COMMERCIAL PANIC IN THE CITY.

Daily Southern Cross, Volume XXII, Issue 2806, 24 July 1866, Page 7

COMMERCIAL PANIC IN THE CITY.

LETTER JfUOM LORD CLARENDON. The following circular, hiving reference to the recent rommeical panic, Ims been transmitted by the Foreign-office to the British embassies and legations throughout Europe: —

Foreign-office, May 12. Sir, — The monetary crisis through which this country is now passing will naturally attract great attention in other countries, and it is theiefore desirable that a clear conception should be formed both of its nature and probable extent, but more particularly of the measures which her Majesty's Government have adopted to enable the mercantile community to meet the difficulties of the present situatiou. Long-continued prosperity in conimerci.il affairs, and the general wealth consequent upon it, have produced their ordinary results in encouraging speculation, especially of a monetary or financial character, aud fostering hopes of acquiring wealth by more speedy means than are presented by the ordinary methods of commercial iuduatry. Again, the events which are taking place on the Continent have tended not only to produce immediate derangement in commercial transactions, but also to shake that confidence in the future without which a return to a souud state in monetary matters was not to be looked lor. The immediate cause, however, of the crisis .lay in the stoppage of the great discount house of Overend, Gurney, and Co., in whose handi were lodged many millions sterling, which, in other times, would in great part have formed, and which, perhaps ought to have formed, the reserves of the various private and joint-stock banks of the country. This failure directed the action of the panic agaiust the b.tnkd in London, and it was apprehended that the movemeutin the capital would be followed by a similar agitation in the rest of the kingdom, where, in addition to the large deposits in the hands of the banker?, there are many millions of paper circulation resting only on the commercial credit of the issuers. In this state of things it could not be surprising that the reserve of the Bank of England was heavily affected yesterday, and it was the combined consideration of- what had then actually happened and what might follow on subsequent days that induced her Majesty's Government to adopt the measure on which, in the course of the evening, they decided. For the money drawn from the banks, having been withdrawn from circulation under the influence of panic, the Bank of England might, without some new resource, have been unable to continue its accustomed assistance. Thus the crisis, which had been anxiously apprehended from this combination of circumst mc'es, has come at last, but with a severity and Buddenuess in regard to its immediate consequences which could not have been anticipated. The Bank of England is prepared to extend relief, to the utmost of its means, to all cases which are justly deserving of its support ; while her Majesty's Government, in full reliance on the eventual sanction of Parliament, if it should be necessary to go beyond the law as it now stands, have signified to the Bank of England their permission to hold itself free from the observance of the ordinary limitations on its issues, if the exigencies of the time require such an extraordinary measure. Her Majesty's Government trust that by this timely assistauce all commercial* establishments which are based on sound principles, and have been conducted with proper prudence, will be enabled to withstand the shock to which the panic occasioned by the recent great failure iti the city will have exposed them. Her Majesty's Government have no reason to apprehend that there is any general want of soundness in the ordinary tiade of this country which can give reasonable ground for anxiety or alarm, either in this country or abroad ; they are satisfied, on the contrary, that the present crisis, peculiar and unprecedented as it is, is onu of a character essentially more favouiable than others which have beeu successfully passed through, and that all that is required is that all classes should cooperate with the Government iv endeavouring to allay needless alarm, aud in acting with pniiieuce and forbearance while so much agitation prevails. It appears to her Majesty's Government to be of great importance that the commercial interests abroad should- be reassuied in regard to what is passing iv this country, and 1 have, therefore, lost no time in authorising you to make known to the Government to which you are accredited, and generally to those who 1 aye a direct interest in such matters, the view taken by her Majesty's Government of the present state of affairs, the active measures which have been adopted to avert any evil consequences, and the confidence which her Majesty's Government feel that thofae measures will be attended with success. The abatement of the panic in the city this morning is, her Majesty's Government trust, au earnest of the gor-d result likely to attend the measures which they have authoii&ed the Bank of England to adopt. — I am, &c, ' Clarendon.

The Home Neios reports :—": — " At the fifth, ordinary meeliug of the 13ank of Queensland, Sir Joshua Rowe piesiding, the directors' report was adopted. Mr. Hugh Muir, Becreta>y, stated that after paying all charges," and providing for the rebate of interest on bills discounted current oil 30th December, 1865, there remained a balance of profit of £10,373 10a. Id , equal to 10 per cent, per annum on the paid-up capital. A considerable amount of bad and doubtful debts had been incurred in Queensland, entirely from advances made by the colonial manager upon securities -which, now prove to be insufficient. The deficiency, estimated at £42,071 53. 10d., it was proposed to cover by the following sums, which the directors recommended to be appropriated for the purpose, viz , from balance of" undivided profit, £7,608; reserve fund, £3 000; capital account, £33,392; or, in all, £44,000 : and they recommend that this amount be held in reserve, and only written off when each debt is definitively ascertained to be bad. After making the above appropriations, there remained a balance of profit of £2,765 10s. Id., which it was proposed to carry forward to profit and loss new account. The chairman, in moving the adoption of the report, regretted being obliged to ask the 'shareholders to forego their claims to a dividend on the profits of the past half-year ; and explained that this unsatisfactory state of things was altogether owing to their colonial manager making advances on securities on sheep and cattle stations, saw-mills, and other build- > ings, one extraordinary item being £1,600 to newspaper proprietors. Had Mr. Anderson, their colonial manager, confined himself to the instructions he had received, the deficiency, instead of b«iug over £40,000, would be only about £2,600. In consequence of Mr. Andersons conduct he had been informed that, as soon as his place could be filled, he would be superseded ; but the funds of the bank w ould never again be placed under the entire control of one individual. The latest quotation is 13 per cent, discount. The letters from Liverpool give a discouraging account of the state of business, .through the fall in the cotton market. Although the embarrassments of several houses are acknowledged, it is asserted that every endeavour will be made to carry most of them forward. The losses in the staple have been exceedingly large, but at present the parties chiefly interested are understood to be very 'wealthy. If these houses can carry through, there need not be any fear of the credit of the locality severely suffering. At this juncture every forbearance should be bhown with the view of lightening the difficulties of the situation. The difficulties of Messrs. Gellatly, Hankey, and Sewell, in the shipping trade, have also been announced. The event has" been produced through exceptional causes,' and it is believed the liquidation will prove most favourable. A surplus of about £60; 000 to £70,000 is anticipated. There was no absolute necessity far the stoppage, but some of the principal parties interested thought it would be well to place the estate under inspection for the protection of the general body. Arrangements have been made for carrying forward the branch of business connected with shipping and freights, so that there will be no interruption in that department. Messrs. Stables, Straker, and Co.'s Australian Circular has the following remaiks on the month's exports to the colonies :—: — ~* shipments of soft goods having proceeded at an accelerated rate during the past month, especially to the -Melbourne market, our returns again show a considerable advance upon previous figures. The aggregate declared value for April-May is £1,197,438, against £1,034,885 for March-April, an increase of £162,553 upon the already enhanced totals last recorded.

Victoria. — The exports to this colony amount to £595,331,~an increase of -£170,559, nearly the whole of which may be placed to the account of season drapery goods and apparel, wrought leather remaining unchanged. A decline in faheet, plate, and galvanised iron is balanced by a commensurate increase in bars and pigs. Tin plates exhibit an improvement, and other metals are about an average. Oils of all kinds are on a lower acale. Woolsacks

and corncacks fully maintain last month's enhanced leturn, and shipments of machinery, slates, gunpowder, faaitpefcie, aud biackiug have been on a large scale. Tob seen is about one-third our previous rep at. 13 tiudy is stationary, but all other spirits, aud wines aie«jn larger supply. Beec on the average is nearly as la&fc. Cheese, malt, hops, and bacon and hams still go pretly freely ; the same also of most descriptions of groceries and »oilmen's stores. Some large parcels of sulphur- have been shipped during the month, and cement and quicksilver ai'e each over double our usual return.

Sydney. — The increase on the present occasion is only £13, 168, the respective monthly totals being £288,580, against £275,412. The actual increase in the soft goods department;, is nearly six times the net excess on the month ; it therefore follows that general exports should be on a lesser scale, and with ' few exceptions such is the fact. Tobacco stands at nearly- double our last accounts. Wines, spirit", and beer of all the enumerations partake in the general decline. Indeed, if the value of the, season gdods which, occupy the whole of our tables, Nos. 1 and 2, were eliminated from,pnr column of cargo values, we should have to report a considerable decrease for' the present month, instead of the slight advande : noted above. The 'Canaan' cleared originally for __ this market on the sth instant, but effected a second clearance- on the 7th ; consequently her manifest' comes forward into our next statistical month.

Queensland. — Exports show a decline of two vessels only having cleared, which, with a few " late entries, are valued afc £24,577.

AiifiiAlDE. — Shipments are in value practically ns 1a5t— £109,427, against £110,846— a decline of £1,419. Three vessels only have cleared during the statistical month, but the 'Pekina' and 'Evelyn' have since cleared.

Tasmania. — 'Che 'Thomas Brown' (278 tons)' cleared for Launcestou on the Ist instant, with cargo valued at £5,279, so far as details are received. Late entries may, however, as for other, vessels, come to hand within the next few days.

New Zealand. — Our tables quobe the manifests ef six vessels with joint cargoes returned at £174, 244, against£l62, oos in March- A pril— a present increase of £12,239. Several vessels have ckared since the close of the month, a Jivfc of which is given in the usual place. The wool sales opened on the 10th instant, under very adverse circumstances— the effect of threatened hostilities on the Continent, intensified by a financial panic of extreme severity at home, which culminated , on the opening day in the suspension of Overend, Gurney, and Co., shortly followed by that of several other establishments. The arrivals for the. series reach the large total of 166,000 bales. The first number of the " Wool Circular"' for the cnrreut series will be issued in time for the Marseilles mail of the 26th instant. From Rotterdam we are advised by Messr3. Gerbaulet'and Co. of the cargo of the ' Fraucina Willemina,' for Melbourne, last month, viz., 12,190 red and 1,100 green cases geneva,- aud 800 boxes condles. Prices of raw spirits are then stated to have again experienced a considerable advance. Note. — While the " Circular" was at press the parcel of additional entries came to hand, of which the following are the principal : — Foe Sydney, per 'Hahlaw.' — Twine, £150; soda, 5 tons ; soap, 1 ton ; appaiel, £1,040 ; apothecary ware, £600. The whole of these items will be carried to the " late entry" list in the usual way. Messrs. Willans, Overbury, and Co. 's wool report of May 2ofch says :—: — The current series of sales commenced on the 16th instant with a good attendance of -English and French buyer*, but Belgium was weakly represented, and Germany not at all. The threatening aspect of continental affairs, the . growing stringeacy of the mouey market, and the large quantity to be offered, had already prepared the way for some decline in price. Under these circumstauces, the failure of £)verend, Gurney, and Co. (limited), on the opening day of sale, created such general distrust that a reduction of 2d. per lb. on fleece wool, and Id. to I^B. on greasy 3 took place. The financial panic which immediately ensued could not fail to affect prices unfavourably, and a further decline took place, until fleece wools were quoted fully 3d, , and greasy 2d. to 2£d. per lb. below the average rates of the preceding series. In some cases, especially on the very fine flocks, the fall was still greater than this. During the past few days, however, an impression has gained ground that prices have reached the •lowest point, and returning confidence, together with the arrival of large numbers of fresh buyers from France, has already had the effect of restoring the range of value established at the outset. Already 53,144 bales have passed sale, and it is expected that altogether 166,476 bales wil be bi ought to the hammer. We take the following from the Times'* Money Article of May 26 :— The English funds this morning opened without recovery, the first transactions in Consols being at 864 to |, and there was subsequently a decline to 86§, but the market was less weak at the close, and - the final bargains were at 86| to $ for delivery, and 854 to I ex dividend for the account. Bank Stock left off at 242 to 244. deduced and New Three per Cents., 84| to 85; India Stock, 208 to 212; India Five per Cent"., 105 to £; rupee paper, 100 to 101, and 106^ to 107£ ; India Bonds, 10s. discount to par; and Exchequer Bills, March, 15s. to Bs. discount ; June, 9s. to 3s. discount. The discount demand at the Bank was very heavy, a large amount of ludian bills falling due to-morrow. In the Stock Exchange, the rate for advances on Government securities remains at 9 to 10 per cent. Tallow. —The maiket was steadier at the opening, but left off flat, at 40s. 6d. spot, 395. 91. accepted for June, and 435. 4d. October to December.