Karl Marx

The French Crédit mobilier

[First Article]

Written about 6 June 1856.

From the English.

["New-York Daily Tribune No. 4735 of 21 June 1856]

In a leading article of the 30th ult., the London *Times* shows itself very astonished at the discovery that socialism in France had never disappeared, but had rather been “forgotten for a number of years”. On making this observation it takes occasion to congratulate England that it is not plagued by this pestilence, but is free from the antagonism of classes, on the soil of which this poisonous plant flourishes. A rather bold assertion, this, in the columns of the leading newspaper of a country whose most eminent economist, Mr Ricardo, begins his famous work on the principles of political economy with the maxim that the three great classes of society — that is, of English society — namely: landowners, capitalists and wage-labourers, form a deadly and unbridgeable antagonism; for rent rises and falls in inverse proportion to the rise and fall of industrial profit, and wages rise and fall in inverse proportion to profit. If, as English jurists assert, the equilibrium of the three rival forces is the cornerstone of the English constitution — that eighth wonder of the world — then according to Mr Ricardo, who, as may be presumed, knows a little more about it than the *Times*, the deadly antagonism of the three classes which are the principal agents of production must permeate the structure of English society.

While the *Times* turns up its nose contemptuously at revolutionary socialism in France, it cannot refrain from casting a greedy eye on imperial socialism in France, which it would gladly hold up as an example worthy of imitation for John Bull, since the principal representative of this socialism, the Crédit mobilier, has just sent it the “report of the board of directors to the ordinary general meeting of shareholders of 23 April 1856, under the chairmanship of M. Pereire”, in the form of an advertisement of three close columns. It is this report which has aroused the envious admiration of the shareholders of the *Times* and dazzled the mind of its editor:

Liabilities on 31 Dec. 1855

frs.

cts.

Company capital

60,000,000.00

The balance on current account rose since 31 Dec. 1854 from 64,924,379 frs. to

103,179,308.64

Amount of bills payable to creditors and of sundry accounts

864,414.81

Reserve

1,696,083.59

Total realised profits for 1855 after deduction of the sum to be allocated to reserve

26,827,901.32

Total liabilities

192,567,708.36

Assets

frs.

cts.

In portfolio:

1. Government securities

40,069,264.40

2. Debentures

32,844,600.20

3. Railway and other shares

59,431,593.66

Total

132,345,458.26

Deduct any instalments not called up by 31 Dec. of the previous year

31,166,718.62

Net assets

101,178,739.64

Fixed-term investments in treasury bills, continuations, loans on shares, debentures etc.

84,325,390.09

Value of land and buildings and of furniture

1,082,219.37

Available cash and bank balance as well as dividends collected up to 31 Dec. of the previous year

5,981,359.26

Total assets

192,567,708.36

Total government securities, shares and debentures in portfolio on 31 Dec. 1854

57,460,092.94

Increased by subscriptions and purchases in 1855 by

265,820,907.03

Total

323,280,999.97

frs.

cts.

Amount of realisations *

217,002,431.34

Plus the amount of securities in portfolio of

132,345,458.26

349,347,889.60

Yields a profit of

26,066,889.63

* Funds invested in lands, etc.

A profit of 26 millions on a capital of 60 millions — that is, a profit of 43 1/3 per cent — these are indeed fascinating figures. And what has this marvellous [Crédit] mobilier, with its magnificent capital of about twelve million dollars, not achieved! With sixty million francs in his hands he has subscribed to the French loans to the tune of first 250 million and then another 375 million; he has acquired a stake in the main railways of France; he has undertaken the issue of the loan raised by the company of the Austrian state railways; he has become a partner in the Swiss Western and Central Railway; he is taking part in a major enterprise whose aim is the canalisation of the Ebro from Saragossa to the Mediterranean; he had his hand in the merger of the Paris omnibus companies and in the founding of the General Shipping Company; by his intervention he has brought about the merger of all the former gas companies of Paris into a single enterprise; he has, as he says, presented the people with 500,000 francs by selling them corn below the market price; by his loans he has decided between war and peace, created new railway lines and supported old ones, lit towns, given an impetus to the development of industry and to commercial speculation, and finally extended his influence beyond the borders of France and strewn the fruitful seed of similar institutions over the entire European continent.

The Crédit mobilier thus proves to be one of the most remarkable economic phenomena of our time, which needs to be thoroughly examined. Without such an examination, one can neither assess the prospects of the French Empire, nor understand the symptoms of the general social upheaval which are manifesting themselves all over Europe. We shall first examine what the board of directors calls its theoretical principles, and then test their practical implementation. As the report informs us, these principles have so far only been partially realised and will undergo a far greater development in future.

The principles of this company are set out in its statutes and in the business reports to the shareholders, but particularly in the first of these reports. According to the preamble of the statutes,

“the founders of the Crédit mobilier have considered the important services that the establishment of a company could render, which sets itself the aim of promoting the development of the industry of public works and effecting the conversion of the various securities of all kinds of enterprises by means of their consolidation in a common fund, and have resolved to put such a useful plan into practice. For this reason they have come together to lay the foundations of a joint-stock company under the name General Company of the Crédit mobilier.”

Our readers will remember that by “anonymous society” the French understand a joint-stock company with limited liability of the shareholders, and that the formation of such a company depends on a privilege which the government grants entirely at its discretion.

The Crédit mobilier therefore intends, firstly, “to promote the development of the industry of public works”, which means that industry and public works are to be made entirely dependent on the favour of the Crédit mobilier and consequently also on the personal favour of Bonaparte, whose word decides the existence of this company. The board does not fail to indicate by what means it intends to extend its patronage and that of its imperial creator over the whole of French industry. The various industrial enterprises operated by joint-stock companies are represented by a variety of securities — shares, bonds, bons, debentures, etc. These various securities are naturally traded on the money market at different prices, depending on the capital invested, the profit they yield, the different relation of supply and demand for them, and other economic conditions.

What, now, does the Crédit mobilier propose? To replace all these various securities, issued by various joint-stock companies, by a single share issued by the Crédit mobilier itself. But how can it achieve this? By buying up the shares of the various industrial enterprises with its own shares or other securities. For if one buys up all the bons, shares, debentures, etc. — in a word, all the securities of an enterprise — one buys up the enterprise itself. By this means, however, the Crédit mobilier admits the intention of making itself the owner and Napoleon the Little the supreme director of the whole diverse industry of France. That is precisely what we call imperial socialism.

To realise this programme, financial operations are naturally necessary; M. Isaac Péreire, in setting forth the sphere of business of the Crédit mobilier, feels he is on slippery ground and is therefore compelled to impose certain restrictions on the company, which he regards as purely accidental and which he intends to remove in the course of the development of this company. The capital of the company is fixed at 60,000,000 francs, divided into 120,000 shares of 500 francs each. The operations of the company, as laid down in the statutes, can be divided into three categories: firstly, operations in support of industry; secondly, the issue of the company’s securities to replace or consolidate the shares of all kinds of industrial enterprises; thirdly, the usual banking operations, dealings in government securities, commercial bills, etc.

The operations of the first category, by which the company intends to gain its patronage over industry, are enumerated in Article V of the statutes, which states:

“To subscribe to or acquire government securities, shares or bonds of industrial or credit enterprises of every kind, organised as joint-stock companies, especially of railways, canals, mines and other public undertakings, already founded or to be founded. To float, place and realise all kinds of loans, as well as all projects of public works.”

We see how this article already goes beyond the claims of the preamble, for it aims at making the Crédit mobilier not only the owner of such great industrial enterprises, but also the slave of the treasury and the despot of commercial credit.

The operations of the second category, which concern the replacement of the securities of all kinds of industrial enterprises by the securities of the Crédit mobilier, comprise the following:

“Issue of the company’s own debentures in an amount equal to the sums required for the subscription of loans and the purchase of industrial securities.”

Articles VII and VIII determine the limits and the character of the debentures which the company is authorised to issue. These debentures or bons

“may reach a sum of up to ten times the capital. They must always be fully covered by government securities, shares and debentures which are in the company’s portfolio. They may not be payable at a notice of less than 45 days. The total amount of sums received on current account and of debentures with a maturity of less than one year shall not exceed twice the paid-up capital.”

The third category, finally, encompasses the operations connected with the exchange of commercial values. “The society accepts money on call.” It is empowered “to sell all kinds of securities, shares and bonds in its possession, or to give them in payment for loans, and to exchange them for other values”. It grants loans on “government paper, on deposited shares and bonds, and opens current accounts on these various kinds of values”. It provides joint-stock companies with all the usual services rendered by private banks, such as the acceptance of all payments on account of the companies, the payment of their dividends, interest, etc. It accepts the securities of these undertakings on deposit, but with regard to the operations concerning the trade in commercial values, bills of exchange, pawn tickets, etc., “it is expressly stipulated that the society may carry out neither secret sales nor purchases for the sake of agio”.