Karl Marx

["Neue Oder-Zeitung" No. 453 of 28 September 1855]

London, 24 September. The commercial and financial state, not only of Great Britain, but particularly also of France, is at this moment occupying public opinion almost as much as the war in the Crimea. The Bank of France, as is known, has raised its discount rate on government securities and similar collateral to 5 per cent, while it discounts commercial bills at 4 per cent. The directors of the French bank, alarmed by the outflow of precious metal from their vaults, had already resolved to raise the discount rate for commercial bills to 5 per cent as well, when the Finance Minister directly intervened and forbade them this operation. For the government, the point is of course to maintain as long as possible the semblance of an easy money market and abundant credit, and to keep the shopkeeping world in good humour.

“The claims upon the wealth of France during the last two years,” said the “Manchester Examiner,” “have been enormous. In two years the government of Louis Napoleon has spent 200,000,000 pounds sterling — the municipality of Paris has used large sums of borrowed money for the embellishment of the capital; projects requiring extraordinary wealth have been formed at the instigation and under the protection of the government; the Crédit mobilier alone was the father of at least half a dozen great companies, each of which has puffed up its shares to an enormous premium; the capital of these companies still remains to be paid up, and an endless mass of share paper passes from hand to hand without regard to the day of settlement. The financial position of the government, the purely speculative character of the greater part of those undertakings, the present state of the French money market, the pressure of another middling harvest upon the mass of the people and the Bourse, all this points to possible calamities, as disturbing for the war in the East as for the internal peace and prosperity of France.”

With reference to the corn market, the newspaper quoted in particular remarks:

“There can be no doubt that both countries, France and England, will be considerable importers of corn. The orders that have already been sent hence to the Danubian provinces will induce the United States to ship grain instead of gold to Europe. Last year’s harvest was the best England ever experienced, and yet from August 1854 to August 1855 we imported 2,335,000 quarters of wheat and 1,588,892 hundredweight of flour, and the average price nevertheless stood above 70 shillings throughout the whole year. This year we shall require much larger imports to check a still higher rise in prices. Whence are the supplies to be obtained except from North America? In North Germany, too, the harvest is below the average yield, and the United States are shipping flour to the Baltic, from which we used formerly to obtain considerable supplies in times of scarcity. Austria, as her government announces, rejoices in an average harvest, but it is doubtful whether she has a surplus available for export, and throughout southern Italy there reigns serious scarcity which cannot, as heretofore, be covered by shipments from the Black Sea. Thus France will have to compete in the demand for corn not only with England but with a large part of the European continent. How uncomfortable this situation is for her government, nothing shows better than the half consoling, half lecturing article in the ‘Moniteur.’”

As regards the numerous new joint-stock companies in France mentioned by the “Manchester Examiner”, a pamphlet recently published in Paris, “Opérations de Bourse”, shows that in one branch alone — in joint-stock banks — the number has increased sixfold in Paris alone since the February Revolution. Before 1848 there existed only 2; there are now 12 of these banks in Paris, namely: the Banque de France, the Caisse Commerciale, the Comptoir d’Escompte, a commandite bank under the firm Lediheur and Co., the Crédit Foncier de France, the Martinique Bank, the Banque de Guadeloupe, the Banque de l’île de la Réunion, the Bank of Algiers, the Crédit mobilier, the Société Générale du Crédit Maritime, the Caisse et Journal des Chemins de Fer, the Comptoir Central, the Crédit Industriel and the Banque de Senegal. The paid-up capital of these banks amounts to only 151,230,000 francs and their total banking capital only 252,480,000 francs, or about 10,000,000 pounds sterling, which does not equal the capital of the Bank of England alone.

“The enormous superstructure which credit has piled up on this narrow capital base,” says the London “Economist”, a government organ, “is by no means reassuring. The Bank of France, for example, issues against a capital of 91,250,000 francs banknotes to the amount of 542,589,300 francs, i.e., six times its amount. The Crédit mobilier is authorised to issue bonds to ten times the amount of its capital. The Crédit Foncier de France, whose nominal capital is only 30,000,000 francs, has issued bonds to the value of 200,000,000 francs. We can therefore foresee that a panic or a depreciation of this immense mass of obligations will cause considerable misery in Paris and France.”