The bullion decreased during last week but one by £208,875, and in last week by £462,852. The effect upon prices at the Stock Exchange has been immediate, every description of security declining. We read in the Money article of last Wednesday's Times:
"Notwithstanding the depression in the Stock-market, Exchequer bills remained at 2 per cent. discount to 1 per cent. premium, but an impression is entertained that the Chancellor of the Exchequer, in order to sustain the price, causes them to be purchased on Government account, in the absence of any funds immediately available for that purpose, by the sales of 3 per cent. Stocks held on account of savings-banks."[i]
This would be a masterpiece on the part of Mr. Gladstone: selling Consols at a low figure and purchasing Exchequer bills at a high one, causing a loss of half the income of the 3 per cent. stocks by converting them into Exchequer bills bearing little more than 1½ per cent. interest.
How can we reconcile an unfavorable exchange or drain of bullion with the unprecedented increase of British exports, which at the end of the year will surpass by £16,000,000 even the exports of 1852?
"As we give credit [...] to all the world in the case of our exports, and pay ready money in the case of our imports, a large expansion of our trade at any moment must necessarily lead to a considerable balance in the payments against us at the time, but which must all be returned when the credit upon our exports has expired, and remittances ought to be made for them."
So says The Economist[j]. According to this theory, if the exports of 1854 were to surpass again those of 1853, the exchange mist continue to be against England, and a commercial crisis would be the only means of adjustment. The Economist thinks that disasters like those of 1847 are out of the question, because no considerable portion of capital has been fixed now as then, in railways, etc. He forgets that it has been converted into factories, machinery, ships, etc. On the other hand, The Observer laments the
"foolish investments in foreign railways, and other companies of very doubtful and suspicious character."[k]
The Economist thinks that the extended commercial operations, so far as Europe is concerned, may receive a wholesome check from the high price of corn, but that America and Australia, etc., are sure. The Times at the same time asserts that the tightness of the New-York money market will put a wholesome check on American operations.
"We must not calculate on the same extent of orders from the United States that we have hitherto experienced," exclaims The Leader.[l]
Australia remains. Here steps in The Observer:
"Exports have been pushed injudiciously forward. [...] From the 74,000 tons of shipping now entered in London for the southern colonies, the condemnatory notices we gave from Adelaide, Melbourne, etc., will receive their justification. It is not to be denied that present prospects are not promising."
As to the Chinese market all reports are unanimous on the point that there exists a great alacrity to sell, but as great a reluctance to buy, the precious metals being hoarded, and any alteration of this state of things remains out of question as long as the revolutionary movement in the monster Empire has not accomplished its end.
And the home market?
"Large numbers of the power-loom weavers in Manchester and its neighbor-hood have followed the example of Stockport in striking for an advance of 10 per cent. on their wages.... The factory heads will probably find, before the end of the winter, that the question is not whether an increase of 10 per cent. will be conceded, but whether the manufacturers will allow work to be resumed at the present rate of wages."
In these terms, not to be misunderstood, The Morning Chronicle[m] alludes to the imminent decline of the domestic market.
I have repeatedly dwelt on the immense enlargement of the old factories, and the unparalleled erection of new ones. I reported to you upon some new-built mills which form, as it were, whole manufacturing towns. I stated that at no former epoch had such a proportion of the floating capital accumulated during the period of prosperity, been directly sunk for manufacturing purposes[n]. Now, take these facts on the one hand, and on the other the symptoms of overstocked markets at home and abroad; remember also, that an unfavorable exchange is the surest means to precipitate over-exports into foreign markets.
But it is the bad harvest which, above all, will drive the long-accumulated elements of a great commercial and industrial crisis to eruption. Every other sort of produce, when enhanced, checks its own demand; but Corn, as it becomes appreciated, is only the more eagerly sought for, drawing depreciation on all other commodities. The most civilized nation, like the most brutal savage, must procure its food before it can think of procuring anything else, and the progress of wealth and civilization is generally in the same proportion, in which the labor and cost of producing food diminish. —A general bad harvest is in itself a general contraction of markets, at home and abroad. Now the present harvest is at least as deficient in the southern part of Europe, in Italy, France, Belgium, Rhenish Prussia, as it was in 1846-47. It is by no means promising in the north-west and north-east. As to England, The Mark Lane Express, that Moniteur of the London Corn Exchange, states in its number of yesterday week[o]:
"That the produce of wheat in the United Kingdom will be the smallest gathered for many years, does not admit of question. [...] The average yield will fall materially short in almost all parts of the kingdom, [...] independent of which it must be borne in mind that the breadth of land sown was, owing to the unpropitious weather during the seeding time, at least one-fourth less than usual."
This situation will not be alleviated by the delusion of commercial convulsions, industrial over-production, and bad harvests having been simultaneously done away with by free trade. On the contrary.
"Holders," remarks the same Mark Lane Express, "cannot yet realize the idea of scarcity under Free Trade. Hence few are disposed to hold heavy stocks. [...] If our necessities should drive us hereafter to import largely, the chances are, that we shall have to pay dearly for supplies."
The Mark Lane Express of yesterday adds:
"There is still so large a proportion of the crops abroad that the character of the weather for some weeks to come will have great influence on trade. [...] The quality of the grain exposed in the fields has already suffered from the last rains, [...] and a continuance of wet might be productive of an immense amount of mischief.... The ultimate result of the harvest threatens to be [...] less satisfactory than appeared likely a week or two ago.... The accounts which have reached us the last few days with regard to potatoes, are less favorable than those previously received.... Notwithstanding the enormously large supplies from abroad during last week (88,833 qrs.), the reaction on prices has been only small, the fall from the highest point not having exceeded 1s. to 2s. per quarter.... The probable result of the harvest in the Baltic is on the whole of an unsatisfactory character.... According to the latest advices, wheat was at 60s. f. o. b. at Dantzic, at 56s. 3d.at Königsberg, 54s. at Stettin, 58s. at Rostock."
The consequences of the dearth are already appearing, as in 1847, on the political horizon. At Naples the town authorities are without means to employ the laborers on public works, and the Exchequer is unable to pay the State officers. In the Papal States, at Tolentino, Terni, Ravenna and Trastevere, there have been bread riots by no means mitigated by the recent arrests, the invasion of the Austrians, and the threat of the bastinado. In Lombardy the political consequences of dearth and industrial stagnation will not be avoided by Count Strassoldo's imposing an additional tax of 6½ kreuzen per florin, payable on the 20th Sept. and 10th Oct., this year, and to be levied on all payers of direct taxes, including the income tax and the tax upon salaries. The general distress in Austria is betrayed by her lingering after a new loan, introduced on the market as usual by the assertion that she wants the money only to reduce her army. The feverish anxiety of the French Government may be inferred from its false harvest accounts, its false assize of bread at Paris, and its immense purchases of corn on all markets. The provinces are disaffected, because Bonaparte feeds Paris at their expense; the bourgeoisie are disaffected because he interferes with commerce in behalf of the proletarians; the proletarians are disaffected because he gives wheat bread instead of brown to the soldiers, at the moment when peasants and workmen are menaced with the prospect of no bread at all; lastly, the soldiers are disaffected because of the humble anti-national attitude of France in the Eastern question. In Belgium several food riots have echoed the foolish festivities lavished by the Coburgs on the Austrian Archduchess[p]. In Prussia the fear of the Government is so great that several corn-brokers have been arrested by way of show, and the rest summoned before the Police President, who "requested" them to sell at "honest" prices.
I conclude by again recording my opinion, that neither the declamation of the demagogues, nor the twaddle of the diplomats will drive matters to a crisis, but that there are approaching economical disasters and social convulsions which must be the sure forerunners of European revolution. Since 1849 commercial and industrial prosperity has stretched the lounge on which the counter-revolution has slept in safety.
Notes[a] See this volume, pp. 203-09.—Ed.
[b] Below is quoted the second article of the series "The Governing Classes" dealing with Aberdeen's surrender. (The Leader, No. 181, September 10, 1853).—Ed.
[c] Pius IX.—Ed.
[e] See this volume, pp. 107-08.—Ed.
[f] The Leader, No. 181, September 10, 1853.—Ed.
[g] Punishment cell.—Ed.
[h] This and the following quotation are from "Vice-Chancellor's Court, Saturday, Sept. 3", The Times, No. 21525, September 5, 1853.—Ed.
[i] The Times, No. 21527, September 7, 1853.—Ed.
[j] In "As Applied to Interest on Capital", The Economist, No. 524, September 10, 1853.—Ed.
[k] The Observer, September 11, 1853. The passages rendered below are from the issue of September 4, 1853.—Ed.
[l] "The Threatened Stop in the Rise of Wages", The Leader, No. 180, September 3, 1853.—Ed.
[m] On September 7, 1853.—Ed.
[n] See Marx's articles "Pauperism and Free Trade.—The Approaching Commercial Crisis" and "Political Prospects.—Commercial Prosperity.—Case of Starvation" (present edition, Vol. 11, pp. 357-63, 477-85).—Ed.
[o] Of September 5, 1853.—Ed.
[p] Marie Henriette.—Ed.
 A reference to Nesselrode's circular letter to Russian diplomats abroad of July 2, 1853. (Below Marx cites the date as June 20, 1853, according to the old style accepted in Russia.) The text of it was published in The Times, No. 21418, July 12, 1853. Written in the spirit of the previous Note of June 11, 1853 (see Note 136 ↓), it supported the Tsarist Government's demands on Turkey and criticised the policy of the Western powers. In referring to the French Minister's reply to the Note, Marx made a slight error, which was due to the lack of clarity in the text of the telegram from Paris published in The Morning Post. He quoted from Drouyn de Lhuys' reply to Nesselrode's first Note of June 11, 1853, the text of which together with the text of the French Government's reply of June 25, 1853 was published in the official newspaper Le Moniteur universel, No. 195, on July 14, 1853. Nesselrode's Note of July 2 and Drouyn de Lhuys' reply to it of July 15 were published in Le Moniteur universel, No. 198 for July 17, 1853, after Marx had written his article. In the second Note, the French Government likewise expressed its disapproval of the Tsar's position in the Eastern question and professed to stand for a peaceful solution of the conflict.
 A reference to Nesselrode's Note (a circular letter of June 11, 1853) to Russian diplomats abroad. The Note criticised the Porte's actions and gave grounds for presenting a new ultimatum to Turkey demanding that the Russian Tsar be recognised as the protector of the Christian subjects of the Sultan and threatening to resort to "decisive measures" if these demands were rejected. This ultimatum, which Marx calls below an "ultimatissimum", was presented to the Porte on June 16, 1853.
 A reference to the closure of the Capuchin monastery in Locarno in the autumn of 1852 and the expulsion of 22 Italian-born Capuchins from Ticino to Lombardy. The actions of the Swiss authorities against the Capuchin Order, which enjoyed Austrian protection, aggravated Austro-Swiss relations, which were further strained by the fact that participants in the Italian national liberation movement resided on Swiss territory.
 A reference to the Milan insurrection started on February 6, 1853 by the followers of the Italian revolutionary Mazzini and supported by Hungarian revolutionary refugees. The aim of the insurgents, who were mostly Italian workers, was to overthrow Austrian rule, but their conspiratorial tactics led them to failure. Marx analysed it in a number of articles (see present edition, Vol. 11, pp. 508-09, 513-16 and 535-37).
Th. Carlyle, Latter-Day Pamphlets, No. II, Model Prisons, London, 1850. A critical analysis of this work was given in one of the reviews published by Marx and Engels in the fourth issue of the journal Neue Rheinische Zeitung. Politisch-ökonomische Revue, 1850 (see present edition, Vol. 10, pp. 301-09).
Source: Marx and Engels Collected Works, Volume 12 (pp.301-308), Progress Publishers, Moscow 1979