"Every political life is stifled—and by what has it been replaced? By the whirlwind of speculation. The great French nation could not surrender itself to slumber, to inaction. Political life has been replaced by the fever of speculation, the greed for gain, the passion for gambling. Everywhere, even in our small towns, even in our villages, men are possessed by the mania to obtain such quickly won riches, of which there are so many examples, riches that are acquired without effort, without labour, and often dishonourably. I need look for no other proof than the bill against the *sociétés en commandite* <limited partnerships>, which has just been laid before you. The copies have just been distributed to us; I have not yet had the time to examine it; nevertheless I am inclined to support it, despite the somewhat Draconian provisions which I believe I have discovered in it. If the remedy is so urgent and so significant, then the evil must be equally serious. The real cause of this evil consists in the fact that every political spirit in France has fallen asleep ... And the evil to which I am pointing is not the only one that springs from this same source. While the upper classes—those old political classes—abandon themselves to speculation, another activity shows itself in the lower classes of society, from which almost all the revolutions that France has suffered have proceeded. In the face of this frightful speculation mania, which has turned almost the whole of France into a gigantic gambling den, one section of the masses, which has fallen under the influence of the Socialists, has been more than ever seduced by the greed for gain. Hence an undoubted growth of the secret societies, a greater and

deeper development of those wild passions which positively slander socialism when they claim its name for themselves, and which were recently revealed in all their vehemence in the trials of Paris, Angers and elsewhere."

Thus speaks Montalembert, himself one of the first shareholders of the Bonapartist enterprise for the salvation of order, religion, property and family!

We have heard from Isaac Péreire that one of the secrets of the Crédit mobilier consisted in the principle of multiplying its activity and diminishing the risk by participating in every possible undertaking and withdrawing from them in the shortest possible time. What does this mean, now, if one strips it of the flowery language of Saint-Simonism? To subscribe to shares on the largest scale, to speculate massively with them, to pocket the premium and then to get rid of the shares again as quickly as possible. Stock-exchange speculation is thus supposed to be the basis of industrial development, or, better said, all industrial activity is meant to become a mere pretext for stock-exchange speculation. And with what instrument is this goal of the Crédit mobilier to be attained? By what means is it to be enabled to "multiply its activity" and "diminish the risk"? It is the same means that Law employed. Since the Crédit mobilier is a privileged company, enjoying the support of the government and possessing a relatively large capital and credit, it is beyond all doubt that the shares of every new undertaking founded by it will, at their first issue, bring a premium on the Bourse. It has learned enough from Law to allot the new shares to its own shareholders at par, in proportion to the number of shares they hold in the parent company. The profit thereby secured to them reacts in the first place upon the value of the shares of the Crédit mobilier itself, while their high price in turn assures a high value for the new shares to be issued. In this way the Crédit mobilier acquires the power of disposal over a large part of the loanable capital destined for investment in industrial undertakings.

Apart from the fact that the premium is thus the real pivot around which the activity of the Crédit mobilier revolves, its objective is therefore evidently to act upon capital in a way which is the exact opposite of the function of commercial banks. A commercial bank, by its discounts, loans and note issues, sets free fixed capital temporarily, whereas the Crédit mobilier precisely fixes floating

capital. For example, railway shares may be highly liquid, but the capital they represent, i.e., the capital invested in the construction of the railway, is fixed. If the portion of capital which a manufacturer has laid out in buildings and machinery stood in no corresponding proportion to the portion reserved for the payment of wages and the purchase of raw materials, the manufacturer would very soon see his factory brought to a standstill. The same holds true for a nation. Almost every commercial crisis in our time has been connected with a violation of the right proportion between floating and fixed capital. What, then, must be the result of the operations of an institution like the Crédit mobilier, whose immediate purpose is to fix as much as possible of the loanable capital of the country in railways, canals, mines, docks, steamships, ironworks and other industrial undertakings, without any regard for the productive capacities of the country?

According to its statutes, the Crédit mobilier can patronise only such industrial undertakings as are carried on by *sociétés anonymes* or joint-stock companies with limited liability. Consequently, a tendency had to arise to found as many such companies as possible, and, furthermore, to give all industrial undertakings the form of these companies. Now, it cannot be denied that the application of joint-stock companies to industry marks a new epoch in the economic life of modern nations. On the one hand, it has revealed the productive powers of association, as they had not been suspected before, and has called into life industrial creations on a scale unattainable by the efforts of individual capitalists. On the other hand, it must not be forgotten that in joint-stock companies it is not the individuals who are united, but the capitals. Through this manipulation, proprietors have been transformed into shareholders, i.e., into speculators. The concentration of capital has been accelerated and, as a natural consequence, also the ruin of the petty bourgeoisie. A species of industrial kings has arisen, whose power stands in inverse ratio to their responsibility, for they are answerable only up to the amount of their shares, while they dispose over the entire capital of the society. They form a more or less permanent element, while the mass of shareholders undergoes an incessant process of change in its composition; and since it is precisely they who dispose over the entire influence and wealth of the society, they are in a position to bribe individual rebellious members of the same. Under this oligarchic directory stands a bureaucratic body of business managers and agents

for the practical work, and immediately under these a vast and daily swelling mass of mere wage-labourers, whose dependence and helplessness grow with the dimensions of the capital employing them, but who also become more dangerous in direct proportion to the decreasing number of the representatives of this capital. It is the immortal merit of Fourier to have foretold this form of modern industry under the designation of
industrial feudalism.
Certainly neither M. Isaac Péreire nor M. Emile Péreire, nor M. Morny, nor M. Bonaparte could invent it. Even before their time, there were banks that granted their credit to industrial joint-stock companies. What they invented was a joint-stock bank that strove for the monopoly of the formerly fragmented and multifarious activity of the private moneylenders, and whose guiding principle was to be the founding of an immense number of industrial companies, not for the purpose of productive investments, but simply for the sake of speculative gains. The new idea which they have introduced consists in making industrial feudalism tributary to stock-exchange speculation.

According to the statutes, the capital of the Crédit mobilier is fixed at 60,000,000 francs. The same statutes permit it to receive deposits on current account for double this sum, i.e., for 120,000,000. The total sum at the disposal of the society thus amounts to 180,000,000 francs. Measured against the bold plan to gain the patronage over the entire industry of France, that is certainly a very small sum. But two-thirds of this sum—because they are received on call—can hardly be used for the purchase of industrial shares or such securities as carry no guarantee of being immediately realisable. For this reason the statutes open another source to the Crédit mobilier. It is authorised to issue obligations up to ten times the amount of its original capital, i.e., up to 600,000,000 francs; or, in other words, the institution which is conceived as a helper for all the world has the authority to appear on the market as a borrower of a sum ten times larger than its own capital.

"Our obligations," says M. Péreire, "will be of two kinds. Those issued with a short term of circulation are intended to correspond to our various temporary investments."

Obligations of this kind do not interest us here, since, according to Article VIII of the statutes, they are only to be issued to make up the presumed deficit up to those 120,000,000 which are to be received on current account,

and which have been entirely got in in this way. The other category of obligations

"will be issued with a long term of circulation, repayable by way of amortisation, and will correspond to the investments of a like character which we shall have made either in government securities or in shares and obligations of industrial companies. According to the economy of the system on which our society is based, these obligations will not only be covered by a corresponding number of securities, which, acquired under the supervision of the government and combined by the application of the principle of mutuality, will offer the advantages of compensation and division of the risk, but they will also be covered by a capital which we have brought to a considerable amount for this purpose."

These bonds of the Crédit Mobilier are therefore simply imitations of railway bonds—obligations which are redeemable at a specified time and under specified conditions and bear fixed interest. There is, however, a difference. Railway bonds are often secured by a mortgage deed of the railway itself; in what, by contrast, does the security for the bonds of the Crédit Mobilier consist? In the government securities, shares, bonds, and the like which the Crédit Mobilier acquires with its own bonds. What is then gained by their issue? The difference between the interest due on the bonds of the Crédit Mobilier and the interest on the shares and the like in which it has invested its loan. To make this operation sufficiently profitable, the Crédit Mobilier must place the capital realised by the issue of its bonds in such investments as promise the most lucrative profit, i.e., in shares which are subject to great fluctuations and changes in quotations. The main security for its bonds will therefore consist of the shares of precisely those industrial enterprises which are founded by the company itself.

While railway bonds are secured by a capital at least twice as large, these bonds of the Crédit Mobilier are therefore secured by a capital which is only nominally of the same size, but which must diminish with every downward movement of the stock exchange. The holders of these bonds consequently share all the risks of the shareowners, without sharing in their profits.

“But the holders of the bonds”, says the last annual report, “are covered not only by the capital investments into which he” (the Crédit Mobilier) “has put his loans, but also by his original capital.”

The original capital of 60,000,000, which is liable for the 120,000,000 of instalments, offers itself as a guarantee for 600,000,000 in bonds, in addition to the guarantees which it will presumably have to furnish for the unlimited number of enterprises which the Crédit Mobilier is authorised to found. If the company succeeded in exchanging the shares of all industrial enterprises for its own bonds, it would indeed become the supreme director and owner of the entire industry of France, while the mass of former owners would find themselves pensioned off with a fixed income corresponding to the interest on the bonds. But the bankruptcy which follows from the economic conditions indicated above will call a halt to the bold adventurers on the way to this end. This trifling mishap has, however, not been overlooked. On the contrary, the actual founders of the Crédit Mobilier have incorporated it into their calculations. When this collapse comes, after the interests of an immense number of Frenchmen have been entangled in it, the government of Bonaparte will then appear justified in intervening in the affairs of the Crédit Mobilier, just as the English government did in 1797 with the Bank of England. The Regent of France <Philippe d’Orléans>, that honourable ancestor of Louis-Philippe, attempted to get rid of the national debt by converting the government bonds into bonds of Law’s Bank; Louis Bonaparte, the imperial socialist, will attempt to make himself master of French industry by converting the bonds of the Crédit Mobilier into government bonds. Will he be more solvent than the Crédit Mobilier? That is the question here.