and English Industry in the Period from 1849 to 1853

Neue Oder-Zeitung.
No. 17, 11 January 1855.
Midday Edition
X. London, 8 January. (Commercial Crisis.) While the clubs and journals
of this city are busy with consequential tittle-tattle about “ministerial crises”,
they find no time to recognise the incomparably more important fact that one
of the great English industrial and commercial crises has broken out again,
and in more calamitous dimensions than in 1847 and 1836. This insight,
which the bankruptcies that have been erupting sporadically for 3 months and
have recently been increasing in number and intensity could not produce, has
finally become inescapable as a result of the publication of the annual trade
returns and of the lists issued by the Board of Trade on the exports and imports of the last 11 months. From these latter lists it follows that exports have
fallen by £1,710,677, compared with the corresponding 11 months of the year
1853, and by £1,856,988, if the last month alone – 5 November to 5 December
– is compared in both years. From the export lists we extract the following
details, which show the decline in some of the most important branches of
industry:

                       1853                1854
                       £                   £
Cotton manufactures    23,757,155          22,877,050
Cotton yarn             6,322,639           6,055,640
Linen manufactures      4,379,732           3,735,221
Linen yarn              1,069,812             852,763
Woollen manufactures    9,470,413           8,566,723
Silk manufactures       1,492,785           1,144,506
Machinery exports       1,368,027           1,271,503

In the trade reports an attempt is naturally made to blame the war for
the crisis of 1854, exactly as the Revolution of 1848 was blamed for a crisis
that had already broken out in the year 1847. This time, however, even the
London Economist – which makes a principle of explaining crises in terms of
accidental circumstances extraneous to trade and industry – is compelled to
admit that the commercial misfortunes and shortfalls of the year 1854 are
the beginning of a natural reaction against the “convulsive prosperity” of
1853. In other words, the commercial cycle has once again reached the point
where overproduction and overspeculation turn into a crisis. The best proof:
the United States of North America, which were only touched by the Eastern
war insofar as it gave their shipbuilding and shipping trade an unprecedented
upswing and furnished them with a market for various raw products which
had formerly been supplied more or less exclusively by Russia. In the United
States the crisis has already been raging for more than four months and is
still constantly growing, although 109 out of 4,208 banks, that is roughly 1/42,
have already gone bankrupt, and such a stagnation of industry, coupled with
such a depression of wages, has set in in the industrial states of the East that
last month over 4,000 European immigrants “re-emigrated” to Europe. The
English crisis of 1836 was followed by the American crisis of 1837. This time
the course is reversed. America has seized the initiative of bankruptcy. The
United States and Australia are equally inundated with English commodities.
How important this is for English trade may be judged from the fact that of the
roughly £100 million worth of commodities exported by Great Britain in 1853,
£25 million fell to the United States and £15 million to Australia. East India
was the most important market after the United States and Australia. East
India, however, had already been so overstocked in the year 1852 that only a
completely new extension of trade through the Punjab and Sindh to Bokhara,
Afghanistan and Balochistan, and from there on the one hand to Central Asia,
on the other to Persia, was able laboriously to maintain exports at the old level
of £8 million. Now all the drainage channels there are also so clogged that
commodities have recently been shipped from Hindustan to Australia, thereby
“carrying coals to Newcastle.” The only market that was for a time “cautiously”
supplied as a consequence of the Eastern war was the Levantine market.
However, it is an open secret in the City that, since the crisis in the United
States and the stagnation in Australia forced trade to look around anxiously for
any markets not yet overstocked, Constantinople became the dumping ground
for all commodities in need of a buyer, and must now also be regarded as
“closed.” The latest movement in Spain has likewise been exploited to introduce
as many English commodities as it can absorb by means of smuggling. The

Commercial Crisis – The Increase of English Trade and of English ...

latest attempt of this kind is now being made in the South American states,
whose slight capacity for consumption, however, requires no proof.

Given the decisive importance of the English crisis for the social and
political conditions of the whole world, it will be necessary to return at greater
length and in detail to the history of English trade in 1854.

Nn

Neue Oder-Zeitung.
No. 19, 12 January 1855.
Midday Edition

X. London, 9 January. (The Increase of English Trade and English
Industry in the Period 1849-53) may be judged from the following data. In
1846 the tonnage of ships laden with commodities clearing from and entering
British seaports amounted to 9,499,000; by 1850 this quantity had grown to
12,020,000 tons and by 1853 to no less than 15,381,000, exactly double the
tonnage of 1843. In 1846 the value of the exports of British manufactures and
raw products was £57,786,000, in 1850, on the other hand, £71,367,000, and
in 1853 over £98,000,000, i.e. more than double the total exports of 1842.
What role do the United States of North America and Australia play in this
increase of exports? In 1842 the value of British exports to Australia was still
less than a million £; in 1850 they reached almost 3 million and in 1853 as
much as £14,513,000. In 1842 exports to the United States amounted to
£3,582,000; in 1850 to almost 15 million and in 1853 to no less than
£23,658,000. From these figures it follows, first, that the year 1854 forms a
turning-point in modern trade history entirely analogous to the years 1825,
1836, 1847; second, that the crisis in the United States is only one element
of the English crisis; and finally, that the war of 1854 – which Le Pays, Journal
de l’Empire very aptly calls une guerre pacifique – has exercised no influence
whatever on this social catastrophe, or if an influence, at most a retarding,
checking one. Individual branches of industry, e.g. the manufacture of leather,
iron and woollen goods, as well as shipbuilding, have been directly supported
by the war demand. The terror evoked by a declaration of war after 40 years
of peace paralysed the flight of speculation for a moment. The loans raised
by the various European states on account of the war kept the rate of interest
at a level that prevented the precipitate launching of industrial undertakings
and thus held up the crisis. Yet, says the Peace Society, has not the war
increased corn prices? Is the rise in corn prices not synonymous with a decline
of domestic trade, i.e. of British consumption of industrial products? And is
this contraction of the home market not the main element of the crisis?

First of all, it must be recalled that the year of greatest British prosperity
– 1853 – was a year of high corn prices, and that the corn prices of the year
1854 rank on average below those of the year 1853; consequently, the
prosperity of 1853 can no more be explained from the state of corn prices
than can the symptoms of the crisis of 1854. But let us leave aside the influence
of corn prices on industry: what was the influence of the war on corn prices?
In other words: Have corn prices risen because the supply from Russia has
fallen off? Of the total amount of corn and flour imported by Great Britain,
approximately 19 per cent falls to Russia, and since total imports satisfy only
about 20 per cent of national consumption, Russia supplies about 2 3/4 per cent
of national consumption. The last official report on the comparative import of
corn and flour from the different continents and countries into Great Britain
was published at the beginning of November 1854 and provides a comparative
table for the first nine months of 1853 and 1854. According to this, the total
import of wheat in 1853 was 3,770,921 quarters, of which 773,507 were
drawn from Russia and 209,000 qrs. from Moldavia and Wallachia. The total
import of flour was 3,800,746 cwt, of which 64 came from Russia and none
at all from the Danubian principalities. In the war year, 1854, Great Britain
received 505,000 qrs. of wheat from Russia and 118,000 qrs. from Moldavia
and Wallachia. No one will assert that this shortfall (moreover outweighed by
greater import of flour from other countries) has rocketed the prices of the
excellent harvest of 1854 roughly to the level of the bad years 1852 and 1853.
On the contrary. The loss of all Russian grain would have failed to produce such
an effect. What remains puzzling – although insignificant for the economic
question – is the decline in the supply from the Danubian principalities.

The puzzle is simply resolved. While the Coalition nominally blockades the
Russian ports in the Black Sea, it has in reality blockaded first the Bosporus,
then the mouths of the Danube, and instead of Russia it has blockaded Turkey
and the Danubian principalities. The Russian crusades against the crescent –
1812, 1828, 1848 (at that time allegedly against the rebels of Jassy and
Bucharest), and 1854 – who does not know that they were partly conditioned
by the trade competition of the southern Russian provinces against the

Commercial Crisis – The Increase of English Trade and of English ...

Danubian principalities, and incidentally against the trade of Bosnia, Serbia
and Bulgaria carried on along the Danube? What ingenuity, then, on the part
of an English ministry, to punish Russia by leaving the trade of Odessa and
Taganrog free, but suppressing, blockading, that of Russia’s competitors on
the Danube, and thus cutting off its own supply!