Rutland weekly herald. [volume] (Rutland, Vt.) 1859-1877, 1866-05-31
Freedmen's Courts have been abolished
in consequence.
Causes OF she English Financial
Panic.


Panic.
The Pail Mall Gazette of the 18th inst.
has an editorial explanation or the eau
SEES of the financial panic In London,
which is more explicit than any other
we have met with, If not more conelu-
slve. The writer says that the panic
cannot be attributed to any of the ordt-
nary causes, like business losses, failure
of crops, cotton famine, excessive export
of bullion, &c, &c. The financing
system" Is at the bottom OF the whole
difficulty, and what this system Is may
be gathered from the circumstances OF
the first great victims OF the panic, as
follows:
THE legitimate business of Overend,
Quincy s. Co. was TO discount ollls,
which. TO people possessed of the neces-
sary capital and experience is one OF the
safest ways Of making money that can
be imagined, and one by which the mem
bers of the old firm had at one time &C
cumulated fabulous wealth. Unlucklly
however, for themselves and the public
they took to advancing money in i'm,
meuse sums to finance companies and
similar bodies on securities which could
not possibly be converted into money
for many months, perhaps even for
wears. In order to enable them to do
this, large numbers of bankers and 9TH
err persons deposited with them their
surplus cash, which could be called in
either on demand, or at very short no.
tice, and we have reason to believe that
when they stopped payment their posi-
ton might not have been represented
very incorrectly by the following figures.
They had capital of 81 100000. They
had deposits which were unsecured, and
for which, accordingly, they were imme-
diately liable, of So, 100000. They had
also e6,000,000 of deposits, for which
the depositors held securities. They had
less than half a million of approved
bills or other securities in their hand, on
which money could be advanced by any
prudent company. What their claims
upon their own debtors were we do not
pretend to know. The shares of the
company, as every one knows, were at
10 premium not long since, but by some
of those fluctuations, and it may be by
some Of those ingenious maneuveres
|
began to fall some time ago. When the
fall had once set in, it had tendency to
increase, as the shareholders did not un-
derstand the immense liabilities which
they had incurred As the shares fell,
the depositors became alarmed and with
| drew their balances, and inasmuCh as
the company had locked up all their
funds in securities which were for prac-
tiCal purposes inconvertlhle, the result
was their stoppage.'
Their application to the Bank of Eng,
land failed, Of course, for the securities
they were able to offer, amounted to less
than half million, while their immedi
ate liabilities were seven times as much
In short, they arrived at the natural enc
of their course of doing business, which
was TO lend for long terms, and at ar
enormous interest, money which they
had borrowed from others for short pc
RODS and at lower interest. So long as
the loans for short terms were for thCom-
ing, they, no doubt, made great profits
but as soon as they were withdrawn
ruin was inevitable. The writer adds
1t is easy to see how a catastrophe o
bankers who were known to have made
deposits with Overend, Quincy & Co. t.
a large amount were of course supposed
to be themselves in danger and hence 6
run came upon them. They in turn haC
to apply in some instances to the Banl
of England for assistance, and though
that assistance has been most literally
given-we believe that the amount o
bills discounted yesterday was create
than had ever been known before-th
Bank Charter Act prevented certain
limit Of accommodation from being
passed"
According to the latest intelligence
the panic had pretty much subsidized
There have been a few more failures, bu
government and other securities on tn
London Exchange have recently i'm
proved and no further depression is ap
pretended.