The European Crisis (November 1856)

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The indications brought from Europe by the two steamers which have arrived this week, certainly seem to postpone to a future day the final collapse of speculation and stock-jobbing, which men on both sides of the sea instinctively anticipate as with a fearful looking forward to some inevitable doom. That collapse is none the less sure from this postponement; indeed, the chronic character assumed by the existing financial crisis only forebodes for it a more violent and destructive end. The longer the crisis lasts the worse the ultimate reckoning. Europe is now like a man on the verge of bankruptcy, forced to continue at once all the enterprises which have ruined him, and all the desperate expedients by which he hopes to put off and to prevent the last dread crash. New calls are made for payments on the stock of companies most of which exist only on paper; great sums of ready money are invested in speculations from which they can never be withdrawn; while the high rate of interest—now seven per cent at the counter of the Bank of England—stands like a stern monitor of the judgment to come.

With the utmost success of the financial devices now to be attempted, it is impossible that the countless stock-jobbing speculations of the continent should be carried much further. In Rhenish Prussia alone there are seventy-two new companies for the working of mines, with a subscription capital of 79,797,333 thalers. At this very moment the Austrian Crédit Mobilier, or rather the French Crédit Mobilier in Austria, meets with the greatest difficulties in obtaining the payment of its second call, paralyzed as it is by the measures taken by the Austrian Government for the resumption of cash payments. The purchase-money to be paid into the Imperial treasury for railroads and mines has, according to contract, to be handed over in specie, causing a drain on the resources of the Crédit Mobilier of above $1,000,000 every month till February, 1858. On the other hand, the monetary pressure is so severely felt by railroad contractors in France, that the Grand Central has been compelled to dismiss five hundred employés and fifteen thousand workmen on the Mulhouse section, and the Lyons and Geneva Company has been obliged to curtail or suspend its operations. For divulging these facts, the Indépendance belge has been twice seized in France. With this irritability of the French Government at any disclosure of the real situation of French commerce and industry, it is curious to note the following passage, escaped from the lips of M. Petit, the substitute of the Procureur General, upon the recent reopening of the courts at Paris.

"Consult statistics and you will find some interesting information upon the present tendencies of trade. Bankruptcies increase every year. In 1851 there were 2,305; in 1852, 2,478; in 1853, 2,671; and in 1854, 3,691. The same increase is to be noted for fraudulent as for simple bankruptcies. The increase of the former has been, since 1851, at the rate of 66 per cent, and that of the latter 100 per cent. As to the frauds committed upon the nature, the quality, and the quantity of things sold, and the employment of false measures and weights, these have augmented in a frightful proportion. In 1851, 1,717 such cases were furnished; in 1852, 3,763; in 1853, 7,074; and in 1854, 7,831."

It is true that, in the face of these phenomena on the continent, we are assured by the British press that the worst of the crisis is over, but we seek in vain for conclusive evidence of such a fact. We do not find it in the raising of discount to seven per cent by the Bank of England; nor in the last report of the Bank of France, which not only exhibits internal proofs of having been cooked, but even formally shows that in spite of the severest restriction upon loans, advances, discounts, and emission of notes, the Bank has been unable to check the efflux of bullion or to dispense with the premium on gold. But however that may be, it is certain that the French Government is far from partaking in the comfortable views which it takes care to spread both at home and abroad. At Paris it is known that the Emperor has not recoiled from the most stupendous monetary sacrifices to keep, during the last six weeks, the Rente above 66, it being not a mere conviction, but a settled superstition with him, that the fall below 66 will ring the death knell of the empire. It is evident that the French differs in this respect from the Roman Empire—since the one feared death from the advance of the barbarians while the other fears it from the retreat of the stockjobbers.