Karl Marx 
Pauperism and Free Trade— 
The Approaching Commercial Crisis 

New-York Daily Tribune. 
Nr.3601, 1. November 1852 

Pauperism and Free Trade— 
The Approaching Commercial Crisis. 

Correspondence of The N. Y. Tribune. 

London, Friday, Oct. 15, 1852. 

In a malt-house in Banbury, Mr. Henley, President of the Board of Trade, 
lately explained to his assembled farming friends that Pauperism had de- 
creased but by circumstances which had nothing to do with free trade; and 
above all, by the famine of Ireland, the discovery of gold abroad, the exodus 
of Ireland, the great demand consequent thereon for British shipping, etc., 
etc. We must confess that "the famine" is quite as radical a remedy against 
Pauperism as arsenic is against rats. 

"At least" observes The London Economist, "the Tories must admit the 
existing prosperity and its natural result, the emptied workhouses." The 
Economist then attempts to prove to this incredulous President of the Board 
of Trade, that workhouses have emptied themselves in consequence of free 
trade, and that if free trade is allowed to take its full development, they are 
likely to disappear altogether from the British soil. It is a pity that The 
Economist's statistics do not prove what they are intended to prove. 

Modern industry and commerce, it is well known, pass through periodical 
cycles of from 5 to 7 years, in which they, in regular succession, go through 
the different states of quiescence—next improvement—growing confidence- 
activity—prosperity—excitement—overtrading—convulsion—pressure—stag- 
nation—distress—ending again in quiescence. 

Recollecting this fact, we will revert to the statistics of The Economist. 

From 1834, when the sum expended for the relief of the poor amounted 
to £6,317,255, it fell to a minimum of £4,044,741 in 1837. From that date it 
rose again every year until 1843, when it reached £5,208,027. In 1844, '45 and 

Pauperism and Free Trade—The Approaching Commercial Crisis 

'46, it again fell to £4,954,204, and rose again in 1847 and '48, in which latter 
year it amounted to £6,180,764—almost as high as in 1834, before the in- 
troduction of the new Poor Law. In 1849, '50, '51 and '52 it fell again to 
£4,724,619. But the period of 1834-37 was a period of prosperity; that of 
1838-42, a period of crisis and stagnation; 1843-46, a period of prosperity; 
1847 and '48, a period of crisis and stagnation, and 1849-1852 again a period 
of prosperity. 
What, then, prove these statistics? In the best of cases, the common-place 
tautology that British pauperism rises and falls with the alternate periods of 
stagnation and prosperity, independently of either free trade or protection. 
Nay, inthe free trade year of 1852 we find the Poor Law expenditures higher 
by £679,878 than in the year of protection, 1837, in spite of the Irish Famine, 
the "nuggets" of Australia, and the steady stream of emigration. 
Another British Free Trade paper attempts to prove that exports rise with 
free trade, and prosperity with exports, and that with prosperity pauperism 
must decrease and finally disappear; and the following figures are to prove 
this. The number of able-bodied human beings doomed to subsist by parish 
support was: 
Jan. 1, 1849, in 590 Unions, 201,644. 
Jan. 1, 1850, in 606 Unions, 181,159. 
Jan. 1, 1851, in 606 Unions, 154,525. 

Comparing herewith the export lists, we find, for exports of British and 
Irish manufacture: 
1848 .. 48,946,395 
1849 .. 58,910,883 
1850 .. 65,756,032 

And what proves this table? An increase of exports of £9,964,488 redeemed 
above 20,000 persons from pauperism in 1849; a further increase of 
£6,845,149 redeemed 26,634 more in 1850. Now, even supposing free trade 
to do entirely away with the industrial cycles and their vicissitudes, then the 
redemption of the total number of able-bodied paupers would, under the 
present system, require an additional increase of the foreign trade of 
50,000,000 annually, that is to say, an increase of very near 100 percent. And 
these sober-minded Bourgeois statisticians have the courage to speak of 

"Utopists."—Verily, there are no greater Utopists in existence than these 
Bourgeois optimists. 

I have just got hold of the documents published by the Poor Law Board. 
They prove indeed that we are experiencing a numerical decrease of paupers 
against 1848 and '51. But from these papers there follows at the same time: 

Karl Marx 

From 1841-'44 the average of paupers was 1,431,571—1845-48 it was 
1,600,257. In 1850 there were 1,809,308 paupers receiving in-door and out- 
door relief, and in 1851 they numbered 1,600,329, or rather more than the 
average of 1845-'48. Now, if we compare these numbers with the popula- 
tion as verified by the census, we find that there were in 1841-'48, 89 pau- 
per s to every 1,000 of the population, and 90 in 1851. Thus in reality pau- 
perism has increased above the average of 1841-'48, and that in spite of 
free trade, famine, prosperity, in spite of the nuggets of Australia and the 
stream of emigration. 

I may notice on this occasion, that the number of criminals has increased 
also, and a glance at The Lancet, a medical journal, shows that the adultera- 
tion and poisoning of articles of food has hitherto kept up apace with free 
trade. Every week The Lancet causes a new panic in London by unraveling 
fresh mysteries. This paper has established a complete commission of inquiry 
of physicians, chemists, etc., for the examination of the articles of food sold 
in London. Poisoned coffee, poisoned tea, poisoned vinegar, poisoned 
cayenne, poisoned pickles—everything mixed up with poison—that is the 
regular winding up of the reports of this commission. 

Either side of the Bourgeois commercial policy, Free Trade or Protection, 
is, of course, equally incapable of doing away with facts that are the mere 
necessary and natural results of the economical base of Bourgeois society. 
And a matter of a million of paupers in the British workhouses is as in- 
separable from British prosperity, as the existence of eighteen to twenty 
millions in gold in the Bank of England. 

This once settled in reply to the Bourgeois phantasts, who on one hand 
hold up as a result of Free Trade, what is a mere necessary concomitant of 
every period of prosperity in the commercial cycles, or who, on the other 
hand, expect things from Bourgeois prosperity which it cannot possibly bring 
about. This once settled, there can be no doubt that the year 1852 is one of 
the most signal years of prosperity England ever enjoyed. The public reve- 
nue, in spite of the repeal of the window tax, the shipping returns, the export 
lists, the quotations of the money market, above all, the unprecedented 
activity in the manufacturing districts, bears an irrefutable testimony to this 
fact. 

But the most superficial knowledge of commercial history from the be- 
ginning of the nineteenth century, suffices to convince anybody that the 
moment is approaching when the commercial cycle will enter the phase of 
excitement, in order thence to pass over to those of over-speculation and 
convulsion. "Not at all!" shout the Bourgeois optimists. "In no previous 
period of prosperity was there less speculation than in the present one. Our 
present prosperity is founded upon the production of articles of immediate 

Pauperism and Free Trade—The Approaching Commercial Crisis 

usefulness which enter into consumption almost as rapidly as they can be 
brought to market, which leave to the producer an adequate profit, and 
stimulate renewed and enlarged production." 

In other words, what distinguishes this present prosperity is the fact that 
the existing surplus capital has thrown, and is throwing itself, directly into 
industrial production. According to the late report of Mr. Leonard Horner, 
Inspector General of Factories, there took place in 1851 an increase in cotton 
factories alone equal to 3,717 horse power. His enumeration of factories in 
course of construction is almost endless. Here a spinning mill with 150 horse 
power, there a weaving shed for 600 looms for colored goods, another 
spinning factory for 60,000 spindles and 120 horse power, another for spin- 
ning and weaving with 200, another with 300 horse power, etc. The largest, 
however, is building near Bradford, (Yorkshire,) for the manufacture of 
Alpaca and mixed goods. "The magnitude of this concern, which is erecting 
for Mr. Titus Salt, may be inferred from the fact that it is calculated to cover 
six statute acres of ground. The principal building will be a massive stone 
edifice of considerable architectural pretensions, having a single room in it 
540 feet long, and the machinery will include the latest inventions of acknowl- 
edged merit. The engines to move this immense mass of machinery are 
making by Messrs. Fairburn, of Manchester, and they are calculated to work 
1,200 horse power. The gas works alone will be equal to those of a small town, 
and will be erected upon White's hydrocarbon system, at a cost of £4,000. 
It ist calculated that 5,000 lights will be required, consuming 100,000 cubic 
feet of gas per diem. In addition to this extensive factory, Mr. Salt is building 
700 cottages for the workpeople in its immediate neighborhood." 

What, then, follows this enormous investment of capital for immediate 
industrial production? That the crisis will not come? By no means; but on 
the contrary, that it will take a far more dangerous character than in 1847 
when it was more commercial and monetary than industrial. This time it will 
fall with its heaviest weight upon the manufacturing districts. Let the un- 
equaled stagnation of 1838—42 be recalled to mind, which, too, was a direct 
result of industrial over-production. The more surplus capital concentrates 
itself in industrial production, instead of dividing its stream amongst the 
manifold channels of speculation, the more extensive, the more lasting, the 
more direct will the crisis fall upon the working masses and upon the very 
élite of the middle class. And if, in the moment of revulsion, the whole 
overwhelming mass of goods on the market already takes at once the form 
of lumbering ballast, how much more must this be the case with these 
numerous enlarged or newly-erected factories, just far enough advanced to 
begin to work, and for which it is of vital importance to set to work at once? 
If every time when capital deserts its habitual commercial channels of cir- 

Karl Marx 

culation, this desertion creates a panic which reaches even into the parlor 
of the Bank of England, how much more so a similar sauve qui peut in a 
moment when an immense amount has thus been turned into fixed capital 
in the shape of mills, machinery, etc., which begin to work only at the 
outbreak of the crisis, or which partially require further sums of circulating 
capital before they can be got into workable condition. 

I take from The Friend of India another fact significative of the character 
of the approaching crisis. From a statement of the commerce of Calcutta in 
1852 therein contained, it results that the value of cotton goods, twist and 
yarn imported into Calcutta in 1851, amounted to £4,074,000, or nearly 
two-thirds of the whole trade. In this year the whole amount of these imports 
will be larger still. The imports into Bombay, Madras, Singapore, are not even 
comprised herein. But the crisis of 1847 has given such revelations of Indian 
trade, that nobody can retain the slightest doubt of the final results of an 
industrial prosperity, in which the imports of "our Indian Empire" count for 
two-thirds of the whole. 

So much as to the character of the state of convulsion which is to follow 
in the wake of the present state of prosperity. That this convulsion will come 
down in 1853 is prognosticated by many symptoms, especially the plethory 
of gold at the Bank of England, andthe particular circumstances under which 
this large influx of bullion takes place. 

At this moment there are £21,353,000 in bullion in the vaults of the Bank 
of England. It has been attempted to explain this influx by the surplus 
production of gold in Australia and California. A simple glance at facts 
proves the incorrectness of this view. 

The increased quantity of bullion in the Bank of England represents, in 
reality, nothing but the diminished import of other commodities; in other 
words a large surplus of exports over imports. The last trade lists show, in 
fact, a considerable decrease of imports in hemp, sugar, tea, tobacco, wines, 
wool, grains, oils, cocoa, flour, indigo, hides, potatoes, bacon, pork, butter, 
cheese, hams, lard, rice, and almost all the manufactures of the European 
continent and of British India. There was an evident over-importation in 1850 
and 1851, and this, as well as the increased price of bread-stuffs on the 
Continent in consequence of abad harvest, tends to keep down imports. The 
imports of cotton and flax alone show an increase. 

This surplus of exports over imports explains why the rate of exchange 
is favorable for England. On the other hand, the balancing by gold of this 
excess of exports, causes a large portion of British capital to lie idle and to 
go to increase the reserves of the banks. The banks as well as private in- 
dividuals hunt up every means to invest this idle capital. Hence the present 
abundance of loanable capital and the low rate of interest. First class paper 

Pauperism and Free Trade—The Approaching Commercial Crisis 

is at 1'U and 2 percent. Now, if you compare any history of trade, say Tooke's 
History of Prices, you find that the coincidence of these symptoms: unusual 
accumulation of bullion in the cellars of the Bank of England, excess of 
exports over imports, favorable rate of exchange, abundance of loanable 
capital, and low rate of interest, regularly opens, in the commercial cycle, 
that phase where prosperity passes into excitement, where on one hand 
overtrading in imports, onthe other, wild speculations in all sorts of attractive 
bubbles, is sure to begin. But this state of excitement itself, is only the 
precursor of the state of convulsion. Excitement is the highest apex of 
prosperity; it does not produce the crisis, but it provokes its outbreak. 

I know very well that the official economical fortune-tellers of England 
will consider this view exceedingly heterodox. But when since "Prosperity 
Robinson," the famous Chancellor of the Exchequer, who in 1825, just 
before the appearance of the crisis, opened Parliament with the prophecy 
of immense and unshakeable prosperity—when have these Bourgeois opti- 
mists ever foreseen or predicted a crisis? There never was a single period 
of prosperity, but they profited by the occasion to prove that this time the 
medal was without areverse, that the inexorable fate was this time subdued. 
And on the day, when the crisis broke out, they held themselves harmless 
by chastising trade and industry with moral, common-place-preaching 
against want of foresight and caution. 

The peculiar state of politics created by this momentary commercial and 
industrial prosperity, will form the subject of my next letter. 

Karl Marx.