The arrival yesterday morning* of the mails of the Canada and 
the Adriatic puts us in possession of a week’s history of the 
European financial crisis. This history may be summed up in a few 
words. Hamburg still formed the center of the convulsion, which 
reacted more or less severely on Prussia, and was gradually 
reducing the English money market to the unsettled state which it 
seemed to be recovering from. Some distant echoes of the storm 
had reverberated from Spain and Italy. Through the whole of 
Europe the palsy of industrial activity and the consequent distress 
of the laboring classes are rapidly spreading. On the other hand, 
the comparative resistance which France still opposed to the 
contagion puzzled the political economists as a riddle harder to be 
solved than the general crisis itself. 

The Hamburg crisis was thought to have passed its climax after 
Nov. 21, upon the establishment of the Guaranteed Discount 
Association, the total subscriptions for which amounted to 
12,000,000 marks banco, destined to secure the circulation of such 
bills and notes as should receive the stamp of the Association. Still, 
some days later, the recurrence of some failures, and events hke 
the suicide of the bill broker Gowa, foreshadowed new disasters. 
On Nov. 26, the panic again had full swing; and as at first the 
Discount Association, so now the Government itself stepped 
forward to stem its current. On the 27th, the Senate proposed, 
and obtained leave from the freehold burgesses of the city, to 
issue securities bearing interest (exchequer notes), to the amount 
of 15,000,000 marks banco, for the purpose of making advances 

4 December 3, 1857.— Ed. 

upon goods of a permanent description, or upon State securities — 
such advances to amount to from 50 to 667/; per cent of the 
respective value of the pawned commodities. This second effort to 
right the course of commerce foundered like the first—both 
resembling the vain cries of distress which precede a shipwreck. 
The guaranty of the Discount Association itself was found to need 
another guaranty in its turn, and the advances of the State, limited 
in their amount as well as the description of commodities to which 
they applied, became, moreover, by dint of the very conditions 
under which they were made, relatively useless, at the same ratio 
that prices were going down. To uphold prices, and thus ward off 
the active cause of the distress, the State must pay the prices 
ruling before the outbreak of the commercial panic, and realize 
the value of bills of exchange which had ceased to represent 
anything but foreign failures. In other words, the fortune of the 
whole community, which the Government represents, ought to 
make good for the losses of private capitalists. This sort of 
communism, where the mutuality is all on one side, seems rather 
attractive to the European capitalists. 

On November 29, twenty great commercial Hamburg firms, 
beside numerous Altona houses, broke down, the discount of bills 
had ceased, the prices of merchandise and securities became 
nominal, and all business arrived at a dead lock.* From the list of 
failures it appears that five of them occurred in_ banking 
operations with Sweden and Norway—the liabilities of Messrs. 
Uliberg & Cramer, amounting to 12,000,000 marks banco, five in 
the Colonial produce trade, four in the Baltic produce trade, two 
in the export of manufactures, two in insurance agencies, one in 
the Stock Exchange, one in the ship-building trade. Sweden 
depends so entirely on Hamburg as her exporter, bill-broker and 
banker, that the history of the Hamburg market is that of the 
Stockholm market. Consequently, two days after the collapse a 
telegram” announced that the failures in Hamburg had led to 
failures in Stockholm, and that there too Government support had 
proved unavailable. What in this respect holds good for Sweden is 
still more true for Denmark, whose commercial center, Altona, is 
but a suburb of Hamburg. On the Ist of December extensive 
stoppages occurred, including two very old firms, viz.: Conrad 

December 1, 1857. See The Times, Nos. 22854, 22855, December 3, 4, 

Times, No. 22855, December 4, 1857.— Ed. 

Warneke, in the Colonial trade, especially sugar, with a capital of 
2,000,000 marks banco, and extensively connected with Germany, 
Denmark and Sweden; and Lorent am Ende & Co., carrying on 
business with Sweden and Norway. One ship-owner and general 
merchant committed suicide in consequence of his embarrass- 
ments. 

The general extent of Hamburg commerce may be inferred 
from the fact that at this very moment about 500,000,000 m. b. in 
goods of all kinds are held in warehouses and in port, on account 
of its merchants. The republic is now recurring to the only 
remedy against the crisis, that of relieving its citizens from the 
duty of paying their debts. A law granting a respite of one month 
on all bills payable at maturity is likely to be passed. As to Prussia, 
the distress of the manufacturing districts of the Rhine and 
Westphalia is hardly noticed by the public papers, since it has not 
yet resulted in extensive failures, the latter having been limited to 
the corn exporters at Stettin and Dantzig, and to about forty 
manufacturers at Berlin. The Prussian Government has interfered 
by authorizing the Berlin Bank to advance loans on goods deposited 
and by suspending the usury laws.* The former measure will 
prove as vain at Berlin as at Stockholm and Hamburg, and the 
latter puts Prussia only on a footing of equality with other 
commercial countries. 

The Hamburg collapse is a conclusive answer to those imagina- 
tive minds which presume the present crisis to have originated in 
prices artificially enhanced by a paper currency. In regard to 
currency, Hamburg forms the opposite pole to this country. 
There, there is no money but silver. There exists no paper 
circulation at all, but a medium of exchanges purely metallic is 
boasted of. Still the present panic not only rages there most 
severely, but since the appearance of general commercial crises— 
the discovery of which is not so old as that of the comets— 
Hamburg has been their favorite arena. Twice during the last 
third of the eighteenth century it exhibited the same spectacle as 
at present; and if it is distinguished by one characteristic feature 
from other great commercial centers of the world, it is by 
the frequency and violence of the fluctuations in the rate of in- 
terest. 

Turning from Hamburg to England, we find that the tone of 
the London money market was progressively improving from 

December 2, 1857.— Ed. 

Nov. 27 to Dec. 1, when again an opposite current set in. On 
November 28 the price of silver had actually declined, but after 
Dec. 1 it again recovered and will probably advance, large 
amounts being required for Hamburg. In other words, gold will 
again be withdrawn from London to buy Continental silver, and 
this renewed drain of bullion will call for the renewed action of 
the Bank of England screw. Beside the sudden demand at 
Hamburg, there is looming in a not remote future the Indian 
loan, which the Government, however it may try to shift off the 
evil day, must necessarily resort to. The occurrence of fresh 
failures had also contributed after the Ist inst. to dispel the 
delusion that the money market had seen its worst. As Lord 
Overstone (the banker Lloyd) remarked in the opening session of 
the House of Lords: 

“The next occasion of pressure upon the Bank will probably occur before the 
exchanges are rectified, and then the crisis will be greater than that which we have 
shrunk from meeting on the present occasion. There are serious and formidable 
difficulties hanging over this country.” 4 

The catastrophe at Hamburg has not yet been felt at London. 
The greater easiness of the loan market had favorably affected the 
produce market; but, irrespective of the eventual new contraction 
of money, it is evident that the great fall in the prices of produce 
in Stettin, Dantzig and Hamburg cannot but bring down the 
London quotations. The French decree rescinding the prohibition 
of the export of corn and flour‘! immediately compelled the 
London millers to reduce their quotations by three shillings per 
280 pounds, in order to stem the influx of flour from France. 
Several failures in the corn-trade have been reported, but they 
have been confined to smaller houses and operators in grain for 
distant delivery. 

The English manufacturing districts exhibit no novelty, except 
that cotton goods adapted to the Indian demand, such as brown 
shirtings, jaconets, madapolams, as well as yarns suitable for the 
same market, fetch, for the first time since 1847, remunerative 
prices in India. Since 1847, the profits made by the Manchester 
manufacturers in that trade have been derived, not from the price 
realized on the sale of their goods in East India, but only on the 
sale in England of their East Indian returns. The almost total 
suppression of Indian export since June, 1857, occasioned by the 
revolt, has allowed the Indian market to absorb the floating 

No. 22855, December 4, 1857.— Ed. 

English goods and even to open itself for new supplies at 
enhanced prices.* Under ordinary circumstances such an event 
would have given extraordinary liveliness to the Manchester trade. 
At present, as we are informed by private letters, it has hardly 
raised the prices of the privileged articles, while it turned such an 
amount of employment seeking productive power to the manufac- 
ture of these particular articles as would suffice to overstock three 
Indias on the shortest notice. Such has been the general 
enlargement of productive power in the British manufacturing 
districts during the last ten years, that even the reduction of 
labor to less than two-thirds its previous amount can only be 
sustained by the mill-owners accumulating in their warehouses a 
large surplus stock of fabrics. Messrs. Du Fay & Co., in their 
monthly Manchester trade report, say that “there was a pause in 
business during the month; very few transactions took place, and 
prices were altogether nominal. Never before was the sum total of 
a month’s transactions so small as in November.” 

It is, perhaps, proper here to call attention to the fact that in the 
year 1858 the repeal of the British Corn Laws*” will first be put 
to a serious test. What with the influence of Australian gold and 
industrial prosperity, what with the natural results of bad harvests, 
the average price of wheat during the epoch from 1847 to 1857 
ruled higher than during the epoch from 1826 to 1836. A keen 
competition of foreign agriculture and produce will now have to 
be sustained concurrently with a decline in the home demand; and 
agricultural distress, which seemed buried in the annals of British 
history from 1815 to 1832, is likely to appear again. It is true that 
the advance in the price of French wheat and flour, following 
upon the Imperial decrees, has proved but temporary, and 
vanished even before any extensive export to England took place. 
But with a further pressure on the money market of France she 
will be forced to throw her corn and flour into England, which 
will be at the same time assailed by forced sales of German 
produce. Then in the spring the shipments from the United States 
will come forward, and give the British corn market its finishing 
blow. If, as the whole history of prices warrants us in supposing, 
several good harvests are now to follow each other in succession, 
we shall see fully worked out the true consequences of the repeal 
of the Corn Laws for the agricultural laborers in the first instance, 

the farmers in the second, and the whole framework of British 
landed property in the last. 

Written on December 4, 1857 Reproduced from the newspaper 
Tribune, No. 5202, December 22, 1857 as