Review, March-April 1850

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(In our previous number the monthly review had to be omitted due to lack of space. We now publish from this review only the part which has reference to England.)

Shortly before the anniversary of the February revolution, when Carlier had the liberty trees cut down, Punch published a cartoon of a liberty tree which had bayonets for leaves and bombs for fruit; opposite the French liberty tree, bristling with bayonets, a song is printed in praise of the English liberty tree, which bears the only fruit of reliable quantity: pounds, shillings and pence. But this irritating attempt at wit pales beside the immoderate fits of rage in which The Times has been slandering the triumphs of 'anarchy' since 10 March The reactionary party in England, as in all countries, feels the blow struck in Paris as if it bad been actually dealt the blow itself.

But at the moment the greatest threat to 'order' in England does not lie in the dangers emanating from Paris but is a direct consequence of this order itself, a fruit from the English liberty tree: a commercial crisis.

We already pointed out in our review for January that a crisis was approaching. It has been precipitated by several factors. Before the last crisis in 1845 surplus capital found an outlet in railway speculation. However, overproduction and excess specula- tion reached such a pitch that the railway market did not even recover during the prosperity of 1848-9, and even the shares of the most respectable firms in this sector of business are still quoted at extremely low prices. Nor did the low prices for corn and the harvest prospects for 1850 offer any opportunity for the investment of capital, and the various government bonds were subject to too extreme a risk to form the object of large-scale speculation. Thus the surplus capital of the period of prosperity found its usual outlets blocked. For the speculators there remained only the possibility of unloading all their capital either into industrial production, or into speculative ventures in colonial foodstuffs and the key industrial raw materials, cotton and wool. With the direct influx of such huge amounts of capital — normally employed in other ways — industrial production naturally grew with extraordinary speed, and as a result the markets became saturated. Thus the out- break of the crisis was significantly accelerated. Even now the first symptoms of the crisis are becoming evident in the most important sections of industry and speculation. For four weeks the situation in the key industry, cotton, has been completely depressed and within this industry it is the main branches — in particular the spinning and weaving of coarse fabrics — which are suffering most. Cotton yarn and coarse calico have already fallen in price far more than raw cotton. Production is being cut back, and almost without exception the factories are working short time. A temporary revival of industrial activity is hoped for as a result of the spring orders from the Continent; but while the orders already placed for the domestic market, the East Indies, China and the Levant are largely being cancelled again, the continental orders, which always provided work for two months, are hardly coming in at all because of the unsettled political situation. In the woollen industry there are symptoms here and there which indicate that the still more or less 'healthy' state of this business is about to come to an end. Iron production is suffering likewise. Manufacturers think it inevitable that prices will soon fall and they are attempting to prevent too rapid a fall by means of mergers. So much for the state of industry. Let us now turn our attention to speculation. The prices of cotton are falling, partly as a result of new increases in supply, partly as a result of the slump in the industry itself. The same is true of colonial foodstuffs. Supplies are increasing, consumption on the home market is dropping. In the last two months twenty-five shiploads of tea alone have arrived in Liverpool. The consumption of colonial produce, which was held back even during the period of prosperity as a result of the distressed state in the agricultural districts, is all the more subject to the similar pressure which is now making itself felt in the industrial districts. One of the most important colonial traders in Liverpool has already succumbed to this adverse turn of events.

The results of the commercial crisis now impending will be more serious than ever before. It coincides with the agricultural crisis which began with the abolition of corn tariff's in England and has increased as a result of the recent good harvests. For the first time England is experiencing at the same time an industrial and an agricultural crisis. This dual crisis in England will be accelerated, widened in scope and made even more explosive by the convulsions which are now simultaneously imminent on the Continent; and the continental revolution will take on an unprecedentedly socialist character as a result of the repercussions of the English crisis on the world market. It is a known fact that no European country will be hit so directly, to such an extent and with such intensity as Germany. The reason is simple: Germany represents England's biggest continental market, and the main German exports, wool and grain, have by far their most important outlet in England. History is most happily summed up in this epigram addressed to the apostles of order: while inadequate consumption drives the working classes to revolt, overproduction drives the upper classes to bankruptcy.

The Whigs will naturally be the first victims of the crisis. As in the past, they will abandon the helm of state as soon as the threatening storm breaks. And this time they will say farewell for ever to the offices of Downing Street. A short-lived Tory ministry may follow them at first, but the ground will quake under their feet; all the parties of the opposition will unite against them, with the industrialists at their head. The Tories have no popular universal panacea for the crisis, such as the repeal of the Corn Laws. They will be forced at least to carry out a parliamentary reform. This means that they cannot avoid assuming power under conditions which will open the doors of Parliament to the proletariat, place its demands on the agenda of the House of Commons and pitch England into the European revolution.

*

We have little to add to these notes written one month ago on the subject of the impending commercial crisis. The temporary upward trend in business which regularly occurs in spring has finally appeared this year, too, but on a much smaller scale than usual. French industry has particularly profited from this, as it supplies excellent summer fabrics, but in Manchester, Glasgow and the West Riding increased orders have also been received. This temporary revival in industry, it must be remembered, occurs every year and will only delay the development of the crisis a little.

There has been a temporary upward trend in business in the East Indies. The more favourable market situation in England has allowed merchants to sell off their supplies below earlier prices and the situation on the Bombay market has eased a little as a result. These temporary and local improvements in trade are also typical of the episodic movements which occur from time to time, particularly at the beginning of every crisis, and which have only an insignificant effect on its general course.

News has just arrived from America describing the market situation there as completely depressed. America, however, is the most important market; the saturation of this market, the stagnation of business and the drop in prices there mark the actual beginning of the crisis, which will have direct, rapid and inevitable repercussions on England. We need only call to mind the crisis of 1837. Only one article continues to rise in value in America: U.S. Bonds, the only government bonds which offer a safe refuge for the capital of our European apostles of order.

After America's involvement in the downward movement caused by overproduction, we can expect the crisis to develop more rapidly than hitherto in the months to come. Political events on the Continent are likewise daily forcing matters to a head, and the coincidence of economic crisis and revolution, which has already been mentioned several times in this Revue, will become more and more inescapable. Que les destins s'accomplissent!

London, 18 April 1850