Black Friday and Our Own Best Interest
There is a run on the "banker's bank" as stock prices collapse. The London bank "Overend, Gurney and Company" has made its name offering commercial loans to banks. (This is called "discounting".) After the retirement of Mr. Gurney, the bank expanded its investments, apparently oversubscribing in railway stocks. Realizing the bank was overextended they attempted to increase their liquidity by selling stock in the bank during the recent stock market upturn, but when the market takes a quick downturn, especially in railway stocks, the bank's account holders are left holding the bag and it is a BIG BAG: about 1.2 billion dollars in modern money. (Breathe in. Breathe out.) The Overend Bank seeks a bridge loan from the Bank of England to get them over this little patch. DENIED! The Overend Bank takes a flying leap into oblivion taking a lot of big investors with them. Discount rates shoot up to 10% causing commercial loans to dry up and sending 200 companies to the chopping block. Unemployment soars to 8% and while that percentage is fairly high, it is survivable, so exactly how the worker's riots got started is more due to the political situation than the economic one. The workers blame the government for yet another fowl up. The workers are fighting for men's suffrage, and more men will get the vote in England and Wales next year. (Women are still at the back of the line.)   
The Trans-Atlantic Telegraph is in Business
Actually, TWO Trans-Atlantic telegraph cables are now working. Last year one of the cables was lost, but the captain took a reading in order to pin point its position for later recovery. Cyrus Field or "Lord Cable" is the American who has been pushing this project along which as become a British project since the American War between the States broke out. With the sudden loss of the cable last year, Cyrus thought that the project was lost too, but the communication break in the cable caused great concern. It was believed the ship had been lost, so when the ship returned intact, Cyrus was a hero! New financing allowed him to build a second, lighter and better designed cable which they laid across the Atlantic this year. Then they returned to the original location where last-year's cable was lost and hooked it. They spliced into it and carried the line all the way across, establishing two telegraph lines. With the recent troubles in the London stock market, the cables are already making money as buy and sell orders wing their way across the Atlantic. The financial world has become a lot smaller as the telegraph creates a unified system.  
The Struggle for Civil Rights Begins
The first Civil Rights Act is passed into law over the veto of President Andrew Johnson. The 13th Amendment to the Constitution has already ended slavery, but Black Codes (or laws) passed by individual states have imposed taxes on ex-slaves who cannot find work. Let's work out the logic of this: An ex-slave or Freedman cannot find work, so he is taxed, but he can't pay the tax because he is out of work, so the Freedman is arrested for tax evasion and forced to work for the state to pay off the debt, after which he is a former-felon who cannot find work. Wash. Rinse. Repeat. To resolve such injustices, the US Congress passes the Civil Rights Act which grants citizenship to any number of people including Freedmen and grants them equal rights to enter into binding contracts, to sue in the courts and to prevent discrimination on the job based on race. There is some doubt as to whether the Congress has the authority to pass such sweeping legislation. Nevertheless, enough Congressmen object to the current injustices to override President Johnson's veto. Then the Congress begins work on the 14 Amendment to grant themselves the authority to do what they already did.       
In Other News
- The first daylight bank robbery by Jesse James and company. A bank in Liberty, Missouri is owned by a Republican and Jesse James and his gang are out-of-work, former Confederates. What could be more natural? 
- Alfred Nobel invents dynamite. He uses diatomaceous earth to stabilize nitroglycerin and BAM! He is going to be rich! DuPont is blowing it. 
This Year in Wikipedia
Year 1866, Wikipedia.
- Overend, Gurney and Company - Wikipedia (2016). Retrieved on 7 September 2016. “After Samuel Gurney's retirement, the bank expanded its investment portfolio, and took on substantial investments in railways and other long-term investments rather than holding short-term cash reserves as was necessary for their role. It found itself with liabilities of around £4 million, and liquid assets of only £1 million. In an effort to recover its liquidity, the business was incorporated as a limited company in July 1865 and sold its £15 shares at a £9 premium, taking advantage of the buoyant market during the years of 1864-66. However, this period was followed by a rapid collapse in stock and bond prices, accompanied by a tightening of commercial credit. Railway stocks were particularly badly affected.”
- Reform Act 1867 - Wikipedia (2016). Retrieved on 7 September 2016. “Before the Act, only one million of the seven million adult males in England and Wales could vote; the Act immediately doubled that number. Moreover, by the end of 1868 all male heads of household were enfranchised as a result of the end of compounding of rents. However, the Act introduced only a negligible redistribution of seats. The overall intent was to help the Conservative Party, yet it resulted in their loss of the 1868 general election.”
- Panic of 1866 - Wikipedia (2016). Retrieved on 7 September 2016. “The crisis led to a sharp rise in unemployment to 8% and a subsequent fall in wages across the country. S”
- Subprime mortgage crisis - Wikipedia (2016). Retrieved on 7 September 2016. “A proximate cause was the rise in subprime lending. The percentage of lower-quality subprime mortgages originated during a given year rose from the historical 8% or lower range to approximately 20% from 2004 to 2006, with much higher ratios in some parts of the U.S. A high percentage of these subprime mortgages, over 80% in 2006 for example, were adjustable-rate mortgages. These two changes were part of a broader trend of lowered lending standards and higher-risk mortgage products. Further, U.S. households had become increasingly indebted, with the ratio of debt to disposable personal income rising from 77% in 1990 to 127% at the end of 2007, much of this increase mortgage-related.”
- Anatomy of a Bail-In by Thomas Conlon, John Cotter :: SSRN. papers.ssrn.com (2016). Retrieved on 7 September 2016. “To mitigate potential contagion from future banking crises, the European Commission recently proposed a framework which would provide for the bail-in of bank creditors in the event of failure.”
- Competition and Crisis in Mortgage Securitization by Michael Simkovic :: SSRN. papers.ssrn.com (2016). Retrieved on 7 September 2016. “Competitive mortgage securitization has been tried three times in U.S. history - during the 1880s, the 1920s, and the 2000s - and every time it has failed. Most recently, competition between mortgage securitizers led to a race to the bottom on mortgage underwriting standards that ended in the late 2000s financial crisis.”
- Missteps to Mayhem - Vanderbilt Magazine - Vanderbilt University. news.vanderbilt.edu (September 1, 2011). Retrieved on 7 September 2016. “The intent was to increase pressure on banks to make loans to less credit-worthy customers—and they did. Subprime issuance bloomed in the 1990s. Then in 1999 the Gramm–Leach–Bliley Act repealed the Glass–Steagall Act of 1933 and officially removed the increasingly leaky separation between the activities of Wall Street banks and depository banks.”
- Grun, Bernard. The Timetables of History: A Horizontal Linkage of People and Events. Simon and Schuster, 428-429.
- Gordon, John Steele. A Thread Across the Ocean. Walker & Company. ISBN 9780802713643.
- Alex Shrugged notes: I've read the book "A Thread Across the Ocean from cover to cover, and most of my remarks come from my memory of that reading last year.
- Civil Rights Act of 1866 - Wikipedia (2016). Retrieved on 7 September 2016. “It was mainly intended to protect the civil rights of persons of African descent born in or brought to America, in the wake of the American Civil War. This legislation was enacted by Congress in 1865 but vetoed by President Andrew Johnson. In April 1866 Congress again passed the bill. Although Johnson again vetoed it, a two-thirds majority in each chamber overcame the veto and the bill therefore became law.”
- Civil Rights Act of 1866 & Civil Rights Act of 1871 - CRA - 42 U.S. Code 21 §§1981, 1981A, 1983, & 1988 - findUSlaw. finduslaw.com (2016). Retrieved on 7 September 2016. “Sec. 1981. Equal rights under the law. 1981a. Damages in cases of intentional discrimination in employment 1983. Civil action for deprivation of rights. 1988. Proceedings in vindication of civil rights.”
- America’s First Civil Rights Act. lincolncottage.org (April 6, 2016). Retrieved on 7 September 2016. “Indeed, these laws in many ways mocked the idea of emancipation and freedom of movement. Although the particulars varied by state, a common theme was requiring black people receive the permission of their current employer before seeking new employment elsewhere. And any white businessman caught enticing the worker of another would face punishment as well. Mississippi’s Black Codes imposed a tax on all black people ages 18-60. Failure to pay the tax gave the state the power to 'hire out' the black person to anyone who would pay the tax on their behalf. A similar system arose for black people convicted of vagrancy, which evolved into a massive system of convict labor by 1900 that has been described as 'slavery by another name.'”
- Civil Rights Act of 1866: Purpose and Provisions ***. american-historama.org (April 2016). Retrieved on 7 September 2016. “The President Johnson vetoed the Civil Rights Act of 1866 on 27 March 1866 stating that blacks were not qualified for United States citizenship and that the bill would 'operate in favor of the colored and against the white race.' The Republicans in Congress were outraged and overrode the presidential veto on April 9, 1866.”
- 150th Anniversary of the Civil Rights Act of 1866 - Biography.com. biography.com (April 6, 2016). Retrieved on 7 September 2016. “To the Senate of the United States: I regret that the bill which has passed both Houses of Congress, entitled 'An Act to protect all persons in the United States in their civil rights, and furnish the means of their vindication,' contains provisions which I cannot approve, consistently with my sense of duty to the whole people, and my obligations to the Constitution of the United States. I am, therefore, constrained to return it to the Senate (the House in which it originated) with my objections to its becoming law. Andrew Johnson Washington, D.C., March 27, 1866.”
- American Experience - Reconstruction: The Second Civil War - Black Legislators - PBS. pbs.org (2016). Retrieved on 7 September 2016. “President Andrew Johnson's veto of the bill was overturned by a two-thirds majority in both houses of Congress, and the bill became law. Johnson's attitude contributed the growth of the Radical Republican movement, which favored increased intervention in the South and more aid to former slaves, and ultimately to Johnson's impeachment.”
- Veto of the Civil Rights Bill - Teaching American History. teachingamericanhistory.org (2016). Retrieved on 7 September 2016. “Yet it is now proposed by a single legislative enactment to confer the rights of citizens upon all persons of African descent, born within the excluded limits of the United States, while persons of foreign birth, who make our land their home, must undergo a probation of five years, and can only then become citizens upon proof that they are of good moral character, attached to the principles of the Constitution of the United States, and well disposed to the good order and happiness of the same.”
- United States v. Wong Kim Ark - Wikipedia (2016). Retrieved on 8 September 2016. “Upholding the concept of jus soli (citizenship based on place of birth), the Court held that the Citizenship Clause needed to be interpreted in light of English common law, which had included as subjects virtually all native-born children, excluding only those who were born to foreign rulers or diplomats, born on foreign public ships, or born to enemy forces engaged in hostile occupation of the country's territory. The court's majority held that the subject to the jurisdiction phrase in the Citizenship Clause excluded from U.S. citizenship only those persons covered by one of these three exceptions (plus a fourth 'single additional exception' —namely, that Indian tribes 'not taxed' were not considered subject to U.S. jurisdiction). The majority concluded that none of these four exceptions to U.S. jurisdiction applied to Wong; in particular, they observed that 'during all the time of their said residence in the United States, as domiciled residents therein, the said mother and father of said Wong Kim Ark were engaged in the prosecution of business, and were never engaged in any diplomatic or official capacity under the emperor of China'.”
- Half dime - Wikipedia (2016). Retrieved on 7 September 2016. “The half dime was one of the early coins of the U.S. Mint. Authorized by the Act of April 2, 1792, it lasted until 1873.”
- Nickel (United States coin) - Wikipedia (2016). Retrieved on 7 September 2016. “In anticipation of the approval of the new five-cent coin, the Mint's chief engraver, James B. Longacre, had begun preparing designs and pattern coins in 1865. After rejecting pieces showing deceased presidents George Washington and Abraham Lincoln, Treasury Secretary Hugh McCulloch decided on a design similar to Longacre's two-cent piece, with a shield on the obverse and a numeral 5 surrounded by stars and rays on the reverse. This has come to be known as the Shield nickel.”
- Jesse James - Wikipedia (2016). Retrieved on 7 September 2016. “These men were the likely culprits in the first daylight armed bank robbery in the United States during peacetime, the robbery of the Clay County Savings Association in the town of Liberty, Missouri, on February 13, 1866. This bank was owned by Republican former militia officers who had recently conducted the first Republican Party rally in Clay County's history. One innocent bystander, a student of William Jewell College (which James's father had helped to found), was shot dead on the street during the gang's escape. It remains unclear whether Jesse and Frank took part.”
- Kelly, Jack. Gunpowder: Alchemy, Bombards, and Pyrotechnics : The History of the Explosive That Changed the World. Basic Books. ISBN 9780465037186. “After trying many absorbents--charcoal, sawdust, cement--he hit on diatomaceous earth, the tiny silica skeletons of algae, as the ideal dope.”