more prafitable in-
vestments, or, in other words, to those methods of
employing money by which trade is quickened and
industry recompensed. Capital is now, as it were,
held iu suspense, ready for any promising employ-
ment as soon as distrust has subsided. We hope
that condition may speedily be .realised, but the
present aspect of affairs ought to have its lesson for
those who fancy that capit d may be easily sub-
jected to the dictates of labour. It was because
things were not pleasant at home that capital went
the other day to Russia. That money might have
found_ many thousands of labourers with good work
during this bitter winter, but the suspicions already
prevailing were not likely to be allayed by the spec-
tacle of quarrels and ." strikes." Masters and men
must understand other better if they wish to get the
advantage of the financial confidence which must
soon return.
POST. —The iong-promisel patent for reforming
the Government of Hungary has at length been
issued by the Emperor of Austria. Whatever other
lessons haire been taught to the Kaiser by the late
war, none has been more impressive than that which
teaches him the necessity of dependence on the
loyalty and co-operation of his Hungarian subjects
in maintaining in their integrity what still remains
of the Austrian empire. After the battle of Sadowa
and the retreat of the imperial army across the Da-
nube, it seemed to Francis Joseph as if nothing
would be left to him of all his extensive dominions
save the kingdom of Hungary and the scattered
provinces which on its southern frontier separate it
from the territories of the Sultan. Bohemia and
Moravia were lost. Austria Proper became un-
tenable. Venetia was virtually
.abandoned, and it
became quite possible that an army which was
believed to be one of the most powerful and best
organised in Europe might be compelled to retire
before an advancing foe, across what still remained
of the empire, to the town of Belgrade. At that
" supreme moment," as our neighbours across the
Channel would term it, the Emperor recollected
that he was King of Hungary, and in his extremity
made a touching appeal to his Magyar subjects. It
was not, the first time in the ann of history that a
similar appeal had been made. Maria Theresa had
acollected the Hungarian nobles around her when she
found her dominions threatened by the Great Frede-
rick, and received their assurances of readiness to
die in defending their Sovereign. With somewhat
less enthusiasm the Hungarian magnates of the pre-
sent day evinced their willingness to defend their

King against Frederick's successor. They could not
forget, and they did not forget, that the unity of
their kingdom, its independence, and its right of
self-government, were absorbed in the empire of
which their Sovereign was the ruler, and they re-
flected with humiliation on the fact that it was net
until his dominions had been practically reduced to
the kingdom of Hungary that Francis Joseph be-,
thought him of his Hungarian subjects. It haft,
been said that property has its duties as well as its.
rights, and, if this be true when applied to a few`
acres of soil, it must be no less true when applied:
to a great kingdom. The Hungarians were fully
jestified in thinking that if in his distress their
Sovereign conceived that he had a right to appeal
to them for succour and help, in his prosperity be
was equally bound to do all that in him lay to pro-
mote their interests. Aaid the same thought must
have occurred to the Emperor himself. Bat, in
truth, it was not a mere abstract conception of what
was just or right which carried to the mind of the
Kaiser the conviction that he was bound to con-
cede something to the demands of his Hungarian
subjects. Ihe severity of the blow struck by Prus-
sia and Italy, the heavy territorial losses inflicted,
and his total exclusion from Germany, taught hint.
that, whatever his inclinations might be, nahing
remained for him but to endeavour to consolidate
on a firm basis the eastern portions of his cnt
hire. According to the terms of the imperial patent,
an extraordinary Reichsrath will be held, which.
will be composed not only of the representatives
of those countries pertaining to the Hungarian
Crown, but also of the remaining portions of the
empire. Before all other things the Emperor deems
it most essential to proVide for the stability of the
empire, and with the view of effecting this object he
has convened this common Parliament. 4, The',._
necessities of the times," to quote from the suua-
mary which has reached us, " and the state of the
empire, require that the negotiations on the con-
stitutional question should be concluded in as short ,
a time as possible, and consequently that the rights
and claims of the non-Hungarian Crown landS
should be discussed in a common assembly." 'With,
the view, therefore, of creating the basis of a con-
stitution which, if it will not be common to the
entire empire, will at least be submitted for the
consideration of the representatives of the several.
countries of which the empire is compose& this
traordinary Reichsrath will be convened in the
course of next month. This, stated in general
terms, is the purport of the patent by which the
Emperor of Austria ha:, shadowed forth his inten-
dons of remodelling the existing form of govern'
ment in his dominions, but more especially in the
kingdom of Hungary. Whatever may be the claims
of -Hungary to be considered per se, it is apparet
that the Emperor cannot regard it as completelY
! isolated, nor would even the most enthusiastic of
Hungarian patriots contend that its interests should
be viewed irrespectively of those of the empire a_
which it forms a part. Francis Joseph, although
King of Hungary, is also Emperor of Austria, and:
he may fairly insist that the concessions made -
him in his former capacity shall not .be of such k
nature .as to jeopardise his imperial statute. The.
time has long gone by since Hungary could reason
ably
call upon her Sovereign to lose sight of tb.
other considerations in the reflection that he
her King, and all that she can now ask is that s
may be entrusted with the privilege of self
government so far is as compatible with the main
tenance of the empire in its integrity. The mg°
tiations with those statesmen who command
confidence of the Hungarian nation, to which re
ference is made in the imperial patent, have un-
questionably had for their end the attainment of
this two-fold object, and before they are brought
to a conclusion the Emperor is desirous of afford-
ing to the representatives of his non-Hungarian
subjects an opportunity of expressing their opinion
of the new system of government which he
proposes to establish. To such a course of pro-
ceeding it seems to us that no reasonable objection
can be made. The Emperor is entitled to ask the
advice of the representatives of every section of his
people before making great fundamental changes
which must more or less directly affect the interests
of all. But the necessity of making such changes
is not on that account the less imperative, and it
will be most unfortunate if the Emperor should
allow the reprsentations of his non-Hungarian
subjects to induce him to modify in *any consider-
able degree the concessions which every motive Of
policy should induce him to make to a long-suffer-
ing and ill-used people. Now that he has it°
further interest in Germany, and is freed from all
anxiety in Italy, Francis Joseph's empire must
necessarily gravitate towards, and centre in,
Hungary. To make his Magyar subjects con'
tented and happy . should therefore be the final
object of all his domestic policy.