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THE BANKERS' MAGAZINE

AND

Journal of the Money Market.

JUNE, 1882.

BANKING AND AGRICULTURAL DEPRESSION. ALTHOUGH the chief centres of English banking are, like the chief centres of English business generally, with but few exceptions to be found now in the manufacturing districts, yet the part which the agricultural counties play in the monetary concerns of the country is still a very important one. The banks in the agricultural districts invariably collect more money than they can profitably employ within those boundaries. Business altogether in such parts of this country is usually on a small scale. The retail trade does not require the assistance of much borrowed capital to carry it on. There are few manufacturers and merchants doing business of anything like a large character who want to borrow largely or whose business is of a nature to cause borrowing to be profitable to them if they do so. Funds gradually accumulate with the banks in such parts of the country for the use of which there is no call. What is not wanted there is remitted to London, and employed in the discount of bills. Meanwhile, bills from the manufacturing districts are sent up to London, either by the merchants and manufacturers themselves or through the interventions of banks. The surplus funds of the agricultural districts hence supply the wants of the districts more active in a commercial sense, and both parts of the country are benefited alike-the one by the employment of their surplus funds, the other by obtaining the use of the capital which they require to carry on their industry.

There has been of late a very distinct impoverishment of most classes of inhabitants in the agricultural districts. The bad seasons, which lasted we may say from 1876 to 1880, led to

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heavy agricultural losses. Rents have not been paid with the same punctuality and have had to be reduced largely. Landlords have found their incomes curtailed while farmers have suffered more severely. The Clergy have also shared in the losses. Country shopkeepers, in towns, have found their trade diminished. It is quite possible, however, that with all this banking deposits within those districts may have declined less than would have been expected. A considerable accumulation goes on in them in bad times as well as in good, mainly because the commendable old-fashioned plan of living a little within the income is practised by many persons in such districts. There are also, always in almost every neighbourhood, whether agricultural or not, persons possessed of capital who steadily increase their means and put by money. It is desirable to mention this part of the question as it is a more important one than many persons imagine. But even giving every weight to these considerations it is obvious that the power of accumulation cannot have been so rapid as in previous years, while it is notorious that the means possessed by farmers have sensibly declined. There has been a good deal of evidence that this process was going on for a long while before the disastrous years for agricultural produce which have recently occurred.

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Few, if any, of the facts recorded in Mr. James Caird's book on the "Landed Interest are more remarkable than the statement in the appendix, which shows with unmistakeable clearness that the annual yield of wheat per acre in the United Kingdom has been gradually diminishing during the last thirty years. The diminution shown is a very serious one. From an average produce of about 29 bushels an acre in the ten years 1849-58, the yield had fallen till it was little more than 25 bushels an acre in the ten years 1869-78, a drop of something like 15 per cent. in the course of that time. That the acreage under wheat crop was steadily shrinking all this time was perfectly well known. This has been ascribed, no doubt with truth, to several very sufficient reasons. Some land really unsuited to corn crops, which under the protection of the corn laws had been broken up and devoted to that class of cultivation, was naturally turned to other uses for which it was more fit when the stimulus of protection was removed, and competition with other countries, where wheat is more readily and also more cheaply grown, has caused the process to be carried on further. But the natural inference from this would be, that as land better fitted for growing wheat was presumably being employed now for the purpose than had been the case before, what was less fit being gradually

rejected, the crops were likely to become better instead of being poorer. The contrary to this has been shown to be the

case.

The agricultural returns show the same results in the case of the live stock of the country. The diminution in the number of sheep kept in the country is very considerable. No proof of the poverty of farmers can be more sure than this. Corn growing, or at all events the growing wheat, is less profitable than it used to be. It is to the breeding and fattening stock that the attention of the farmer should be turned, yet in this very direction there is a distinct and considerable diminution in his resources. Some very remarkable statements on this point, exhibiting the main facts in a statistical form, have recently appeared in the Times newspaper. They are based on the best evidence which can be found, namely, the Agricultural Returns, and we are indebted to them for much information. These inquiries are carried back as far as 1868. The series of the returns commences two years before this; the earlier returns, however, are less complete, and 1868 is as far back as the inquiry can well be carried.

The results shown are disastrous enough. In 1881 there was only one-third of the number of sheep in Cheshire, and about half the number in Warwickshire, Worcestershire, and Buckinghamshire, which were found there thirteen years ago. From about a half to two-thirds of the former numbers are found in the counties of Gloucester, Hereford, Hertford, Leicester, Middlesex, Monmouth, Nottingham, Oxford, Shropshire, Somerset, Stafford, and Surrey. The remaining counties have not suffered so much. Bedfordshire, Berkshire, Derbyshire, Hampshire, Norfolk, Northamptonshire, Rutland, Suffolk, and the West Riding of Yorkshire have from two-thirds to threefourths of their former stock of sheep. No county is without a diminution; but more than three-quarters of the former number is found in Cambridge, Cornwall, Cumberland, Devon, Dorset, Durham, the East and West Ridings of Yorkshire, Huntingdon, Kent, Lancaster, Lincoln, Northumberland, Sussex, Westmoreland, and Wiltshire.

The decrease may be summed up as follows: There are fewer5,749,000 sheep in England and Wales in 1881 as compared with 1868, 381,000 in Scotland, and 1,564,000 in Ireland, altogether a diminution of 7,694,000. While fewer sheep are kept, cattle have not increased in proportion. It must be borne in mind that simultaneously with this there has been an increase in the land under permanent pasture, green crops, and root

crops. An increase in the numbers of sheep and cattle kept was therefore to have been expected, and not a decrease.

It may not be very easy to make an exact calculation of the money value of this depreciation of farmers' stock, but a valuation has been formed which is probably not far from the truth. From this it appears that the total money loss of farmers during the thirteen years under consideration has been from this cause not less than £8,000,000, or at the rate of £600,000 a year if uniformly distributed over the whole time.

Bankers doing business in agricultural districts will be able no doubt to check their calculations from their own experiences, and we do not doubt that these will corroborate the statement given. The present season promises better for farmers' interests than those recently passed. Should this prove to be the case, we may not be unlikely to see farmers make an effort to recover their lost ground. It is obvious that there are opportunities for the investment of money in replacing the diminished stock of farmers; and if the coming season is encouraging, we may see capital turning into this direction. This may for a time cause some demand for the use of money. But the root of the matter lies far deeper. Many years must elapse before the farmers' interest of the country can recover the losses which it has recently experienced. Competition with America may explain part of these losses; but it is plain that the downward course has been many years in progress. New arrangements between landlord and tenant will gradually have to be worked out. Into that we cannot now examine; but if farming in the United Kingdom is to exist as a profitable industry, it is clear they must be such as will encourage the application of capital to land.

NEW SECURITIES AND THE LONDON MARKET.

NINE months of quietude have given London subscribers time to digest the surfeit of new securities which they undoubtedly had in the first half of 1881. The rise in money last autumn effectually quieted the London Stock Exchange, and gave it the rest which internally it was beginning to be much in need of, aud happily prevented our becoming involved in the Paris crash of January last. The present time, therefore, finds this market with comparatively light commitments, with most of its last year's new securities placed in what may be termed ultimate hands, and without any serious losses recently incurred to be written off. Indeed, the London market has lately made some

profits over the Paris crisis. Hence, now that money is cheap again speculation is again drifting here; and, though the political events which have lately moved the nation have for the moment checked gambling in some of the leading departments of the Stock Exchange, it has not checked the strong flood-tide of new securities.

During May this influx has been considerably more extensive than in all the previous four months put together. The application of first importance has undoubtedly been the second half (£14,589,800) of the Italian loan of last year. At the issue price of 88-or 2 per cent. under the first moiety-it would appear to have attracted a fair amount of subscriptions, though it is reported that it was not entirely covered. Still, this is a matter of no great moment, for European markets will readily absorb the balance. Then, there have been a number of external railway applications from America, Spain, India, the Cape, and Brazil; and of more miscellaneous ventures, a good sprinkling have made their appearance, though some of them it is said have not been well received.

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But, after all, it has been the "electricity market" which has witnessed the great speculative excitement. Since the beginning of this year over thirty companies of this class have been brought out, involving net subscriptions to the value of over £7,000,000, after making deductions for shares allotted to vendors. Of this total no less than twenty-six companies, with a combined application of £4,250,000, were brought forward last month, and most of them obtained the money they asked for. Indeed, for many of them, the rush of subscribers was great. Some of the companies were fully placed on the first day of applications being received. Yet it hardly appears that the public have been so infatuated with the electric light and power mania as the Stock Exchange itself has been. Speculators therein have found that every company of the class brought out went to a premium, and that applications for shares would probably place them in possession of similar premiums; and hence it would seem that most of these shares have passed into the hands of operators who will have to sell again. Indeed, the premiums quoted upon not a few of the concerns recently introduced have already vanished, and selling will not prove so profitable an operation as those led away by the rush anticipated.

The occurrences which have brought about this speculation are worthy of consideration. In the first place it may be conceded that electricity is a great power, the utilisation of which is even as yet but little understood. The exhibition at the

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