London, Friday, October 15, 1852 

In a malt-house in Banbury, Mr. Henley, President of the Board 
of Trade, lately explained to his assembled farming friends that 
Pauperism had decreased but by circumstances which had nothing 
to do with free trade; and above all, by the famine of Ireland, the 
discovery of gold abroad, the exodus of Ireland, the great demand 
consequent thereon for British shipping, &c., &c.*7 We must 
confess that “the famine” is quite as radical a remedy against 
Pauperism as arsenic is against rats. 

‘At least,’ observes The London Economist, ‘the Tories must admit the existing 
prosperity and its natura] result, the emptied workhouses.” 

The Economist then attempts to prove to this incredulous 
President of the Board of Trade, that workhouses have emptied 
themselves in consequence of free trade, and that if free trade is 
allowed to take its full development, they are likely to disappear 
altogether from the British soil. It is a pity that The Economist’s 
statistics do not prove what they are intended to prove. 

Modern industry and commerce, it is well known, pass through 
periodical cycles of from 5 to 7 years, in which they, in regular 
succession, go through the different states of quiescence—next 
improvement— growing confidence — activity — prosperity — 
excitement— over-trading — convulsion — pressure — stagnation — 
distress— ending again in quiescence. 

Recollecting this fact, we will revert to the statistics of The 
Economist. 

Times, No. 21234, September 30, 1852.— Ed. 
b eM. Henley and Pauperism”, The Economist, No. 475, October 2, 1852.—Ed. 

From 1834, when the sum expended for the relief of the poor 
amounted to £6,317,255, it fell toa minimum of £4,044,741 in 1837. 
From that date it rose again every year until 1843, when it reached 
£5,208,027. In 1844, ’45 and ’46, it again fell to $4,954,204, and rose 
again in 1847 and ’48, in which latter year it amounted to 
£6,180,764,—almost as high as in 1834, before the introduction of 
the new Poor Law.” In 1849, ’50, 51 and ’52 it fell again to 
£4,724,619. But the period of 1834-37 was a period of prosperity; 
that of 1838-42, a period of crisis and stagnation; 1843-46, a period 
of prosperity; 1847 and ’48, a period of crisis and stagnation, and 
1849-1852 again a period of prosperity. 

What, then, prove these statistics? In the best of cases, the 
common-place tautology that British pauperism rises and falls with 
the alternate periods of stagnation and prosperity, independently 
of either free trade or protection. Nay, in the free trade year of 
1852 we find the Poor Law expenditures higher by £679,878 than 
in the year of protection, 1837, in spite of the Irish Famine,”*’ the 
“nuggets” of Australia, and the steady stream of emigration. 

Another British Free Trade paper attempts to prove that 
exports rise with free trade, and prosperity with exports, and that 
with prosperity pauperism must decrease and finally disappear; 
and the following figures are to prove this. The number of 
able-bodied human beings doomed to subsist by parish support 
was: 

Jan. 1, 1849, in 590 Unions, 201,644 
Jan. 1, 1850, in 606 Unions, 181,159 
Jan. 1, 1851, in 606 Unions, 154,525 

Comparing herewith the export lists, we find, for exports of 
British and Irish manufacture: 

BS tet senite ss Reet £48,946,395 
WBA oa. cesiacecsdigsecdysialicendecees 58,910,833 
EB5O isd iinsirmossesentaeennnssase 65,756,035 

And what proves this table? An increase of exports of 
£9,964,438 redeemed above 20,000 persons from pauperism in 
1849; a further increase of £6,845,202 redeemed 26,634 more in 
1850. Now, even supposing free trade to do entirely away with the 
industrial cycles and their vicissitudes, then the redemption of the 
total number of able-bodied paupers would, under the present 
system, require an additional increase of the foreign trade of 
£50,000,000 annually, that is to say, an increase of very near 100 
per cent. And these sober-minded Bourgeois statisticians have the 

courage to speak of “Utopists.”—Verily, there are no greater 
Utopists in existence than these Bourgeois optimists. 

I have just got hold of the documents published by the Poor 
Law Board. They prove indeed that we are experiencing a 
numerical decrease of paupers against 1848 and 51. But from 
these papers there follows at the same time: From 1841-’44 the 
average of paupers was 1,431,571— 1845-48 it was 1,600,257. In 
1850 there were 1,809,308 paupers receiving in-door and out-door 
relief, and in 1851 they numbered 1,600,329, or rather more than 
the average of 1845-48. Now, if we compare these numbers with 
the population as verified by the census, we find that there were 
in 1841-48, 89 paupers to every 1,000 of the population, and 90 
in 1851. Thus in reality pauperism has increased above the 
average of 1841-48, and that in spite of free trade, famine, 
prosperity, in spite of the nuggets of Australia and the stream of 
emigration. 

I may notice on this occasion, that the number of criminals has 
increased also, and a glance at The Lancet, a medical journal, 
shows that the adulteration and poisoning of articles of food has 
hitherto kept up apace with free trade. Every week The Lancet 
causes a new panic in London by unraveling fresh mysteries. This 
paper has established a complete commission of inquiry of 
physicians, chemists, &c., for the examination of the articles of 
food sold in London. Poisoned coffee, poisoned tea, poisoned 
vinegar, poisoned cayenne, poisoned pickles—everything mixed 
up with poison—that is the regular winding up of the reports of 
this commission. 

Either side of the Bourgeois commercial policy, Free Trade or 
Protection, is, of course, equally incapable of doing away with facts 
that are the mere necessary and natural results of the economical 
base of Bourgeois society. And a matter of a million of paupers in 
the British workhouses is as inseparable from British prosperity, as 
the existence of eighteen to twenty millions in gold in the Bank of 
England. 

This once settled in reply to the Bourgeois phantasts, who on 
one hand hold up as a result of Free Trade what is a mere 
necessary concomitant of every period of prosperity in the 
commercial cycles, or who, on the other hand, expect things from 
Bourgeois prosperity which it cannot possibly bring about. This 
once settled, there can be no doubt that the year 1852 is one of 
the most signal years of prosperity England ever enjoyed. The 
public revenue, in spite of the repeal of the window tax, the 
shipping returns, the export lists, the quotations of the money 

market, above all, the unprecedented activity in the manufacturing 
districts, bears an irrefutable testimony to this fact. 

But the most superficial knowledge of commercial history from 
the beginning of the nineteenth century, suffices to convince 
anybody that the moment is approaching when the commercial 
cycle will enter the phase of excitement, in order thence to pass 
over to those of over-speculation and convulsion. “Not at all!” 
shout the Bourgeois optimists. “In no previous period of 
prosperity was there less speculation than in the present one. Our 
present prosperity is founded upon the production of articles of 
immediate usefulness, which enter into consumption almost as 
rapidly as they can be brought to market, which leave to the 
producer an adequate profit, and stimulate renewed and enlarged 
production.” 

In other words, what distinguishes this present prosperity is the 
fact that the existing surplus capital has thrown, and is throwing 
itself, directly into industrial production. According to the late 
report of Mr. Leonard Horner, Inspector General of Factories, 
there took place in 1851 an increase in cotton factories alone equal 
to 3,717 horse power.* His enumeration of factories in course of 
construction is almost endless. Here a spinning mill with 150 horse 
power, there a weaving shed for 600 looms for colored goods, 
another spinning factory for 60,000 spindles and 620 horse power, 
another for spinning and weaving with 200, another with 300 
horse power, etc. The largest, however, is building near Bradford 
(Yorkshire) for the manufacture of Alpaca and mixed goods. 

“The magnitude of this concern, which is being erected for Mr. Titus Salt, may be 
inferred from the fact that it is calculated to cover six statute acres of ground. The 
principal building will be a massive stone edifice of considerable architectural 
pretensions, having a single room in it 540 feet long, and the machinery will include 
the latest inventions of acknowledged merit. The engines to move this immense mass 
of machinery are being made by Messrs. Fairbairn, of Manchester, and they are 
calculated to work 1,200 horse power. The gas works alone will be equal to those of a 
small town, and will be erected upon White’s hydrocarbon system, at a cost of £4,000. 
It is calculated that 5,000 lights will be required, consuming 100,000 cubic feet of gas 
per diem. In addition to this extensive factory, Mr. Salt is building 700 cottages for the 
workpeople in its immediate neighborhood.” 

What, then, follows this enormous investment of capital for 
immediate industrial production? That the crisis will not come? 

By no means; but on the contrary, that it will take a far more 
dangerous character than in 1847, when it was more commercial 
and monetary than industrial. This time it will fall with its heaviest 
weight upon the manufacturing districts. Let the unequaled stagna- 
tion of 1838-42 be recalled to mind, which, too, was a direct result 
of industrial over-production. The more surplus capital concen- 
trates itself in industrial production, instead ‘of dividing its stream 
amongst the manifold channels of speculation, the more extensive, 
the more lasting, the more direct will the crisis fall upon the 
working masses and upon the very élite of the middle class. And if, 
in the moment of revulsion, the whole overwhelming mass of 
goods on the market already takes at once the form of lumbering 
ballast, how much more must this be the case with these numerous 
enlarged or newly-erected factories, just far enough advanced to 
begin to work, and for which it is of vital importance to set to 
work at once? If every time when capital deserts its habitual 
commercial channels of circulation, this desertion creates a panic 
which reaches even into the parlor of the Bank of England, how 
much more so a similar sauve qui peut in a moment when an 
immense amount has thus been turned into fixed capital in the 
shape of mills, machinery, etc., which begin to work only at the 
outbreak of the crisis, or which partially require further sums of 
circulating capital before they can be got into workable condition. 

I take from The Friend of India another fact significative of the 
character of the approaching crisis. From a statement of the 
commerce of Calcutta in 1852 therein contained, it results that the 
value of cotton goods, twist and yarn imported into Calcutta in 
1851, amounted to £4,074,000, or nearly two-thirds of the whole 
trade. In this year the whole amount of these imports will be 
larger still. The imports into Bombay, Madras, Singapore, are not 
even comprised herein. But the crisis of 1847 has given such 
revelations of Indian trade, that nobody can retain the slightest 
doubt of the final results of an industrial prosperity, in which the 
imports of “our Indian Empire” count for two-thirds of the 
whole. — 

So much as to the character of the state of convulsion which is 
to follow in the wake of the present state of prosperity. That this 
convulsion will come down in 1853, is prognosticated by many 
symptoms, especially the plethora of gold at the Bank of England, 
and the particular circumstances under which this large influx of 
bullion takes place. 

At this moment there are £21,353,000 in bullion in the vaults of 
the Bank of England. It has been attempted to explain this influx 

by the surplus production of gold in Australia and California. A 
simple glance at facts proves the incorrectness of this view. 

The increased quantity of bullion in the Bank of England 
represents, in reality, nothing but the diminished import of other 
commodities; in other words a large surplus of exports over 
imports. The last trade lists show, in fact, a considerable decrease 
of imports in hemp, sugar, tea, tobacco, wines, wool, grains, oils, 
cocoa, flour, indigo, hides, potatoes, bacon, pork, butter, cheese, 
hams, lard, rice, and almost all the manufactures of the European 
continent and of British India.* There was an evident over- 
importation in 1850 and 1851, and this, as well as the increased 
price of bread-stuffs on the Continent in consequence of a bad 
harvest, tends to keep down imports. The imports of cotton and 
flax alone show an increase. 

This surplus of exports over imports explains why the rate of 
exchange is favorable for England. On the other hand, the 
balancing by gold of this excess of exports, causes a large portion 
of British capital to lie idle and to go to increase the reserves of 
the banks. The banks as well as private individuals hunt up every 
means to invest this idle capital. Hence the present abundance of 
loanable capital and the low rate of interest. First-class paper is at 
1°/, and 2 per cent. Now, if you compare any history of trade, say 
Tooke’s History of Prices, you find that the coincidence of these 
symptoms: unusual accumulation of bullion in the cellars of the 
Bank of England, excess of exports over imports, favorable rate of 
exchange, abundance of loanable capital, and low rate of interest, 
regularly opens, in the commercial cycle, that phase where 
prosperity passes into excitement, where on one hand over-trading 
in imports, on the other, wild speculations in all sorts of attractive 
bubbles, is sure to begin. But this state of excitement itself, is only 
the precursor of the state of convulsion. Excitement is the highest 
apex of prosperity; it does not produce the crisis, but it provokes 
its outbreak. 

I know very well that the official economical fortune-tellers of 
England will consider this view exceedingly heterodox. But when 
since “Prosperity Robinson,” the famous Chancellor of the 
Exchequer, who in 1825, just before the appearance of the crisis, 
opened Parliament with the prophecy of immense and unshake- 
able prosperity—when have these Bourgeois optimists ever 

September 5, 1852”, The Economist, No. 476, October 9, 1852.— Ed. 

foreseen or predicted a crisis? There never was a single period of 
prosperity, but they profited by the occasion to prove that this time 
the medal was without a reverse, that the inexorable fate was this 
tume subdued. And on the day, when the crisis broke out, they 
held themselves harmless by chastising trade and industry with 
moral, common-place preaching against want of foresight and 
caution. 

The peculiar state of politics created by this momentary 
commercial and industrial prosperity, will form the subject of my 
next letter. 

Written on October 12, 1852 Reproduced from the New-York 

Tribune, No. 3601, November 1, 1852;