26 OCTOBER 1878, Page 11


ENGLISH Middle-class people, by which we mean just now people with small realised properties besides incomes from work, are at this moment not happy at all. Peace has departed from them. They do not care about their money as Continentals of the same class do, can let it go without despairing, and are in- disposed to protect it by incessant watchfulness ; but still they value it much, and they have become, for the hour, exceedingly uneasy about its safety. The world seems inclined to reel about under their feet, and their fixed ideas are all shaken. They had all begun unconsciously to regard the pecuniary progress of England as a sort of law of Nature, and the " shrinkage of values" which has commenced, and which, if we judge circumstances aright, has by no means ended, perplexes and in many cases irritates them excessively. They do not know what to do to pro- tect their money. They believed in house property quite strongly, especially in house property in great cities, and house property seems to fail them in a most bewildering way. They cannot let their houses as they did, and they are for the first time in many years uneasy about their mortgages on " shells," houses just on the point of being finished. Houses are not quoted on 'Change, and " shells " are not quoted anywhere, but the amount of quiet people's money put into both would, if the figures were recorded, startle anybody but lawyers, who know the passion of small in- vestors for anything that looks safe and promises 5 per cent. Such investors are not getting their 5 per cent. just now at all easily, or anything per cent. ; and though they have the comfort of seeing their securities, and repeating to themselves that houses cannot melt or run away, they aro not happy in their minds at all. Why should so many builders fail and so many houses remain unlet, and when is the turn of the tide going to arrive ? is their money with the Building Societies quite safe ? They think it is, but they are not sure, and are uneasy, with an uneasiness which, as the Secretaries to those Societies know, produces the most bewildering rushes, often—though, be it carefully remarked, not always—without meaning, and sometimes absurdly misdirected. Houseowners are worried, and so still more are the holders of gas bonds, though in a different way. About a third of the latter are genuinely panic-stricken, quite wretched, indignant that a nasty American should be worrying them with inventions, and sending down their nice, solid properties, which they used to quote so triumphantly as proofs of their acumen and forethought, but do not doubt that he has beaten them "for good." The remainder, though quite as uneasy, are in a pet with their neigh- bours' folly ; tell you that electric light is all nonsense, affirm, what they do not believe a bit, that if they had spare money they would buy nothing but gas shares, and hold on to their bonds with a tenacity which may turn out wise, but may also cost them very dear indeed. Both classes want convictions, and know they want them, and do not know where to look for them. So do the owners of shipping shares, who have had 15 per cent. occa- sionally, and suspect their own shares, therefore, holding that God made 5 per cent. the natural interest on visible property, and that to get more is to steal an advantage on one's neighbours. They are not now getting a clear 2 per cent. So do owners of shares in all manner of industrial undertakings, usually quite solid, and now suffering till their perplexed proprietors fret every evening in an agony of indecision whether they shall sell or not. As for the owners of Bank shares, they are demented. What has happened to the Banks, to make them suffer like this, and lose ground, sometimes by a fifth or sixth within six months ? Arc they going to pieces like the City of Glasgow Bank? The owners do not know, they understand nothing about banking, they realise for the first time the full extent of their liabilities, and they, very often quite needlessly, chuck their properties into the gutter, rather than bear the anxiety any longer. People realise with sufficient clearness the misery inflicted in West Scotland by a failure like that of the City of Glasgow Bank, but they do not realise the anxiety, amounting often to misery, which its reflex effect produces in England. Shareholders in equally unlimited Banks think they may '-e involved in the same way, and grow sick with doubt whether they ought to sell at a sacri- fice or not. (Clearly, they ought not, as they are liable either for three years or one year, and sale in a panic will not rid 1 them of their liability at all.) There is one Bank in Britain, at 1 all events, which is everywhere, which always seems prosperous, and which, for aught we know or suspect, is as safe as the 1 Bank of France, but in which the shares are chiefly held by well-to-do county-town people, who wake up under news like

this from Glasgow into a sort of frenzy of annoyance and alarm. It is not pleasant, if you are ever so safe or so certain, to have your best friends giving you solemn little warnings. You may know all about it, just as you know your lungs are sound, but the tenth advice in one day to take more care about that cough fixes the word " pulmonary " for ever in your mind. Even owners of Consols are not happy. Consols cannot fail, and Smith knows that if they passed par he would not sell ; but all the same, he hates to see them go down by sixteenths, in that exasperatingly steady way. Something is wrong with the world, and where is his bank balance to go to ? He has not the slightest idea. If he lets it stop in the Bank he may lose it, or lose the use of it for six months, which is nearly as bad. If he draws it out, he will never sleep for care-taking, with such a sum in the house. If he invests it, what is the investment to be, and can he get at it quickly enough ? and if he puts it in the Bank of England, he has a new account to open, perhaps in an inconvenient place. (What is the reason of the reluctance of the Bank of England to open London branches ?) People everywhere are think- ing over these things, with the intentness with which men think over their immediate and pressing interests, and with a sort of fretfulness, born partly of indecision and partly of keenness, which would deepen in a moment into either panic or rage. If the Chancellor of the Exchequer were to make a mistake just now, and do anything, no matter what, that the Money Market disapproved, he would be stung to death, for all his explanations, by persons whom he never heard of, but who would be as unreasonable for the moment as frightened wasps.

It is very difficult to give advice under such circumstances, and the City Editors ought not perhaps to be blamed for not giving it well. Still, they are not giving it well. Almost all of them think it their duty to prevent panic, which is quite right ; and that the best way to prevent it is to deny danger, which is quite wrong. When the air grows electric, people feel danger, and all the weather prophets may prophesy smooth seas without inducing anybody to go to sea. It would be far wiser to admit the danger, such as it is—it is not extreme, for an accident is required to make a crash—and point out clearly the many chances of safety. Our anxiety is, however, not for the City Editors' clients, but for the middle-class investors ignorant of City lore, but awake to a notion of danger, who are just now in such perplexity and fear. We would say to them all, that a little calmness will be their best help. If they are unlucky enough to own Bank shares with heavy liabi- lities above the amount paid up, let them resolve to sell them, but not to sell them now. They cannot get rid of the liability, and they only increase panic by trying to do so. Trustees in particular are naturally frightened, but they are simply insane in shaking confidence in old institutions by a stampede which carries them nowhere, and may bring down everything on their heads. They are responsi- ble for a year, whatever they do, and should sit down and sit still for a month or two. This scurry will be over before Christmas, and they cannot get out before that. As to the holders of other properties, gas shares excepted, their best course is to wait and see how things go. We do not ourselves believe in a speedy revival in trade or in a short cycle of depression, holding that three great trades at least are in a very bad way ; but properties will not fall rapidly now, except perchance for a moment, if the " Black Friday" comes, and every solid stock will rise again. There has been no over -production of solid securities, such as a great war might produce, for even this Government cannot destroy the value of Exchequer bills, though it can make them a nuisance. Houses, mortgages, Consols, and the like could hardly be sold at a worse time. Gas, no doubt, is a puzzle. Our own belief, on the whole, is that its day is over, that the scientific world is just in the state in which discoveries are made,—hundreds of clear minds working sleeplessly at a particular and very narrow difficulty, the subdivision of the electric light —and that shareholders are well out of it ; but some of the first electricians in the world, men without ages share, doubt this, and allege that the difficulty of coat is misunderstood, and that though the Gas Companies may be hit, they will be able to save, say, fifteen shillings of their pound of profit. For everybody else, at all events, a little patience will be well ; and as to depositors, they can get nothing by mad runs. If their stake is too large, let them hold Consols for a time, or Exchequer bills, or anything they can get that will keep its value ; but let them not be rushing at the Banks, which, if let alone, will be as safe to- morrow as to day. Their stake is not unlimited ; most of them are quite sure, under any circumstances, of their money in the end ; and their visible fright is just the very thing needed to cause a general overturn. Let each man be just as

discreet as if he alone were in danger, and resist to the utmost the mental influence of the crowd. It seems absurd to write such platitudes—and we are half ashamed of them ourselves—but we have been greatly struck by the spectacle recently presented by depositors in some Building Societies. They have been rush- ing, in Manchester, for example, on their trustees as if raging crowds, wild with passion and fear, could make property safe. We know nothing about the Societies, which may for us be worth fifty shillings in the pound, or only five ; but crowds of excited people, blocking up doorways, swearing, striking, and fainting, in their furious desire to draw deposits, can by no conceivable pos- sibility benefit anybody. By great good-luck, those Societies could drop their shutters without being insolvent, being only bound to pay deposits after a month's notice, and in a few hours they were all safe again ; but Banks so treated must go, there is no doubt of that. If they are solvent ten times over, they cannot get all their deposits into their vaults in twenty-four hours. We do not see why men should not be ashamed of selfish timidity about their money, as well as about their lives, or why they should not be told, like the poor wretches in a music-hall under a false alarm of fire, that the strong have some duties to the feeble, and some obligation to meet what happens with decent self-respect. Nothing justifies a well-to-do man with a moderate deposit in helping on a panic. The timid might learn something from the Scotch. The Directors of the City of Glasgow Bank may be rogues, but the Shareholders are certainly brave men. The absence of useless whining among them is most noteworthy, and at the meeting to arrange ruin, only one man cursed, and he did it in the respectable, though bitter Scotch way. He only intimated a strong wish that the rogues would turn Christ- ians, and a strong belief that if they did, they would be horribly unhappy, from remorse.