The Monetary Crisis in Europe (1856)

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London, Oct. 3, 1856

The general commercial crisis which occurred in Europe about the Autumn of 1847, and lasted till the Spring of 1848, was ushered in by a panic in the London money market, beginning in the last days of April and reaching its climax on the 4th of May, 1847. During these latter days all monetary transactions were brought to a complete stand-still; but from the 4th of May the pressure subsided, and merchants and journalists congratulated one another on the merely accidental and transitory character of the panic. A few months later the commercial and industrial crisis burst forth, of which the monetary panic had been but the symptom and the forerunner.

There is now a movement in the European money markets analogous to the panic of 1847. The analogy, however, is not complete. Instead of moving from west to east—from London via Paris to Berlin and Vienna—as did the panic of 1847, the present panic is moving from east to west, with Germany for its starting point, thence spreading to Paris, and last reaching London. Then the panic assumed a local aspect from the slowness of its progress; now it appears at once in its universal character, from the rapidity of its extension. Then it lasted about a week or so; now it has lasted already three weeks. Then there were few who suspected it to be the forerunner of a general crisis; now nobody doubts it save those Englishmen who imagine themselves to make history by reading The Times newspaper. What the most far-sighted politicians feared then, was a repetition of the crisis of 1825 and 1836; what they now are sure of is an enlarged edition not only of the crisis of 1847 but also of the revolutions of 1848.

The anxiety of the upper classes in Europe is as intense as their disappointment. Having had it all. their own way since the middle of 1849, the war, as yet, was the only cloud in their view of the social horizon. Now, after the war is over, or supposed to be over, they make the same discovery everywhere as was made by the English after the battle of Waterloo, and the peace of 1815, when the bulletins of battles were replaced by the reports on agricultural and industrial distress. With a view to save their property they did everything in their power to put down the Revolution, and to crush the masses. They are now discovering that they were themselves the instruments of a revolution in property greater than any contemplated by the revolutionists of 1848. A general bankruptcy is staring them in the face, which they know to be coincidental with the settlement-day of the great pawning shop at Paris; and as the English found, to their surprise, after 1815, when Castlereagh, "the man of the stern path of duty," cut off his own head, that he had been a madman, so the stock-jobbing public of Europe already begin to ask themselves, even before his head is cut off, whether Bonaparte has ever been sane. They know that every market is over-imported; that every fraction of the proprietary classes, even those never before infected, has been drawn into the vortex of the speculative mania; that no European country has escaped from it; and that the demands of Governments on their tax-paying people have been stretched to the last point. In 1848 the movements which more immediately produced the Revolution were of a merely political character, such as the reform banquets in France, the war of the Sonderbund in Switzerland, the debates of the United Diet at Berlin, the Spanish marriages, the Schleswig-Holstein quarrels, &c.; and when its soldiers, the workingmen of Paris, proclaimed the social character of the Revolution of 1848, its generals were as much taken by surprise as the rest of the world. Now, on the contrary, a social revolution is generally understood, even before the political revolution is proclaimed; and a social revolution brought about by no underground plots of the secret societies among the working classes, but by the public contrivances of the Crédits Mobiliers of the ruling classes. Thus the, anxiety of the upper classes in Europe is embittered by the conviction that their very victories over revolution have been but instrumental in providing the material conditions in 1857 for the ideal tendencies of 1848. The whole epoch from the middle of 1849 down to the present appears, then, as a mere respite given by history to Old European Society, in order to allow it a last condensed display of all its tendencies. In politics, adoration of the sword; in morals, general corruption and hypocritical return to exploded superstitions; in political economy, the mania of getting rich without the pains of producing—such have been the tendencies manifested by that Society during its counter-revolutionary orgies of 1849-56.

On the other hand, if we place side by side the effect of this short monetary panic and the effect of Mazzinian and other proclamations, the whole history since 1849 of the delusions of the official revolutionists is at once deprived of its mysteries. They know nothing of the economical life of peoples, they know nothing of the real conditions of historical movement, and when the new revolution shall break out they will have a better right than Pilate to wash their hands and protest that they are innocent of the blood shed.

We have said that the present monetary panic in Europe made its appearance first in Germany, and this circumstance has been hit upon by the journals of Bonaparte to exculpate his régime from the suspicion of having had the least share in precipitating it.

"Government," says the Paris Constitutionnel, "has endeavored to moderate the spirit of enterprise even after the conclusion of peace, by adjourning several new concessions and by forbidding the introduction of new schemes on the Bourse. Unfortunately it could do no more; it could not prevent all excesses. Now, whence did they proceed? If a part was generated in the French market, it was certainly the smaller portion. Our railway companies, from a spirit of rivalry, were, perhaps, too hasty in issuing bonds, the proceeds of which were destined to extend the branch lines. But this would not have created embarrassment but for the mass of foreign enterprise suddenly sprung into life. Germany, above all, which had taken no part in the war, threw itself recklessly into schemes of all kinds. Not possessing sufficient resources itself, it appealed to ours, and as the official market was closed to it, our speculators opened to it the Coulisse. France, therefore, became the center of cosmopolitan projects which might enrich foreign countries at the expense of national interests. Capital became, in consequence, rare on our market, and our securities, meeting with fewer buyers, suffered that depreciation which, in the presence of so many elements of wealth and prosperity, astonishes the public."

Having given this specimen of imperial official nonsense on the causes of the European panic, we cannot withhold an example also of the sort of opposition tolerated under Bonaparte.

"The existence of a crisis," says the Assemblée Nationale, "may be denied, but we cannot help thinking that prosperity is somewhat on the wane, when we consider the recent falling off in the receipts of our railways, in the amount of Bank advances on commercial bills, and in the duties on exportation levied during the first seven months of the year, which exhibit a decline of twenty-five millions of francs."

In Germany, then, all the active part of the middle classes have ever since the counter-revolution of 1849 devoted their energies to commercial and industrial enterprise, as the thinking part of the nation have abandoned philosophy for the natural sciences. The Germans, neutral in the war, have accumulated as much more capital as their French neighbors sank in the war. Finding them in this position, with a rapidly progressing industry and an accumulation of capital, the French Crédit Mobilier condescended to notice them as being fit subjects for its operations—the passive alliance between Bonaparte and Austria having already drawn its attention to the unexplored regions of Austria, Hungary and Italy. However, having set the example and taken the initiative of speculation in Germany, the Crédit Mobilier itself was startled at the unexpected crop of stock-jobbing and credit institutions generated by its impulse. The Germans of 1855-56 received the swindle-constitutions of the French Crédits Mobiliers as dry-cut as the Germans of 1831 had received the political constitutions of France. Thus, a Frenchman of the seventeenth century would behold with astonishment the Court of Louis XIV. reproduced a hundred-fold grander on the other side of the Rhine; and thus the Frenchmen of the last decennium were surprised to behold in Germany sixty-two national assemblies where they had with so much trouble produced one. Germany is not a land of decentralization after all; only centralization itself is decentralized, so that instead of one there exist a great many centers. Such a country, then, was quite fit to develop in the shortest time and in every direction the contrivances taught it by the Crédit Mobilier, just as Paris fashions are sooner circulated in Germany than in France. This is the immediate cause of the panic having made its first and most widely-spread appearance in Germany. We shall give the history of the panic itself, as well as its immediate causes, in a future article.