Published unsigned, without a headline, as a leading article in the New-York Daily Tribune, No. 5206, December 26, 1857, p. 4; attributed to Karl Marx by MEGA² (I/16), whose title is used here and where the text is first republished. Text from the original newspaper (Library of Congress, Chronicling America). Traducción al español.
The commercial and industrial state of England during the week ending Dec. 10, of which we received full accounts by the Persia yesterday, exhibits a peculiar feature. While a decided improvement is apparent in the position of the Bank of England, due to a temporarily favorable turn in the bullion tide, everything else, save the public funds and the share market, looks more and more gloomy. Even the bullion market seems laboring under conflicting influences, its upward tendency having been checked on Dec. 10, as it had been on Dec. 4, by a high pressure for silver, raising the price of the latter to 5s. 2⅜d., while at the same time a continental demand, however small, had again set in for gold. The markets of railway shares, mining shares, and joint-stock bank shares, which at the opening of the week were all buoyant, had also declined on Dec. 7, and had not recovered. Still all these variations are bounded by too narrow limits to disparage the generally favorable aspect of the bullion, stock and security markets. The London failures occurring from Dec. 3 to Dec. 10 were, indeed, by no means unimportant, since they reach the number of twenty-one, and involve, for nine firms only, liabilities to the amount of £1,300,000. But apart from eight failures belonging to the Stock Exchange, the other disasters have mainly occurred in the German and Northern trade, and might, therefore, be fairly considered as the inevitable and comparatively cheap discount on the London market of the Hamburg and Baltic catastrophe. The important point upon which we wish to fix the attention of our readers, and which is of vital importance for this country, is the accelerated approach of the crisis in the English produce and industrial markets. What we have till now witnessed in England, apart from the commencing distress of the working population, and the restriction of productive forces, has in its main features been nothing but a monetary crisis, which consists still more in the inconvertibility of bills of exchange against bank notes than in the inconvertibility of bank notes against gold. Now the tightening of the terms of credit may certainly affect the produce and industrial markets in a serious manner, and may even work them up to an explosion; but, on the other hand, these markets possess movements of their own, in regard to which the movement of the money market appears not as a cause but as an effect.
From 1839 to 1842 English industry went through the most direful trials, while the money market was easy and the corn market buoyant. In the year 1850 great losses were inflicted on the English produce market, while the money market was as little affected as industry. During the Autumns of 1854, 1855 and 1856, monetary pressure prevailed through the whole of Europe, while industry went on taking an unprecedented start and the quotations of every kind of products, raw materials, provisions and colonial produce, realized prices the standard of which was so exceptional as to be ascribed to a corresponding depreciation in the value of gold. At this very moment it is not the monetary pressure which keeps down the industrial and produce markets in England, but it is the commencing crisis in those markets that keeps down monetary credit. What leads astray the London money-article writers is the thoughtless comparison of the crisis of 1857 with that of 1847. In the latter year the general crisis subsided, indeed, consequent upon the suspension of Peel’s Act, and the cessation of the imaginary panic it had created. But why so? Because the crisis in the produce market, beginning as early as May, 1847, had long since burnt itself out; while the manufacturing districts, comparatively speaking, escaped unscathed, since the surplus capital of the nation had for the most part been invested in railways instead of in factories. The monetary panic of 1847 was the mere London epilogue of a drama whose five acts had been enacted from May to October, on the whole surface of the country, while the monetary panic of 1857 is the mere Lombard and Threadneedle street prologue to a drama whose principal scenes will be enacted at Manchester, Liverpool and in London itself, at Mark lane and Mincing lane.
To commence with the produce market: its general feature, whether we take London or Liverpool, is that, the markets opening with a partial improvement on Friday, Dec. 4, the advance was again lost on Saturday, Dec. 5, and until the 10th went gradually but surely down. Sugar, for instance, having realized in some qualities a rise of 1s. to 1s 6d., had on Dec 9 sunk to a point lower than before Dec. 4, the fall in the better qualities amounting to 6d., and in lower ones to 1s. per cwt. The same tale may be told of coffee, tea, dyestuffs, saltpeter, wool, silk, hides, metals, cotton and breadstuffs. But how has even this decline been maintained within its actual bounds? The mere falling off in the demand for raw materials in consequence of the check put upon their use by manufacturers, and for other produce in consequence of the general restriction of expenditure throughout the country, ought to have lowered the prices in a much greater proportion, even if the supply had remained the same, and even if these descriptions of commodity were not violently depreciated by the action of the Hamburg and Baltic collapse. But the supply has not remained the same, nor diminished, but on the contrary has vastly increased, the extraordinary prices of these articles having naturally led to an extraordinary increase in their production. Thus the London stock of sugar exceeded already on Dec. 7, by about 20,000 tuns, that of the corresponding day of last year; rice by 12,000 tuns; coffee by 14,000 tuns, and so on. In the departments where the deliveries are still comparatively small, as in cotton and corn, large quantities are known to be on their way, or to have come forward at a more or less distant date. The secret of the comparatively slow fall of the produce markets, after the first great and sudden collapse in general prices, is simply that the supply is artificially depressed to a low ebb, holders keeping their stocks back in the vain hope of catching, at the right moment, the occasion of an increased demand. This process, by dint of which supplies, absolutely and relatively large, are converted into small deliveries, could not fail to send prices up at a low ratio indeed for the day, and to restrict their decline on the following days. The fall itself, however, is not to be out-manœuvred, since the falling off of the demand is perpetually overtaking the curtailing of the supply, and since forced sales, resulting from the insolvency of individual holders, are continually breaking through the conventional checks which sellers put upon the market. The longer the play is continued, the more new supplies will have found their way to England, and the more actual demand for manufacturing purposes as well as for immediate consumption will be checked by the maintenance of artificially enhanced prices. Between the increase of the real supply and the decrease of the actual demand, all that holders can contrive to do is to moderate the fall, and to give it the quiet aspect of a sliding scale, temporarily interrupted by some slight advances. The apparent quiet of the movement contributes in its part to confirm them in their obstinate delusion, until at last the situation becomes untenable. That moment arrives as soon as the foreign bills drawn upon them for their stocks, and contracted at prices which rule from 35 to 40 per cent higher, will have fallen due. Then a panic will ensue and forced sales will carry all goods before them. No expansion of the money market, which the holders are anxiously expecting, will cure this mortal malady. Advances upon produce will go down with the prices of produce, and their relieving effect thus be paralyzed by the very decline of prices which they were to counteract. It should never be forgotten that in fact all merchants deal, not in the value of produce, but in its surplus value. As far as the value of produce is concerned, they do nothing but transmit it from the producer to the consumer. As soon, therefore, as prices have come down so low as to not only eat up the surplus value but to cripple the very value of the commodity, the merchant is a bankrupt, if he is not an exceptionally heavy capitalist. As far as from this distance we can observe the movements of the London and Liverpool markets, we are inclined to consider the execution of the holders of stocks of all kinds of raw materials at those two places as rapidly approaching.
If we turn now to the manufacturing districts of England, we find, throughout, mills closing, short time extending, a growing number of operatives thrown on the street, and a frightful increase in the aggregate amount of pauperism. At Manchester, Preston, Akrington, Blackburn, Burnley, Chorley, Clitheroe, Darwen, Bacup, Mossley, Leeds, Halifax, Derby, Macclesfield, Stockport, Birmingham, Sheffield, Rochdale, Barnsley, Bolton, Oldham, Carlisle, everywhere the same tale. At Macclesfield, for instance, where tickets are issued to the workmen, admitting them to soup kitchens, a provincial paper, representing the manufacturers, gives us the following description:
“From all we can learn we have reason to believe that between three and four persons are on the average provided for by each ticket; a family of five or six receiving two, one of nine or ten, three, and so on. As the number of tickets now daily issued is 3,600, this gives us the number of 10,000 to 14,000 persons deprived of their ordinary means of support, and dependent upon the charity for their daily bread. Such a number, in a town of some 40,000 inhabitants, is truly alarming. We have heard statements on very high authority, according to which a far larger number than this have been deprived of their ordinary means of livelihood.”
But in speaking of the impending crisis in the industrial districts, we mean less the distress of the working population than the downfall of their masters. Hitherto only a few and insignificant failures have occurred among that class, but they must be considered as mere symptoms of what is to happen. The cost of production for the manufacturers remains the same, as far as coals, oil, etc., are concerned, whether they run their machinery short or full time. The main item in which they are able to reduce their expenses is wages. Still, at the present moment, while stocks are accumulating in their warehouses, and they meet with a daily increasing difficulty in finding buyers, the money they realize from sales is absorbed. Their stocks of raw material are rapidly worked up, while they are unable to renew them. A great part of them are short of floating capital of any kind, money included; indeed, most of them are said to have fixed all their capital in factories and machinery, while they have carried on business by the help of credit. Such must be the case, indeed, as the loanable capital of the country could bear no interest, if not to a great extent employed in the process of immediate production. Now there is no hope for them of a speedy recovery of foreign markets, and their workshops are built upon the market of the world as their basis. After the comparative shutting up of America, there remained three great markets, India, Australia and Germany. The sudden and unexpected demand sprung up in India has even sooner subsided than we anticipated. As to the Australian prospect, it will suffice to quote The Melbourne Argus of Oct. 15:
“Stocks are far too heavy, and shipments still in excess. The value of the imports for the year amounted to £11,722,923; of the exports to £10,971,890. The imports amount far beyond the legitimate consuming power of a population of something under 140,000 men, women and children, and until some nearer calculation of the actual wants of the colony is arrived at, there can be no improvement. At present every description of imported merchandise, except Eastern produce, is selling at very low rates.”
Then as to the German market, the Hamburg catastrophe has closed it more hermetically to England than the strictest continental system could have done. It is, therefore, only natural that the British manufacturers should anticipate a crash of a most profound and sweeping character. We find in all their organs the most gloomy anticipations of its approaching outbreak. Its effects will be deeply felt in this country, especially by those engaged in the raising and the selling of cotton.