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[The Crisis in Europe][433]

Karl Marx

The mails of the Niagara reached us yesterday, and a careful examination of our files of British journals only confirms the views we have lately had to express with regard to the probable course of the crisis in England[a]. The London money market is decidedly improving; that is to say, gold is accumulating in the vaults of the Bank of England; the demand for discount at the Bank is decreasing; first-class paper may be discounted in Lombard street[434] at 9½ to 9 3/4 per cent; the public funds are firm, and the share market participates to some degree in this movement. This agreeable aspect of things is, however, badly impaired by great failures, recurring every two or three days in London; by daily dispatches, sad messengers of provincial disasters; and by the thunder of The London Times, inveighing more than ever against the general and helpless corruption of the British mercantile classes. In fact, the comparative easiness with which unexceptionable paper is discounted, seems to be more than balanced by the growing difficulty of finding paper which can pass as unexceptionable. Consequently, we are told in the London money articles of the latest date, that at Threadneedle street[435] the applications are extremely "limited," and that at Lombard street but little business is doing. Still, as the supply on the part of the Bank and the discount houses is increasing—while the pressure upon them, the demand on the part of their customers, is decreasing—the money market must be said to be comparatively easy. Nevertheless the Bank of England Directors have not yet dared to lower the rate of discount, convinced as it would appear that the renewal of the monetary crisis is not a question of time, but of percentage, and that, consequently, as the rate of discount sinks, the monetary crisis is sure to rise again.

While the London money market, one way or the other, has thus got more easy, the stringency of the English produce market is increasing in intensity, a continuous fall in prices not being able to overcome the growing disinclination to purchase. Even such articles as tallow, for instance, which had previously formed an exception to the general rule, have now, by dint of forced sales, been obliged to give way. On comparing the price current of the week ending December 18 with the weekly price current of November, it appears that the extreme depression in prices which prevailed in the latter month has again been reached; this time, however, not in the shape of a panic, but the methodic form of a sliding scale. As to the manufacturing markets, an earnest of the industrial crisis which we predicted[b] has now been given in half a dozen failures of spinners and weavers in Lancashire, of three leading houses in the woolen trade in the West Riding, and an important firm in the carpet trade of Worcester.

Since the phenomena of this double crisis, in the produce market and among the manufacturing classes, will by and by become more palpable, we shall content ourselves, for the present, with quoting the following passage of a private letter from Manchester, which has been communicated for our columns:

"Of the continuous pressure on the market and its disastrous effects you can hardly form any notion. No one can sell. Every day you hear of lower quotations. Things are come to that pass that respectable people prefer not to offer their commodities at all. Spinners and weavers are weighed down by utter despondency. No yarn commissioners sell yarn to the weavers except on cash or double securities. It is impossible for this state of things to go on without ending in a frightful collapse."[c]

The Hamburg crisis has scarcely abated[d]. It is the most regular and classical example of a monetary crisis that ever existed. Everything except silver and gold had become worthless. Firms of old standing have broken down, because they are unable to pay in cash some single bill that had fallen due, although in their tills there lay bills to a hundred times its value, which, however, for the moment were valueless, not because they were dishonored, but because they could not be discounted. Thus, we are informed that the old and wealthy firm of Ch. M. Schröder, before its bankruptcy, had offered to it two millions in silver, on the part of L. H. Schröder, the brother, of London, but replied by telegraph: "Three millions or nothing." The three millions did not come forward, and Ch. M. Schröder went to the wall. A different instance is that of Ullberg & Co., a firm much spoken of in the European press, which, with liabilities amounting to 12,000,000 marks banco, including 7,000,000 of bills of exchange, had, as now appears, a capital of only 300,000 marks banco as the basis of such enormous transactions.[e]

In Sweden, and especially in Denmark, the crisis has rather increased in violence[f]. The revival of the evil after it appeared to have passed away is to be explained by the dates on which the great demands on Hamburg, Stockholm and Copenhagen fall due. During December, for instance, nine millions of bills drawn on Hamburg by Rio de Janeiro houses for coffee fell due, were all protested, and this mass of protests created a new panic. In January the drafts for the cargoes of sugar shipped from Bahia and Pernambuco will probably meet with a similar fate, and cause a similar revival of the crisis.

Written on December 18, 1857
First published in the New-York Daily Tribune, No. 5213, January 5, 1858 as a leading article,
reprinted in the New-York Semi-Weekly Tribune, No. 1316, January 5, 1858
Reproduced from the New-York Daily Tribune


[a] See this volume, pp. 406-09.—Ed.

[b] See this volume, pp. 390, 401-02.—Ed.

[c] Marx paraphrases Engels's letter to him of December 17, 1857 (present edition, Vol. 40, pp. 222-23). In this article he also uses other data from that letter.—Ed.

[d] See this volume, pp. 404-06.—Ed.

[e] For the description of the Hamburg bankruptcies Marx used the facts cited by Engels in his letter of December 7, 1857 (present edition, Vol. 40, pp. 212-13).—Ed.

[f] See this volume, pp. 405-06.—Ed.

[433] The title is given according to the New-York Semi-Weekly Tribune.

[434] The big London banks and discounting houses are located in Lombard Street which has become a synonym for the London money market. As distinct from the Bank of England, where only banks' first class papers were discounted, all bills of exchange could be discounted in Lombard Street and the discount interest there, being called market interest, was always higher than that of the Bank of England.

[435] In Threadneedle Street (London) the Bank of England is situated.

Source: Marx and Engels Collected Works, Volume 15 (pp.410-412), Progress Publishers, Moscow 1980
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