The successive reduction by the Bank of France of its rate of 
discount from 10 per cent, at which it stood after Nov. 12, to 9 
per cent on Nov. 26, 8 per cent on Dec. 5, and 6 per cent on 
Dec. 17,* is, of course, pointed out by the Imperialist organs as 
irrefutable proof that the commercial revulsion has entered its 
decreasing stage, and that “France will go through the severe trial 
without any catastrophe.” The financial system of Napoleon III. is 
said to have created “this evident superiority of the commercial 
state of France over that of all other nations,” and to insure the 
fact that France is, and always will be, “less injured in a time of 
crisis than the countries competing with it.” Now, 6 per cent is a 
rate of bank discount which, since the beginning of the present 
century, has never occurred in France save in February, 1800, 
some days after the foundation of the Bank by the uncle,” until 
under the nephew,* in the critical period of 1855 and 1856. But if 
the Bank of France continues to lower its rate of interest, say to 4 
per cent, what then? The rate of discount was reduced to 4 per 
cent on Dec. 27, 1847, when the general crisis still lasted and the 
French crisis had not yet reached its climax. Then, as now, the 
Government congratulated France on its privilege of escaping 
general crisis with nothing but scratches, and those not skin deep. 
Two months later the financial earthquake had overturned the 
throne and the wise man who sat upon it.“ 

We do certainly not contest the fact that thus far the crisis has 
had less influence on French commerce than was expected. The 
reason is simply that in transactions with the United States, Great 
Britain, and the Hanseatic towns, the balance of trade is, and has 
been for a long time, in favor of France. Thus, in order that the 
disasters occurring in those countries should directly recoil on 
France, large credits must have been given to them, or com- 
modities for export to them have been speculatively accumulated. 
Nothing of the sort has happened. The American, English and 
Hanseatic events could, consequently, produce no drain of bullion 
from France; and if its Bank for some weeks raised the rate of 
interest to the English standard, it did this only for fear lest 
French capital should seek more profitable employment abroad. 

But it cannot be denied that the general crisis has, even in its 
present phase, told on France in a form agreeable to the 
commercial relations of that country with the United States, 
England and the Hanseatic towns, viz.: in the chronic form of 
distress. It has forced Bonaparte—who, in his letter of November 
10, declared “the evil to exist in the imagination only” *—to come 
out with another official message to the effect that “in spite of the 
prudence of French trade and the vigilance of the Government, 
the commercial crisis has obliged many branches of industry, if not 
to suspend work, at any rate to shorten their time or lower their 
wages,” so that ““many workmen suffer from forced idleness.” » He 
has consequently opened a credit of a million francs for the relief 
of the necessitous and finding them means of employment; he has 
ordered military precautions to be taken at Lyons; and, through 
his journals, has appealed to private charity. The withdrawals 
from the savings banks have begun by far to exceed the deposits. 
Heavy losses from failures in America and England have been 
sustained by many manufacturers, production is contracting to a 
disastrous degree at Paris, Lyons, Mihlhausen, Roubaix, Rouen, 
Lille, Nantes, St. Etienne, and other industrial centers, while 
serious embarrassments prevail at Marseilles, Havre and Bor- 
deaux. 

The general stagnation of trade throughout the country is most 
evident from the last monthly report of the Bank of France, which 
shows for the month of December a decrease in circulation of 

universel, No. 315, November 11, 1857.— Ed. 

73,040,000 francs, as compared with October, and of 48,955,900 
francs as compared with November; while the aggregate of 
discounts has fallen about 100,000,000 francs, if compared with 
October, and 77,067,059 francs compared with November.* In the 
present state of the French press it is, of course, not possible to 
ascertain the exact state of the failures occurring in provincial 
towns, but the Paris bankruptcies, although certainly not yet 
serious, exhibit a tendency to grow not only in quantity, but also in 
the quality of the concerns involved. In the fortnight from 
Nov. 17 to Dec. 1 thirty-four Paris bankruptcies only occurred, of 
which not fewer than twenty-four were of dealers in second-hand 
clothes, miulk-dealers, tailors, artificial flower-makers, cabinet- 
makers, reticule-makers, gilders, leather dealers, jewelers, fringe- 
makers, vinegar-makers, cap-makers, fruiterers, &c. From the Ist 
of December up to the 8th the bankruptcies were no fewer than 
thirty-one, and from the 9th to the 15th the number amounted to 
thirty-four, including some of greater importance, such as Messrs. 
Bourdon, Dubuch & Co., bankers; the General Company of 
voitures de remise,” a Company for Jacquard looms, an_ oil 
Company,° &c. On the other hand, Bonaparte’s attempt at 
checking the ruinous fall in the prices of wheat and flour by the 
abrogation of the prohibition decrees, has proved a failure, prices 
having progressively sunk from the 26th November to the 21st of 
December, and despite a fair margin of profit on sales in London, 
no more than 3,000 sacks (of 110 kilogrammes) being shipped 
thither up to the 22d of December. 

If, however, the balance of trade is in favor of France in her 
dealings with the United States, England, and the Hanseatic towns, 
it is against her in her commerce with Southern Russia, the 
Zollverein,*’ Holland, Belgium, the Levant and Italy. As to 
Switzerland, the temporary balance of trade is always against her,. 
but France is so deeply indebted to her—most of the Alsatian 
manufactures being carried on by Swiss capital—that in times of 
monetary scarcity she may always heavily pull upon the French 
money market. At this period, as at every former one, there will 
be no active French crisis before the commercial difficulties in 
those countries have reached a certain height. That Holland cannot 
tide over the present storm; will be understood on the simple 

© The Economist, No. 747, December 19, 1857.— Ed. 

consideration that her still large commerce is almost limited to that 
description of produce which has undergone and is progressively 
undergoing the most fatal depreciation. In the industrial centers 
of the Zollverein the premonitory symptoms of the crisis are 
already visible. Apprehensions of a crash in the Black Sea and 
Levantine trade are announcing themselves in the Trieste papers, 
and its first precursory flashes have sufficed to bring down some 
large houses at Marseilles. In Italy, finally, the monetary panic, at 
the very moment that it seems subsiding in the North of Europe, 
has burst out ablaze, as will be seen from the following extract 
from the Opinione of Milan, of Dec. 18: 

“The difficulties of the present time are very, very great; failures are occurring 
on a frightful scale, and after those of Palleari, of Ballabio and Co., of Cighera, of 
Redaelli, of Wechler and Mazzola, after the contre-coup of foreign cities, after the 
suspension of payments by the best houses of Verona, Venice, Udine and 
Bergamo, our strongest firms also begin to waver, and to make up their accounts. 
And the accounts are very sad. Let it suffice to remark that among our great silk 
houses there is not one that has in warehouse a less quantity than 50,000 pounds of 
silk, whence it is easy to calculate that at present prices every one of them must lose 
from half a million to two millions of francs—the stock of some of them exceeding 
150,000 Ib. The firm of Brambilla Brothers was supported by a loan of one million 
and a half of francs; Battista Gavazzi is liquidating, and others are doing the same. 
Every man asks himself what we have to look forward to; so many fortunes 
vanished, so many reduced by one-half; so many families, lately in easy 
circumstances, now at their last shift; so many workmen without work or bread, or 
means of subsistence of any kind.” 2 

When the French crisis, consequent upon the growing pressure 
from these countries, comes to maturity, it will have to grapple 
with a nation of gamblers, if not of commercial adventurers, and 
with a Government that has played the same part in France as 
private commerce has done in this country,” in England and 
Hamburg. It will fall severely upon the stock market and 
endanger the supreme security of that market—the State itself. 
The natural result of the contraction of French commerce and 
industry is to place money at the disposition of the Bourse, 
especially as the Bank of France is bound to make advances upon 
public funds and railway securities. Instead of checking stock 
gambling, the present stagnation of French commerce and 
industry has favored it. Thus we see from the last monthly report 
of the Bank of France, that its advances on railway shares have 
increased simultaneously with the decrease in- discounts and 

The Times, No. 22871, December 23, 1857.— Ed. © 

circulation. Thus, in spite of the heavy decrease in the receipts of 
most of the French railways, their quotations are looking up, the 
receipts of the Orleans line, for instance, having decreased by 
22'/, per cent toward the close of November, as compared with 
the corresponding period of last year; yet Orleans was quoted 
on Dec. 22 at 1,355, while it stood on 1,310 francs only on 
Oct. 23.* 

When the depression of trade set in upon France some railway 
companies were at once compelled to interrupt their works, and a 
similar fate threatened almost all of them. To mend this the 
Emperor forced the Bank of France into a treaty with the 
companies, by dint of which it becomes in fact the real railway 
contractor. It has to advance the money upon the new bonds 
which the companies are authorized by the settlement of Nov. 30, 
1856, to emit in 1858; and on that part which remained still to be 
issued for 1857; the authorized issue of bonds for 1858 amounting 
to forty-two and a half millions. The Crédit Mobilier**’ seemed 
also destined to succumb before the first shock, and had on the 3d 
of December to sel] at an enormous sacrifice part of its immense 
amount of securities. There is now a project afloat of amalgamat- 
ing it with the Crédit Foncier and the Comptoire d’Escompte,**? in 
order to make it share in the privilege granted to those institutions 
of having their bills discounted and their securities received by the 
Bank of France. Thus the plan evidently is to weather the storm 
by making the Bank of France responsible for all these concerns— 
a maneuver which of course exposes the Bank itself to wreck. But 
what even Napoleon III cannot think of, is to make the Bank 
pay the calls the private shareholders of the different joint-stock 
companies will have to encounter. Excluding petty affairs, the calls 
to be met toward the close of December were: Mercantile and 
Industrial Company of Madrid (Messrs. Rothschild), $30 per 
share; Franco-American Navigation Company, $10 per share; 
Victor Emmanuel Railway Company, $30 per share; Herserange 
Iron Works Company, $20 per share; the Mediterranean, $30 per 
share; the Austrian Railway, $15; the Saragossa, $10; the 
Franco-Swiss, $10; the Société Générale de Tanneries, $10; the 
Companie de la Carbonisation de Houilles $10, &c. At the 
beginning of the year there is a payment of $20 per share on the 

Chimay and Marienburg Railway, of $12'/, on the Lombard- 
Venetian Railways, and $20 on the Belgian and South American 
Steam Navigation Company. According to the settlement of 
Nov. 30, 1856, the calls for French railways alone will, in 1858, 
amount to about $50,000,000. There is certainly a great danger 
that France may founder on these heavy engagements in 1858, as 
England did in 1846-47. Moreover, capitalists in Germany, 
Switzerland and the Netherlands, are large holders of French 
securities, the greater part of which, at the progress of the crisis in 
those countries, will be thrown upon the Paris Bourse to be turned 
into money at any price. 

Written on December 25, 1857 Reproduced from the newspaper 

Tribune, No. 5219, January 12, 1858 asa