The State of Trade, March 6, 1849

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In this article, the editors of the Neue Rheinische Zeitung raised the important question of the relation between economic development and the course of the European revolution and of the influence of the economic factor on the revolutionary process. Subsequently, Marx and Engels dealt with this problem on several occasions, partirularly in the period when, in the pages of the Neue Rheinische Zeitung. Politisch-Okonomische Revue—the journal that continued the traditions of the periodical they had published during the revolution—they summed up the results of the revolutionary battles that had just ended. In the autumn of 1850, they elaborated the ideas expressed in this article when they wrote the following in the "Review [ May to October 1850]": "However, this much at least is certain, that the commercial crisis contributed infinitely more to the revolutions of 1848 than the revolution to commercial crisis" (MECW, Vol. 10).

The Neue Rheinische Zeitung was founded by Marx as a militant periodical intended to exert an effective influence upon the masses, to educate and unite them politically and ideologically and pave the way for the creation of the mass party of the German proletariat. The newspaper provided Marx and Engels with an opportunity to guide the activities of the Communist League founded by them in 1847, which they regarded as the nucleus of the future proletarian party. However, since the League was too weak and numerically small, it could not be directly transformed into the rallying centre of the proletarian forces at the time when the 1848 revolution was at its peak. As the underground activities of the League lost all sense under the conditions of revolution, Marx and Engels instructed its members, who were scattered throughout Germany, to avail themselves of every legal opportunity to join the emerging workers' associations and democratic societies. In this context, a revolutionary proletarian newspaper became the main instrument for directing and co-ordinating the activities of the Communist League members, of mobilising the masses to resolve the tasks of the bourgeois-democratic revolution.

It was decided to publish the Neue Rheinische Zeitung in Cologne, the capital of the Rhine Province, which was more advanced economically and politically than the other regions of Germany (here the working class was fairly strong and the Code Napoleon was in operation, which provided for somewhat greater freedom of the press than did the Prussian Law). The name, Neue Rheinische Zeitung, was chosen in order to stress the intention to continue the revolutionary-democratic traditions of the Rheinische Zeitung, which was edited by Marx in 1842 and 1843. In view of the specific conditions and the absence of the mass workers' party in Germany, Marx, Engels and their followers entered the political scene as the Left, in fact the proletarian, wing of the democratic movement. This predetermined the stand adopted by the Neue Rheinische Zeitung, which was put out under the subtitle Organ der Demokratie (Organ of Democracy). Only after mid-April 1849, when the German workers' class consciousness underwent certain changes, did the newspaper's editors take steps to set up an independent mass political party of the German proletariat, organisationally separate from petty-bourgeois democracy.

The first issue came out in the evening of May 31, but was dated June 1, 1848. The editorial board consisted of Karl Marx (editor-in-chief). Heinrich Bürgers, Ernst Dronke, Georg Weerth, Wilhelm Wolff, Ferdinand Wolff and Frederick Engels. In October 1848, the poet Ferdinand Freiligrath became one of its editors. All the editors were members of the Communist League. Common views, a strict division of functions and good co-ordination were characteristic of the work of the editorial board. Besides reading and answering letters and assisting the editor-in-chief, every editor dealt with a specific range of problems. The editorial board had correspondents in various parts of Germany and abroad. It established contacts with a number of democratic periodicals in other countries.

As a rule, Marx and Engels wrote the editorials, formulating the paper's stand on the most important questions of the revolution. These articles were marked "*Köln" and "**Köln". Sometimes editorials marked with one asterisk were printed in other sections of the paper under the heading of News from Italy, France, Hungary, Switzerland and other countries. In addition to editorials, Engels wrote articles on other subjects, such as the progress of the revolutionary and liberation movement in Italy, the revolutionary war in Hungary, the political situation in Switzerland and so on. Wilhelm Wolff contributed articles on the agrarian question, on the condition of the peasants and their movement, particularly in Silesia. He was also responsible for the Current Events section. Georg Weerth wrote feuilletons, and Ernst Dronke contributed various reports (including reports from Paris). Heinrich Bürgers' contribution to the paper was limited to a single article, which was practically rewritten by Marx; he had more success speaking at various meetings as the paper's representative. Freiligrath published his revolutionary verses in the paper.

The Neue Rheinische Zeitung was a daily (from September 1848 it appeared every day except Monday); it aimed to give its readers prompt information on all the most significant revolutionary developments in Germany and Europe. Often a second edition was put out on the same day; supplements were printed when there was too much material to be squeezed into the four pages of the issue, while special supplements and special editions in the form of leaflets carried the latest and most important news.

The consistent revolutionary tendency of the Neue Rheinische Zeitung, its militant internationalism, and articles that appeared in its columns containing political accusations against the Government, aroused the displeasure of its bourgeois shareholders in the first months of the paper's existence and led to the persecution of its editors by the Government and attacks in the feudal monarchist and liberal bourgeois press. It was particularly the paper's articles in defence of the June 1848 uprising of the Paris proletariat that frightened away the shareholders.

To make Marx's stay in the Rhine Province more difficult, the Cologne authorities, on instructions from Berlin, refused to restore his Prussian citizenship (which Marx had renounced in 1845), and on several occasions instituted legal proceedings against him and other editors of the paper. On September 26, 1848, when a state of siege was declared in Cologne, several democratic newspapers, the Neue Rheinische Zeitung among them, were suspended. To avoid arrest, Engels, Dronke and Ferdinand Wolff had to leave Germany for a time. Wilhelm Wolff stayed in Cologne, but for several months he lived in hiding. When the state of siege was lifted, the paper resumed publication on October 12, thanks to the great efforts of Marx who invested all his ready money in the paper. Until January 1849, the brunt of the work, including writing leading articles, fell to Marx, since Engels had to stay in France and later in Switzerland.

Persecution of the Neue Rheinische Zeitung editors by the judicial authorities and the police became particularly intense after the counter-revolutionary coup in Prussia in November-December 1848. On February 7, 1849, Marx, Engels and Hermann Korff, the responsible manager, had to appear before a jury in Cologne and, the next day, Marx was summoned to court as the leader of the Rhenish District Committee of Democrats, together with Schapper and the lawyer Schneider. In both cases, Marx and his associates were acquitted thanks to skilful defence.

The paper's highly unstable financial position led to Marx continually taking steps to raise the necessary funds for its publication. Towards the end of March 1849, he insisted that Korff, who had considerably entangled the paper's financial affairs, be replaced by Stephan Adolf Naut who was closely associated with the Cologne Communists. In mid-April Marx had to undertake a trip to North-West Germany and Westphalia to raise funds among Communist League members and German democrats. In his absence (he returned to Cologne about May 8), the newspaper was managed by Engels. At the time, in the context of a new rise of revolutionary developments caused by the conflict between the Frankfurt National Assembly and the German governments, the Neue Rheinische Zeitung intensified its campaign for the consolidation of the revolutionary forces by publishing reports on the course of the uprising in Rhenish Prussia, Saxony and South-West Germany in defence of the imperial Constitution drafted by the Assembly. The authorities used this as a fresh pretext to persecute the paper. The number of legal proceedings against its editors rose to 23. However, the authorities' failure to win previous cases induced them to resort to another means of suppressing the revolutionary periodical. In May 1849, under the conditions of the general counter-revolutionary offensive, the Prussian Government issued an order to expel Marx from Prussia on the grounds that he had not been granted Prussian citizenship. Marx's expulsion and new repressions against other editors of the Neue Rheinische Zeitung resulted in the paper ceasing publication. The last issue, No. 301, printed in red ink, appeared on May 19, 1849. In their farewell address "To the Workers of Cologne", the editors wrote that "their last word everywhere and always will be: emancipation of the working class" (see this volume, p. 467).

Cologne, March 6. An Englishman is never more unhappy than when he does not know what to do with his money. Therein lies the secret of all grandiose speculations, all profit-making enterprises, but it is also the secret of all bankruptcies, all financial crises and commercial depressions.

In 1840, 1841 and subsequent years, it was the new Asian markets, besides the customary commerce with the European continent, which claimed a special share of English export trade. Manufacturers and exporters had every reason to greet Sir Henry Pottinger on the Manchester stock exchange with loud cheers. But the good times quickly passed. Canton, Bombay and Calcutta soon overflowed with unsalable goods, and capital, which no longer found any outlet in that direction, for a change once more sought application inside the country; it was poured into railway construction and so opened up a field for speculation in which the latter was soon rampant to a quite unprecedented extent.

According to a conservative estimate, the total sum invested in the enterprises could be put at 600 million and it would perhaps have gone still higher if the failure of the potato harvest in England, Ireland and many regions of the Continent, and further the high price of cotton, and as a result of both the reduced sale of manufactured goods, as well as, finally, the excessive railway speculation, had not caused the Bank of England on October 16, 1845 to raise the bank rate by one-half per cent.

In view of the superstitious fear in which the Britisher holds the omnipotence of his bank, this slight rise in the bank rate or, in other words, this lack of confidence on the part of the bank directors, at once affected the existing level of activity, so that a general mood of dejection set in, and the apparent prosperity was immediately followed by the restriction of credit and numerous bankruptcies. Consequently one of those great commercial crises, like those of 1825 and 1836, would have immediately developed if the repeal of the Corn Laws that followed soon afterwards had not suddenly come to the aid of the falling confidence, and once more stimulated the spirits of the entrepreneurs.

For the commercial world expected so much from the immediate consequences of this great measure that it found it easy to forget about the tribulations which had just overtaken it. The settlement of the Oregon conflict which promised a continuation of the hitherto extremely flourishing trade with America, and the British victories in the Punjab which ensured peace in Hindustan, played their part, of course, in a revival of spirits. And although the bad harvest of 1845 was followed by a similar one in 1846, although everywhere the reserves of former times had to be drawn upon and a credit for business purposes involved paying 12-15 per cent, despite all this, all the spinning mills of Lancashire and Yorkshire were set in continual motion as though crop failures, railway speculations and glutted markets had now suddenly become mere trifles which could be coped with in a trice.

This happy state of affairs, however, was not destined to last long, for whereas in September 1847 Dr. Bowring at the Brussels Free Trade Congress was still expounding with such highly comical eloquence the marvellous consequences of the repeal of the Corn Laws, it was already noticed in London that even the "all-powerful measures of Sir Robert Peel" were no longer able to save the country from the catastrophe which had so long been feared. One had to submit to fate and the London firms which, like Read Irving and Co., owned landed property worth almost one million pounds on Mauritius, were the first to start a series of bankruptcies—because of the shattered state of affairs in that part of the English colonies—they collapsed, taking with them in their fall numerous smaller East-Indian and West-Indian firms.

At the same time the big wigs of the factory districts realised that they had been mistaken about the consequences of the repeal of the Corn Laws. Business with all parts of the world was at a standstill and panic spread simultaneously in the City of London and in the stock exchanges of Liverpool, Manchester, Leeds etc.

Consequently, the crisis of October 1845, which had been delayed by various events, finally broke out in September 1847. Confidence was at an end. Courage had run out. The Bank of England abandoned the banks inside the country; these banks withheld credit from traders and manufacturers. Bankers and exporters restricted their business with the Continent, the continental trader, in his turn, put pressure on the manufacturer who owed him money; the manufacturer, of course, reimbursed himself at the expense of the wholesaler, and the latter fell back on the boutiquier. Each one of them hit out at the others and gradually the distress due to the trade crisis affected the whole world, from the giants of the City of London down to the smallest German shopkeeper.

This was before February 24, 1848! England experienced the worst days in the last four months of 1847. There was a clean sweep of the railway speculators; between August 10 and October 15, twenty of the leading London firms trading in colonial merchandise, with a capital of £5 million, and paying dividends of about 50 per cent, went bankrupt; and in the factory districts the distress reached its peak when in Manchester on November 15, only 78 out of 175 spinning mills were working full-time, and 11,000 workers were out of work.

So ended the year 1847. It was reserved for the Continent to experience during 1848 the after-effects of this English crisis—after-effects that on this occasion were, of course, all the more perceptible because the political transformations did not exactly help to make good the consequences of this extraordinary English occurrence.

We now come to the most interesting moment in the recent history of commerce, namely, the influence which the revolutions had on commercial activity.

The tables of English export trade provide us with the best illustration of this because, in view of the dominant position of England in world trade, the contents of these tables are nothing but an expression in figures of the political and commercial situation or, more correctly, the expression in figures of the ability to pay of the various nations.

Therefore, when we see that exports in April 1848 fell by £1,467,117, and in May by £1,122,009, and that total exports in 1847 amounted to £51,005,798, and in 1848 to only £46,407,939, conclusions very unfavourable to the revolutions could, it is true, be drawn from this and such an idea could be arrived at all the more easily because exports in January and February 1848, i.e. immediately before the outbreak of revolution, were actually £294,763 higher than in 1847.

Nevertheless, such a view would be completely erroneous. Because, firstly, the increased exports in January and February, i.e. precisely in the two months separating the peak of the crisis from the revolution, are easily explained by the fact that the Americans, in return for their enormous deliveries of grain to England at that time, took more British manufactured goods than ever before and thus at least for a short while prevented the falling off that would otherwise have arisen. But, in addition, English trade history provides most striking proof that exports do not diminish immediately after a crisis, but only when sufficient time has passed for the crisis to spread also to the Continent.

The increased export of the first two months of 1848, therefore, should by no means mislead us, and we can turn without misgivings to a consideration of the total decline during the whole year.

This decline, as we have already mentioned, compared with 1847 amounted to £4,597,859—certainly a considerable decrease, which in the hands of the reactionaries, who behave in politics like yapping curs and in trade like old women, became an argument against the revolution, one that is only too effectively used towards the uninformed.

But there is nothing easier than to refute the fallacious assertions of the party of reaction, for one has only to look up the tables of exports for the past 30 years to demonstrate that the decrease in exports in 1848, brought about by the combined influence of a trade crisis and a revolution, bears no comparison with the decline in exports of previous years.

After the trade crisis of 1825, in which year total exports amounted to £38,870,851, exports dropped to £31,536,724 in 1826. Thus there was a decrease of £7,334,127. After the crisis of 1836, when exports amounted to £53,368,572, exports dropped to £42,070,744 in 1837. The decrease, therefore, was £11,297,828. Nothing can be more striking than that!

Hence after two trade crises, which, it is true, were caused exclusively by the over-production of manufactured goods but in their extent cannot at all be compared with the crisis just ended, the drop in exports was double that of 1848, a year which was preceded by a glut in the Asian markets, two bad harvests, and speculation on a scale never seen before in the world, and a year when every corner of old Europe was shaken by revolutions!

In truth, trade got off easily in 1848! The revolutions contributed to the fact that now and then trade stagnated, that sales became difficult and dangerous, and that many persons collapsed under the burden of their obligations. During the past year, however, under Louis Philippe, the same difficulties would have been met with in Paris in discounting a miserable 20,000 or 30,000 francs as under the republic. In Southern Germany, on the Rhine, in Hamburg and in Berlin, with or without the revolution we would have had our bankruptcies; and business in Italy would have been depressed just as much under Plus as under the heroes of Milan, Rome and Palermo.

It is just as ludicrous, therefore, to ascribe the revival of trade to the temporary victories of the counter-revolution. The French are not paying 25 per cent more for wool at the London wool auctions because some of Louis Philippe's Ministers are again in power,—no, they are having to pay more because they need the wool, and they need more of it, their demand is growing, precisely because in the last years of Louis Philippe's rule it had greatly decreased. Such a fluctuation of demand can be observed throughout the history of commerce.

And the English are once more working a full day in all the mines, foundries, spinning mills, and in all their ports, not because a certain Prince Windischgrätz orders the summary shooting of the Viennese people,—no, they are at work because the markets of Canton, New York and St. Petersburg wish to be supplied with manufactures, because California is opening up a new market which the speculators regard as inexhaustible, because the bad harvests of 1845 and 1846 were followed by two good harvests in 1847 and 1848, because the English have given up railway speculation, because money has returned to its customary channels, and the English will go on working...until there is a new trade crisis.

Above all, we must not forget that it was by no means the monarchical countries that in recent years were the chief source of employment for English industry. The country which has almost continuously placed the most colossal orders for English goods and whose demand at the present time, too, is able to empty the markets of Manchester, Leeds, Halifax, Nottingham, Rochdale, and all the great emporia of modern industry, and which can enliven the ocean with its ships—is a republican country, the United States of North America. And it is just now that these states are prospering most of all, when all the monarchical states of the world are collapsing.

If, however, in the recent period a few branches of German industry have to some extent improved their position, they owe it solely to the English period of prosperity. From the whole of the history of commerce the Germans should know that they have no commercial history of their own, that they have to suffer for English crises, while in periods of over-production in England, a minute percentage is all that falls to their lot. But they have nothing to thank their Christian-Germanic governments for except accelerated bankruptcy.