THE STATE OF TRADE! 

Cologne, March 6. An Englishman is never more unhappy than when he 
does not know what to do with his money. Therein lies the secret of all 
grandiose speculations, all profit-making enterprises, but it is also 
the secret of all bankruptcies, all financial crises and commercial 
depressions. 

In 1840, 1841 and subsequent years, it was the new Asian markets, 

besides the customary commerce with the European continent, 
which claimed a special share of English export trade. Manufactur- 
ers and exporters had every reason to greet Sir Henry Pottinger on 
the Manchester stock exchange with loud cheers. But the good times 
quickly passed. Canton, Bombay and Calcutta soon overflowed with 
unsalable goods, and capital, which no longer found any outlet in 
that direction, for a change once more sought application inside the 
country; it was poured into railway construction and so opened upa 
field for speculation in which the latter was soon rampant to a quite 
unprecedented extent. 

According to a conservative estimate, the total sum invested in 
the enterprises could be put at 600 million and it would perhaps have 
gone still higher if the failure of the potato harvest in England, 
Ireland and many regions of the Continent, and further the high 
price of cotton, and as a result of both the reduced sale of 
manufactured goods, as well as, finally, the excessive railway 
speculation, had not caused the Bank of England on October 16, 
1845 to raise the bank rate by one-half per cent. 

In view of the superstitious fear in which the Britisher holds the 
omnipotence of his bank, this slight rise in the bank rate or, in other 
words, this lack of confidence on the part of the bank directors, at 

once affected the existing level of activity, so that a general mood of 
dejection set in, and the apparent prosperity was immediately follow- 
ed by the restriction of credit and numerous bankruptcies. Conse- 
quently one of those great commercial crises, like those of 1825 and 
1836, would have immediately developed if the repeal of the Corn 
Laws’ that followed soon afterwards had not suddenly come to the 
aid of the falling confidence, and once moré stimulated the spirits 
of the entrepreneurs. 

For the commercial world expected so much from the immediate 
consequences of this great measure that it found it easy to forget 
about the tribulations which had just overtaken it. The settlement of 
the Oregon conflict which promised a continuation of the hitherto 
extremely flourishing trade with America, and the British victories in 
the Punjab‘ which ensured peace in Hindustan, played their part, of 
course, in a revival of spirits. And although the bad harvest of 1845 
was followed by a similar one in 1846, although everywhere the 
reserves of former times had to be drawn upon and a credit for 
business purposes involved paying 12-15 per cent, despite all this, all 
the spinning mills of Lancashire and Yorkshire were set in continual 
motion as though crop failures, railway speculations and glutted 
markets had now suddenly become mere trifles which could be 
coped with in a trice. 

This happy state of affairs, however, was not destined to last long, 
for whereas in September 1847 Dr. Bowring at the Brussels Free 
Trade Congress was still expounding with such highly comical 
eloquence the marvellous consequences of the repeal of the Corn 
Laws,* it was already noticed in London that even the “all-powerful 
measures of Sir Robert Peel” were no longer able to save the country 
from the catastrophe which had so long been feared. One had to 
submit to fate and the London firms which, like Read Irving and Co., 
owned landed property worth almost one million pounds on 
Mauritius, were the first to start a series of bankruptcies— because of 
the shattered state of affairs in that part of the English col- 
onies—they collapsed, taking with them in their fall numerous 
smaller East-Indian and West-Indian firms. 

At the same time the big wigs of the factory districts realised that 
they had been mistaken about the consequences of the repeal of the 
Corn Laws. Business with all parts of the world was at a standstill and 

* See Engels, “The Economic Congress” and “The Free Trade Congress at 
Brussels” and Marx, “Speech on the Question of Free Trade” (present edition, Vol. 6, 
pp. 274-78, 282-90 and 450-65).— Ed. 

The State of Trade 5 

panic spread simultaneously in the City of London and in the stock 
exchanges of Liverpool, Manchester, Leeds etc. 

Consequently, the crisis of October 1845, which had been delayed 
by various events, finally broke out in September 1847. Confidence 
was at an end. Courage had run out. The Bank of England 
abandoned the banks inside the country; these banks withheld credit 
from traders and manufacturers. Bankers and exporters restricted 
their business with the Continent, the continental trader, in his turn, 
put pressure on the manufacturer who owed him money; the 
manufacturer, of course, reimbursed himself at the expense of the 
wholesaler, and the latter fell back on the boutiquier2 Each one of 
them hit out at the others and gradually the distress due to the trade 
crisis affected the whole world, from the giants of the City of 
London down to the smallest German shopkeeper. 

This was before February 24, 1848! England experienced the worst 
days in the last four months of 1847. There was a clean sweep of the 
railway speculators; between August 10 and October 15, twenty of 
the leading London firms trading in colonial merchandise, with a 
capital of £5 million, and paying dividends of about 50 per cent, 
went bankrupt; and in the factory districts the distress reached its 
peak when in Manchester on November 15, only 78 out of 175 
spinning mills were working full-time, and 11,000 workers were out 
of work. 

So ended the year 1847. It was reserved for the Continent to 
experience during 1848 the after-effects of this English 
crisis—after-effects that on this occasion were, of course, all the 
more perceptible because the political transformations did not 
exactly help to make good the consequences of this extraordinary 
English occurrence. 

We now come to the most interesting moment in the recent history 
of commerce, namely, the influence which the revolutions had on 
commercial activity. 

The tables of English export trade provide us with the best 
illustration of this because, in view of the dominant position of 
England in world trade, the contents of these tables are nothing but 
an expression in figures of the political and commercial situation or, 
more correctly, the expression in figures of the ability to pay of the 
various nations. 

Therefore, when we see that exports in April 1848 fell by 
£1,467,117, and in May by £1,122,009, and that total exports in 

? Retail salesman.— Fd. 

1847 amounted to £51,005,798, and in 1848 to only £46,407,939, 
conclusions very unfavourable to the revolutions could, it is true, be 
.drawn from this and such an idea could be arrived at all the more 
easily because exports in January and February 1848, i.e. immediate- 
ly before the outbreak of revolution, were actually £294,763 higher 
than in 1847. 

Nevertheless, such a view would be completely erroneous. 
Because, firstly, the increased exports in January and February, i.e. 
precisely in the two months separating the peak of the crisis from the 
revolution, are easily explained by the fact that the Americans, in 
return for their enormous deliveries of grain to England at that time, 
took more British manufactured goods than ever before and thus at 
least for a short while prevented the falling off that would otherwise 
have arisen. But, in addition, English trade history provides most 
striking proof that exports do not diminish immediately after a crisis, 
but only when sufficient time has passed for the crisis to spread also 
to the Continent. 

The increased export of the first two months of 1848, therefore, 
should by no means mislead us, and we can turn without misgivings 
to a consideration of the total decline during the whole year. 

This decline, as we have already mentioned, compared with 1847 
amounted to £4,597,859—certainly a considerable decrease, which 
in the hands of the reactionaries, who behave in politics like yapping 
curs and in trade like old women, became an argument against the 
revolution, one that is only too effectively used towards the 
uninformed. 

But there is nothing easier than to refute the fallacious assertions 
of the party of reaction, for one has only to look up the tables of 
exports for the past 30 years to demonstrate that the decrease in 
exports in 1848, brought about by the combined influence of a trade 
crisis and a revolution, bears no comparison with the decline in 
exports of previous years. 

After the trade crisis of 1825, in which year total exports 
amounted to £38,870,851, exports dropped to £31,536,724 in 1826. 
Thus there was a decrease of £7,334,127. After the crisis of 1836, 
when exports amounted to £53,368,572, exports dropped to 
£42,070,744 in 1837. The decrease, therefore, was £11,297,828. 
Nothing can be more striking than that! 

Hence after two trade crises, which, it is true, were caused 
exclusively by the over-production of manufactured goods but in 
their extent cannot at all be compared with the crisis just ended, the 
drop in exports was double that of 1848, a year which was preceded 
by a glut in the Asian markets, two bad harvests, and speculation on a 

The State of Trade 7 

scale never seen before in the world, and a year when every corner of 
old Europe was shaken by revolutions! 

In truth, trade got off easily in 1848! The revolutions contributed 
to the fact that now and then trade stagnated, that sales became 
difficult and dangerous, and that many persons collapsed under the 
burden of their obligations. During the past year, however, under 
Louis Philippe, the same difficulties would have been met with in 
Paris in discounting a miserable 20,000 or 30,000 francs as under the 
republic. In Southern Germany, on the Rhine, in Hamburg and in 
Berlin, with or without the revolution we would have had our 
bankruptcies; and business in Italy would have been depressed just 
as much under Pius as under the heroes of Milan, Rome and 
Palermo.” 

It is just as ludicrous, therefore, to ascribe the revival of trade to 
the temporary victories of the counter-revolution. The French are 
not paying 25 per cent more for wool at the London wool auctions 
because some of Louis Philippe’s Ministers are again in power,—no, 
they are having to pay more because they need the wool, and they 
need more of it, their demand is growing, precisely because in the 
last years of Louis Philippe’s rule it had greatly decreased. Such a 
fluctuation of demand can be observed throughout the history of 
commerce. 

And the English are once more working a full day in all the mines, 
foundries, spinning mills, and in all their ports, not because a certain 
Prince Windischgratz orders the summary shooting of the Viennese 
people,—no, they are at work because the markets of Canton, New 
York and St. Petersburg wish to be supplied with manufactures, 
because California is opening up a new market which the speculators 
regard as inexhaustible, because the bad harvests of 1845 and 1846 
were followed by two good harvests in 1847 and 1848, because the 
English have given up railway speculation, because money has 
returned to its customary channels, and the English will go on 
working ... until there is a new trade crisis. 

Above all, we must not forget that it was by no means the 
monarchical countries that in recent years were the chief source of 
employment for English industry. The country which has almost 
continuously placed the most colossal orders for English goods and 
whose demand at the present time, too, is able to empty the markets 
of Manchester, Leeds, Halifax, Nottingham, Rochdale, and all the 
great emporia of modern industry, and which can enliven the ocean 
with its ships—is a republican country, the United States of North 
America. And it is just now that these states are prospering most of 
all, when all the monarchical states of the world are collapsing. 

If, however, in the recent period a few branches of German 
industry have to some extent improved their position, they owe it 
solely to the English period of prosperity.* From the whole of the 
history of commerce the Germans should know that they have no 
commercial history of their own, that they have to suffer for English 
crises, while in periods of over-production in England, a minute 
percentage is all that falls to their lot. But they have nothing to thank 
their Christian-Germanic governments for except accelerated 
bankruptcy.