"Money and Crisis" (Part Five)

Sergio Bologna

[Part Five of five parts. Continued from here.]

Does this highlighting of the Crédit's non-productive and speculative characteristics, contrasting with the revolutionary and innovative view given in the first group of articles in 1858, perhaps show the influence of Proudhon's Manual? In the pages that he dedicates to the Péreire bank, Proudhon, who was more concerned with problems of value than with the political function of the institution, had shown how the Crédit, with a capital of sixty million francs, had issued bonds to the tune of six hundred million francs, guaranteed by an equal sum employed in subscriptions of public bills (treasury bonds, etc) or of company shares. But since shares are subjected to depreciation, they would not provide effective guarantees. Unlike the circulating banks which discount commercial effects of a given value and are guarantees of a transaction - Proudhon concluded - the Crédit Mobilier is not in a position to supply guarantees of value, and thus it "cheats" its clients. Proudhon did not draw the conclusions which Marx had indicated - that the Crédit, by virtue precisely of that structure, was an institution which could prosper only in times of boom, and which would collapse in times of monetary panic. He had not drawn them because he lacked an overall perception of the cycle. His vision of the speculative nature of the Crédit Mobilier was therefore static and moralistic, and to the extent that it influenced Marx, it was in the sense of making possible a further deepening of his analysis.

"Money and Crisis" (Part Three)

Sergio Bologna

[Part Three of five parts. Continued from here.]

Between the end of October and the start of December 1856, Marx wrote four articles in the New Yrok Daily Tribune devoted to the world crisis. In the first, on 27 October, we find ourselves in the midst of a financial panic; once again the crisis was due to a "disproportion between the disposable capital and the vastness of the industrial, commercial and speculative enterprises"; it was not due to a scarcity of the circulating medium, to a crisis of money as a means of payment, but to a crisis in the relation between money and capital, between rates of accumulation and the system of exchange. The raising of interest rates did nothing to stop the outflow of gold; the fact that the capital markets of the various countries were closely connected stood in the way of measures aimed at isolating the crisis; the crisis was general. "The present crisis in Europe is complicated by the fact that a drain of bullion - the common harbinger of commercial disasters - is interwoven with a depreciation of gold." Marx analyses the international monetary system with extreme precision, examining the standards of value present in the various countries (for example, those in which gold was the standard, those where silver was the standard, and those where bimetallism existed) and the ways in which the workings of these standards, far from making crises less communicable, actually multiplied their effects. Between 1848 and 1855, £105 million in gold flowed onto the market, as a result of the development of goldfields in California, Australia, and Russia. Having taken into account that a large part of this was used for international payments, for the replenishment of bank reserves, and for articles of luxury, it was reckoned that this left £53 million, of which only part was used to replace silver in America and in France. In reality the outflows of silver from France and England were much higher, and this was explained by the strong preference of Italian and Levantine traders for silver, as well as by an accumulation of silver reserves by the Arabs. But even this is only a partial explanation. The basic reason was to be sought in trade relations with China and India. "Since the beginning of the seventeenth century, Asia, and especially China and India, have never ceased to exercise an important influence on the bullion markets of Europe and America," as Marx notes in his next article, on 1 November. Prior to the discoveries of gold in California, the flow of metal coming from America was balanced by payments to Asia, but the crisis in the opium trade with India, due to the Chinese rebellion, had produced an impressive drive towards hoarding, which, following on the discovery of gold in California, was principally in silver. At that point India too wanted to be paid in silver, which provoked an outflow of silver from Europe, and at the same time its price rose in relation to gold. This was the framework within which the European commercial crisis developed. It was precisely for this reason that "this Chinese revolution is destined to exercise a far greater influence upon Europe than all the Russian wars, Italian manifestos and secret societies of that Continent."

"Money and Crisis:

Marx as Correspondent of the New York Daily Tribune, 1856–57"

Sergio Bologna

[Editorial Note: This article was written in 1973. It was a key article in developing the theoretical base of the newly emerging politics of working-class autonomy. This translation, presented here in five parts, was made by Ed Emery and John Merrington for an anticipated volume to be published by Red Notes: Selected Writings of Sergio Bologna. For further details, write to Red Notes, BP15, 2a St Paul's Road, London N1 UK]

At the beginning of 1855, in a series of articles in the Neuer Oder Zeitung (11, 12, 20 and 25 January and in successive articles in the following months) Marx confronted the problem of cyclical crises and questions related to the British banking reforms of 1844. Already there were signs of the coming world recession of 1856–58 and it was urgent to set about analysing its causes.

Marx's unpublished notes on Geldwesen, Kreditwesen, Krisen ("Essence of Money, Credit and Crisis") also date from the same period — November 1854 to January 1855. The relation between the money form and general crisis must thus have been clear to him before the direct experience of the crisis of 1857. Even so, it seems historically legitimate to locate in this experience a decisive turning point in Marx, relating the early stages of his project for Capital to the need for building the base for an international revolutionary working-class party. It seems likely that this convergence of his theoretical and practical work would not have been so solidly achieved had it not been for the close scrutiny and stage-by-stage observation that he devoted to the monetary crisis of 1857. I have taken this as my starting point for a reading of the articles which Marx was writing about the crisis, articles which appeared in the New York Daily Tribune between June 1856 and December 1858.