The French Crédit Mobilier (1856)

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The Crédit Mobilier is short for the Société générale du Crédit Mobilier—a French joint-stock bank founded in 1852 by the Péreire brothers. The bank was closely connected with the Government of Napoleon III and, protected by it, engaged in speculation. It went bankrupt in 1867 and was liquidated in 1871.

The first article on Crédit Mobilier was published by Marx in The People's Paper without any indication that it was "to be continued". The editors of the New York Daily Tribune who published the subsequent articles on the subject printed them as a series and defined them by ordinal numbers.

In this volume the numbers of articles are put in square brackets as subtitles.

I

The London Times of the 30th of May is much surprised at the discovery that Socialism in France had never disappeared, but had rather been forgotten for some years. Whereof it takes occasion to congratulate England for not being pestered with that plague but free from that antagonism of classes on which soil the poisonous plant is produced. A rather bold assertion this, coming from the principal journal of a country whose leading economist, Mr. Ricardo, commences his celebrated work on the principles of political economy with the principle that the three fundamental classes of society, i.e., of English society, viz.: the owners of the land, the capitalists, and the wages labourers, are forming a deadly and fatal antagonism; rents rising and falling in inverse ratio to the rise and fall of industrial profits, and wages rising and falling in inverse ratio to profits. If, according to English lawyers, the counterpoise of the three contesting powers is the keystone of the constitution of England, that eighth marvel of the world; according to Mr. Ricardo, who may be presumed to know something more about it than The Times, the deadly antagonism of the three classes representing the principal agents of production is the framework of English society.

While The Times contemptuously sneers at revolutionary Social-ism in France, it cannot help casting a covetous glance at imperial Socialism in France, and would fain hold it up as an example for imitation to John Bull, the chief agents of that Socialism, the "Crédit Mobilier", having just sent The Times in an advertisement of about three close columns; the Report of the Board of Administration at the ordinary general meeting of shareholders on April 23rd, 1856, Mr. Péreire in the chair.

The following is the account that has enlisted the envious admiration of the Times shareholders, and dazzled the judgment of the Times editor: —

Liabilities.
On 31st December, 1855.	francs.	centimes.
Capital of the Society	60,000,000	-
The balance of accounts current in December 31st, 1854, from a total of 64,924,379 to that of	103,179,308	64
Amount of bills payable of the creditors and for sundries	864,414	81
Total of reserve	1,696,083	59
Total of profits realised in 1855, after the deduction of the sum to be carried in the reserve	26,827,901	32
	192,567,708	36
Assets.
In hand.	f.	c.
1. Rents	40,069,264	40
2. Debentures	32,844,600	20
3. Railway & other shares	59,431,593	66
	132,345,458	26
From which is to be deducted for calls not made up 31st Dec. last	31,166,718	62
Balance asset	101,178,739	64
Investments for a fixed period in treasury bonds, continuations, advances on shares etc.	84,325,390	9
Value of premises and furniture	1,082,219	37
Disposable balance in hand and at the bank, and the amount of dividends to be received 31st of December last	5,981,359	26
Total assets	192,567,708	36
The total amount of rents, shares, and debentures in hand on December 31, 1854	57,460,092	94
Has been augmented by subscriptions and purchases made in 1855	265,820,907	3
Total	323,280,999	97
Amount of realisation being	217,002,431	34
To which must be added the amount of securities remaining in hand	132,345,458	26
	349,347,889	60
These results show a profit of	26,066,889	63

A profit of 26 millions on a capital of 60 millions—a profit at the rate of 43¹/3% these are indeed fascinating figures. And what has not this stirring mobilier effected with its grand capital of something like two and a half millions of pounds sterling? With sixty million francs in hand they have subscribed to the French loans first 250 millions, and afterwards 375 millions more; they have acquired an interest in the principal railways of France—they have undertaken the issue of the loan contracted by the Austrian Association for the Railways of the State—they have participated in the Western and Central railways of Switzerland—they have taken an interest in a considerable operation, professing for its object the canalisation of the Ebro from Saragossa to the Mediterranean—they had their hands in the amalgamation of the omnibuses at Paris, and in the constitution of the General Maritime Company—they have brought about by their intervention the amalgamation of all the old gas companies of Paris into one enterprise—they have, as they say, made a present of 300,000 francs to the people by selling them corn below the market price—they have decided on peace and war by their loans, erected new and propped up old lines of railways—illuminated cities, given an impulse to the creations of manufacture and the speculations of commerce, and lastly extended their swindling propaganda over France and scattered the fruitful seeds of their institution over the whole continent of Europe.

The "Crédit Mobilier" thus presents itself as one of the most economical phenomena of our epoch wanting a thorough sifting. Without such a research it is impossible either to compute the chances of the French Empire or to understand the symptoms of the general convulsion of society manifesting themselves through-out Europe. We shall investigate first into what the board calls its theoretic principles and then test their practical execution which, possibly, as the report informs us, have been until now but partially realised, and attend as immensely greater development in the future.

The principles of the society are set forth in its statutes, and in the different, but principally in the first, reports made to the shareholders. According to the preamble of the statutes, and

"considering the important services which might be rendered by the establishment of a society having for its aim to favour the development of the industry of the public works, and to realise the conversion of the different titles of various enterprises through the means of consolidating them in one common fund, the founders of the 'Crédit Mobilier' have resolved to carry into effect so useful a work, and consequently they have combined to lay down the basis of an anonymous society, under the denomination of the General Society of the 'Crédit Mobilier'".

Our readers will understand by the word "anonymous society," a joint-stock company with limited responsibility of the shareholders, and that the formation of such a society depends on a privilege arbitrarily granted by the Government.

The "Crédit Mobilier" then proposes to itself firstly to "favour the development of the industry of the public works," which means to make industry of public works in general dependent on the favour of the "Crédit Mobilier", and therefore on the individual favour of Bonaparte, on whose breath the existence of the society is suspended. The Board does not fail to indicate by what means it intends to bring about this its patronage, and that of its imperial patron, over the whole French industry. The various industrial enterprises carried on by joint stock companies, are represented by different titles, shares, obligations, bonds, debentures, etc. Those different titles are of course rated at different prices in the money market, according to the capital they trade upon, the profits they yield, the different bearing of demand and offer upon them, and other economical conditions. Now what intends the "Crédit Mobilier"?

To substitute for all these different titles carried on by different joint stock companies, one common title issued by the "Crédit Mobilier" itself. But how can it effect this? By buying up with its own titles the titles of the various industrial concerns. Buying up all the bonds, shares, debentures, etc.; in one word the titles of a concern, is buying up the concern itself. Hence the "Crédit Mobilier" avows the intention of making itself the proprietor, and Napoleon the Little the supreme director of the whole great French industry. This is what we call Imperial Socialism.

In order to realise this programme, there are needed, of course, some financial operations, and M. Isaac Péreire in tracing their operations of the "Crédit Mobilier," naturally feels himself on delicate ground, is obliged to put limits to the society considered purely accidental and intended to disappear in its development, and rather throws out a feeler than to divulge at once his ultimate scheme to the world.

The social fund of the society has been fixed at 60,000,000 francs divided into 120,000 shares of 500 francs each, payable to the bearer.

The operations of the society, such as they are defined in the statutes, may be ranged under three heads. Firstly, operations for the support of the great industry, secondly, creation of a value issued by the society for replacing, or amalgamating the titles of different industrial enterprises, thirdly, the ordinary operations of banking, bearing upon public funds, commercial bills, etc.

The operations of the first category, intended to obtain for the society the patronage of industry, are enumerated in art. V of the statutes, which says:

"To subscribe for, or acquire public funds, shares, or obligations in the different industrial or credit enterprises, constituted as anonymous societies, and especially those of railways, canals, mines, and other public works already established, or about to be established. To undertake all loans, to transfer and realise them, as well as all enterprises of public works."

We see how this article already goes beyond the pretensions of the preamble, by proposing to make the "Crédit Mobilier" not only the proprietor of the great industry, but the slave of the Treasury, and the despot of commercial credit. The operations of the second category, relating to the substitution of the titles of the "Crédit Mobilier" for the titles of all other industrial enterprises, embraces the following:

"To issue in equal amounts for the sums employed for subscriptions of loans and acquisitions of industrial titles the society's own obligations."

Articles 7 and 8 indicate the limits and the nature of the obligations the society has power to issue. These obligations, or bonds

"are allowed to reach a sum equal to ten times the amount of the capital. They must always be represented for their total amount by public funds, shares, and obligations in the society's hands. They cannot be made payable at less than 45 days notice. The total amount of the sums received in account-current and of the obligations created at less than a year's run shall not exceed twice the capital realised."

The third category, lastly, embraces the operations necessitated by the exchange of commercial values. The society "receives money at call." It is authorised "to sell or give in payment for loans all sorts of funds, papers, shares, and obligations held by it, and to exchange them for other values." It lends on "public funds, deposits of shares and obligations, and it opens account-currents on their different values." It offers to anonymous societies "all the ordinary services rendered by private bankers, such as receiving all payments on account of the societies, paying their dividends, interest, etc." It keeps a deposit of all titles of those enterprises, but in the operations relating to the trade in commercial values, bills, warrants, etc., "it is expressly understood that the society shall not make clandestine sales nor purchases for the sake of premium."

II

It should be recollected that Bonaparte made his coup d'état on two diametrically opposite pretenses: on the one hand proclaiming it was his mission to save the bourgeoisie and "material order" from the Red anarchy to be let loose in May, 1852; and on the other hand, to save the working people from the middle-class despotism concentrated in the National Assembly. Besides, there was the personal necessity of paying his own debts and those of the respectable mob of the Society of the Dix Décembre, and of enriching himself and them at the joint expense of bourgeoisie and workmen. The mission of the man, it must be avowed, was beset by conflicting difficulties; forced as he was to appear simultaneously as the robber and as the patriarchal benefactor of all classes. He could not give to the one class without taking from the other, and he could not satisfy his own wants and those of his followers without robbing both. In the time of the Fronde the Duc de Guise was said to be the most obliging man of France. because he had transformed all his estates into obligations held by his partisans. Thus Bonaparte also proposed to become the most obliging man of France, by converting all the property and all the industry of France into a personal obligation toward Louis Bonaparte. To steal France in order to buy France—that was the great problem the man had to solve, and in this transaction of taking from France what was to be given hack to France, not the least important side to him was the percentage to be skimmed off by himself and the Society of December Tenth. How were these contradictory pretenses to be reconciled? how was this nice economical problem to be solved? how this knotty point to be untwined? All the varied past experience of Bonaparte pointed to the one great resource that had carried him over the most difficult economical situations—Credit. And there happened to be in France the school of St. Simon, which in its beginning and in its decay deluded itself with the dream that all the antagonism of classes must disappear before the creation of universal wealth by some new-fangled scheme of public credit. And St. Simonism in this form had not yet died out at the epoch of the coup d'état. There was Michel Chevalier, the economist of the Journal des Débats; there was Proudhon, who tried to disguise the worst portion of the St. Simonist doctrine under the appearance of eccentric originality; and there were two Portuguese Jews, practically connected with stockjobbing and Rothschild, who had sat at the feet of the Pere Enfantin, and who with their practical experience had the boldness to suspect stockjobbing behind Socialism, Law behind St. Simon. These men—Emile and Isaac Péreire—are the founders of the Crédit Mobilier, and the initiators of Bonapartist Socialism.

It is an old proverb, "Habent sua fata libelli". Doctrines have also their fate as well as books. St. Simon to become the guardian angel of the Paris Bourse, the prophet of swindling, the Messiah of general bribery and corruption! History exhibits no example of a more cruel irony, save, perhaps, St. Just realized by the juste milieu of Guizot, and Napoleon by Louis Bonaparte.

Events march swifter than man's consideration. While we, from an investigation of its principles and economical conditions, are pointing at the unavoidable crash foreboded by the very constitution of the Crédit Mobilier, history is already at work realizing our predictions. On the last of May, one of the Directors of the Crédit Mobilier, M. Place, failed for the sum of ten millions of francs, having only a few days before been "presented to the Emperor by M. de Morny" as one of the dieux de la finance. Les dieux s'en vont! Almost on the same day the Moniteur published the new law on the Sociétés en commandite, which, on pretense of putting a check on the speculative fever, places those societies at the mercy of the Crédit Mobilier by making their formation dependent on the will of the government or of the Crédit Mobilier. And the English press, ignorant of even the .existence of a difference, between Sociétés en commandite and Sociétés anonymes, to which latter the former are thus sacrificed, goes into ecstacies at this great "prudential act" of Bonapartist wisdom, imagining that French speculators will soon be speedily brought round to the solidity of . the English Sadleirs, Spaders and Palmers. At the same time the law of drainage just passed by the famous Corps Législatif, and which is a direct infraction of all former legislation and the Code Napoleon, sanctions the expropriation of the mortgagors of the land, in favor of the government of Bonaparte, who by this machinery proposes to seize on the land, as by the Crédit Mobilier he is seizing on the industry, and by the Bank of France on the commerce of France; and all this to save property from the dangers of Socialism!

Meanwhile we do not think it superfluous to continue our examination of the Crédit Mobilier, an institution which, we think, is destined yet to enact achievements of which the above are but small beginnings.

We have seen that the first function of the Crédit Mobilier consists in affording capital to such industrial concerns as are carried on by anonymous societies. We quote from the report of M. Isaac Péreire:

"The Crédit Mobilier acts, with regard to the values representing industrial capital, a part analogous to the functions discharged by discount banks with regard to the values representing commercial capital. The first duty of this society is to support the development of national industry, to facilitate the formation of great enterprises which, abandoned to themselves, meet with great obstacles. Its mission in this respect will he more easily fulfilled, as it disposes of various means of information and research that escape the grasp of private individual for soundly appreciating the real value or prospects of undertakings appealing to its aid. In prosperous times our society will be a guide for capital anxious to find profitable employment; in difficult movements it is destined to offer precious resources for the maintenance of labor, and the moderation of the crises which result from a rash contraction of capitals. The pains which our society will take to invest its capital in all affairs only in such proportions and for such limited terms as will permit of a safe withdrawal, will enable it to multiply its action, to fructify in a small space of time a great number of enterprises, and to diminish the risks of its concurrence by the multiplicity of partial commandités" (investments in shares).

Having seen in what manner Isaac develops the ideas of Bonaparte, it becomes important also to see the manner in which Bonaparte comments upon the ideas of Isaac, a comment which may be found in the Report addressed to him by the Minister of the Interior on June 21, 1854, with respect to the principles and the administration of the Crédit Mobilier:

"Among all the establishments of credit existing in the world, the Banque de France is justly considered that which boasts of the most solid constitution;"

so solid that the slight storm of February, 1848, had borne it down in a day, but for the prop afforded it by Ledru-Rollin and Co.; for not only did the Provisional Government suspend the .obligation of the Banque de France to pay its notes in cash, and thus roll back the tide of note and bondholders blocking up its avenues, but empowered it to issue notes of 50 francs, while it had never been permitted under Louis Philippe to issue less than 500 franc notes; and not only did they thus cover the insolvent Banque by their credit, but in addition they pledged the State forests to the Banque for the privilege of obtaining credit for the State.

"The Banque de France is at the same time a support and a guide for our commerce, and its material and moral influence gives to our market a very precious stability."

This stability is such that the French have a regular industrial crisis each time when America and England condescend only to a little smash in their commerce.

"By the reserve and prudence which direct all its operations, this admirable institution fulfills, therefore, the part of a regulator; but the commercial genius, to generate all the wonders it carries in its womb, wants, above all things, to be stimulated; and precisely because speculation is restrained in France in the strictest limits, there existed no inconvenience, but on the contrary a great advantage, in putting alongside of the Banque de France an establishment conceived in quite a different order of ideas, and which should represent in the sphere of industry and commerce the spirit of initiative.

"The model for this establishment happily existed already; it is derived from a country celebrated by its severe loyalty, the prudence and solidity presiding over all its commercial operations. By placing at the disposition of all sound ideas and useful enterprises its capital, its credit, and its moral authority, the General Society of the Netherlands has multiplied in Holland canals, drainage, and a thousand other improvements which have raised the value of property a hundred fold. Why should not France likewise profit by an institution the advantages of which have been demonstrated by so dazzling an experience? This is the thought which determined the creation of the Crédit Mobilier, authorized by the decree of 18th Nov., 1852.

"According to the terms of its statutes this Society can, among other operations, buy and sell public effects or industrial shares, lend and borrow on them as securities, contract for public loans, and in a word, issue its paper at long dates, to the account of the values thus acquired.

"It has thus the means in hand of summoning and combining at any moment, under advantageous conditions, considerable wealth. In the good use it may make of these capitals the fertility of the institution resides. Indeed, the Society may arbitrarily invest in (commanditer) industry, take an interest in enterprises, participate in operations of a long term, which the constitution of the Banque de France and of the Discount Office forbids these establishments to do; in one word, it is free in its movements, and may change its action just as the wants of commercial credit require it. If it knows how, among the enterprises constantly brought forth, to distinguish the fruitful; if by the timely intervention of the immense funds which it has the disposition of, it enables works to be carried out highly productive in themselves, but absorbing an unusual duration, and otherwise languishing; if its concurrence be the sure index of a useful idea or a well-conceived project, the Society of the Crédit Mobilier will deserve and win the public approbation; floating capital will seek its channels and direct itself in mass whithersoever the patronage of the Society indicates a guarantied employ. Thus, by the power of example, and by authority which will become attached to its support, more even than by any material aid, this Society will be the cooperator of all ideas of general utility. Thus it will powerfully encourage the efforts of industry, and stimulate everywhere the spirit of invention."

We shall take an early occasion to show how all these high-flowing phrases conceal but feebly the plain scheme of dragging all the industry of France into the whirlpool of the Paris Bourse, and to make it the tennis-ball of the gentlemen of the Crédit Mobilier, and of their patron Bonaparte.

III

The approaching crash in Bonapartist finance continues to announce itself in a variety of ways. On May 31 Count Montalembert, in opposing a project of law to raise the postage on all printed papers, books, and the like, sounded the note of alarm in the following strain:

"The suppression of all political life, by what has it been replaced? By the whirl of speculation. The great French nation could not resign itself to slumber, to inactivity. Political life was replaced by the fever of speculation, by the thirst for lucre, by the infatuation of gambling. On all sides, even in our small towns, even in our villages, men are carried away by the mania of making those rapid fortunes of which there are so many examples—those fortunes achieved without trouble, without labor, and often without honor. I seek for no other proof than the bill which has just been laid before you, against the sociétés en commandite. Copies have just been distributed to us; l have not had time to examine it; l feel, however, inclined to support it, despite the somewhat Draconian regulations which l fancy l discovered there. If the remedy is so urgent and so considerable, the evil must he so likewise. The real source of that evil is the sleep of all political spirit in France.... And the evil which l point to is not the only one resulting from the same source. While the higher and middle classes—those ancient political classes—give themselves up to speculation, another labor presents itself among the lower classes of society, whence nearly all the revolutions emanated which France has suffered. At the sight of this fearful mania of gambling which has made a vast gambling booth of nearly all France, a portion of the masses, invaded by Socialists, has been more corrupted than ever, by the avidity of gain. Hence an unquestionable progress of secret societies, a greater and deeper development of those savage passions which almost calumniate Socialism by adopting its name, and which have been recently well shown up, in all their intensity, in the trials at Paris, Angers and elsewhere."

Thus speaks Montalembert—himself one of the original shareholders in the Bonapartist enterprise for saving order, religion, property and family!

We have heard, from Isaac Péreire, that one of the mysteries of the Crédit Mobilier was the principle of multiplying its action and diminishing its risks by embarking in the greatest possible variety of enterprises, and withdrawing from them in the shortest possible time. Now, what does this mean when divested of the flowery language of St. Simonism? Subscribing for shares to the greatest extent, in the greatest number of speculations, realizing the premiums, and getting rid of them as. fast as it can be done. Stockjobbing, then, is to be the base of the industrial development, or rather all industrial enterprise is to become the mere pretext of stockjobbing. And, by the aid of what instrument is this object of the Crédit Mobilier to be attained? What are the means proposed to enable it thus to "multiply its action" and "diminish its risks?" The very means employed by Law. The Crédit Mobilier being a privileged company, backed by Government influence, and disposing of a large capital and credit, comparatively speaking, it is certain that the shares of any new enterprise started by it will, on the first emission, fetch a premium in the market. It has learned thus much from Law, to allot to its own shareholders the new shares at par, in proportion to the number of shares they hold in the mother society. The profit thus insured to them acts, in the first place, on the value of the shares of the Crédit Mobilier itself, while their high range, in the second place, insures a high value to the new shares to be emitted. In this manner the Crédit Mobilier obtains command over a large portion of the loanable capital intended for investment in industrial enterprises.

Now, apart from the fact that the premium is thus the real pivot on which the activity of the Crédit Mobilier turns, its object is apparently to affect capital in a manner which is the very reverse of the action of commercial banks. A commercial bank, by its discounts, loans, and emission of notes, sets free temporarily fixed capital, while the Crédit Mobilier fixes actually floating capital. Railway shares, for instance, may be very floating, but the capital they represent, i. e., the capital employed in the construction of the railway, is fixed. A mill-owner who would sink in buildings and machinery a part of his capital out of proportion with the part reserved for the payment of wages and the purchase of raw material, would very soon find his mill stopped. The same holds good with a nation. Almost every commercial crisis in modern times has been connected with a derangement in the due proportion between floating and fixed capital. What, then, must be the result of the working of an institution like the Crédit Mobilier, the direct purpose of which is to fix as much as possible of the loanable capital of the country in railways, canals, mines, docks, steamships, forges, and other industrial undertakings, without any regard to the productive capacities of the country?

According to its statutes, the Crédit Mobilier can patronize only such industrial concerns as are carried on by anonymous societies, or joint-stock companies with limited responsibility. Consequently there must arise a tendency to start as many such societies as possible, and, further, to bring all industrial undertakings under the form of these societies. Now, it cannot be denied that the application of joint-stock companies to industry marks a new epoch in the economical life of modern nations. On the one hand it has revealed the productive powers of association, not suspected before, and called into life industrial creations, on a scale unattainable by the efforts of individual capitalists; on the other hand, it must not be forgotten, that in joint-stock companies it is not the individuals that are associated, but the capitals. By this contrivance, proprietors have been converted into shareholders, i.e., speculators. The concentration of capital has been accelerated, and, as its natural corollary, the downfall of the small middle class. A sort of industrial kings have been created, whose power stands in inverse ratio to their responsibility—they being responsible only to the amount of their shares, while disposing of the whole capital of the society—forming a more or less permanent body, while the mass of shareholders is undergoing a constant process of decomposition and renewal, and enabled, by the very disposal of the joint influence and wealth of the society, to bribe its single rebellious members. Beneath this oligarchic Board of Directors is placed a bureaucratic body of the practical managers and agents of the society, and beneath them, without any transition, an enormous and daily swelling mass of mere wages laborers—whose dependence and helplessness increase with the dimensions of the capital that employs them, but who also become more dangerous in direct ratio to the decreasing number of its representatives. It is the immoral merit of Fourier to have predicted this form of modern industry, under the name of Industrial Feudalism. Certainly neither Mr. Isaac, nor Mr. Émile Péreire, nor Mr. Morny, nor Mr. Bonaparte could have invented this. There existed, also, before their epoch, banks lending their credit to industrial joint-stock companies. What they invented was a joint-stock bank aiming at the monopoly of the formerly divided and multiform action of the private money-lenders, and whose leading principle should be the creation of a vast number of industrial companies, not with the view of productive investments, but simply for the object of stockjobbing profits. The new idea they have started is to render the industrial feudalism tributary to stockjobbing.

According to the statutes, the capital of the Crédit Mobilier is fixed at 60,000,000 of francs. The same statutes allow it to receive deposits in accounts-current for twice that sum, i. e., for 120,000,000. The sum at the disposal of the society thus amounts altogether to 180,000,000 of francs. Measured by the bold scheme of obtaining the patronage of the whole industry of France, this is certainly a very small sum. But two-thirds of this sum can hardly be applied to the purchase of industrial shares, or such values as do not command the certainty of immediate realization, precisely because they are received on call. For this reason the statutes open another resource to the Crédit Mobilier. It is authorized to issue debentures amounting to ten times its original capital, i. e., to the amount of 600,000,000 francs; or, in other words, the institution intended for the accommodation of all the world is authorized to come into the market as a borrower for a sum ten times larger than its own capital.

"Our debentures," says M. Péreire, "will be of two kinds. The first, issued for a short period, must correspond with our various temporary investments."

With this sort of debentures we have nothing to do here, as, by article VIII of the statutes, they are to be issued only to make up the supposed balance short of the 120,000,000 to be received in current account, which have been entirely received in that way. With respect to the other class of debentures,

"they are issued with remote dates of payment, reimbursable by redemption, and will correspond with the investments of like nature, which 'we shall have made either in public funds or in shares and debentures of manufacturing companies. According to the economy of he system which serves as the basis of our Association, these securities will not only be secured by a corresponding amount of funds purchased under the control of Government, and the united total of which will afford, by the application of the principle of mutuality, the advantages of a compensation and division of the risks, but they will have, besides, the guarantee of a capital which, for that object, we have increased to a considerable amount."

Now, these debentures of the Crédit Mobilier are simply imitations of railway bonds—obligations redeemable at certain epochs and under certain conditions, and bearing a fixed interest. But there is a difference. While railway bonds are often secured by a mortgage of the railway itself, what is the security for the Crédit Mobilier debentures? The rentes, shares, debentures and the like, of industrial companies, which the Crédit Mobilier buys with its own debentures. Then, what is gained by their emission? The difference between the interest payable on the debentures of the Crédit Mobilier and the interest receivable on the shares and the like, in which it has invested its loan. To make this operation sufficiently profitable, the Crédit Mobilier is obliged to place the capital realized by the issue of its debentures in such investments as promise the most remunerative returns, i. e., in shares subject to great fluctuations and alterations of price. The main security for its debentures, therefore, will consist of the shares of the very industrial companies started by the Association itself. Thus, while railway bonds are secured by a capital at least twice in amount, these Crédit Mobilier debentures are secured by a capital only nominally of the same amount, but which must fall below, with every downward movement of the stock-market. The holders of these debentures, accordingly, share in all the risks of the shareholders, without participating in their profits.

"But," says the last Annual Report, "the holders of the debentures have not only the guaranty of the investments in which it [the Crédit Mobilier] has placed its loans, but also that of its original capital."

The original capital, 60,000,000, responsible for the 120,000,000 of deposits, offers to serve as guaranty to 600,000,000 of debentures, beside the guaranties it may be required to furnish for the unlimited number of enterprises which the Crédit Mobilier is authorized to start. If the Association were to succeed in exchanging the shares of all industrial companies against its own debentures, it would indeed become the supreme director and proprietor of the whole industry of France, while the mass of ancient proprietors would find themselves pensioned with a fixed revenue equal to the interest on the debentures. But, on the road to this consummation, the bankruptcy which follows from the economical .conditions we have above illustrated, will stop the bold adventurers. This little accident, however, has not been over looked; on the contrary, the real founders of the Crédit Mobilier have included it in their calculations. When that crash comes, after an immensity of French interests has been involved, the Government of Bonaparte will seem justified in interfering with the Crédit Mobilier, as the English Government did in 1797 with the Bank of England. The Regent of France, that worthy sire of Louis Philippe, tried to get rid of the public debt by converting the State obligations into obligations of Law's Bank; Louis Bonaparte, the imperial Socialist, will try to seize upon French industry by converting the debentures of the Crédit Mobilier into State obligations. Will he prove more solvent than the Crédit Mobilier? That is the question.