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Panic on the London Stock Exchange.

Karl Marx

London, Tuesday, Sept. 27, 1853[a]

The intelligence that the combined fleets had passed up the Dardanelles, concurrent with rumors of a change in the Ministry and of commercial difficulties, produced a real panic at the Stock Exchange on Saturday:

"To describe the state of the English funds, or the scene that has prevailed in the Stock Exchange, would be a task of no small difficulty. It is rare that such excitement is witnessed, and it is well that it is infrequent.... It is perhaps no inflation to assert that the Bearing at the present time equals almost what took place during the French Revolution.... Funds have this week been done at 91½ [...] and [...] have not been so low since 1849.... In the railway market there has been an incessant fall."

Thus says The Ministerial Observer[b]. All the leading railway shares were about 68 s. to 80 scp. under the prices of the previous week. As to the sudden pressure of stock upon the market, it would not signify much, as the mere time-dealers are able, at a given moment, to turn the market and intimidate the bona fide stockholders. But, coinciding, as it does, with general symptoms of a commercial crisis, the great fluctuation of funds, even if it be of a mere speculative character, will prove fatal in its consequences. At all events, this consternation in the Money market is condemnatory of any State loans looming in the future, and particularly so of the Austrian ones. Moreover, capitalists are reminded that Austria did pay, in 1811, a dividend 1s. 7d. farthing in the pound on their promissory notes; that, notwithstanding her revenue having been screwed up from £12,000,000 to £18,000,000 sterling, by means of a greatly increased pressure of taxation exerted on Hungary and Lombardy since 1849, her annual deficit amounts, on an average, to more than one-quarter of her whole revenue; that about £50,000,000 have been added to her national debt since 1846; and that she only has been prevented from a new bankruptcy by the interested forbearance of the children of Israel, who still hope to rid their tills of heaps of Austrian paper accumulated in them.

"Trade has been pushed on somewhat beyond its proper limits, and our commercial liabilities have partially outstripped our means," says The Observer. "lt is useless," exclaims The Morning Post, "to evade the question, for although there are [...] some favorable features in the pending crisis which did not exist in 1847, it must be perceptible to every intelligent observer of passing events that, to say the least of it, a very trying condition of affairs has arrived."[c]

The bullion reserve in the Bank of England has again decreased by £338,954, and its reserve of notes i.e., the. fund available for discounts, amounts but to seven millions, a sum fully required by the Chancellor of the Exchequer[d] for paying off the dissentient holders of South Sea stock. As to the state of the Corn market, we learn the following from yesterday's Mark Lane Express[e]:

"With average crops we have for [...] years consumed some millions of quarters of foreign wheat per annum. What, then, are our requirements likely to be under existing circumstances? The produce of wheat at the utmost cannot be estimated at more than three-quarters of an average, and there is [...] no excess in the yield of any other crop. Potatoes are seriously affected by disease, and have been forced into consumption so rapidly, owing to their unfitness for storing, that this article of food must very shortly become scarce. So enormous has been our consumption that with an importation of 3,304,025 qrs. of wheat and 3,337,206 cwts. of flour during the eight months ending the 5th inst., the stocks in granary are by no means excessive.... We are anxious not to exaggerate the difficulties the country may be placed in, but that difficulties exist it would be folly to deny.... The reports as to the yield of wheat are very unsatisfactory; in many cases where the produce has been tested by thrashing, the quantity turned out little more than half of what had been calculated upon."

While thus the bright sunshine of commercial and industrial prosperity is hidden by gloomy prospects, strikes are still forming, and will for some time yet form, an important feature of our industrial condition; only they are beginning to change their character contemporary with the change that is now going on in the general condition of the country.

At Bury a new advance of 2d. per 1,000 hanks has been asked on the part of the spinners. Masters refusing, they left work, and the weavers will do so as soon as they have worked up the yarn on hand. At Preston, while the weavers still demand an advance of 10 per cent., being supported by the operatives of the surrounding districts, six masters have already locked up their mills and the others are likely to follow them. Two thousand operatives have thus been thrown out of work. At Blackburn the mechanics of Mr. Dickinson, iron-founder, still remain out. At Wigan the capreelers of one mill have struck for an advance of 1d. per score, and the throstle-spinners of another mill refused to commence work until their wages were advanced. The mills were closed. At the same place the coal-miners' strike, embracing about 5,000 hands, is going on. The Earl of Crawford, and other extensive coal-miners in the neighborhood, dismissed their hands on Wednesday evening. A numerous meeting of the colliers was then held in Scales' Orchard. At Manchester 5,000 looms stand still, besides the minor strikes going forward, such as that of the fustian-dyers, the skein-dyers, felt-hat makers, etc. At Bolton, meetings of the operative cotton-spinners are being held for an advance of wages. There are shoemakers' strikes at Trenton, Bridgewater, etc.; cab-drivers' strikes at Glasgow; masons' strikes at Kilmarnock; threatened turn-outs of the police at Oldham, etc. At Birmingham, nailers demand an advance of 10 per cent.; at Wolverhampton, the carpenters one of 6d. per day; the London carpenters ditto, and so on. While through the principal manufacturing towns of Lancashire, Cheshire, Derbyshire, etc., the operatives are holding public meetings, to decide upon measures for the support of their suffering brethren, the masters on the other hand are resolved to close their establishments for an indefinite period, with the design of starving their hands into subjection.

"We find," says the Sunday Times, "that, generally speaking, the demand for an advance of wages has not exceeded 6d. a day; and, looking at the present price of provisions, [...] it can hardly be said [...] that the demand is an unreasonable one. We know it has been said that one aim of the present strikers is to obtain a sort of communistic share of the real or supposed profits of the manufacturer; but the comparison between the increased demand for wages and the enhanced value of the prime necessaries of life, furnishes an ample refutation of the charge."[f]

When the working people ask for more than "the prime necessaries of life," when they pretend "to share" in the profits resulting from their own industry, then they are accused of communistic tendencies. What has the price of provisions to do with the "eternal and supreme law of supply and demand?" In 1839, 1840, 1841, and 1842, while there was a continued rise in the price of provisions, wages were sinking until they reached the starvation point. "Wages," said then the same manufacturers, "don't depend upon the price of provisions, but upon the eternal law of supply and demand."

"The demands of the working people," says the Sunday Times, "may be submitted to when urged in a respectful manner."

What has respect to do with the "eternal law of supply and demand?" Has any one ever heard of the price of coffee rising at Mincing-lane[g] when "urged in a respectful manner?" The trade in human flesh and blood being carried on in the same manner as that of any other commodity, give it at least the chances of any other.

The wages-movement has been going on now for a period of six months. Let us judge it by the test acknowledged on the part of the masters themselves, by the "eternal laws of supply and demand," or are we, perhaps, to understand, that the eternal laws of political economy must be interpreted in the same manner as the eternal peace treaties Russia has concluded with Turkey?

Six months ago the work-people, had they even found their position not strengthened by the great demand for their labor, by constant and enormous emigration to the gold fields and to America, must have inferred the enhancement of industrial profits from the general prosperity-cry uttered by the middle-class press exulting at the blessings of Free Trade. The workmen, of course, demanded their share of that so loudly proclaimed prosperity, but the masters fought hard against them. Then, the workmen combine, threaten to strike, enforce their demands in a more or less amicable manner. Wherever a strike occurs, the whole of the masters and their organs in pulpit, platform and press, break out into immoderate vituperation of the "impudence and stupidity" "of such attempts at dictation." Now, what did the strikes prove, if not that the workmen preferred applying a mode of their own of testing the proportion of the supply to the demand rather than to trust to the interested assurances of their employers? Under certain circumstances, there is for the workman no other means of ascertaining whether he is or not paid to the actual market value of his labor[249], but to strike or to threaten to do so. In 1852, on an average, the margin between the cost of the raw material and the price of the finished goods for instance, the margin between the cost of raw cotton and that of yarn, between the price of yarn and that of cotton goods, was greater, consequently the profit of the spinner and the manufacturer was undoubtedly larger than it has been in 1853. Neither yarn nor goods have, until very lately, risen in the same proportion as cotton. Why, then, did the manufacturers not advance wages at once in 1852? There was no cause, they say, in the relative position of supply and demand justifying such a rise of wages in 1852. Indeed? Hands were not quite as short a year ago as they are now, but the difference is out of proportion to the sudden and repeated rise of wages forced out of the manufacturers since then, by virtue of the law of supply and demand, as expounded by turn-outs. There are, certainly, more factories at work than last year, and more able-bodied workmen have emigrated since then, but at the same time never has there been such a supply of factory labor poured into our "hives of industry" from agricultural and other pursuits, as during the last twelve months.

The fact is that the "hands," as usual, perceived only too late, that the value of their labor had risen 30 per cent. many a month ago, and then, in the summer of this year only then they began to strike, first for 10 per cent., then for another 10 per cent., and so on, for as much, of course, as they could get. The constant success of these strikes, while it generalized them all over the country, was the best proof of their legitimacy, and their rapid succession in the same branch of trade, by the same "hands" claiming fresh advances, fully proved that according to supply and demand the work-people had long been entitled to a rise of wages, which was merely kept from them on account of their being ignorant of the state of the labor market. When they at last became acquainted with it, the manufacturers, who had all the while preached "the eternal law of supply and demand," fell back on the doctrine of "enlightened despotism," claiming the right to do as they liked with their own, and propounding as their angry ultimatum that the work-people don't know what is good for them.

The change in the general commercial prospects must change the relative position of the work-people and their employers. Sudden as it came on, it found many strikes begun, still more in preparation. No doubt, there will be more, in spite of the depression, and, also, for a rise of wages, for as to the argument of the manufacturer, that he cannot afford to advance, the workmen will reply, that provisions are dearer; both arguments being equally powerful. However, should, as I suppose, the depression prove lasting, the work-people will soon get the worst of it, and have to struggle very unsuccessfully against reduction. But then their activity will soon be carried over to the political field, and the new organization of trades, gained in the strikes, will be of immense value to them.

Written on September 27, 1853
Reproduced from the New-York Daily Tribune
First published in the New-York Daily Tribune, No. 3900, October 17, 1853;
reprinted in the New-York Semi-Weekly Tribune, No. 876, October 18;
published simultaneously in abridged form in German in Die Reform, No. 60, October 19, 1853
Signed: Karl Marx


[a] In the New-York Daily Tribune the article was datelined: "Thursday, Sept. 29". Here it is corrected on the basis of a note in Karl Marx's notebook.—Ed.

[b] Here and below the quotations are from The Observer, September 26, 1853.—Ed.

[c] The Morning Post, No. 24887, September 26, 1853.—Ed.

[d] Gladstone.—Ed.

[e] Of September 26, 1853.—Ed.

[f] "The Wages Movement,—'The Strikes'", Sunday Times, No. 1616, September 25, 1853.—Ed.

[g] A London street, centre of trade in spices and other goods brought from the colonies.—Ed.

[248] On the use of Engels' material in this article see Note 245 ↓.

[245] In response to Marx's request Engels sent him material on the economic situation in Lancashire and other industrial regions of England which Marx used in this and the following article. Marx wrote about it in his letter to Engels of September 28, 1853 (see present edition, Vol. 39).

In selecting a title for the article the editors of the present edition made use of the entry in Marx's notebook: "Dienstag. 27. September. Turkey. Strikes. Manchester Geschichte. "An abridged translation into German was published in Die Reform under the title "Der Stand der Arbeiterbewegung in England".

An excerpt from the first section of the article together with the beginning of the following article: "The Russians in Turkey", was published under the title "The English Ministry Outwitted.—Panic" in The Eastern Question.

[249] In the latter period Marx and Engels substituted the more precise terms "value of labour power" and "price of labour power" for "value of labour" and "price of labour" as Marx concluded that the worker sells the capitalist his labour power and not his labour (see F. Engels, Introduction to a separate edition of Marx's "Wage Labour and Capital" of 1891, present edition, Vol. 28).

Source: Marx and Engels Collected Works, Volume 12 (pp.329-334), Progress Publishers, Moscow 1979
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