ABSTRACT
The financial depression after the crisis of 1866 was both long and severe for although there are indications that the capital market was beginning to revive in 1868, a major upswing in economic activity did not develop until the last quarter of 1869. Foreign trade, the continuing engine of economic growth, began to recover during the closing months of 1868. However, the revival of financial and business activity was hesitant being disturbed by the Franco-Prussian war and affected by the course of the American business cycle. In England the slow unwinding of the speculative and heady boom of the first half of the 1860s was a continuing demper on business psychology during the last four years of the decade. The Economist remarked in December 1866:
"The state of the money market indicates that much money is lying idle which the owners do not know what to do with. Confidence is said to be shaken and in many things is shaken. But as soon as any investment is proffered in which the public have faith, be it a Russian loan, or a Queensland loan, or a Victoria loan - the sums subscribed commonly exceed the sum asked for. There is evidently a mass of money craving for a safe and not extreme income, if only it knew where to find it."1
