[The French Crédit Mobilier]

The downward movement of the Crédit Mobilier, as we anticipated some months ago, when examining its flowery Report for 1856[a], has again set in, this time filling the monetary mind of Europe with considerable alarm. In the course of a few days the shares of the concern declined from 950 francs to about 850, this latter quotation being far from the lowest point to which they are likely to ebb. The rise and subsidence of the primeval waters affords no subject of greater interest to the geologist than t he ascent and declension of the Crédit Mobilier shares to the politician. There are different epochs to be distinguished in the oscillations of the latter. Their first issue in 1852 was cleverly managed. The shares were divided into three series, the holders of the first series being entitled to the second and third series at par. The consequence was that the fortunate possessors of the first series had all the advantage of a limited supply of shares in a highly excited market, and also of the exaggerated anticipations of the large premium to be quickly attained by the stock of the society. With 250 francs paid on the first issue, the market price of the shares rose at once to 1,775 francs. Their oscillations during the years 1852, '53 and '54 are of minor political interest, since they indicate the different phases through which the forming enterprise had to run rather than the trials of the full-grown concern. In 1855 the Crédit Mobilier had reached its apogee, the momentary quotation at 1,900 francs of its shares marking its greater distance from common earthly business. Since that time the oscillations in the prices of the Crédit Mobilier shares, if closely considered, and if the average of periods, say of 4 months, be taken, exhibit a downward movement, regulated, in spite of accidental deviations, by a constant and unerring law. The law is this, that from the highest point reached in each of those periods the prices subside to a lowest average point, which, in its turn, becomes the highest starting point for the subsequent period. Thus the figures of 1,400 francs, 1,300 francs, 1,100 francs, mark successively the lowest average point of one period and the highest average point of the other. During the whole of the present Summer, the shares were unable to reach, for any more protracted time, the bight of 1,000 francs; and the present crisis, if it does not result in worse consequences, will bring down the highest average price of the shares to about 800 francs, thence to sink down, in due course of time, to a still lower average level. This process can, of course, not go on ad infinitum, nor is it compatible with the organic laws of the Crédit Mobilier that its stocks should be reduced to their nominal quotation of 500 francs. An immense disproportion between capital and operations, hence the realization of extraordinary profits, and, consequently, an unusual elevation of the market price of its shares over their original amount, are conditions for the Crédit Mobilier not of prosperity, but of life. We need the less dwell on this point, as we have sufficiently elucidated it when examining the reduction of its profits from 40 per cent in 1855 to 23 per cent in 1856.[b]

The present depreciation of the Crédit Mobilier shares is connected with circumstances likely to be mistaken for causes, although they are only effects. Mr. A. Thurneyssen, one of the most "respectable" directors of the Crédit Mobilier, has been declared a bankrupt in consequence of the law tribunals pronouncing him liable for a debt of 15,000,000 francs, contracted by his nephew, Mr. Charles Thurneyssen, who fraudulently de-camped from France in May last. That the mere bankruptcy of an individual director cannot at all account for the present state of the Crédit Mobilier, will be understood at once by referring to the bankruptcy of Mr. Place, which passed away without shaking to any sensible degree the Bonapartist bulwark. The public mind, however, is more apt to be struck by the sudden downfall of an individual than to trace the slow decline of an institution. Panic seizes the masses only when danger assumes a gross and palpable form. For instance, Law's shares and bank notes went on enjoying the superstitious confidence of France as long as the Regent[c] and his counselors contented themselves with depreciating the metallic money which the notes pretended to represent. The public did not understand that when the mint coined the mark[d] of silver in double the original number of livres, the bank note representing a given amount of silver livres was depreciated one half. But the very moment the notes themselves became, by order of council, depreciated in their official denomination, and a note of 100 livres was to be exchanged for a note of 50 livres, the process was at once understood, and the bubble burst. Thus the fall of almost 50 per cent in the profits of the Crédit Mobilier did not for a moment attract the attention even of the English money-article writers, while the whole press of Europe is now full of din and bustle about Mr. A. Thurneyssen's bankruptcy. The latter, in fact, is accompanied by aggravating circumstances. When Mr. Charles Thurneyssen defaulted in May last Mr. Isaac Pereire, with more than his usual display of virtuous indignation, started forward in the London press to solemnly deny all connection on the part of Mr. A. Thurneyssen and the Crédit Mobilier with the wretched defaulter[e]. The present decision of the French law tribunals has, therefore, given a flat contradiction to that high-sounding gentleman.

Moreover, panic seems to reign in the Crédit Mobilier itself. Mr. Ernest Andrée, one of the Directors, has thought fit to publicly free himself from all future liability, and to renounce all connection with the institution by legal methods. Others—among them the house of Hottinguer—are also said to be beating the retreat. When the pilots themselves take to the life-boat, the passengers may justly consider the vessel lost. Lastly, the intimate connection of the Thurneyssens with the St. Petersburg banking-house of Stieglitz and the great. Russian railway scheme may well afford food for thought to the European monetary mind.

If the Directors of the Crédit Mobilier condescend to "create credit in France," to "foster the productive powers of the nation," and to prop up stock gambling all over the world, it would be a stupendous mistake to suppose that they did so for nothing. Over and above the average interest of about 25 per cent annum on the capital represented by their shares, they regularly received a bonus of 5 per cent on the gross profits, say the sum of 275,000 francs or $55,000 each for the first five years of the institution. Then, those Railway Companies and other public works which especially enjoyed the patronage of the Crédit Mobilier, are invariably found to be somehow or other mixed up with the private affairs of the Directors. Thus the Pereires were known to be largely interested in the new shares of the French Southern Railways. Now, in perusing the published accounts, we find the Company in its aggregate capacity to have subscribed not less than 623,000,000 francs to these identical railways. But not only did the fifteen Directors use to direct the operations of the Company according to their private interests; they were also able to regulate their private speculations, in conformity with the foreknowledge they possessed of the great coups de bourse[f] the Company was about to execute; and, finally, to enlarge their own credit in proportion to the immense sums officially passing through their hands. Hence the miraculously rapid enrichment of these Directors; hence the nervous anxiety of the European public in regard to financial reverses occurring among them; hence, too, the intimate connection between their private fortunes and the public credit of the Company, although some of the former are sure to be so managed as to outlive the latter.

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