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[The Economic Crisis in France]

Karl Marx

No argument can be required to prove that the precarious tenure of power by which Louis Napoleon still calls himself the Emperor of the French, must be seriously affected by the culmination in France of the commercial crisis which has already spent its fury in other parts of the world. The symptoms of this culmination are now chiefly to be found in the condition of the Bank of France and of the French markets for agricultural produce. The returns of the Bank, for the second week of February, as compared with those of the last week in January, exhibit the following features[a]:

Decrease of circulationfrancs     8,766,400
Decrease in deposits29,018,024
Decrease of discounts at the Bank47,746,641
Decrease of discounts at the Branches23,264,271
Total decrease in discounts71,010,912
Increase in bills overdue2,761,435
Increase in bullion31,508,278
Increase in premium on purchases of gold and silver      3,284,691

Throughout the whole of the commercial world the metallic reserve of the banks has increased as the activity of trade has diminished. At the same ratio that industrial life has grown fainter, the position of the banks has, generally, grown stronger; and so far the bullion increase in the vaults of the Bank of France would seem but one more instance of an economical phenomenon observed here in New-York as well as in London and Hamburg. Yet there is one feature distinctive of the bullion movement in France, viz.: the increase to the amount of 3,284,691 francs of the premium on purchases of gold and silver, while the total sum spent in this way by the Bank of France for the month of February reaches the figure of 4,438,549 francs. The gravity of this fact becomes evident from the following comparison:

Premiums paid by the Bank of France
on purchases of gold and silver
February, 1858francs 4,438,549
January, 18581,153,858
December, 18571,176,029
November, 18571,327,443
October, 1857949,656
1st January to 30th June, 18563,100,000
1st July to 11th December, 1856     3,250,000
1st July to 31a December, 18554,000,00

Thus we see that the premium paid in February to procure temporary artificial additions to the bullion reserve of the Bank amounts to a sum almost equal to that expended for the same purpose during the four months from October, 1857, to January, '58. and exceeds the aggregate half-yearly premiums paid during the years 1856 and 1855; while the total amount of premiums paid from October, 1857, to February, 1858, reaching the figure of 9,045,535f., exceeds the premium paid during the whole year of 1856 by almost one-half. Despite this apparent plethora, the metallic reserve of the Bank is, consequently, really weaker than for the last three years. So far from the Bank being incumbered with bullion, the influx is only artificially raised to its necessary level. This single fact proves at once that in France the commercial crisis has not yet entered the phase already passed in the United States, England, and the North of Europe. In France, a general depression of commerce exists, as is shown by the simultaneous decrease in circulation and discounts; but the crash is still impending, as is shown by the decrease of deposits simultaneously with an increase of premium on bullion bought, and of bills overdue.

The Bank has also been forced to announce that a great part of its own new shares, on which the installments have not been duly paid up, will be sold. It has also been converted by the Government into the general railway contractor of France, and compelled to make within fixed periods large advances to the railway companies—advances which for January and February alone amounted to the sum of 50,000,000 francs. It is true that in return for these advances it has received the bonds of the companies, which it may sell when it can. The present moment, however, is peculiarly unfavorable to such a sale, and the weekly railway returns, testifying to a constant falling off in receipts, are far from warranting any sanguine expectations in this line. For the month of January, for instance, the Orleans presented a decline of 21 per cent, the Eastern of 18 per cent, the Lyons of about 11 per cent, and the Western of 14 per cent, compared with the corresponding receipts in 1857.[b]

It is a well-known fact that the resistance, on the side of the seller or the buyer, Against a change from low prices to high ones, and still more from high prices to low, is always very considerable; and that frequently there occur intervals, of longer or shorter duration, during which sales are heavy and prices nominal, until at last the tendency of the market declares itself one way or the other with irresistible force. Such a transitory struggle between the holders and buyers of merchandise is nothing extraordinary; but the protracted contest, lasting from the beginning of November to the present day, between French merchants and French consumers, is perhaps unparalleled in the history of prices. While French industry is stagnant, great numbers of workmen unemployed, and the means of everybody stinted, prices, which have elsewhere declined on an average from 30 to 40 per cent, are still maintained in France at the speculative range of the period preceding the general crisis. If we are asked by what means this economical miracle has been worked, the answer is simply that the Bank of France, under Government pressure, has twice been obliged to renew the bills and loans which had fallen due, and that thus, more or less directly, the means of the French people, accumulated in the Bank vaults, have been employed to keep up inflated prices against that very people. The Government seems to imagine that by this exceedingly simple process of distributing bank notes wherever they are wanted, the catastrophe can be definitively warded off. Yet the real result of this contrivance has been, on the one hand, an aggravation of distress on the part of the consumers, whose diminished means have not been met by diminished prices; on the other hand, an enormous accumulation of commodities in the Customs entrepots, which, when ultimately, as they must be, they are forced upon the market, will collapse under their own weight. The following statement, extracted from an official French paper, of the comparative quantities of merchandise stored up in the French Customs entrepots at the end of December, 1857, 1856 and 1855, will leave no doubt as to the violent self-adjustment of prices still looming in the future for France[c]:

Tin 4,0531,8531,811
Oleaginous Seeds     253,596198,98274,537
Sugar (colonial)170,33456,73555,387
Sugar (foreign)89,60789,80771,913

In the trade in bread-stuffs, however, the contest has already terminated with disastrous consequences for the holders. Still their losses are of far less importance than the general state of the agricultural population of France at the present juncture. At a recent meeting of French agriculturists it was stated that the average price of wheat for all France was 31fr. 94c. the hectolitre (about 2 3/4 bushels) at the end of January, 1854; 27fr. 24c. at the same epoch in 1855; 32fr. 46c. in January, 1856; 27fr. 9c. in January, 1857, and 17fr. 38c. in January, 1858. The unanimous conclusion arrived at was that

"this state of prices must prove ruinous to French agriculture, and that at 17fr. 38c. the present average price, the producers in some parts of France have an extremely narrow margin profit left them, while in others they sustain a serious loss."[e]

One would think that in a country like France, where the greater part of the soil belongs to the cultivators themselves, and but a relatively small portion of the aggregate produce finds its way to market, a superabundance of grain ought to be considered a blessing instead of a bane. Yet, as Louis XVIII. told us in a crown speech on Nov. 30, 1821: "No law can prevent the distress resulting from a superabundant harvest."[f] The fact is that the large majority of the French peasantry are owners in name only—the mortgagees and the Government being the real proprietors. Whether the French peasant be able to meet the heavy engagements weighing on his narrow strip of soil depends not on the quantity, but on the price of his produce.

This agricultural distress, taken together with the depression of trade, the stagnation of industry, and the commercial catastrophe still in suspense, must tend to bring the French people into that state of mind in which they are wont to embark in fresh political ventures. With the disappearance of material prosperity and its regular appendage of political indifference, every pretext for the prolongation of the second Empire also disappears.

Written on February 12, 1858
First published in the New-York Daily Tribune, No. 5270, March 12, 1858 as a leading article


[a] Here and below see "Situation de la Banque de France et de ses succursales", Le Moniteur universel. Nos. 15 and 43, January 15 and February 12, 1858.—Ed.

[b] The Economist, No. 754, February 6, 1858.—Ed.

[c] The Economist, No. 754, February 6, 1858. (The Paris correspondent said that the information had been taken by him "from an official paper".)—Ed.

[d] Metrical quintal—a unit of weight equal to 100 kilograms.—Ed.

[e] The Economist, No. 755, February 13, 1858.—Ed.

[f] Louis XVIII's speech in the Chamber of Deputies on November 30, 1821, Le Moniteur universel, No. 335, December 1, 1821.—Ed.

Source: Marx and Engels Collected Works, Volume 15 (pp.459-463), Progress Publishers, Moscow 1980
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