Excerpts, notes and newspaper clippings circa 1869 - MEGA² IV/19
Timm Grassman
1
With the present edition (MEGA² IV/19), four excerpt notebooks and a notebook by Marx, as well as in the appendix three notebooks with newspaper clippings, which Marx's daughter Jenny created for her father, are published for the first time. Marx made most of the four excerpt notebooks within four and a half months, between October 13, 1868 and March 1, 1869. Only the last three excerpts of the fourth notebook were written later, probably by 1872, at the latest by 1875. The notebook was kept by Marx between 1869 and 1871 and the three notebooks with newspaper clippings by Jenny Marx probably between August 1868 and January 1870. [^*]
2
The excerpt notebooks are related to the planned revision and completion of the second and third books of Marx's main work of economic criticism, Das Kapital. Most of the excerpts deal with the topics of money markets, credit, banking and stock exchanges, joint-stock companies, exchange rates, monetary systems, as well as crisis, economic crime, and financial fraud. Marx informs himself extensively on the commercial and financial history of the recent past and on the current literature on money, credit, and crisis theory. In the context of a systematic study of the movement of the English money market in the years 1866 to 1868, the economic crisis of 1866, which primarily affected England, and its social and political effects constitute two major themes. Other central themes are the political economy of the American Civil War (1861-1865) and the formation of an American central state, economic development in the French Empire and in the British colonial territories of India and Ireland, and furthermore agriculture, labor struggles, and pauperism.
3
Marx titled all four excerpt notebooks himself: They are called "London. 1868," "1868," "1869 I Heft," and "Heft II. 1869." The first three booklets contain mainly excerpts from the three 1866 to 1868 volumes of the two economic journals published in London and published weekly, "The Economist" and "The Money Market Review." Marx makes excerpts from a total of about 840 articles; in addition, he compiles in an independent structure materials on the movement of the money market from 1866 to 1868 from various columns of the "Money Market Review" under a total of 158 headings.
4
Marx begins his excerpts from the two periodicals with the extensive booklet "London. 1868": it contains excerpts from about 530 articles as well as a pasted newspaper clipping from "The Social Economist." In "London. 1868," between October 13 and about mid-November 1868, he creates excerpts from 102 of the 104 issues of the 1866/1867 volumes of "The Economist" as well as from most issues of "Money Market Review" published between May 19, 1866 and December 28, 1867. At the end of an excerpt from an "Economist" article, Marx writes a longer note on various monetary systems and the role of state banks. Marx continues his excerpts from the 1866/1867 volumes of the "Money Market Review" roughly between mid-November and mid-December 1868 in the issue "1868" with excerpts from 82 articles as well as the beginning of the collection of material on the money market from 1866 to 1868. The "1868" issue also contains short excerpts from Henry Enfield Roscoe's "Kurzen Lehrbuch der Chemie," written before October 1868. Marx finished his excerpts from the two periodicals in January 1869 in the booklet "1869 I Heft" with excerpts from 222 articles from the 1868 volumes of the two periodicals and the continuation of the collection of material on the money market. After the excerpts from the two periodicals, Marx entered two more excerpts in "1869 I Heft" in about the first two weeks of February 1869: first excerpts from the book "The Theory of the Foreign Exchanges" by George Joachim Goschen and then the first part of his extensive excerpts from the mathematical textbook "Das Ganze der kaufmännischen Arithmetik" by Friedrich Ernst Feller and Carl Gustav Odermann. Marx produced the second part of the excerpts from Feller/Odermann immediately afterwards in the subsequent booklet "Heft II. 1869". In "Heft II. 1869" then follow excerpts from "An Essay on the Principle of Commercial Exchanges" by John Leslie Foster, which in all probability were written between February 27 and March 1, 1869, and which, like the excerpts from Goschen's work, deal with the theory of exchange rates and international trade and credit relations. "Heft II. 1869" continues Marx with a short note on Charles Lyell's "Principles of Geology" and long excerpts from Otto Hausner's "Comparative Statistics of Europe" and Michael Thomas Sadler's "Ireland; its Evils, and their Remedies," both of which excerpts were probably written after 1869 (for dating, see the "Origin and Tradition" apparatus sections on the individual issues).
5
The notebook from 1869 to 1871 includes, in addition to various notes, a short excerpt from Max Wirth's "History of Trade Crises," which is still widely cited today, in which Marx records what he considers to be some obvious factual errors or misjudgments on Wirth's part. The three notebooks prepared by Jenny Marx contain pasted clippings from 288 articles in English newspapers such as "The Daily News," "Reynolds's Newspaper," and "The Standard" from the period August 10, 1868, to January 6, 1870. The notebooks are titled "Trade and Finance 1868," "Trade and Finance 1869," and "Social cases. 1869" and deal with the same topics that predominate in Marx's four excerpt notebooks: the period of economic stagnation at the time, events surrounding joint-stock and finance companies, the court case against the directors of the discount bank Overend, Gurney and Company, and the social question and pauperism. Since the three booklets with pasted newspaper clippings, although not produced by Marx himself, were commissioned by him and, moreover, can be shown to have been used by him (see the history of their creation and transmission), they are published in the appendix to the present edition.
6
Marx did not work continuously or exclusively on the excerpt notebooks from October 13, 1868, the day he received the first volumes of the "Money Market Review" and the "Economist" from Sigismund Ludwig Borkheim. Meanwhile, he also suffered from illness and became involved in the General Council meetings of the International Labor Association (IAA).1 In addition, Marx was probably also working on the second book of "Capital" at this time (see MEGA² II/11). According to his own information, Marx then went at the beginning of February 1869 - at about the time when he had finished the excerpts from the "Money Market Review" and the "Economist" at about the end of January 1869 - to continue his work on the second book of "Capital", which had possibly begun in the course of 1868 and had been interrupted in the meantime. He informed Engels on February 13, 1869, that he had "resumed work after an interruption of several weeks of cold fever" and was "at this moment" "very busy" with his book.2
7
Marx intended to publish his great work "Das Kapital" on the general principles of the capitalist mode of production and the critique of the accompanying science of political economy in four books. He published the first volume of "Capital" with the first book on the production process of capital in September 1867 (see MEGA² II/5). The second volume was to contain books 2 and 3 and the third volume the fourth book on the history of political economy.3 Even though Marx wrote an extensive manuscript for the second book of "Capital" on the circulation process of capital between 1868 and 1870, in which he made use of many excerpts written in 1868/1869, his manifold and comprehensive studies of these years can be seen primarily as preparation for the third book, in which he wanted to treat the disintegration of the surplus value generated in the production process of capital into the independent revenue forms profit, interest, and ground rent.
8
Marx wrote an extensive draft for the third book of "Capital," which Engels published after Marx's death as the third volume of "Capital" (see MEGA² II/15), in 1864/1865 (see MEGA² II/4.2). He finished a draft of the fifth chapter of the third "Kapital" book on interest-bearing capital in October 1865, as witnessed by the increase of the Bank of England's discount rate from 4.5% to 7% in early October 1865, recorded at the end of the chapter.4 After working on the manuscript for the third book, Marx worked out the final text form of the first volume of "Capital" from the beginning of 1866. As he approached the completion of this work about a year later, he expressed the need, for the completion of the second volume - which, as noted, was to contain Books 2 and 3 - to resume his research and review the current literature that had appeared in the fields of credit and landed property relevant to the third book. In May 1867, he wrote Engels: "At last Meissner demands the 2nd volume for the end of autumn at the latest. The Schanzerei must therefore begin as soon as possible, since a great deal of new material has been supplied for the chapters on credit and real property since the writing of the mscrpt. In winter, the third volume is to be completed, so that by next spring the entire opus will be shaken off."5
9
The excerpts published in Volume IV/18 and in the present edition document this Marxian "Schanzerei" in preparation for the planned completion of the second volume of "Capital". After the publication of the first volume in September 1867, Marx first studied questions of landed property, land rent, and agriculture in the first three months of 1868 in the three "Heften zur Agrikultur 1868" (see MEGA² IV/18). In parallel, he began reviewing the 'much new material' on credit that had appeared "since the writing of the Mscrpt," that is, since the end of 1865. The excerpt notebooks published with the present edition are to be regarded as an essential contribution to these studies on credit that Marx was pursuing at this time - even if they represent only an excerpt from them. For example, although Marx's excerpt notebooks published in Volume IV/18 focus on the problem of landed property and land rent, they also include, for example, material on credit in the form of the "Heft zum fixen Kapital und Kredit 1868." Conversely, the present booklets also contain materials that thematically belong rather to the "Hefte zur Agrikultur": extensive statistics on land ownership and agricultural production from Otto Hausner's "Vergleichender Statistik von Europa" in "Heft II. 1869," the excerpts from Roscoe and Lyell, and furthermore excerpts in "London. 1868" on the ecological complex of soil depletion, river pollution, and urban water and sewage systems, as well as on industrial animal husbandry and its consequences, such as the cattle plague rampant in England between 1865 and 1867.6 Marx also excerpted the detailed "Economist" review of the book "The Coal Question" (London, Cambridge 1865) by William Stanley Jevons, in which Jevons calculated that English coal resources would be exhausted before the year 1960 ("London. 1868", p. 2).
10
Similarly, in preparation for revising his theory of credit, Marx consulted much more literature than has survived through the present excerpt notebooks. As early as March 1868, he read a new edition of a book by Henry Dunning Macleod on banking, which apparently did not excite him much.7 Shortly thereafter, when he turned his attention to Maurice Aycard's just-published book on the history of the French joint-stock bank Crédit Mobilier, which was compulsorily liquidated in the fall of 1867, he wrote Engels:
11
Reading through the 'Histoire du Crédit Mobilier.' As far as the actual essence of the matter is concerned, I had in fact already written better things about it years ago in the 'Tribune'. The author knows the business. He himself is a Parisian banker. But he has in fact no other material than the official one, supplied by Crédit itself in its reports, and the fata recorded in the stock exchange quotations. The secret material could only be produced by judicial means. What strikes me above all is this: the actual tricks all dissolve in agiotage on the stock exchange and, in this department, au fond, which is always the disguises, nothing new since Law! Neither on this, nor on that side of the channel. The interesting thing about these things is the practice, not the theory.8
12
It is possible that Marx's statement that practices on the stock exchange on both sides of the channel had not developed significantly refers not only to the descriptions in Aycard and Macleod, but also already to the current works of two British authors, which Marx excerpted alongside another writing by Macleod in April/May in the "Heft zum fixen Kapital und Kredit 1868" (see MEGA² IV/18). In his excerpts from "The Theory of Business for Busy Men" (London 1868) by John Laing and "The Science of Finance" (Edinburgh, London 1868) by Robert Hogarth Patterson, he informed himself, among other things, about the financial instruments that had been invented and used during the British railroad boom of the 1860s. Furthermore, in the summer of 1868, Marx made excerpts from British commercial reports and learned about some of the effects of the 1866 crisis on China, Brazil, and the Netherlands.9 In August 1868, he also corresponded with John Mills and read his theory of credit cycles;10 he also excerpted from a Times article of August 18, 1868, in "Heft 1. 1868" of the "Hefte zur Agrikultur", which emphasized the extraordinary duration and depth of the economic stagnation after the crisis of 1866.11 Probably at this time Jenny Marx also put on "Trade and Finance 1868", the first of her three notebooks intended for her father, with newspaper clippings, at least the first article pasted into the notebook dates from August 10, 1868. On September 25, 1868, Marx asked Engels for the first time if he could get him John Leslie Foster's "Essay on the Principle of Commercial Exchanges" in Manchester, since the book was not available in London.12
13
Beginning on October 13, Marx began excerpting from the "Money Market Review" and the "Economist." About the time he finished the first issue, "London. 1868", he wrote to Engels on November 14, 1868: "Since practice is better than all theory, I request you to describe to me quite precisely (by means of examples) the method in which you conduct your business quant à banquier etc. [...] Since the 2nd volume is largely too theoretical, I will use the chapter on credit for actuel denunciation of fraud and commercial morals."13
14
In his two letters to Engels of April 11 and November 14, 1868, similar emphases appear, indicating Marx's more detailed research interests. He stated in both letters that the practice of banking and stock exchange was "the interesting thing" and even "better" than the theory about it. Also, his own remarks in books 2 and 3 seemed to him "too much theoretical," so he wanted to enrich and expand them with an account of the practice prevailing in the money market, based on quite up-to-date material. In the manuscript for the third book of 1865, Marx drew primarily on the writings excerpted in his "London Hefte 1850-1853" and the British parliamentary reports of 1857 and 1858 on the money market and the crisis, and thus on material that was in part already twenty years old. The "practice" on the stock exchange could be described as agiotage, that is, making differential profits by exploiting price fluctuations. Engels confirmed on April 17, 1868, that "theoretically nothing interesting & nothing new can be represented in the agiotage": "Everything dissolves into bouncing under false pretenses, & there just nothing can change but the manner."14 Marx was thus interested in the precise workings and technical aspects of speculation: the "method" of bankers and merchants, the "disguises" of agiotage, and the "tricks" on the stock exchange.
15
For this reason, he found fault with Aycard's account for relying only on the official material of the Crédit Mobilier. He pinned his hopes on the "secret material" that would come to light when Crédit Mobilier was wound up by the courts.15 Marx therefore intensively followed the court case concerning the English discount bank Overend, Gurney and Company in the present excerpts and had it documented by his daughter Jenny, also because he probably hoped that it would be determined in court which transactions characterized the daily life of the City of London. In the letter of November 14, 1868, he combined his interest in the precise techniques and forms of credit transactions with a new goal, for which he wanted to use the chapter on credit in the third "Capital" book: the "actuel denunciation des Schwindels u. der commercial morals" (on this in more detail below).
16
In addition, beyond the titles excerpted by Marx and discussed in the correspondence, a wide field of reading emerges on the basis of the writings and books from the years 1865 to 1870 that are listed in the inventories of his library: Theory of exchange rates and international financial relations, stock exchange and merchant's manuals, methods and techniques of exchange and commercial arithmetic, economic and crisis history, financial innovations of the 1860s, current credit theory, the concrete design of the money market (by banks, joint-stock and finance companies), financial fraud, and currencies in various countries.16 Marx was apparently also in search of the minutes of the French "Bank Enquête Committee" - which Napoleon III authorized in 1865 because of continuing controversies over the causes of the 1863/1864 monetary squeeze, and in which the leading figures from the financial system of the Second Empire argued, among other things, over the monetary policy of the Banque de France - as well as for the report of the American "National Revenue Commission" chaired by David Ames Wells on the fiscal and monetary upheavals during the American Civil War. This is suggested by his letter to Nikolai Francevič Daniel'son of October 7, 1868, in which Marx wrote: "You cannot wait for the second volume, the appearance of which may be delayed another 6 months. I cannot finish it until certain official enquêtes, conducted during the past year (& 1866) in France, United States & England, are finished or publicized."17 The reports of the "Bank Enquête Committee" and the "National Revenue Commission" are received by Marx in the present issues by means of the translations, excerpts, and reviews printed in the "Economist" (see "Origin and Tradition" for "London. 1868").
17
When Marx wrote in 1867 of the 'much new material' that had appeared in the field of credit theory since the end of 1865, he was probably also thinking of the contemporary literature on the crisis of 1866, which turned out to be even more extensive and varied than the literature on earlier economic crises.18 To be sure, for Marx there was already earlier a close connection between the economic crises and the money market and credit system,19 but this connection therefore gained topicality and explosiveness, since he determined the crisis of 1866 in the first volume of "Capital" as a crisis which assumed a "predominantly financial character".
18
The economic crisis of 1866 was the defining event of the years 1866 to 1868, at least in Britain, and the one that most occupied the attention of contemporaries. Marx was convinced that the periodic recurrence of economic crises was a phenomenon as specific to modern society as it was inevitable, and he regarded explaining this from the contradictory logic of development of the capitalist mode of production as a fundamental concern of his economic theory. He defined the crises as the eclat of all contradictions of the capitalist mode of production:20 It is "the great world market tempests, wherein the contradiction of all elements of the bourgeois production process discharges itself".21
19
In all the recurring crises since 1825 in 1836/1837, 1839, 1847, and 1857, England was in some way at the center, and that of 1866 was the second general crisis that Marx witnessed at close quarters since he had to go into exile in London in 1849. At the very beginning of the "London Hefte 1850-1853," he excerpted a series of writings on the crisis of 1847, which had then just been overcome (see MEGA² IV/7), and which had culminated in the revolution of 1848/1849.22 He documented the world economic crisis of 1857/1858, which began with a bank crash in the United States, in its immediate course in the three "crisis notebooks" (see MEGA² IV/14). Although the new crisis, unlike in the "Krisenhefte" of 1857/1858, is by no means the only topic of the present excerpt notebooks, the latter can also be seen as a continuation of Marx's crisis studies.
20
Already in the first volume of "Capital" (1867), Marx outlined the origin, character, and course of the crisis of 1866 in a lengthy passage that he did not modify - even after the intensive studies in the present excerpt notebooks - for the second German edition (1872) and the French edition of "Capital" (1872-1875).
21
One remembers: the year 1857 brought one of the great crises with which the industrial cycle closes each time. The next one was due in 1866. Already discounted in the actual factory districts by the cotton famine, which chased a lot of capital from the usual investment sphere to the large central seats of the money market, the crisis this time took on a predominantly financial character. Its outbreak in May 1866 was signaled by the fall of a giant London bank, which was followed by the collapse of countless financial swindling companies. One of the major London businesses hit by the catastrophe was iron shipbuilding. The magnates of this trade had not only overproduced during the swindling period, but had also taken on enormous supply contracts on the speculation that the source of credit would soon flow away in abundance. Now a terrible reaction occurred, which also continues in other London industries until the end of March 1867.23
22
Marx cites the cotton famine (1861-1865), the "Cotton Famine", as the central event for the emergence of the crisis. This refers to the disruption of the English cotton industry by the American Civil War, when the English 'workbench of the world' was suddenly cut off from its main supplier of raw cotton - the southern states of the United States, where cotton was produced on slave plantations - after the Union blockaded the ports of the southern states as a war measure. The trade blockade on the other side of the Atlantic caused a shock disruption of English industry.24 All crises since 1825 were, according to Marx, crises of overproduction in form, arising from the rapid expansion of industrial production and the credit expansion related to it. But the crisis of 1866 was already "discounted" "in the actual factory districts by the cotton famine," that is, with the paralysis of the key industry of the time, its tendency to overproduction was also interrupted, and the crisis was thus anticipated. For as a result of the "Cotton Famine," the capital habitually invested in the "actual factory districts" of the cotton industry had been withdrawn from there and chased "to the great central seats of the money market." 25 In the course of this shutdown, then, it was not only the Lancashire factory complex that was largely idle26 and the English textile proletariat affected by record unemployment,27 but a financial and stock boom also occurred in England. Therefore, according to Marx, the crisis of 1866 "assumed a predominantly financial character" - it was the first major financial crisis of the industrial age. In the present issues, Marx repeats this assessment: "The cotton famine diminished business. But at the same time it released capital, which led to the financial etc swindles within." ("London. 1868," p. 91.)
23
The crisis began on May 10, 1866, with the "fall of a giant London bank": the discount bank Overend, Gurney and Company, one of the most important banking houses in the City of London, where money capital was already concentrated at that time. This bankruptcy was immediately followed by "the collapse of countless financial swindling companies," and there was a panic the following day, "Black Friday" (this expression is also found in the excerpts, see "London. 1868," p. 219).
24
The crisis intertwined three financial developments of the 1860s.28 First, "repatriation" of British money capital occurred as a result of the American Civil War29, which now became less involved in overseas ventures and more involved in domestic joint stock companies, especially in the railroad sector. Between 1860 and 1865, British exports stagnated and, at the same time, domestic investment doubled, especially in railroad ventures.30 The deposits made in banks and the bills in circulation reached their peak in 1865.31 Second, new kinds of finance companies ("finance companies") flourished in Britain. Finance companies brokered financial transactions and charged a commission, which was the main source of their profit. The intermediation service was called "financing" and the main feature of finance companies was to lend against all kinds of collateral. This boom was thirdly promoted by a 'deregulation' of the money markets. The restrictive provisions of Peel's Joint Stock Banking Act of 1844 were increasingly rolled back by the Limited Liability Act of 1855 (18 and 19 Vict., Cap. 133), the Joint Stock Companies Act of 1856 (19 and 20 Vict., Cap. 47), and the Acts of 1857 (20 and 21 Vict., Cap. 49) and 1858 (21 and 22 Vict., Cap. 91). Between 1844 and 1857, there were only twelve new joint-stock banks.32 But the new laws facilitated the formation of limited liability companies, and the Companies Act of 1862 (25 and 26 Vict., Cap. 89) placed banks on an equal footing with other commercial companies.33 Marx notes at one point the calculations of the statistician Leone Levi that in 1864/1865 alone a total of 832 joint-stock companies, including many banks and finance companies, were newly founded ("London. 1868," p. 213). The reform of the liability system improved the investment climate, since owners and shareholders were now only liable for the invested sum in the event of bankruptcy, and no longer with their personal assets. Overend, Gurney and Company was also transformed into a limited liability company in mid-1865.
25
Marx was not only aware of this boom in the stock market and finance companies in the 1860s, but even participated in it himself. At least he let his uncle Lion Philips know on June 25, 1864, that he had "speculated partly in American funds, but especially in the English share certificates, which are growing like mushrooms out of the earth here this year (for all possible and impossible share ventures), are being driven to a certain unreasonable height and then mostly burst. I have gained over £400 pc in this way, and will start again now that the intricacies of political circumstances offer new scope. This kind of operation takes only a little time, and one can already risk something to take the money from one's enemies."34
26
Thus, Marx did draw Engels' attention on February 13, 1866 - in view of the first bankruptcies such as that of the railroad contractor Watson, Overend and Company in January 1866 - to the fact that "the economic status [...] points to Crise threatening u. threatening."35 But six days after "Black Friday" he was at first not very impressed by the events: "The present crisis seems to me merely a premature, special financial crisis. It could only become important if business in the U. States were lazy, for which there would hardly be enough time."36 Engels agreed: "The panic has in any case come much too early & may possibly spoil for us a good solid crisis which would otherwise have come in 67 or 68. [...] This collapse of limited liability & financing shenanigans was, after all, long foreseen".37 In the first volume of "Capital", however, it is stated that the crisis was followed by "a terrible reaction", "which also continues in other London industries up to the present hour, at the end of March 1867".38 The crisis of 1866 thus became more intense and longer than Marx had initially suspected. Thus, he may have regarded the crisis not only as a treasure trove for his project to examine more closely the practice of credit speculation in the City of London, the disguises of agiotage, and the tricks of the stock exchange. Moreover, it was also necessary to explain how events that at first looked like a "mere premature, special financial crisis" could turn into a deep economic depression that was to last until the end of 1869.39
27
However much literature Marx consulted from 1868 onward when he resumed his studies of credit, excerpts have survived hardly from theoretical writings, but primarily from two journals that were primarily committed to daily news reporting. Marx probably also dealt so extensively with the "Money Market Review" and the "Economist" because he was interested in economic and financial history40 of the years in which he was intensively occupied with the completion of the first volume of "Capital", up to the present moment, he wanted to study and thereby better understand "the practice" in the City of London and the concrete design of the English and the international money market. He also perceived that much new material had been supplied, for example, on the crisis of 1866, and possibly he thought he could get an overview of this literature through the press. In any case, the present notebooks contain excerpts from only eight books, but Marx took note of many more titles and sometimes received their contents through the often detailed reviews in the organs of the money market.41
28
Marx received the volumes of the two periodicals on loan in two deliveries from Sigismund Ludwig Borkheim. Regarding the first delivery of October 13, 1868, with the 1866/1867 volumes, Borkheim wrote: "Bearer of this will give you Money Market Review and Economist - both for 1866 & 1867; also Slades book. This I ask to be returned to me quite soon."42 He sent the 1868 volumes of the two journals on December 30, 1868: "I send you by Ueberbringer this Econ., MM Review 1868, Haxthausen and N. Rheinische Febr. 1849 with request to send me back Econ, u. M.M. Review u. what else."43 Thus, to make the excerpts, Marx did not have to visit the library of the British Museum, but could do so from home. The fact that Borkheim wanted the loan back and that Marx only had it for a short time also helps to explain why Marx went through the volumes so thoroughly and expeditiously. Any letters from Marx to Borkheim that might indicate the purpose for which he wanted to look through the journals have not survived.
29
For this reason, it cannot be decided whether it was a coincidence that Marx consulted the Money Market Review. In any case, the present excerpts represent Marx's first surviving reception of this journal. Like the Economist, the Money Market Review was published once a week on Saturdays, so both journals were published on the same date. The Money Market Review was first published on June 9, 1860.44 and under that title until August 1914, when its title changed to "Money Market Review and Investors' Chronicle". In 1976, the magazine was renamed Investors Chronicle, and it is still published under that name today. The Money Market Review's self-image as a journal of commercial and financial affairs can be seen in an advertisement placed in The Daily News about two weeks before the first issue of the Money Market Review, which advertised it as follows: "exclusively devoted to the discussion of commercial and financial topics. [...] This journal has access to the highest sources of information, and will comprise only original and condensed matter. The 'Money Market Review' appeals specially to all interested in trade and finance, in Stock Exchange movements, and in public securities of every kind."45
30
With the 'deregulation of the financial market' by the Acts of 1856, 1857, 1858, 1859, and 1862, and the stock market boom of the 1860s, a certain readership had also grown: investors, small and large, interested in ways to place their financial capital for profit. From 1860 onward, the number of such financial market publications in England grew by leaps and bounds.46 However, the "Money Market Review" - already recognizable from its subtitle "A Weekly Record of Trade and Finance; i.e., of Railway, Banking, Insurance, Mining, Steam, & Other Public Companies" - did not primarily pronounce concrete investment tips, but rather directed its attention to those economic and economic policy developments that were favorable or detrimental to the investment climate: events on the money market, on the stock exchange and in international diplomacy, the introduction of new bonds, the current harvest, political disputes - and of course, for investors, the rumors, outlooks, assessments and expectations about all these circumstances are just as important as the actual events themselves.47 The "Money Market Review" promised independent analysis and commentary on the various commercial and financial issues of the week: the weekly reports of the Bank of England; the state of trade, industry, and mining; the balance sheets ("accounts") and economic condition of the major English railroads, banks, and joint-stock companies; currencies, commodities, and corporations. Because the Money Market Review was clearly on the side of investors, shareholders, and stockholders, its coverage can be understood as reasonably critical: Attacks on the management of joint-stock companies, the examination of company balance sheets, reports of shareholders' meetings, letters to the editor from money market insiders, fierce polemics against the representations in the "Times" and the "Economist" and, last but not least, a sharp criticism of British economic policy, especially the "Bank Act" of 1844, are characteristic of this journal, which intended to establish the greatest possible transparency and risk assessment for shareholders and all who wanted to become one. There was a great deal of attention in the Money Market Review to shoddy accounting, falsified balance sheets, economic fraud, institutional weaknesses, and incompetent and corrupt politics. The magazine was not infrequently outraged and accordingly used a relatively large number of exclamation points in its articles. At times, conspiracies were also suspected.48
31
The "Economist," on the other hand, Marx read regularly since his forced exile to London in 1849. Especially in the "London Hefte 1850-1853" a great many excerpts from this journal, founded in 1843 by James Wilson, have survived (see MEGA² IV/7 to IV/11). Even then, Marx not only consulted the current issues, but also older volumes, such as those from 1844 and 1847, in order to read the journal's assessments of important events of the past: in 1844, Peel's "Bank Act" was passed, to which the "Economist" took a critical stance, and in 1847, an economic crisis raged in Great Britain. In the "London Hefte," Marx came to appreciate the "Economist" as a valuable source of economic statistics and political-economic discussions. He occasionally drew on information from the "Economist" in his own articles in the following years during his correspondence for the "New-York Tribune," which lasted until 1861. In his documentation of the Great Depression of 1857/1858 in the "Krisenhefte," the "Economist" was also by far the most frequently used source.49 Despite his esteem, he never spared criticism of the paper.50 He did not miss the opportunity to document in the "18th Brumaire of Louis Bonaparte" that the "Economist" supported Louis Napoléon at that time, by letting announce through its France correspondent only four days before his coup d'état that Louis Napoléon would be recognized as "the guardian of order" at all European stock exchanges.51
32
In the "18th Brumaire of Louis Bonaparte" Marx referred to the "Economist" as the "European organ" of the "financial aristocracy" and shortly thereafter in an article as "the most sober, the most rational, the most moderate organ of the industrial bourgeoisie, The London Economist".52 The journal thus offered Marx insights into the world of thought, the activities and projects of the bourgeoisie: "The position of the financial aristocracy is most strikingly described by a quotation from its European organ, the London Economist."53 In two passages of Manuscript II to the second book of "Capital", which probably originated approximately with the present excerpts, Marx, however, no longer connects such periodicals with the ideas and intentions of a particular class, but instead speaks, both times not without critical side-swipes, of the "organs of the money market"54 and "the professional authorities, the London 'Economist', the 'Money Market Review', etc."55 These "organs" thus personify the money market56 and give voice to its mind, spirit, and imagination; in this sense Marx, while working on the present excerpts, expressed himself in a letter: "The 'Money Market Review' simply reflects the mind of the Money Market." 57 In his excerpts, Marx also calls both periodicals "the oracle" ("London. 1868", p. 14) and "oracle of the Money Market" ("1868", p. 35), respectively. The organs of the money market are thus, to a certain extent, the speaking place and the medium through which the fata recorded in the "stock exchange quotations"58 - that is, the divine sayings, destinies, and fates mediated by the 'higher instance' of the money market - experience their enigmatic proclamation and revelation.
33
Although it is unknown whether Marx, when he resumed his studies on the theory of credit in 1868, consciously intended to refer to a second organ of the money market-and deliberately to the Money Market Review-he evidently derived great benefit from his study of that journal. A number of reasons can be identified for Marx's excerpting so extensively from a second source altogether, and from this one in particular. In the "London notebooks" Marx came to appreciate in particular James Wilson, the founder of the "Economist" and its editor-in-chief until 1857. "Der Herr Economist"59 had been a bitter opponent of David Ricardo's theory of money and the "Currency School" based on it around Samuel Jones Loyd (alias Lord Overstone), Robert Torrens, George Warde Norman and William Clay. Along with Thomas Tooke, John Fullarton and James William Gilbart, Wilson is today regarded as a representative of the so-called "Banking School," a current of thought on monetary policy that opposes the "Currency School" in many respects. Ricardo and the representatives of the "Currency Principle" who referred to him were adherents of the quantity theory of money, which assumes, among other things, that the quantity of money in circulation determines the prices of goods. But since in every economic crisis prices fall abruptly, and thus it may seem that they were simply 'too high' beforehand, in the eyes of the "Currency School" one must limit the issuance of money in order to stop in this way the inflationary, crisis-triggering rise in prices.60 The monetary policy assumptions of the "Currency School" found an implementation in the "Bank Act" of 1844, by which the banknote issue of the Bank of England was to be legally linked to its gold reserves and thus the recurrence of economic crises was to be prevented. While James Wilson was a radical advocate of global free trade and the abolition of the agrarian protectionist Corn Laws, he was also a vehement critic of that other great Peel reform project, the Bank Act of 1844, which he, following Tooke and Fullarton, as an arbitrary way of regulating the Bank of England, which would have to unnecessarily aggravate every economic crisis, since this law would artificially tighten the supply of money, which was already in panic demand in every crisis. Marx appreciated the "Banking School's" detailed critique of the "Bank Act" in the "London Hefte 1850-1853,"61 although in the 1865 draft of the credit chapter he also noted that it is "as well admitted by Tooke as by Loyd" that in crises "the greatest sacrifices of real wealth are necessary to maintain the metal base" and that the "dispute" between the two schools "is only about a plus or minus and the more or less rational treatment of the inevitable"62 turns.
34
Wilson, however, had died of dysentery in 1860 at the age of 55 in India - where he was commissioned by Queen Victoria to reform the fiscal, monetary and financial system - and the other representatives of the "Banking School" were also long gone by 1868. Fullarton, whom Marx called "the best economists"63 counted had already died in 1849, Tooke - for Marx "the last English oekonomist of any value"64 - in 1858 and Gilbart in 1863. Thus, not only could Marx no longer rely on the business cycle and money market analysts of the "Banking School" whom he valued in understanding the economic developments of the 1860s and the crisis of 1866, but in the meantime the quality of the "Economist" had also become questionable in his eyes. After an interlude by Richard Holt Hutton (between 1857 and 1861), Walter Bagehot, Wilson's son-in-law, took over as editor-in-chief from 1861. Marx therefore frequently excerpts Bagehot's editorials in the present issues, which, like the vast majority of articles in the "Economist," appeared anonymously.65 Without his name being mentioned once, Bagehot is thus one of the most excerpted authors of the present issues.66 Under his editorship, a significant change in the orientation of the "Economist" took place, as he, unlike Wilson, adopted an ambivalent attitude toward the "Bank Act." Following Wilson, Bagehot also maintained that the Bank Act must aggravate every crisis, as Marx excerpts: "The provisions of Peel's Act aggravate alarm. They cause panic where there would have been merely fear." ("London. 1868," p. 53. ) But at the same time, Bagehot assumed that the Bank Act would help concentrate and increase a national reserve of money in the Bank of England, in that its provisions would require the Bank of England to defend its gold hoard by a policy of restriction (increasing its discount rate) in the event of a "drain of bullion"; Marx summarizes Bagehot's position as follows: "Know nothing good to say of the Act but that by timely increase of the rate of interest from 1861-66 we kept sufficient bullion. " (Ibid, p. 84.) Bagehot therefore argued not for abolition but for modification of the Bank Act. At the height of the Panic of 1866, he called in The Economist, May 12, for the inclusion of an "expansive clause," or "crisis clause," in the Bank Act, which would give the government the power, in states of commercial emergency, to legally suspend the Act to allow the Bank of England to pursue an expansive monetary policy.67 In his excerpts from this article, Marx does not at first note this proposal, but later records the detailed criticism which the "Money Market Review" made of it: "Economist, under J. Wilson,68 antagonist of the Bank Act. Then, it 'ratted', became its supporter. Latterly, again backsliding. [...] demands expansive clause (so that minister Chancellor of Exchequer by law can suspend it). Wants, therefore, partial abrogation of the Act." (Ibid, p. 247.) For Marx, this ambiguity seems to have been unforgivable. He counters in his excerpts from an "Economist" article by Bagehot that, according to Bagehot's own account, in the crises of 1847 and 1857 the Bank of England's reserve had been empty despite the 1844 Act: "The main use of the law is that it compels the Bank to act at an early stage during a foreign drain of bullion ... But, the ass says himself: the Banking department was bare in 1857 and 1847, before they had aroused themselves to act as they ought, and then, yes, Act of 1844 existed! " (Ibid, p. 62. Editorial underlining here of Marx's additions.)
35
Bagehot's departure from a clear critique of the "Currency Principle" is not the only reason for Marx's dissatisfaction with the "Economist" in the present excerpts. While the Money Market Review consistently reported from the point of view of shareholders and investors, and in this way perhaps embodied the rationality of the money market more purely, the somewhat more 'political' Economist was more concerned with the administration and management of joint-stock companies. For example, the Economist argued that even the defrauded shareholders of Overend, Gurney and Company should pay for the bank's liabilities (see "London. 1868," pp. 100 & 109). In his 1865 draft of the credit chapter, Marx considered it a characteristic of joint-stock companies that, by their form, they separate ownership of the means of production from its management, making the functionaries of capital mere managers and administrators of an enterprise that does not belong to them, whereas the owners of capital cede control of the production process to the administrators, directors, and officers ("managers").69 To a certain extent, the separation of ownership and management of a business corresponds to the contrary positions of the "Money Market Review" and the "Economist," each of which tends to occupy one side of this opposition, which had found a spread of new proportions in the 1860s.
36
Moreover, in Marx's eyes, the "Economist" kept an extremely close distance from the goings-on in the English money market in the City of London and defended, for example, the "bears," speculation on falling stock prices through short selling, as a legitimate means of exposing unsound companies. The fact that the Economist approached the Bank Act, defended short selling, and took sides against the shareholders of Overend, Gurney and Company may have been reasons for Marx not to trust this 'uncritical' source alone, but also to reach for the Money Market Review, which took the opposite view on all these issues. When the "Economist" at one point also polemicizes against trade unions, Marx blurts out: "what foolery!", "Perfection as profit-producing machines for the capitalist!" - and he insults the paper as "a City sycophant like the Economist" ("London. 1868," p. 128). From the 1866/1867 volumes of both journals Marx still excerpts more or less to the same extent, but from the 1868 volumes he makes about twice as many excerpts from the "Money Market Review" as from the "Economist."70
37
The "Money Market Review" seems to have Marx in particular once critically in mind,71 namely when it almost fanatically takes sides with the Council of Foreign Bondholders, a forum of private British lenders to coordinate their dealings with foreign debtors, founded in 1868 in view of the increase in importance of foreign bonds after the crisis of 1866. Marx summarizes the position of the Council of Foreign Bondholders' proponents to act against defaulting governments in his own words: "Main joke [...] that the English government should intervene against Venezuela (the government there had leased certain tariffs to the English capitalists). [...] And the Money Market Review says: [...] if a foreign state, as a state, contracts to pay a British subject, the latter has an undoubted right to the assistance of his Gvt., in enforcing the performance of that contract." ("1869 I Issue," p. 38.) In its defense of shareholders and investors, the Money Market Review, which merely brought up the rationality of the money market, went so far as to encourage the British state to intervene, even by military means, to ensure that foreign debtors would meet obligations to their British creditors.
38
As a rule, Marx excerpts the two periodicals year by year in chronological order, issue by issue. He structures his excerpts by noting first the heading of the volume, then of an issue, and then of an article from that issue.72 First, he thus goes through the 1866/1867 volumes of the "Economist" in the issue "London. 1868" and subsequently prepares a content index to his excerpts. Then he proceeds in the same way with the 1866/1867 volumes of the "Money Market Review," for which he also creates a contents index in the same issue. In issue "1868," Marx continues these excerpts from the 1866/1867 volumes of the "Money Market Review," and in "1869 I Issue" he creates excerpts from the 1868 volume, this time first of the "Money Market Review," then of the "Economist.
39
In addition to the excerpts from the articles, in the second and third issues Marx creates a collection of material on the movement of the money market from 1866 to 1868, which he publishes in the issue "1868" from the first week after the crisis of 1866 to the end of 1867 under the headings "Money Market. 1866. from May 16 (Bank of England)" and "Bank of England and Moneymarket. 1867" and continues for 1868 at the beginning of the third issue "1869 I issue." Here he does not simply excerpt from an article, but compiles various data, descriptions, and analyses of the money market using indicators such as Bank of England balance sheets, stock price trends, bankruptcies, and international movements of gold. He arranges the material by week. In this collection of material, Marx records for the period from May 16, 1866, to December 23, 1868, in large tables, on the one hand, the weekly reports ("returns") of the Bank of England, the volume of transactions at the London Clearing House, data from the weekly reports of the Banque de France, and, on the other hand, detailed comments on the important developments of the week. This collection of material thus exhibits a higher degree of independent editing by Marx compared to the excerpts from the articles, which is also evident, for example, in the fact that Marx, unlike in the excerpts from the articles, generally refrains from citing sources in his collection of material. Although almost all of the information was printed in the Money Market Review, Marx does not simply take ready-made tables from the journal, but creates them himself and fills them in with selected information from the journal. He also frequently compiles information and material from several sections of the "Money Market Review," such as "The Money Market," "The Stock Markets," and "City Article."73 which are located in various places in the issue. It is also noteworthy that Marx systematically transfers an entirely new statistic: the volume, measured in pounds sterling, of daily clearings for each day between May 2, 1867, and December 23, 1868, of the London Clearing House. The Clearing House was an interbank clearing house in London's Lombard Street where mutual liabilities of banks were set off against each other; this facilitated payments with bills of exchange and bank bills.74 The Clearing House first published these statistics on the volume of daily clearing - at the suggestion of John Lubbock, a banker and later theorist of the emergence of "civilization" - on May 9, 186775 and from then on weekly (see "London. 1868", pp. 122 u. 131). Marx thus excerpts the data from the first day of their publication and, in addition, often the statements of The Money Market Review for days with particularly high or low clearing volumes.
40
In his systematic compilation of the materials on the movement of the money market after the crisis of 1866 up to the present moment, Marx in each case first brings together various selected data in tables of his own; following this, he excerpts the assessments of the weekly events under headings such as "Notices to Moneymarket" and "Notes to Movement of Money Market," although these headings are not taken from the journal but come from himself. Again and again, Marx addresses supposed anomalies and peculiarities of money market phenomena. He appreciated Thomas Tooke for starting undogmatically from the phenomena themselves in money market questions: "Tooke derives his principles not from any theory, but from conscientious analysis of the history of commodity prices from 1793 to 1856."76 Conversely, he criticized David Ricardo for his "false dogma" - later taken up by the "Currency School" - that an unfavorable balance of trade is always due to a debased currency as a result of its excessive quantity in circulation.77 Ricardo and his followers tended to attribute all phenomena unilaterally to the excessive issue of paper money.78 For instance, he finds that in John Leslie Foster's "Essay on the Principle of Commercial Exchanges" of 1804 "the Ricardian theory is fully developed, u. better than in Ricardo - on money, exchange rate, etc"79 The first part of this article is a discussion of the "Currency Principle" in the context of the "Currency Principle", which can even be literally proven to have been applied to the issue of banknotes, as later conceived by Lord Overstone. As expected, Marx criticizes Foster for being able to grasp the facts only by means of a preconceived theory - David Hume's quantity theory of money - and thus having to distort the real connections: "The examples Foster always gives [...] show nothing but how preconceived theory clouds the head and obscures the facts." ("Heft II. 1869," p. 50.) Foster's remarks demonstrate "[w]hat all facts twist, in the head of the currency principle Besessnen" (ibid., p. 38).
41
Like Tooke, Marx devotes himself to a conscientious analysis of the phenomena of the money market in the present issues. While he will have recognized a certain regularity in the movement of the money market, nevertheless, as in the industrial cycle between the crises of 1847 and 1857, some phenomena were novel, others unusual at least in their dimension. For instance, the Cotton Famine represented a disruption of the ordinary course of credit and trade relations between Great Britain and the United States and contributed to the fact that, unlike in 1857, the crisis of 1866, in the absence of economic interdependence, did not become a transatlantic experience and did not reach the United States. But the "greenback" currency issued in the United States during the American Civil War also led to some 'anomalies', which Marx read about mainly in the "Economist" and Goschen.80 Moreover, the period of high interest rates was particularly long during the monetary crisis of 1866, and during this period, to the surprise of English commentators in particular, there was a large difference in discount rates between the Bank of England and the Banque de France: while the Bank of England jacked up its discount rate to 10% during the crisis and held it there for an exceptionally long 14 weeks, the Banque de France was able to leave its at 4% and lower during this period. This fact was an indication that France was hardly hit by the monetary crisis, and caused plenty of discussion among the English public, where there was talk of a European "run upon England". In many theories of foreign trade and exchange rates, the prevailing view was that interest rate differentials between London and Paris tended to equalize and could never be particularly large. Marx also notes this view in his excerpts from Goschen's "The Theory of the Foreign Exchanges" and makes brief critical remarks on it ("1869 I Heft," pp. 106 u. 108). At the same time, gold was pouring in from the United States during this period, and the "Economist" suggested that this was possible precisely because of the "greenback" currency there, that is, the unbacked paper money in circulation ("London. 1868," p. 79). This analysis motivated Marx to write a lengthy note on monetary systems and the role of state banks (ibid., pp. 79/80).
42
Finally, the crisis was followed by a period of low interest rates of unknown length. Marx had already found out in the manuscript of the third book of Capital that "at the beginning of the industrial cycle," in the phase of economic stagnation, "the low rate of interest is coincident with contraction [...] of productive capital."81 Typically, according to Marx, the low interest rate in stagnation thus expresses that overproduced, devaluing capital is reflected in an excess mass of lendable capital in the credit system, which no longer throws itself on the accustomed spheres, but looks for new spheres of investment, respectively, because of the lack of spheres of investment, accumulates in the credit system, in the banks and money dealers. But a Bank of England discount rate of 2% had existed only twice in the recent past: In 1852, after the gold discoveries in California and Australia, for 37 weeks during general prosperity, and for 14 weeks in 1862, when there was a large importation of gold from the United States because of the crisis in the English cotton industry caused by the cotton famine, because imports of British industrial goods there could no longer be paid for with raw cotton ("1868," p. 56). While these phases lasted only 37 and 14 weeks, respectively, as Marx accurately notes (ibid., pp. 48/49), the Bank of England now began to increase its discount rate only after 69 weeks in November 1868 ("1869 I issue," p. 17). In 1867, the Bank of England at the same time accumulated enormous gold reserves, which Marx also understood as a typical expression of the periodic alternating case of stagnation,82 even if they assumed a historically unique size in 1867 ("1868," p. 37). Thus, in the three years following the crisis of 1866, something like a record depression occurred in England.
43
It is clear that Marx creates his collection of materials on the money market of 1866 to 1868 in order to gain an understanding of what was going on and an explanation of the peculiarities that were evident before, during, and after the crisis of 1866. No use of this collection of material by Marx in other writings or letters can be determined. He probably did not assume that the peculiarities of the observed phase were so great that general conclusions could not be drawn from them. He wrote to Engels more than four years later, "I have here communicated to Moore a story with which I have privately dallied for a long time. He believes, however, that the matter is insoluble, or at least, because of the many factors involved, most of which have yet to be determined, it is insoluble pro tempore. The thing is this: You know the tables in which prices, discount rates, etc., are shown in their movement during the year in ascending and descending zigzags. I have tried various times - for the analysis of crises - to calculate these ups and downs as irregular curves and believed (I still believe that it is possible with sufficiently dense material) to determine mathematically from them the main laws of crises. Moore, as I said, considers the matter unthubable for the time being, and I have decided, for the time being, to give it up."83 Possibly the collection of material on the money market of the years 1866 to 1868 was intended to provide the data basis for such mathematical determinations of the "main laws of crises." However, Marx does not perform any calculations in the present notebooks.
44
Although at first the crisis of 1866 seemed "premature" and not particularly "important" to Marx, its exploration nevertheless forms one of his main activities in the present excerpt notebooks. In three of the total of four content registers that Marx prepares for his excerpts from the two organs of the money market, the crisis of 1866 is listed as a second bullet point. These indexes, which Marx himself calls "registers" and "content registers," he prepares immediately after each of the excerpts of a volume: in the booklet "London. 1868" an index to the excerpts from the 1866/1867 volumes of the "Economist" and one to the excerpts from the 1866/1867 volumes of the "Money Market Review"; in the "1868" issue an index to the continued excerpts from the 1866/1867 volumes of the "Money Market Review"; and in "1869 I issue" an index to the excerpts from the 1868 volumes of both periodicals. In these contents indexes, Marx does not simply reproduce the chronology of the issue pages, as would be usual for a table of contents, but arranges his extensive excerpts by bullet point and thematically under headings. He provides the entries in the table of contents with the page numbers of the booklets paginated by himself, on which the noted excerpts are located. The indexes are therefore not tables of contents, but rather subject overviews or a kind of subject index that were created with great effort. The first item in the contents indexes is usually the movement on the money market, the second item usually the crisis of 1866.84 Probably because the crisis was after all longer and more intense than Marx first suspected, and probably because of its special character as a financial crisis, he excerpts extensively on the origin, characteristics, and course of the crisis and the period of economic stagnation that followed it.
45
As noted, the "Black Friday" of May 11, 1866, was triggered by the bankruptcy of the Overend, Gurney and Company bank a day earlier. The crisis of 1866 was the first of the 19th century to break out in the spring rather than the fall ("London. 1868," p. 101).85 As a result of the Overend bankruptcy, a whole series of banks, joint-stock, finance, and railroad companies went bankrupt, which is also evident in Marx's content registers:86 among others, the English Joint Stock Bank, the European Bank, the Bank of London, the Consolidated Bank, and the Agra and Masterman's Bank. By August 10, 1866, 180 houses in the City of London had gone bust.87 Because the crisis did not originate in commerce, but in the sphere of the stock exchange, banks, and finance, it hardly spread outside England, for financial interdependence assumed only minor international proportions in the 1860s, unlike a decade earlier. The contagion did not reach the United States or France (see ibid., pp. 64 and 78/79). In the excerpts from commercial reports in the summer of 1868, Marx therefore twice referred to the events in his own words as the "English crisis of 1866."88 Nevertheless, "repercussions" ("Reactions") of this English crisis on other countries were to be noted: on India, which was more closely connected with the English financial system and where trade with England had suddenly intensified during the "Cotton Famine", but also on China and Brazil.89
46
The crisis took its cue from the Bank of England's October 1865 increase in the discount rate from 3.5% to 7%, which abruptly worsened refinancing conditions, triggering a wave of bankruptcies. At the end of the fifth chapter on interest-bearing capital of the manuscript for the third book of "Capital," completed in October 1865, Marx had noted this jarring increase.90 He also excerpted about it in excerpts from a "Daily News" article in the "Großheft 1865/1866" of the "Hefte zur Agrikultur", written shortly after.91 The increase in interest rates was not because of an outflow of gold abroad, but, according to Marx, "because of internal drain"92, i.e. growing internal demand for notes and coins. At the beginning of 1866, the Bank of England's discount rate stood at 8%, which Marx records in the first sentence of the present notebooks: "Bankrate at 8%." ("London. 1868," p. 1.) More bankruptcies of railroad contractors occurred in early February (ibid., p. 14), and while the Bank of England discount rate was lowered to 7% in late February 1866 (ibid., p. 23) and to 6% in mid-March (ibid., p. 34), the stock prices fell for British financial companies such as the London Financial Association, the Imperial Mercantile Credit Association, and the Joint Stock Discount Company (ibid., p. 11), which ran into trouble in March, (ibid., p. 32). In April, Barned's Banking Company stopped paying, leaving extensive liabilities (ibid., p. 46), which led to further stock price declines. The Economist noted as early as January 20, 1866, that 72% of limited liability company shares represented a loss of principal to the original subscribers to the capital stock, but nevertheless did not want to believe that such a large proportion of securities could be worthless, which Marx commented on derisively: "So 72% of these limited liability cos' shares entailed loss of principal upon the original subscribers at par, or their representatives, the succeeding proprietors. But still not so large proportion 'valueless or even unsound!' By no means, dear me!" (Ibid., p. 6.)
47
As he traces the chain of events that culminated in the crisis, Marx finds pleasure in recording the many unfulfilled "prophecies" - again, a religious metaphor - of the "Economist," whom he repeatedly referred to as a "wiseacre," about the further course of the 1866 economic year. He collects a whole series of false predictions made by the "Economist" before the crisis, according to which 1866 would be a quiet year. In the very second excerpt, he notes from the Economist article "What The Value of Money in 1866 is Likely to Be": "Under this heading, the wiseacre discovers: 1) That since the free trade, decrease in one market, expansion in the other compensate each other. [...] 2) Our system of credit is better than it used to be. The bank [...] did not know the secret of holding on to bullion by increasing the interest rate." ("London. 1868," p. 1.) Marx notes the prediction of the "Economist" that there would be no crisis in 1866, with partial double underlining: "But, now there is no reason to fear the least diminution of credit. ... As far as our credit goes, we may expect 1866 to be a normal year." (Ibid.) Even in the face of the first corporate bankruptcies at the beginning of the year, "the oracle" (ibid., p. 14) remained optimistic (ibid., pp. 6, 11, 14 u. 46). Marx refers to the prophecy of the "Economist" of April 21, 1866, that such bankruptcies 'nowadays' would no longer result in greater contagion than "the ruling stupidity in the head of the Economist" (ibid., p. 46). When Bagehot asked the rhetorical question in the May 12, 1866, issue, at the height of the panic - "despite his constant prophecy of the opposite!" (ibid., p. 53), as Marx reminds him - "if there ever was a collapse of credit more diffused and more complete," he added at the same time: "As to the general state of the trade of the country, we have no doubt of its substantial soundness." (Ibid.) Marx congratulates this ironically in his excerpts with a "Hurrah!" and probably thereupon writes in Manuscript II to the second book of "Capital": "We experience [...] periodically at every crisis, the standing recurrence of the insurance phrase in parliamentary speeches, in the organs of the money market, etc., that production was sound (healthy), but has suddenly become 'unsound' (unhealthy) through various coincidences and trade adventures."93.
48
Just as the crisis was not preceded by a large external outflow of precious metals, there was uncharacteristically no special demand for gold in the money crisis, but there was for Bank of England bills. Marx therefore added already in the first volume of "Capital" that the "manifestation of money" demanded in a money crisis is "indifferent": "The money hunger emergency remains the same whether it is to be paid in gold or credit money, bank bills, for instance."94 A peculiarity of the crisis of 1866 thus consisted in a great discrepancy between the hardly diminished precious metals ("bullion") in the Bank of England and its considerably shrunken banknotes in reserve. On the other hand, the tendency, already visible in the crisis of 1857 but absent in 1847, of an increase in the Bank of England's "Other Securities" or "Private Securities" section during the first week of the crisis, which Marx records in several places (for example, issue "1868," p. 1a), was confirmed. This increase indicates that, unlike in 1847, the Bank of England issued bills against securities during the 1866 crisis.95 For this reason, at the height of the 1866 crisis, its reserve shrank to what the "Economist" called the "childish" level of 800,000 pounds sterling ("London. 1868," p. 61), so that for a moment the Bank of England itself stopped lending against British government bonds (ibid., p. 56). After the panic, active banknote circulation thus increased: "Overends failed on Friday Evening [...], and by the next Friday the active circulation had increased by 3,776,000l." (Ibid., p. 98.) As Marx excerpts, notes in amounts over 20 pounds sterling were predominantly demanded, indicating that these notes had been in demand primarily for deposits of other major banks rather than for circulation in the English provinces (ibid.). Thus, because there was hardly any demand for gold in this crisis, but primarily for Bank of England bills, the "Economist" characterized the crisis as a "credit panic," to be distinguished from a "capital panic" as in 1847 and a "bullion panic" as in 1857 (ibid., p. 56). Marx also calls the crisis a "banking crisis" in his own words at one point (ibid., p. 67), where the source says "credit crisis." He thus specifies the crisis as a banking crisis.96
49
It is not only in his excerpts that Marx documents the special role that the Bank of England already then played in a crisis. Already in the manuscript of the third book of "Capital" he wrote that "[t]he whole artificial system of forcible expansion of the reproduction process [...] cannot, of course, be cured by a bank (the Bank of England, for example) giving all swindlers the capital they lack in paper",97 but also recognized "that as long as the credit of a bank is not shaken, it alleviates the panic by increasing the credit money [...] and increases it by contraction".98 To Collet Dobson Collet, while working on the present notebooks, writes: "In another article, Times rails at the 'distressed' London bankers 'begging' assistance from the B.o.E. (that is to say, asking for their own deposits)."99 In the longer note on monetary systems, Marx also notes that, just as banking in general is "dealing in other people's money," a state bank also has no capital: "The Banks of England and France have jezt in fact no disposable capital. It is entirely pumped into the state. Their capital is therefore mere credit that the public gives to the state and has nothing to do with their business. They have promissory bills on the state." ("London. 1868," p. 79.) In this note, Marx thinks of the state banks as formally independent of the government, but also materially dependent on the state and its finances: The state "can therefore discount or borrow from the state bank only so far as it gives it security, transfers its revenues to it (as with the B. o. England), etc." (Ibid.) As long as the state supports the Bank of England, Marx thought, the latter can borrow abundantly and thus alleviate the panic.
50
But with the Bank Act of 1844, England had imposed on itself an artificial block on the multiplication of credit money. Thus, in the crisis of 1866, at the height of the panic on May 11, 1866, the Bank Act had to be suspended for the third time after the crises of 1847 and 1857. After Marx had studied the theoretical foundations of the "Bank Act" in detail for the first time in the "London Notebooks" and also the arguments of the critics Fullarton, Tooke and Wilson, he counted this law in his first criticism of it in 1851 among the "crazy[n] interferences of state power" which "can aggravate the present crise, as in 1847."100 In the next crisis of 1857, he consequently correctly predicted in the "New-York Tribune" the renewed suspension of this law.101 And also in the present excerpts Marx writes about the "Bank Act" that it is "not an effect of the nature of things. Quite the contrary" ("1869 I Heft", p. 105). Although this time, unlike in 1857, there was no over-issuance of banknotes beyond the legal limit imposed by the Bank Act, and the Bank Act was merely suspended but not infringed, the 14-week discount rate of 10% drew the displeasure of the commercial world and triggered new discussions about this law among the English public. Marx informs himself of many positions in the current debate. The question at issue was whether the national money reserve should be concentrated in a government-owned bank with a public mission or whether it should be distributed among several banks. A majority of commentators favored the crisis clause in the Bank Act proposed by Bagehot ("London. 1868," pp. 247/248).
51
It also caused irritation among commentators that this time, contrary to previous experience and contrary to the prevailing theory of exchange rates, the increase in interest rates could not reach an immediate import of gold from the European continent. Marx notes, "this time no such magnetism." ("London. 1868," p. 89.) On the contrary, despite the high interest rates, even gold flowed out of England to the European continent, for which the formula "run upon England" (ibid., p. 87) was found, which Marx also takes up (ibid., p. 67). To Collet Dobson Collet, Marx confirmed that the suspension of the Bank Act and the high interest rate of 10% acted as an alarm signal to foreign countries that England's economic situation was bad: "The Bank maintained the 10% minimum rate of discount for more than 3 months. This rate was regarded by Europe as a danger signal."102 In a longer commentary, he criticizes the "Bank Act" as a means for the Bank of England to profit from the general emergency: "They acted very prudently - for their own pockets!" (Ibid., p. 78.)
52
In his excerpts, Marx does not see the Bank Act as the only means of unnecessarily exacerbating the crisis through mishandling. A misleading letter from George Villiers, the Earl of Clarendon, Secretary of State, dated May 12, 1866, which sought to assure foreign countries that the suspension of the Bank Act did not mean the bankruptcy of the Bank of England or the abolition of the convertibility of the pound note into gold, and that there was generally no reason to panic, further exacerbated the stigma, for given the first drafting of such a letter, foreign countries became all the more wary (ibid., pp. 62 & 91). Marx saw the outflow of gold from England to the continent as being caused solely by Clarendon's letter, despite the English discount rate of 10%: "Such a thing was quite unheard of in the annals of English commercial history. Gold was shipped from London to France, while, simultaneously, the official minimum rate of discount was 10% in London and 31/2 to 3% at Paris. This proves that the withdrawal of gold was no regular 'commercial' transaction. It was simply the effect of Clarendon's letter."103
53
Also on the bankruptcy of the Consolidated Bank, Marx writes in summary in his own words, "foolish through the stupidity of some directors, who out of panic, without any reason, closed the doors to the public on their own hand" (ibid., p. 67). Finally, under the heading "The Times and the Panic," he excerpts various reports on the misleading and potentially crisis-exacerbating reporting of the daily newspaper "The Times" during the crisis of 1866, which, according to the "Money Market Review," had, among other things, spread the false news that even the suspension of the "Bank Act" had not been able to calm the panic in the City of London. To Collet, Marx writes: "I have not yet touched upon a most important point, - the influence which [...] a paper like the Times would be able to exercise in bringing about the catastrophe."104 Already from the "Economist" Marx excerpts in the present issue that the "Times" simply printed a false report that had been sent to it by telegram: "Telegrams further (falsity) of outbreak of war to Times, and next day all over the world that a great Bank had failed."(Ibid., p. 70.) Indeed, overseas banks were falling by telegram at the time: the Indian branches of Agra and Masterman's Bank in Calcutta and Bombay suffered deposit withdrawals after news arrived via the telegraph that the London headquarters of this great Indian bank had been forced to close its doors after a severe run-up, as Marx excerpts with marginal notes (ibid., pp. 69/70). The bankruptcy of this bank had significant repercussions for India: "Its collapse almost a national misfortune. It will carry poverty and sorrow to hearts of 100nds of men and women, who [...] had entrusted all to this institution."(Ibid., p. 70.) About the communication medium of the telegraph, Marx critically excerpts: "The telegraph the most enormous machine for the diffusion for rumour for all the agencies at work in the panic." (Ibid.)105
54
That the extreme tightness and fragility of the money market during a panic provides a scope for manipulation, political intrigue,106 and opening a kind of financial war, Marx discussed in detail in his three letters to Collet Dobson Collet of November 1868, which became known only a few years ago and in which he made extensive use of the available excerpts on the course of the crisis. The first of these letters is dated November 2, 1868, and later resulted in the article "How Mr. Gladstone's Bank Letter of 1866 Procured a Loan of Six Millions for Russia," which appeared in the London Diplomatic Review on December 2, 1868, of which Collet was editor.107 Marx argued here "that Peel's Bank Act v. 1844 enabled the Russian government, under certain conjunctures of the money-market, to force the B.o.E. to bankerutt."108
55
While Marx considered low interest rates and the accumulation of lendable capital in banks as a characteristic of periods of stagnation, he suggested to Collet that the Bank Act was partly responsible for the extreme manifestation of these phenomena in the years 1866 to 1868: "The 10% minimum rate of discount having thus been kept up for more than 3 months, there followed the inevitable reaction. From 10% the minimum rate receded by quick steps to 2%, which is still the official bankrate."109 Thus, during the period of stagnation, foreign government bonds and colonial bonds began to flourish (see "1868," p. 21) and British foreign investment regained greater importance, as the redacted article version of Marx's letter to Collet of November 2, 1868, in the Diplomatic Review of December 2, 1868, also states, "all English securities, railway shares, bank shares, mining shares, every sort of home investment, had become utterly depreciated, and was anxiously shunned. Even the Consols declined. [...] Then the hour had struck for Foreign Investments. Foreign Government Loans were contracted, under the most facile conditions, on the London market."110 Therefore, according to Marx, Russia could find buyers for a loan on the London money market, and he concludes to Collet that the Russian government, by withdrawing funds from the English money market during an economic crisis, could bring about the bankruptcy of the Bank of England: "The bankruptcy of the B. o. Engld might then have been enforced by a telegram from St. Petersburgh."111 To Engels, Marx distanced himself from this argumentation, but nevertheless insisted that "the thing is right within certain limits".112
56
In his excerpts on the comparatively long and deep period of stagnation that followed the crisis of 1866, Marx finds confirmation of this connection when the Money Market Review used a statistical comparison to demonstrate that the Bank of England kept raising its discount rate for longer and longer periods of time in the crises after 1844, adding that the higher the rate had been before, the lower it would have to fall and the longer it would have to remain at that low level ("1869 I Heft," p. 50). Marx excerpts several articles on the "Causes of Depression" ("London. 1868," pp. 131/132 u. 133) and the "Aftermath" ("1869 I Heft," p. 87) and "Nachwehn" (ibid., p. 31) of the crisis of 1866.113 In the Economist, Bagehot cited three reasons for the stagnation: First, since the crisis, demand had fallen in almost all sectors; second, due to the enormous number of ventures established during the "Extension Mania" phase of 1863 to 1865, much of the capital laid out was fixed ("locked up") and now yielded no income at all, so that nine-tenths of all joint-stock companies established between 1861 and 1865 and fed with enormous sums "have failed to make any profit, and, too, incurred losses so great as to extinguish most of the capital" ("London. 1868," p. 132);114 third, the cotton industry had overproduced in 1866/1867 (ibid., p. 133).115 The cotton industry was admittedly less affected by the crisis of 1866, because it had already been paralyzed before, because of the "Cotton Famine"116 to manifest overproduction in the cotton industry, however, occurred after the crisis, when the ordinary supply of cotton from the United States was restored with the end of the American Civil War.117 Marx examines in detail the period of stagnation that lasted until the end of 1869 in "1869 I Heft," where he notes his excerpts under the bullet point "2) Crisis of 1866 and Aftermath" of his index of contents. In 1868/1869, his daughter Jenny also collects articles from various newspapers such as "The Daily News" and "Reynolds's Newspaper" on the state of the economy at the time, among other things, and pastes many articles on the stagnation into the "Trade and Finance 1868" booklet.
The denunciation of the swindle
57
As noted, Marx had already indicated in April 1868 that the "interesting thing" about banking and stock exchange operations in his eyes was "the practice, not the theory," but about the time he was completing the first issue, "London. 1868," he more decisively informed Engels on November 14, 1868, of his intentions for the credit chapter: "Since the 2nd volume grossentheils too much theoretical, I shall use the chapter on credit for actuel denunciation of swindling & commercial morals."118 This statement is certainly a key to understanding the present excerpts. Evidently encouraged by the telling coverage from the "Economist" and especially the "Money Market Review," Marx wanted to enrich the new version of his credit chapter with up-to-date material and a specific critique.
58
The term "Commercial Morality" was frequently used in the "Money Market Review" to criticize the fraudulent operations of the City of London: it first appears in Marx's excerpts on p. 237 of the issue "London. 1868" and is subsequently used more frequently in the headings of the excerpts. At one point, Marx succinctly excerpts the "Money Market Review's" criticism of the daily newspaper "The Times": "Fraudulent concealment and wilful and deliberate misrepresentation, for the purpose of taking the public in, if the public could not be taken in without them, are, according to the Times, neither legal crimes nor moral offences, but fair and allowable mercantile transactions. That is the orthodox commercial morality of the Times." ("London. 1868," p. 242/243.) Thus, "commercial morals" are about a certain normativity of bourgeois society that tends toward selfishness, ruthlessness, insincerity, and an incapacity for prudence and foresight. In this sense, Marx already remarked in the first volume of "Capital": "Capital [...] is determined in its practical movement by the prospect of future rottenness of mankind [...] as little and as much as by the possible fall of the earth into the sun. In every stock swindle everyone knows that the storm must strike some day, but everyone hopes that it will strike the head of his neighbor after he himself has caught the shower of gold and brought it to safety. Après moi le déluge! is the election cry of every capitalist and every capitalist nation."119
59
Marx frequently used the term vertigo in the manuscripts for the second and third books of Capital, apparently attaching to it a double meaning. On the one hand, it denotes an intoxication or frenzy into which one involuntarily falls, possibly even against one's own will, if one wants to "make money" and perform the, according to Marx, conceptless form G-G': "All nations of capitalist mode of production are therefore periodically seized by a vertigo, wherein they want to perform money-making without the troublesome mediation of the production process."120 In the third chapter of the manuscript to the third book of "Capital" on the law of the tendential fall of the rate of profit, Marx assumed that when the rate of profit falls, capital becomes adventurous to raise the rate again: "The mass of small fragmented capitals therefore adventurous, speculation, credit swindle, stock swindle, crisis."121 Thus it is immanent to the entire credit system - and thus not due to the individual manipulation or the greed of individuals - to develop the "drive of the capitalist mode of production, enrichment through exploitation of other people's labor, into the purest and most colossal system of swindles and games"122 and especially with the stock system, "a whole system of swindling and fraud arises with reference to stock trading, their issue, etc."123 The second meaning of swindle involves operations beyond, or at least on the border of, the legal. From the "Money Market Review" Marx excerpts about this gray area: "The periodic recurrence of speculative manias, and their tendency to promote transactions either positively fraudulent or verging upon fraud, have become familiar historical facts." ("London. 1868," p. 256.) At one point Marx also speaks in his own words of the "so to speak criminal revelation" (ibid., p. 252) of commercial crises, i.e., the aspects of crises that become a case for criminal writers and the legal apparatus. Marx's interest in the "practice" of merchant, banker, and stock exchange life is thus directed not only at the precise techniques of accounting, bookkeeping, settling accounts, exchange trading, and speculation, but also at fraud and white-collar crime.
60
Particularly affected by the crisis were the railroad, stock, and finance companies in which the money capital released by the Cotton Famine was invested in the 1860s. Accordingly, Marx informs himself in detail about the finance companies and their role in railroad expansion in this issue. The "Economist" stated that in the "Railway Mania" of the 1840s, shareholders had still acquired their shares through their own savings ("London. 1868," p. 48), but that the boom in the 1860s was essentially made possible by "financing": through lending techniques such as "finance paper" (ibid., p. 49), "financial securities" (ibid., pp. 49 and 226) or "accommodation bills" (ibid., p. 177), with the help of which the lendable capital was increased. With their financing transactions, the finance companies mediated a widely ramified business network between various actors such as the directors of the railroad company, engineers and contractors. From the "Economist" Marx excerpts the claim, later disputed by him, that the verb "to finance" was invented only in 1864: "The year 1864 was remarkable for several things, and one of the most characteristic was the invention of a new verb. 'Finance' used to be a substantive only in English, but it then became a verb also " (ibid., p. 32).124 Details on "Financing" Marx excerpts on the example of the London, Chatham and Dover Railway Company, which got into turbulences at the end of July 1866. When this railroad company was already on the verge of bankruptcy in early 1866, it sold land to its contractor Samuel Morton Peto, and Peto received two large loans from the Imperial Mercantile Credit Association and General Credit and Finance Company with this land as 'security'. Marx notes, "These 2 Cos. were not to advance any actual money at all. They were to give their acceptance to bills to be drawn from time to time during a twelvemonth by 'firms or individuals resident on the Continent of Europe, and on that behalf approved by the Credit Cos.'; and the bills so drawn and accepted were to be handed to the borrowers 'for discount'." (Ibid., p. 177.) Peto thus received twelve-month bills accepted by the finance companies (at a 5% commission) drawn on persons on the Continent of Europe. It later turned out that neither the property Peto had been sold by the railroad company nor the drawees existed in Europe. Peto could in turn have such bills discounted in the City, for example at Overend, Gurney and Company, as long as the money market remained trouble-free.125 In the second edition of the first volume of "Capital", Marx related Peto to Bethel Henry Strousberg, who had a similar role as a railroad magnate during the Gründerzeit in the German Empire as Peto had a few years earlier in England.126
61
Marx wrote earlier that a tendency to financial instability is inherent in the credit and banking system, since it transforms all money income into capital and at the same time reduces the money reserve: "But it is precisely the development of the credit and banking system [...] that creates this sensibility of the whole machinery."127 However, the credit system only appears "as the main lever of overproduction", "because the process of reproduction, which is elastic by nature, is forced here to the utmost limit", also "because a large part of the social capital is used by the non-owners of the same, who therefore risk quite differently than the owner anxiously considering the limits of his private capital".128 One risky financial operation frequently mentioned in Marx's excerpts is "bearing." The "bears," as defined by the "Economist," "have sold the shares of some particular banks which they never owned, have depressed the price of those shares and have ruined the credit of the bank" ("London. 1868," p. 76). The term "bears" was thus used to describe stock market speculators who sell large quantities of shares that they do not own at the time of sale but undertake to deliver only later, and who in the meantime try to depress the price of the shares by, for example, spreading bad rumors about the stock companies, sometimes by using straw men and false reports. If they are successful, they gain the difference between the high price at which they sold the shares and the comparatively low price at which they later bought them, which they partly brought about themselves through their own machinations. The "bears" thus try to make profits by speculating on share price collapses or the bankruptcy of a bank. Because "bearing" was not unimportant to the outbreak of the crisis of 1866,129 later George Leeman, a member of the British House of Commons, submitted a proposal to regulate short selling. Leeman's bill proposed to prohibit the sale of non-owned bank shares and to record share ownership in registers (ibid., p. 76 & 123). The "Economist," meanwhile, defended "bearing" as a means of exposing unsound houses, and Marx criticized this defense in his own words, drawing on formulations from Heinrich Heine's poem "Anno 1829": "Very characteristic! An infamy always checked by a still worse infamy! Dieß ist satte Tugend und zahlungsfähige Moral." (Ibid., p. 76.)
62
It is true that Marx had already read about the "bears" earlier in the "London Hefte,"130 but in the draft for the chapter on interest-bearing capital of 1865 he did not mention them, nor did he mention the corporate principle of unlimited liability. However, it was precisely the new crisis that offered much illustrative material on its exact procedure and thus for Marx's earlier thesis that when "property [...] exists in the form of the share, [...] its movement itself, its transfer, [becomes] pure result of the stock exchange game, where the small fish is devoured by the sharks and the sheep by the loup garou."131 The "Money Market Review" reported much more critically than the "Economist" on short selling, drawing attention to the "Investors Losses from 'Bear' Frights" ("London. 1868", p. 190). Marx seems to have formulated a similar criticism when he wrote: "Incidentally, when the Economist says that no good concerns ruined by the bears, so massed private possessors of good securities frenzied into selling them." (Ibid., p. 76.) Also in a letter to Collet, he remarks about the crisis-exacerbating behavior of the "bears": "It is notorious that, during the Panic, an organized conspiracy of Bears was deliberately seizing upon, and exaggerating, every symptom of distress. Now, if our supposed Greek firm had at 2 o'clock forced two great Joint Stock Banks to suddenly withdraw a million of Notes from the B.o.E., and simultaneously, through the agency of a few Bears, alarmed the Stock Exchange by spreading this news, the Banking Department must have stopped payment within an hour."132
63
Marx's assessment of the economic scandal surrounding Overend, Gurney and Company, the banking house whose bankruptcy precipitated the crisis of 1866, is unequivocal. This old bill broker had been converted into a limited liability company in mid-1865, and soon after its bankruptcy on May 10, 1866, it came to light that old debts amounting to four million pounds sterling had been concealed in the prospectus of the new company when the firm was converted, which Marx at one point describes in his own words as "deliberate fraud upon the public" ("London. 1868," p. 74). The "Money Market Review" considered the events surrounding this company as "one of the most gigantic and unmitigated frauds ever recorded in our mercantile history" (ibid., p. 259). Marx, in his own words, calls the firm a "swindling concern" (ibid., p. 286). He documents several such cases of discrepancies ("misrepresentations") between either the articles of incorporation or the real situation of a company, on the one hand, and the actual situation of the company as presented in the prospectus available to the public, on the other: like Overend, Gurney and Company, Smith, Knight and Company was converted into a limited liability company because it was insolvent and wanted to pay off its lenders. In the case of Overend, Gurney and Company, moreover, the deficits of the old unlimited liability company were simply added to the assets on the balance sheet of the new company when it was converted into a limited liability company, as Marx excerpts: "All bad debts figured as assets 'to pay the liabilities transferred to the limited Co.' To the bad debts under the same headings still added by the limited liability Co." (Ibid., p. 224.) Some of the amounts recorded in the company's guarantee accounts also came from insolvent companies. In addition to these bad debts, which were transferred to the new company as assets, the old company had liabilities from rediscounted bills of exchange, loans granted, and guarantees amounting to nearly nine million pounds sterling, including many liquidity bills ("accommodation bills"), some of which had been created using straw men (ibid., pp. 225 & 233).
64
After the bankruptcy of Overend, Gurney and Company, the shareholders were supposed to pay for the company's losses. Because they had remained unaware of the fraudulent transactions, some shareholders refused to pay off the firm's debts and serve the firm's creditors (ibid., p. 100). When purchasing a share, it was not uncommon for shareholders to pay in only a portion of the nominal share value: a share with a nominal value of 20 pounds sterling was often subscribed for at only five pounds sterling, and the company could call in the difference (or a portion of it) at a later date. As noted, the Economist took the view that, despite the fraud, the shareholders had to repay the discount bank's liabilities (ibid., p. 109). This partisanship must probably be counted among the reasons Marx relied so extensively on the "Money Market Review," which clearly sided with the shareholders. It is precisely these extensive excerpts from the reporting of the "Money Market Review" as well as from a series of letters to the editor by an insider with the pseudonym "1915" to the journal that Marx lists under the heading "Commercial Morality" (ibid., pp. 258, 258/259, 259, 260 u. 263) and also collects in a content index under the same heading (ibid., p. 286). Inspired by the reporting of the "Money Market Review" and the letters to the editor of "1915," Marx provides a lengthy commentary on the events at Overend, Gurney and Company:
65
"The case was very simple. Under the Limited Liability Act of 1862, the creditor has no hold on the personal shareholder, but only on the corporate body, the Co. Now the shareholders - that was the question - said they were not members of this fraudulent Co, which originally consisted only of the 7 directors. The shareholders had not received any income, the creditors had already eaten their paid-in capital. The Co. was bankrupt, at its beginning (eh shareholders were in it) July 1865 as good as May 1866. With very few exceptions all creditors were the identical creditors of the old firm. So they were paid by the fraud - after the Judgment first of the Malins, then of the Lords, and were perhaps in on the hocus pocus! The press was almost entirely bought, Times and Economist in the lead, by the creditors.133
Dieß Urtheil zugleich gegen die durch die Lords selbst anerkannte Precedents!" (Ibid., p. 271.)
66
Later, at a meeting of Overend shareholders, it was discovered that at the time of the company's conversion from an unlimited liability company to a limited liability company in July 1865, three contracts had been issued between the partners of the old firm and the directors of the new firm, only one of which had been made available to the shareholders and another contract that revealed the insolvency of the old firm had been withheld ("1869 I Issue," p. 30). As a result of these revelations, a court case ensued against the directors of Overend, Gurney and Company, which Marx followed over several excerpt notebooks and had documented by his daughter Jenny, through journals other than those he excerpted himself, such as "The Daily News" and "Reynolds's Newspaper." Jenny Marx herself stated in the letter to Louis Kugelmann of December 27, 1869, that she had made newspaper clippings for her father for this purpose: "I have looked through several hundred newspapers, in order to make extracts from them to Moor of the financial swindling concerns etc."134 Marx's interest in this process may also have been related to his intention to study the exact business transactions. Just as he was disappointed to find in April 1868 that Aycard had used only the official material for his history of Crédit Mobilier, noting that the "secret material [...] can only be brought in by judicial means"135, he was also so interested in the trial of Overend, Gurney and Company because he hoped that court intervention would bring to light what had really been going on in the City of London.
67
However, Marx also stated to Engels-around the time he was completing the excerpts from the Money Market Review and the Economist-that he was highly entertained by the proceedings and trial of six of the seven directors of Overend, Gurney and Company: "The Gurney affaire amuses me royally. I have studied this saucase in every detail; found, therefore, nothing new in the proceedings at the Mansion House, except great Edwards."136 This trial ended in December 1869 with an acquittal for all directors, which Jenny Marx commented to Kugelmann on December 27, 1869: "By the bye Overend and Gurney have just been acquitted. The bourgeoisie throughout the length and breadth of the land rejoice at the liberation of these 'martyrs' [...]. I shouldn't be at all surprised if these thieves in broadcloth were one of these days returned to Parliament to legislate for their countrymen. The partiality of the Judge for the defendants was so glaring, that it struck even the obtuse jury, and on one occasion elicited a protest from them."137
##The politics of stock
68
Although Marx already mentioned the "great city frauds" in the chapter on interest-bearing capital of the manuscript for the third book of Capital,138 but wrote there at the same time: "It is even more unseemly and conceptless to bring in here the lending of houses etc. for individual consumption. That the working class is swindled in this form also, and heaven-sent, is clear; but this is done likewise by the detail seller who supplies it with food."139 Alongside their "[p]rimitive" exploitation as producers of surplus value in the production process of capital, the "secondary exploitation" takes place140 of the working class, therefore, insofar as it acts as consumer and borrower or lender.141
69
It may have been a reorientation prompted by the excerpts, especially from the "Money Market Review," that Marx wanted to enrich the chapter on interest-bearing capital with an account of current 'swindling practices.' As he reported at length on food adulteration in the first volume of "Capital, 142 he also documented in the present issues the falsification of balance sheets, prospectuses and bills of exchange, but also of cognac, news and telegram messages. Finally, he described Overend's operations as "deliberate fraud upon the public" ("London. 1868," p. 74). However, as Marx had already criticized in the crisis of 1857/1858, the press overflowed with moral indignation about individual speculators,143 he also notes in the present excerpts the objections of the "Money Market Review" against attempts to reduce the problem to a few scapegoats ("London. 1868", pp. 250, 252 u. 255).144 And when he excerpts from the "Money Market Review" that the crisis revealed, to the surprise of many, the unsoundness of the railroad companies, he remarks: "In these cases the ordinary philistine indignation and astonishment, moral clamor, Committees of Investigation and so forth!" ("1868," p. 54.) But as soon as the catastrophe has passed and dividends are again being paid, Marx further excerpts, the public also forgets the crisis events, whereupon he notes, "Such, however, is the modern money philistine and will be in seculum seculorum!" (Ibid.)
70
Nevertheless, Marx toyed with the idea that the Overend affair might bring about a change in the political climate in England by casting the government in a bad light. He wrote Engels on July 3, 1869, "What do you say to the proceedings of the virtuous Gladstone u. Puritan Bright in Overend, Gurney et Co? [...] The Gurney Affair, resp. the attitude of the Ministry in it, ditto in the Mold Affair,145 finally the ministerial machinations with Lamuda & other swine-dogs against the Trades Unions Bill - have broken the spell of the Gladstone-Bright names here among the workers in London."146 Marx recurs, among other things, to the conduct of the government under Chancellor of the Exchequer William Ewart Gladstone in the trial of Overend, Gurney and Company. Since there was no prosecution in Great Britain at that time and court trials were costly and difficult for private plaintiffs to conduct, only a handful of criminal cases were brought overall in British joint stock and finance companies despite hundreds of delinquents convicted in the wake of the 1866 crisis ("1869 I Issue," p. 55). Adam Thom, the prosecutor of Overend, Gurney and Company and a shareholder in that bank, therefore had to prosecute at his own expense and solicit money in newspapers. The government under the "virtuous" Chancellor of the Exchequer Gladstone, meanwhile, refused to support the suit with government funds or to let it be conducted by the state ("Trade and Finance 1868," p. [99]). See also Geoffrey Elliott,147 In an article clipped by Jenny Marx from the "Daily News" of July 2, 1869, it says: "Dr. Thom alleged that he had already spent all the money which he was able to spend in this prosecution, and unless the matter was taken up by the Government, they would hear the hackneyed phase of there being one law for the rich and another for the poor. This case showed more than anything of late the necessity of appointing a public prosecutor." ("Trade and Finance 1869," p. [11].) Many newspaper readers sided with Thom, the prosecutor: "a prosecutor does represent the public," reads a letter to the editor clipped by Jenny Marx from "Reynoldsʼs Newspaper" of July 11, 1869 ("Trade and Finance 1868," p. [99]). Since Gladstone also owed his chancellorship to the reform of suffrage by the Representation of the People Act (alias the Reform Act) of 1867 (30 and 31 Vict., Cap. 102), which brought about a substantial extension of male suffrage to proletarian classes as well,148 Marx pondered whether such instances, in which a judicial and military apparatus directed against the proletariat also operated under the new government, might jeopardize the legitimacy of the new government among the "workers in London."
71
It is likely, moreover, that Marx was also so interested in the case of Overend, Gurney and Company because he saw it as typical of the joint-stock system. In the 1865 manuscript for the third book of Das Kapital, Marx saw the joint-stock companies that had spread so rapidly in Britain after the crisis of 1857/1858 as characterized by three features: first, they allow for an immense extension of the ladder of production and exceed the limits of a private capital; second, capital in joint-stock companies "takes the form of company capital (Capital direkt associirter Individuen)";149 third, as noted above, the joint-stock companies separate the ownership of means of production from their management according to form. For these reasons, Marx calls the joint-stock system the "result of capitalist production, in its highest development"150 and elaborates as follows:
72
This is the abolition of the capitalist mode of production within the capitalist mode of production and therefore a self-cancelling contradiction, which prima facie presents itself as a mere transition point to a new form of the mode of production. As such a contradiction it then also presents itself in appearance. It establishes the monopoly in certain spheres and therefore requires state interference. It reproduces a new financial aristocracy, a new pack of parasites in the form of business projectors and directors (merely nominal managers); a whole system of swindling and fraud with respect to the trading of shares, their issue, etc.; and a new system of private production without the control of the state. Private production without the control of private property.151
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Against the background of the present excerpts, this passage reads like a research note on the stock system, which Marx wanted to study in depth: the splitting up of capital functions, the "system of swindling and fraud with reference to stock trading," and, not least, the expropriation of small capitalists, the formation of monopolies, and the resulting state interference. Even if share trading remains "private production" and thus does not overcome the fundamental form determinations of the capitalist mode of production such as commodity, money and capital, its development "forms anew the contrast between the character of wealth as social and as private wealth."152 Also, because what is risked in the stock exchange game is social capital, the stock system inevitably induces ("sollicitirt") state interference.
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The stock market, monopoly formation, and the role of the state in modern society are consequently other major themes of the present excerpts. State interference is not only about agencies such as public prosecutors, bankruptcy courts, boards of inquiry and tribunals, money market regulation, and financial supervision, but also about cases of a takeover, control, or regulation of joint stock companies by the state. An example of this is the supply of gas in London, which since the Metropolitan Gas Act of 1860 was carried out by thirteen joint stock companies, each of which supplied a district of the city. When a parliamentary inquiry report documented significant problems with the quality of the gas, the Economist criticized this system as a dysfunctional monopoly, and Marx noted the journal's view that the state should manage the gas supply itself: "Every monopoly must, as such, be under public regulation, or it may hurt the public. Incomparably the best system in such a case where it can be applied, is that the State should be itself the producer." ("London. 1868," p. 130.) Already in his longer note on monetary systems, Marx emphasizes the growing importance of state capital, writing that the state "to an ever greater extent" is "doing business itself, railroads, mines, telegraphs, etc" (ibid., p. 79).
75
On the railroad question, Marx also goes into several aspects of state interference: regulation and auditing of balance sheets, socialization of losses, and planning of a network of lines.153 From an article he notes, under the self-chosen heading "Railways and State Control," the then-discussed demand for a compulsory audit of railroad company accounts by the state: "'Economist' at last reluctantly admits: 'sole remedy for the present discredit in the railway market is an independent audit of the accounts of railway Cos by official auditors appointed by the State.' The Govt is the only uniform authenticator possible. Review notes: the audit ought not to be optional (as Economist will) but compulsory upon every Railway Co." ("1869 I Issue," p. 21.) The "Economist" was thus more hesitant about regulatory proposals than the "Money Market Review," which openly reported on the methods of "falsification" of railroad accounts ("Falsification of Railway Accounts"). Again, Marx notes the exact methods of "account cooking" such as paying dividends not from profits but from loans, underrepresenting future capital expenditures, and not showing actual labor costs on balance sheets. Meanwhile, the new regulation by the Regulation of Railways Act 1868 (31 and 32 Vict., Cap. 119) did not provide for mandatory government control, as Marx excerpts from the Money Market Review of August 8, 1868: "The act does not contain Compulsory official Audit." (Ibid., p. 41.) Moreover, the crisis necessitated government support for distressed railroads: "In past years the question was raised as to whether the State ought not to buy up the railways as a means of increasing its revenue. Now the question has changed its complexion, and the interference of the State is demanded chiefly in the interest of the railway companies themselves, as a method of relief from pressing embarrassments." (Ibid., p. 27.) Commenting on an Economist review of a paper by Robert Dudley Baxter, Marx says: "It seems the real purpose of this paper was, in any way to help the railroads - penniless and then very much at a loss to pay their debentures etc - by the State." ("London. 1868," p. 110.)
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State assistance in the event of a disaster was also needed by the British joint-stock East India Irrigation and Canal Company, which played an inglorious role in the famine in Orissa, India, in 1866 that claimed the lives of about one million people.154 As a direct cause of the famine is considered the drought in the winter of 1865, caused by the failure of the monsoon, which led to a weak rice harvest. In this case, the amount of rainfall in the fall was sufficient, but there was a lack of an irrigation system to store and distribute the rainfall. The East India Irrigation and Canal Company was to construct an extensive canal system for Orissa, and after the famine of 1866, the Indian government accused the company of neglecting and failing to complete work on Orissa's canal system. Meanwhile, the accelerated completion subsequently demanded by the government presented the Company with problems in raising capital, so the Indian government proposed that the Company take over the Orissa project ("1869 I Issue," p. 52). When it was decided at the shareholders' meeting in London on November 28, 1868, to sell the Orissa project to the Indian government (ibid., p. 54), the company received as consideration a sum in cash equal to the total assets paid in and 5% interest, and furthermore the directors and officers received a remuneration of 50,000 pounds sterling (ibid., p. 50).155
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In addition, Marx traces discussions about the establishment of central government institutions to deal with economic, ecological, and social problems in England. For example, the commissioners of an inquiry report on the pollution of the English River Lee proposed the establishment of a "Conservancy Board" that would be responsible for the entire watershed to ensure an end to sewage flowing into the river as well as its general maintenance. Similarly, in September 1865, in the face of the "Cattle Plague," the government convened the "Cattle Plague Commission" and established a State Veterinary Department. Furthermore, in his note on the relationship between the state and the state bank, Marx notes that the Bank of England, then formally still a private bank, is increasingly becoming a state bank: "State bank (exclusively) with branch banks, as in France and more and more in England." ("London. 1868," p. 79.) Finally, he reads about efforts to improve public statistics: his excerpts on the proposal that storekeepers and shippers be required to report monthly their stored cotton inventories, Marx notes under a heading with the addition "(Sthaatseinmischung.)" He excerpts, "formerly the great object of commercial reformers was to exclude the government from trade; now their object is to get it back into trade. And the persons who used to object to State aid are now the persons who invoke it." ("1869 I Issue," p. 68.) The Council of Foreign Bondholders can also be understood as a form of solliciting state interference: Here, the British state was "sollicitirt" in the legal sense, that is, it sought legal assistance to represent the interests of English creditors against debtor states on the international stage.
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Even before all these excerpts on state interference, Marx writes at the beginning of the booklet "London. 1868": "Ueberall Centralisation und centralised Gvt. action unvermeidliches Schicksal der modernen Gesellschaft!" ("London. 1868," p. 34.)156 He makes this remark in his excerpts concerning a meeting at a London social club in March 1866, at which, in order to remedy the disastrous conditions in the English workhouses, resolutions were introduced proposing that the poor hospitals should be consolidated, supported by a general city tariff, and placed under a unified management. In other excerpts on this subject from an article presenting two recent parliamentary reports documenting the atrocious conditions in the workhouses, Marx similarly comments, "This shit important because it shows again how impossible local Gvt. in our state of things." (Ibid., p. 152).157 In the present excerpts, Marx thus deals with multiple forms of state interference such as state capital, foreign policy, monetary policy, regulation, environmental, social and housing policy.
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Jenny Marx documents the social question and pauperism for her father in the booklet "Social cases. 1869," in which she pasted 106 self-selected and then clipped articles from various English newspapers. Marx already drew attention to the increase in pauperism after the crisis of 1866 in the first volume of "Capital," in the section in which he intends to illustrate the "General Law of Capitalist Accumulation" of producing a constantly growing population that is superfluous when measured against the exploitation possibilities of capital.
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"Before that, a word about official pauperism, i.e., that part of the working class which has forfeited its condition of existence, the sale of labor power, and vegetates on public alms. [...] The crisis of 1866, which hit London hardest, created in this seat of the world market, more populous than the Kingdom of Scotland, a pauper increase of 19.5% for 1866, compared with 1865, and of 24.4%, compared with 1864, an even greater increase for the first months of 1867, compared with 1866."158
81
The crisis produced enormous social dislocations in London, and Marx cited an account already in Das Kapital describing how thousands of mechanics in the east of the city waited outside workhouses for food stamps to be issued.159 The first article pasted into the booklet "Social cases. 1869" dates from October 25, 1868, that is, from the time when Marx was working intensively on the excerpts from the "Money Market Review" and the "Economist," which might indicate that from the beginning he also wanted to take into account the social consequences of the crisis and possibly to cite them in the second volume or in a new edition of the first volume of "Capital." Also, when in the "1868" issue he excerpts the "Money Market Review" criticism of the "Times" for simply denying the economic stagnation and the suffering of the London workers, he remarks: "And East End of London etc!" ("1868," p. 68.) The subjects of the papers pasted in "Social cases. 1869" pasted newspaper articles are, for example, the innumerable scandals in English prisons and workhouses, where overcrowded and unventilated rooms, suicides, staff violence, and outbreaks of epidemics were the order of the day; the deaths in police stations, workhouses, and their infirmaries; the emergence and spread of epidemics such as typhoid fever and a febrile disease known as "famine fever," which particularly afflicted London's poor population in the fall of 1869; emigration as a "cure" for poverty; and poor-law legislation such as the Metropolitan Poor Act of 1867. The collection of materials paints a grim picture of social conditions in Victorian London. Reynolds's Newspaper, a newspaper frequently used by Jenny Marx, spoke of the "barbarous mode in which the sick poor are dealt with in our workhouses" ("Social cases. 1869," p. 38).160
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As noted, in the manuscript for the third book of Capital, Marx assumed that the stock system "re-forms the contrast between the character of wealth as social and as private wealth." It seems undeniable that in the present excerpts he takes a stand against the private character of wealth: against the "great city frauds" and the swindle of Overend, Gurney and Company, against the apologetics of the "Economist," and against the wretched condition of a large part of the working class in England. These expressions of antipathy, however, are not to be confused with taking sides with the "corporate capital" side of the joint-stock companies. For one thing, it seems rather as if Marx were observing in the present excerpts how existing antagonisms were being shifted and realigned by institutional innovations (such as the reform of the liability system) and old familiar but rapidly spreading forms of economic combination (such as the joint-stock system). On the other hand, in 1881, in a passage in the first draft of the letter to Vera Ivanovna Zasulič that has been deleted again, he criticized the elements of the stock system-"la jeu de bourse, la spéculation, les banques, les sociétés par action, les chemins "161 - which had gained a foothold in Russia at the expense of the peasants, as "excesses" ("excroissances") of the capitalist mode of production. The 'abolishing' side of the joint-stock companies, which was still strongly emphasized in the manuscript of the third book of "Capital," seems to have been left out of Marx's mind here.
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Nor does his critique of private production in the joint-stock system mean that Marx would have endorsed state interference. After all, he deepened his long-standing critique of the state precisely after the present excerpts in his writing about the Commune de Paris of 1871, "The Civil War in France." Marx presented precisely the Commune as the true antithesis of the modern state and as "the political form of the social emancipation":162 "The true antithesis to the Empire itself - that is to the state power, the centralized executive, of which the Second Empire was only the exhausting formula - was the Commune."163 In a passage influenced by the economic history of the 1860s, Marx consequently wrote already in Manuscript II to the second book of "Capital" that in a future, post-capitalist society, in which "the production process can be brought under the planned social control of man u. can be controlled by him,"164 "society" - not the state - must come to an agreement on the amount of labor it wants to expend - then without money capital and its "disguises" - for the expansion of its system-relevant infrastructure:
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If we think society not capitalist but communist, then d'abord money capital falls away altogether, thus also the disguises of the transaction which come in through it. The matter is simply reduced to the fact that society must calculate in advance how much labor, means of production, and food it can use without any abortion in branches of business (e.g., construction of railroads, etc.) which for a long time [...] supply neither means of production, nor food, nor any useful effect, but do take labor, means of production, and food out of the total annual production. In capitalist society, on the other hand, where the social mind always asserts itself only post festum, great disturbances can and will constantly occur in this way.165
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Marx assumes in the present notebooks, as he did earlier, that the "fate" of a centralized state is not a merely French matter, but affects modern society as a whole and "[u]niversally." In the present excerpts, he deals not only with the concrete manifestation of this fate in England, the "classic[n] site"166 of the capitalist mode of production, but, in addition, has in mind the emergence of a central state in the United States as a result of national reforms of education, taxation, currency, and banking in the wake of the American Civil War.167
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Marx dealt with the topics of money, credit and crisis many times after 1869. He experienced two more general economic crises in 1873 and 1878/1879, and in this context again studied credit, stocks, the stock exchange, and the financial system in the excerpt notebooks of 1878/1879, reading not only English but also American, Italian, French, and Russian authors (these excerpts are published in Volume IV/25). Indications that he wanted to treat these topics with greater attention can be found in the drafts of the letter to Zasulič and also in the economic texts that were written after the present excerpts: Marx came to talk about shares, stock exchanges, and railroads several times in the manuscripts for the second book of "Capital" (see MEGA² II/11), and he mentioned the agiotage, the stock exchange game, as well as the importance of joint-stock companies as a means of centralizing capital in the French edition of "Capital" (1872-1875), where this appears for the first time in an edition of "Capital".168 Even though Marx made extensive use of the materials gathered in Volume IV/18 and the present edition in Manuscript II on the second book of "Capital" (the histories of the creation and transmission of the individual booklets provide information on this), he did not proceed to a revision of the third book of "Capital", despite all the efforts handed down by these excerpt booklets.Ibid.
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The present edition was prepared by Timm Grassmann at the Berlin-Brandenburg Academy of Sciences and Humanities (BBAW) with the assistance of the Japanese MEGA working group in Tokyo headed by Teinosuke Otani (✝). Hideto Akashi (Tokyo), Kohei Saito (Osaka), Soichiro Sumida (Tokyo), and Susumu Takenaga (Tokyo) participated in the edition work as members of the group. The initial decipherments were made at the Marx-Engels-Lenin Institute in Moscow, at the BBAW, and at the Japanese MEGA office in Tokyo. The excerpts from Otto Hausner's "Comparative Statistics of Europe" were deciphered by Johanna Preusse (Berlin), who also assisted in transferring the texts to the digital edition. The excerpt booklet "1869 I Heft" as well as the excerpts from Feller/Odermann in "Heft II. 1869" were collated by Norman Jakob (BBAW), who also wrote the history of origin and transmission for the excerpts from Feller/Odermann. The three notebooks kept by Jenny Marx were collated by Isaak Gelen (Passau) and E. Michael Schauerte (Miyazaki) collated them. Caroline Lura (BBAW) contributed to the register work. The booklet "London. 1868" was proofread by Carolyn Benson. Due to the coronavirus pandemic, the original notebooks could not yet be consulted at the IISG, so the witness descriptions are provisional. Lyudmila Vasina (Moscow) wrote the witness description for the 1869-1871 notebook. The digital edition was realized by the TELOTA working group (BBAW) of Teodora Dogaru, Gordon Fischer, Sascha Grabsch, Lou Klappenbach, and Ruth Sander, with the assistance of Timm Graßmann and Caroline Lura. Thanks are due to all institutions that supported the preparation and editing of the volume, especially the International Institute of Social History Amsterdam (IISG) and the Russian State Archive of Social and Political History (RGASPI) in Moscow. Finally, the Berlin-Brandenburg Academy of Sciences and Humanities is to be thanked for its extensive support of the work.
Notes
[*]: Research results have been incorporated into the introduction from Timm Graßmann: Die Krisen des Kapitals. Marx, political economy and the periodically recurring economic crises. Phil. Diss., University of Osnabrück. Osnabrück 2020.
Footnotes
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According to the minutes of the General Council meetings of the IAA, he regularly attended the almost weekly meetings from October 13 to March 30, missing only the meetings of November 10, December 8, 1868, and January 19 and 26, 1869, and March 30, 1869. (See the General Council minutes of the IAA in: MEGA² I/21. pp. 603-637.) Although he let Engels know on January 13, 1869, that he had been suffering from a severe cold for two weeks - a "stick cold" had been holding up "the eye, ear, nose, and the whole head since the beginning of the year," Engels said. the whole head, for about 2 weeks, in a formal state of siege" (IISG, Marx-Engels Nachlass, Sign. L 4587) -, he took part in the IAA meetings of January 5 and 12, 1869 (see MEGA² I/21. pp. 617.3 and 619.3). Marx also spoke of a long illness to Louis Kugelmann on February 11, 1869: "the damned foggy weather here - nothing but mist -" had given him "an almost four-week-long, quite exceptionally vicious flu" (IISG, Marx-Engels Nachlass, Sign. C 358). Thus, Marx was probably absent from the General Council meetings of January 19 and 26, 1869, due to illness, but did attend the meetings of February 2 and 9, 1869, according to the minutes. (See MEGA² I/21. pp. 622.4 u. 624.3.) Possibly, then, he was only unable to work in the second half of January 1869. ↩
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Marx to Engels, February 13, 1869 (IISG, Marx-Engels Nachlass, Sign. L 4591). - Exactly when Marx began work on Manuscript II to the second book of "Capital" is difficult to determine (see MEGA² II/11. pp. 910-915). Through the available excerpts, it may be possible to specify that the majority of the first chapter was also written only from January 1869, because already footnote 11 on p. 12 of the manuscript, in which Marx mentions reviews of the "Money Market Review" and the "Economist" of a book by Ernest Seyd (MEGA² II/11. p. 33), can be traced back to a reception of the 1868 volumes of the two periodicals (see "Origin and Tradition" for "1869 I Heft"), which Marx received from Borkheim only on December 30, 1868. Although it is possible that Marx inserted this footnote only later into an already existing main text, then the footnote 12 on Victor Riquetti Marquis de Mirabeau that immediately follows in the manuscript would also have to have been written at a later time, which seems unlikely, since this footnote directly elaborates and proves an assertion made in the main text. ↩
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Marx still repeated this plan at the beginning of Manuscript II to the second book of "Capital" (MEGA² II/11. p. 28). ↩
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Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Third Book. In: MEGA² II/4.2. p. 664. ↩
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Marx to Engels, May 7, 1867. in: MEGAdigital. ↩
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Marx gathers these and other excerpts under the heading "7) Land in England and Agriculture" of his index of contents to the extracts from the 1866/1867 volumes of the "Economist" in the issue "London. 1868" (pp. 185/186) and under the entry "8) Land" in "1869 I issue" (p. 88). Some of the titles from whose reviews Marx excerpts he later collects in bibliographical lists in "Heft 3. 1868" of the "Hefte zur Agrikultur" (MEGA² IV/18. pp. 586-588 u. 728-730). ↩
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Marx let Engels know on March 6, 1868: "Mr. Mac Leod has made it to a 2nd edition with his lousy and pedantic-scholastic book on banks. He is a very spread ass, who puts every banal tautology 1) into algebraic forms and 2) constructs it geometrically. I have already given him an occasional kick in the booklet published by Duncker. His 'great' discovery is: Credit is Capital." (MEGAdigital.) - The book mentioned is Henry Dunning Macleod: The Theory and Practice of Banking. 2nd ed. vol. 1.2. London 1866. ↩
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Marx to Engels, April 11, 1868, in MEGAdigital. - The book mentioned is [Maurice] Aycard: Histoire du Crédit Mobilier 1852-1867. Bruxelles, Leipzig, Livourne 1867. Marx probably received the book from Borkheim, for the latter later asked him if the book was with him. See Sigismund Ludwig Borkheim to Marx, December 28, 1868, in MEGAdigital. ↩
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Karl Marx: Index to: Commercial Reports of H. M.'s Consuls ... 1865-1867. In: MEGA² IV/18. pp. 654-658. ↩
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See John Mills to Marx, September 16, 1868, in MEGAdigital. - According to Marx, he had written Mills a note on August 26, 1868, which has not survived, asking him to send him his lecture on credit cycles. Mills confirmed the sending of a pamphlet. This is John Mills: On Credit Cycles, and the Origin of Commercial Crises. In: Transactions of the Manchester Statistical Society. Session 1867-68. Manchester 1868. pp. 9-40. This book is also listed in the 1927 SPD library catalog (no. 41531), making it even more likely that it was in Marx's possession. Because Mills also mentions a positive review of this lecture in the "Economist," it cannot be ruled out that Marx may have come to the impression through correspondence with Mills that he had missed new developments in credit theory and also wanted to go through the volumes of the "Economist" for that reason. However, in reading this review, Marx severely criticizes Mills's theory ("1869 I Issue," p. 61). ↩
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Karl Marx: Excerpts from "The Times," August 18, 1868. in: MEGA² IV/18. pp. 449/450. ↩
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Marx to Engels, September 25, 1868. in: MEGAdigital. - Marx had thus already been in search of this book before he began the excerpts from the "Economist" and the "Money Market Review". The excerpts from Foster in "Heft II. 1869" are indeed the last excerpts in the present edition that deal with credit theory in a broader sense, but they thus tend not to result from a possible logic of Marx's research. While resuming his studies on credit, he was eager to read this classic from 1804 (see "Origin and Tradition" to "Heft II. 1869"). The excerpts from the "Kaufmännische Arithmetik" (Commercial Arithmetic) by Feller/Odermann, which were written immediately before this, do not have to be directly related to the excerpts from the two economic journals either, because the book had already been in Marx's possession since 1864, when he inherited it from Wilhelm Wolff (see "Entstehung und Überlieferung" zu "1869 I Heft"). However, Feller/Odermann's appropriation of the precise commercial arithmetical operations fits in with Marx's intention to better comprehend the practice of banking, stock exchange and trade. ↩
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Marx to Engels, November 14, 1868, in MEGAdigital. ↩
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Engels to Marx, April 17, 1868. in: MEGAdigital. ↩
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Engels further wrote: "The secret material of the history of the Credit Mobilier can, by the way, & will probably come to light of its own accord at the fall of the Empire even if it should pass off without intervention of the courts." (Engels to Marx, April 17, 1868. In: MEGAdigital.) ↩
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His library contained the following writings from 1865 to 1870: George Anderson: The Reign of Bullionism. Glasgow 1867 (MEGA² IV/32. No. 20); James J[ones] Aston: The Stock Exchange "a Sham Market"? London 1869 (ibid. no. 41); [Samuel Orchart Beeton:] Beeton's Guide Book to the Stock Exchange and Money Market. With Hints to Investors, and the Chances of Speculators. London [1870] (ibid. no. 114); Seton Laing: A New Series of the Great City Frauds of Cole, Davidson, & Gordon. 5th ed. London 1869 (ibid. no. 718); Life Assurance Companies. Their Financial Condition. By an Actuary. London 1869 (ibid. no. 777); Managers and Marionettes. London 1869 (ibid. no. 829); [Malcolm Ronald Laing Meason:] The Bubbles of Finance. London 1865 (ibid. no. 885); [id.:] The Profits of Panics; Showing How Financial Storms Arise, Who Make Money by Them, Who Are the Losers, and Other Revelations of a City Man. London 1866 (ibid. no. 886); Robert Lucas Nash: Money Market Events, and the Value of Securities Dealt in on the Stock Exchange in the Year 1868. London 1869 (ibid. no. 932); Adolph Samter: The reform of the monetary system. Berlin 1869 (ibid. No. 1166); Vollständige Handelswissenschaft. The theory and practice of the same systematically presented for merchants and industrialists, especially for trainees in commerce. In conjunction with capable businessmen and scholars, edited by Theodor Wenzelburger. Stuttgart, Leipzig 1869 (ibid. no. 1380). - Also listed in the 1927 SPD library catalog, and thus probably in Marx's possession, were books and writings such as A[lexander] Brückner: Finanzgeschichtliche Studien. Copper Money Crises. St. Petersburg 1867 (No. 32983); Adolph Wagner: Die russische Papierwährung. Riga 1868 (no. 33968); The Law of Negotiable Instruments; a Handbook of the Law on Inland and Foreign Bills of Exchange, Promissory Notes, Cheques, IOUs, and the Law of Bills of Lading. By a Barrister. London 1868 (No. 41442); John Mills: On Credit Cycles, and the Origin of Commercial Crises. Manchester 1868 (No. 41531); Overend, Gurney and Co. or the Saddle on the Right Horse. London 1866 (No. 41576); Ernest Seyd: Bullion and Foreign Exchanges Theoretically and Practically Considered. London 1868 (No. 41735; for a Marxian assessment see MEGA² II/11. p. 33); John Benjamin Smith: An Inquiry into the Causes of Money Panics and of the Frequent Fluctuations in the Rate of Discount. London 1866 (no. 41745). ↩
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Marx to Nikolai Francevič Daniel'son, October 7, 1868. in: MEGAdigital. ↩
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"No other crisis of the nineteenth century inspired as broad a range of commentary." (History of Financial Disasters. Vol. 2. ed. by Benedikt Koehler. London 2006. p. 67.) Progress analyses, satirical pamphlets, analyses of crisis management, legal treatises, and polemical pamphlets were written. ↩
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The overall crisis "eclatirt" in the money market, Marx wrote as early as 1851 in his longer note "Reflection" (MEGA² IV/8. p. 231). Probably in 1855/1856 a collection of excerpts was produced, which Marx labeled "Citate. Monetary system. Creditwesen. Crisen" (IISG, Marx-Engels Nachlass, Sign. B 79) (appears in MEGA² IV/13.) The "Economic Manuscript 1861-1863" states that "the real crisis [...] can [only] be represented from the real movement of capitalist production, concurrence and credit." (MEGA² II/3. P. 1133). ↩
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Karl Marx: On the Critique of Political Economy 〈Manuscript 1861-1863〉. In: MEGA² II/3. p. 1154. ↩
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Karl Marx: On the critique of political economy. 1st ed. In: MEGA² II/2. p. 240. ↩
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Marx assumed at the time that there was a close connection between crisis and revolution, as he wrote, for example, at the conclusion of his own reconstruction of the crisis of 1847 in the "Neue Rheinische Zeitung. Politisch-ökonomische Revue": "A new revolution is only possible in the wake of a new crisis. But it is also just as certain as this one." (Karl Marx, Friedrich Engels: Revue. May to October 1850. In: MEGA² I/10. p. 467.) ↩
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Karl Marx: Das Kapital. Critique of political economy. Vol. 1. In: MEGA² II/5. p. 540. ↩
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Marx referred to the cotton famine in the manuscript for the third book of Capital as the "greatest example of the interruption of the reproduction process by want and consequent high price, of the raw material" (MEGA² II/4.2. p. 198). ↩
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See Susumu Takenaga: Marx's Excerpthefte of the later 1860s and the Economic Crisis of 1866. in Marx-Engels-Jahrbuch 2015/16. Berlin 2016. pp. 71-102. ↩
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"As for the extent of the paralysis, according to authentic estimates, 60.3% of the spindles and 58% of the looms were at a standstill in October 1862." [MEGA² II/5. P. 372.) ↩
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On the "Cotton Famine," see, for example, Douglas Anthony Farnie: The English Cotton Industry and the World Market, 1815-1896. Oxford 1978; W. O. Henderson: The Lancashire Cotton Famine, 1861-1865. Manchester 1934. Marx and Engels read the book by John Watts: The Facts of the Cotton Famine. London, Manchester 1866. In late 1868, when they discussed the extent of cotton supplies during the Cotton Famine, Engels wrote: "You will find much, by the way, in Watts." (Engels to Marx, December 11, 1868. In: MEGAdigital.) ↩
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On financial developments in Britain during the 1860s and the crisis of 1866, see John Harold Clapham: The Bank of England. A History. Vol. 2. Cambridge 1944; Philip L. Cottrell: Railway Finance and the Crisis of 1866: Contractors' Bills of Exchange, and the Finance Companies. In: The Journal of Transport History. N. S. 1975. no. III. pp. 20-40; id.: Credits, Morals and Sunspots: the Financial Boom of the 1860s and Trade Cycle Theory. In: Money and Power. Essays in Honour of L. S. Pressnell. Ed. by P. L. Cottrell and D. E. Mogridge. Basingstoke, London. pp. 41-71; David Foucaud: The Impact of the Companies Act of 1862. Extending Limited Liability to the Banking and Financial Sector in the English Crisis of 1866. in: Revue économique. Vol. 62. 2011. no. 5. pp. 867-897; Joshua Gooch (n.d.:) On "Black Friday," May 11, 1866. in BRANCH: Britain, Representation and Nineteenth-Century History. Ed. Dino Franco Felluga. Extension of Romanticism and Victorianism on the Net (accessed May 2021); Marc Flandreau, Stefano Ugolini: Where It All Began: Lending of Last Resort at the Bank of England Monitoring During the Overend-Gurney Panic of 1866. In: The Origins, History, and Future of the Federal Reserve. Ed. by Michael D. Bordo and William Roberds. Cambridge 2013. pp. 113-161. ↩
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On Philip L. Cottrell: Railway Finance and the Crisis of 1866: Contractors' Bills of Exchange, and the Finance Companies. In: The Journal of Transport History. N. S. 1975. no. III. pp. 20-40. ↩
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As noted, Marx had already obtained more detailed information from Patterson and Laing in April/May 1868 in the "Heft zum fixen Kapital und Kredit 1868" (MEGA² IV/18) on the basic forms of "railroad finance" and the various shares and bonds of which the railroad companies made use. ↩
-
Philip L. Cottrell: Credits, Morals and Sunspots: the Financial Boom of the 1860s and Trade Cycle Theory. In: Money and Power. Essays in Honour of L. S. Pressnell. Ed. by P. L. Cottrell and D. E. Mogridge. Basingstoke, London 1988. pp. 41-71, here: S. 43-45. ↩
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Philip L. Cottrell: Investment Banking in England, 1856-1881. A Case Study of the International Financial Society. Vol. 1. New York 1985. p. 52/53. ↩
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See B. L. Anderson, P. L. Cottrell: Money and Banking in England. The Development of the Banking System, 1694-1914. Newton Abbot 1974. p. 304; David Foucaud: The Impact of the Companies Act of 1862. Extending Limited Liability to the Banking and Financial Sector in the English Crisis of 1866. in: Revue économique. Vol. 62, 2011. no. 5. pp. 867-897. ↩
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Marx to Lion Philips, June 25, 1864, in MEGA² III/12, p. 575. - Shortly thereafter, he reiterated that in the course of 1864 "myriads of swindling jointstock companies [...] sprang up like mushrooms" and announced a "big crash," which more or less actually occurred in October 1864 in the form of a money crunch. See Marx to Lion Philips, August 17, 1864 (MEGA² III/12. p. 612). ↩
-
Marx to Engels, February 13, 1866. in: MEGAdigital. ↩
-
Marx to Engels, May 17, 1866. in: MEGAdigital. - Marx means here that the time after the end of the "Cotton Famine" and the restoration of the supply of raw materials from the United States was not sufficient to bring about a new overproduction of the English cotton industry. ↩
-
Engels to Marx, May 25, 1866. in: MEGAdigital. ↩
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Karl Marx: Das Kapital. Critique of Political Economy. Vol. 1. in: MEGA² II/5. p. 540. ↩
-
The causes of the crisis also attracted attention among Marx's circle of acquaintances; for example, Wilhelm Eichhoff wrote him on March 25, 1868, that he had "promised 3 lectures on 'The Causes of the Trade Stagnations of the Present'" (MEGAdigital). Unfortunately, no reply from Marx has survived, which might have provided information about his assessment of Eichhoff's project. ↩
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In a letter, Marx speaks of the "annals of English commercial history" (Marx to Collet Dobson Collet, November 2, 1868. In: MEGAdigital) and Engels, in his table of contents for "1869 I Heft," records Marx's excerpts from the 1868 volume of the two periodicals as "commercial history" as well ("1869 I Heft," cover), a term Marx also used in the second edition of the first volume of "Capital" (MEGA² II/6. p. 669.10). ↩
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Titles dealing with the crisis that Marx records through references, reviews, and partial excerpts in the press include [Malcolm Ronald Laing Meason:] The Profits of Panics; Showing how Financial Storms Arise, who Make Money by them, who Are the Losers, and other Revelations of a City Man. London 1866; John Benjamin Smith: An Inquiry into the Causes of Money Panics and of the Frequent Fluctuations in the Rate of Discount. London 1866; The Financial Lessons of 1866. A Letter, Addressed, by Permission, to W. E. Gladstone. By a City Manager. London 1867; William Fowler: The Crisis of 1866. London 1867; John Peter Gassiot: Monetary Panics and Their Remedy. London 1867; John Mills: On Credit Cycles, and the Origin of Commercial Crises. In: Transactions of the Manchester Statistical Society. Session 1867-68. Manchester 1868. pp. 9-40. - In one of his indexes of contents, Marx even creates a subheading "B.) Theory of Panic" ("London. 1868," p. 285). ↩
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Sigismund Ludwig Borkheim to Marx, October 13, 1868. in: MEGAdigital. ↩
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Sigismund Ludwig Borkheim to Marx, December 30, 1868. in: MEGAdigital. - Borkheim had announced the delivery of the loans two days earlier: "Have you not from me: 1, Slade 2, Aycard 3, Evans? Tomorrow or the day after tomorrow I will send you Economist. M.M. Review for 1868 - Haxthausen u. N. Rheinische." (Sigismund Ludwig Borkheim to Marx, December 28, 1868. In: MEGAdigital.) ↩
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The journal was founded by a "Mr. Dunham," who had previously been editor of the Daily News for many years and responsible there for the financial section of the City Article. See James Grant: The History of the Newspaper Press. Vol. 3. The Metropolitan Weekly and Provincial Press. London, New York [1872]. S. 120. ↩
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The Daily News, May 24, 1860. p. 4. Somewhat more condensed, an advertisement printed two days later states: "exclusively devoted to Commerce and Finance. [...] Thoroughly well-informed and perfectly original." (The Daily News, May 26, 1860. p. 4.) ↩
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Other papers established at this time include the Financial Reformer (appearing from 1858), the Liverpool Journal of Commerce, Daily Shipping, and Mercantile Advertiser (1861), the Insurance Record and Investors' Guardian (both 1863), and The Bullionist (1866). See David J. Moss, Chris Hosgood: The Financial and Trade Press. In: Victorian Periodicals and Victorian Society. Ed. by J. Don Vann and Rosemary T. VanArsdel. Toronto 1994. pp. 199-218. ↩
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This was already evident to Marx from the stock exchange manuals of his time. See [Samuel Orchart Beeton:] Beeton's Guide Book to the Stock Exchange and Money Market. With Hints to Investors, and the Chances of Speculators. London [1870]. P. 69/70. The book was in Marx's library (MEGA² IV/32. No. 114). ↩
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"In London, the Money Market Review: A Weekly Record of Trade and Finance was determined to be the best in the field. Seeking to prove that assertion, it ferociously attacked all competitors, including the 'politically motivated' Economist. The editor believed that conspiracies abounded and hinted at hidden deals between publishers and promoters to enhance certain companies. The Review's accusations were not without merit, because some papers did act more in the manner of race-track touts than impartial analysts." (David J. Moss, Chris Hosgood: The Financial and Trade Press. In: Victorian Periodicals and Victorian Society. Ed. by J. Don Vann and Rosemary T. VanArsdel. Toronto 1994. pp. 199-218, here: S. 215.) ↩
-
See MEGA² IV/14th App. S. 561. ↩
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See, for example, the critical discussions in the excerpts from the "Economist" in the "London Hefte" (MEGA² IV/7. pp. 449.25, 458 u. 484.28-29; MEGA² IV/8. pp. 11/12 u. 71). ↩
-
Karl Marx: The 18th Brumaire of Louis Bonaparte. In: MEGA² I/11. p. 164 u. 166. See: The Economist, November 29, 1851. p. 1317. ↩
-
Karl Marx: Corruption at Elections. In: New-York Daily Tribune, September 4, 1852. In: MEGA² I/11. p. 334. ↩
-
Karl Marx: The 18th Brumaire of Louis Bonaparte. In: MEGA² I/11. p. 164. ↩
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Karl Marx: Das Kapital 〈Economic Manuscript 1868-1870〉. Second book: the circulation process of capital (manuscript II). In: MEGA² II/11. p. 17. ↩
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Ibid. S. 33.33-34. ↩
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"In the money market, capital is gesezt in its totality," Marx wrote in the "Grundrisse" (MEGA² II/1. p. 199). ↩
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Marx to Collet Dobson Collet, 19 November 1868. in: MEGAdigital. ↩
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Marx to Engels, April 11, 1868. in: MEGAdigital. ↩
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Karl Marx: Excerpts from "The Economist. In: MEGA² IV/7. p. 449. ↩
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"The most general and most obvious phenomenon of trade crises is a sudden, general fall of commodity prices, following a prolonged, general rise of the same. [...] Ricardo's theory of money was therefore immensely convenient, since it gives the appearance of a causal relation to a tautology. Where does the periodic general fall of commodity prices come from? From the periodic increase of the relative value of money. [...] It could just as correctly be said that the periodic rise and fall of prices derives from their periodic rise and fall." (Karl Marx: On the Critique of Political Economy. First issue. In: MEGA² II/2. p. 241.) ↩
-
See Fred E. Schrader: Restauration und Revolution. Die Vorarbeiten zum "Kapital" von Karl Marx in seinen Studienheften 1850-1858. Hildesheim 1980. ↩
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Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Drittes Buch. In: MEGA² II/4.2. p. 625. ↩
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Karl Marx: On the Critique of Political Economy 〈Manuscript 1861-1863〉. In: MEGA² II/3. p. 1121. ↩
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Marx to Engels, March 5, 1858. in: MEGA² III/9. p. 94. ↩
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Bagehot's Collected Works contains, among other things, a selection of Bagehot's "Economist" articles and identifies Bagehot as the author for the following articles, which Marx also excerpts in the present issues: "Should the Bank of England Allow Interest on Deposits?" (The Economist, March 24, 1866. p. 346/347), "The State of the City" (The Economist, May 12, 1866. p. 553/554), "What a Panic is and How it Might be Mitigated" (The Economist, May 12, 1877. pp. 554/555), "The Panic" (The Economist, May 19, 1866. pp. 581-583), "The Practical Effect of the Act of 1844" (The Economist, May 26, 1866. pp. 614/615), "Overend, Gurney, and Co., Limited and Unlimited" (The Economist, June 16, 1866. pp. 697/698), "Is it Better that the Banking Reserve of a Country Should be Kept in a Single Bank or be Distributed between Several Banks?" (The Economist, August 25, 1866. pp. 995/996), "The Causes of the Existing Depression of Trade and the Probabilities of its Removal" (The Economist, 18. May 1867. pp. 554/555; May 25, 1867. pp. 582/583), "The 'National Bank' System of the United States: its Progress and Effects" (The Economist, June 8, 1867. pp. 638-640; June 15, 1867. pp. 667/668; June 22, 1867. pp. 695-697; July 6, 1867. pp. 750-752). See Walter Bagehot: The Collected Works. Ed. by Norman St John-Stevas. Vol. 9-11. the Economic Essays (in three volumes) with an Introduction by R. S. Sayers. As editor-in-chief, Bagehot was the main contributor to the Economist, contributing about two articles per issue, so many more of the articles excerpted by Marx may have come from his pen. ↩
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Two other named authors of the "Economist" issues excerpted by Marx are Thomas Edward Cliffe Leslie and Bonamy Price, whose articles were drawn. ↩
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See The Economist, May 12, 1866. p. 555. ↩
-
The remark "under J. Wilson" is not in the "Money Market Review," but is an addition by Marx. ↩
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Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Third Book. In: MEGA² II/4.2. p. 502. - The "Money Market Review" referred to the conflicts between the shareholders and the management of railroad companies as a "war" ("The War between Railway Shareholders and the Board Rooms" ("1868", p. 37). The dispute in 1867 over "pre-preference shares" may be considered an example of this struggle. A railroad company in financial distress wanted to issue "pre-preference shares," a new form of stock to alleviate its troubles, the issuance of which would have simply overwritten the existing priorities of already issued preference shares and thus devalued these preference shares (ibid., pp. 35/36). As Marx remarks on these plans in his own words, in this way "the existing Proprietors would have been expropriir[t]" (ibid., p. 54). ↩
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In the excerpts from the 1866/1867 volumes from the two periodicals, Marx first resorts to the "Economist," then to the "Money Market Review," but for the 1868 volume he reverses the order and first takes the "Money Market Review. ↩
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Another time he is amused when an article in the "Money Market Review" declares debt to be the source of wealth and congratulates the European states on their growing indebtedness: "If this is not 'Progress,' says the Money Market oracle, where the devil is Progress to come from?" (Issue "1868," p. 35.) In the French edition of "Capital," Marx explained such notions by the importance of government debt to the emergence and development of capitalism: "Il n'y a donc pas à étonner de la doctrine moderne que plus un peuple s'endette, plus il s'enrichit." (MEGA² II/7. P. 671.) ↩
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Occasionally, Marx also merges excerpts from several articles under one heading, excerpts one article under separate headings, or jumps back and forth between issues. In addition, he often modifies the titles of the articles, supplements them with additions in brackets, and not infrequently replaces them with his own headings. Both the modifications and the additions often reveal his precise interest in the excerpted material (see the histories of the origin and transmission of the individual issues). ↩
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In "The Money Market," a brief overview of important events of the week on the money market was usually offered at the beginning of the issue; "The Stock Markets" was the name of a section in the middle of the issue on movements on the Stock finally, the "City Article" was a column, usually about four pages long, with detailed information and assessments of the weekly happenings at the Bank of England, the Banque de France, the Clearing House, in the money and precious metals markets ("Money Market," "Bullion Market") and in the exchange rates ("Exchanges) with various economic news on, for example, bankruptcies ("Mercantile Embarassments"), railroads ("Railways"), banks ("Banks"), bonds ("Bonds") such as foreign government bonds, the stock market ("Stock and Share Market"), securities ("Securities"), the insurance and public companies ("Assurance Companies", "Public Companies") as well as on individual companies and corporations. ↩
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In the manuscript of the third book of Capital, Marx defined the clearing house as a technique of cashless payment: "The blose Oekonomisiren appears in the highest form in the clearing house, the mere exchange of bills of exchange, or the predominant function of money as a means of payment. (MEGA² II/4.2. P. 534.) ↩
-
See The Money Market Review, May 11, 1867. p. 563. ↩
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Karl Marx: On the Critique of Political Economy. 1st ed. In: MEGA² II/2. p. 243. ↩
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"How the wrong conception of the laws governing the mass of the means of circulation is only reflected in the wrong conception of the international movement of the noble metals, I have demonstrated at length in Ricardo." (Karl Marx: Das Kapital. Critique of Political Economy. Vol. 1. In: MEGA² II/5. p. 98.) Marx is referring here to his 1859 paper "On the Critique of Political Economy" (see MEGA² II/2). ↩
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In addition to the criticism of the "Bank Act" and the "crisis clause," this refers in particular to his excerpts from the books of Goschen and Foster, and further to his comments on the crisis expectations of the "Economist" and its analysis of the "greenback" currency in the United States, which caused an inflation of commodity prices ("London. 1868," pp. 5, 38 u. 144). ↩
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Marx to Engels, March 1, 1869 (IISG, Marx-Engels Nachlass, sign. L 4594). ↩
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During the Civil War, since the passage of the Legal Tender Act of 1862, the Northern states issued so-called "greenbacks," that is, inconvertible paper money not backed by gold or silver, which was declared by the central government to be legal tender ("legal tender") for economic transactions and debt repayment. ↩
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Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Third Book. In: MEGA² II/4.2. p. 542. ↩
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"[O]bsent a full bullion reserve mostly there in the Prosperity time, this treasure always forms in the quiescent and stagnant time that follows the storm." (Ibid. p. 514.) ↩
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Marx to Engels, May 31, 1873 (IISG, Marx-Engels Nachlass, Sign. L 4685). ↩
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In the only register where this is not the case, Marx discusses the crisis branches. See fn. 86. ↩
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Marx also communicated this fact to Collet Dobson Collet in his letter of November 13, 1868: "The 1866 Crisis exceptionally took place in the spring; commercial panics usually occur in autumn" (MEGAdigital). ↩
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In his index of contents to the excerpts from the "Money Market Review" in the issue "London. 1868," Marx subdivides the bullet point "2) Crisis of 1866" into seven further sub-items, also noting the crisis sectors stock, finance, and railroad companies: "A) Bank o. England and Act of 44," "B.) Theory of Panic," "C) Securities (Investments) and Panic," "D) Joint Stock Banking and other Cos. Panic since 1865, etc. (respective since 62)," "E.) Railways," "F) Plethora of Money," and "G.) Limited Liability Act of 1862." He structures the index to his excerpt booklet "1868" similarly, but without explicitly connecting the items to the 1866 crisis. The five bullet points there are: "1) Bank of England. (resp. France) and Moneymarket," "2) Stock and Share Market. Investments etc," "3) Cos.", "4) Trade" and "5) Railways" (issue "1868", pp. 84-86). ↩
-
See History of Financial Disasters. Vol. 2. ed. by Benedikt Koehler. London 2006. p. 67. ↩
-
Karl Marx: Index to: Commercial Reports of H. M.'s Consuls ... 1865-1867. In: MEGA² IV/18. pp. 654.9-10 u. 658.15. ↩
-
See ibid. ↩
-
Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Third Book. In: MEGA² II/4.2. p. 664. ↩
-
Karl Marx: Excerpts from "The Daily News," October 23, 1865. In: MEGA² IV/18. pp. 123-125. ↩
-
Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Third Book. In: MEGA² II/4.2. p. 664. ↩
-
Karl Marx: Das Kapital 〈Economic Manuscript 1868-1870〉. Second book: the circulation process of capital (manuscript II). In: MEGA² II/11. p. 17. ↩
-
Karl Marx: Das Kapital. Critique of Political Economy. Vol. 1. in: MEGA² II/5. p. 95. ↩
-
As Marx read in John Laing, from whose book he excerpted in the "Heft zum fixen Kapital und Kredit 1868" (MEGA² IV/18), at the height of the crisis the Bank of England granted advances on an unprecedented scale of more than 12 million pounds sterling in only five days. See John Laing: The Theory of Business for Busy Men. 2nd ed. London 1868. p. 276/277. ↩
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Possibly with a view to the crisis of 1866, Marx already defined the independent money crisis as a special type of crisis in the first volume of Capital: "The money crisis [...] as a phase of every crisis, is to be distinguished from the special type of crisis, which is also called a money crisis, but which came to form an entirely independent phenomenon, so that it only has a repercussive effect on industry and trade. These are crises whose center of movement is money capital, and whose immediate sphere is therefore also the sphere of the main and state actions of money capital, bank, stock exchange, finance." (MEGA² II/5. P. 94.) ↩
-
Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Third Book. In: MEGA² II/4.2. p. 543. ↩
-
Ibid. P. 595. - In Marx's manuscript, at this point it reads "d. Panic", which in MEGA² II/4.2 is mistakenly resolved to "the Panic". ↩
-
Marx to Collet Dobson Collet, November 13, 1868. in: MEGAdigital. ↩
-
Marx to Engels, February 3, 1851. in: MEGA² III/4. p. 27. ↩
-
See Karl Marx: The Bank Act of 1844 and the Monetary Crisis in England. In: New-York Daily Tribune, November 21, 1857. In: MEGA² I/16. pp. 64-68. This article provided him with a "Satisfaction" because the Bank Act actually had to be suspended shortly thereafter (MEGA² III/8. p. 210.) ↩
-
Marx to Collet Dobson Collet, November 2, 1868. in: MEGAdigital. ↩
-
Ibid. ↩
-
Marx to Collet Dobson Collet, 13 November 1868. in: MEGAdigital. ↩
-
This recalls his later statement in the letter to Louis Kugelmann of July 27, 1871: "The daily press and the telegraph, which scatters its inventions in an instant over the whole face of the earth, fabriciren more myths (and d. bourgeois mind believes and spreads them) in a day than could formerly be completed in a century" (IISG, Marx-Engels Nachlass, sign. C 133). ↩
-
At one point Marx writes: "The B.o.E. asked for Government intervention on Friday (11 May) evening only, instead of on Thursday evening, because, to some extent, it was able to calculate the limits of the pressure to be met during the interval of one day. All such calculation becomes impossible from the moment political intrigue enters the field." (Marx to Collet Dobson Collet, November 13, 1868. In: MEGAdigital.) ↩
-
Karl Marx: How Mr. Gladstone's Bank Letter of 1866 Procured a Loan of Six Millions for Russia. In: MEGA² I/21. pp. 101-103. ↩
-
Marx to Engels, November 14, 1868. in: MEGAdigital. - See also Marx to Collet Dobson Collet, November 13, 1868: "I did never assert that the Russian Gvt. could prevent the Brit. Gvt. from suspending Peel's Act. What I affirm is that, under certain conjunctures of the Money Market, the Russ. Gvt. might take the Bank unawares notwithstanding the will and the power of the Brit. Gvt. to come to her rescue." (MEGAdigital.) ↩
-
Marx to Collet Dobson Collet, November 2, 1868. in MEGAdig. ↩
-
Karl Marx: How Mr. Gladstone's Bank Letter of 1866 Procured a Loan of Six Millions for Russia. In: MEGA² I/21. p. 102. ↩
-
Marx to Collet Dobson Collet, November 2, 1868. in: MEGAdigital. - It further says: "This, however, is the least thing Peel's Act does for Russia - to keep the English money market open for her. That act puts England, the richest country in the world, literally at the mercy of the Moscovite government, the most bankrupt government in Europe." (Ibid.) ↩
-
That the Bank Act empowered the Russian government to bring down the Bank of England in the strain of a monetary crisis he described to Engels as "a new flea" that he had "put in the ears of the Urquhartites [...]" and which was now "seriously interposed between Collet u. Urquhart is debattirt" (Marx to Engels, November 14, 1868. In: MEGAdigital.) When he had promised Collet Dobson Collet's publication of his letter in the "Diplomatic Review," he again stated to Engels on November 23: "As for the Collet, I have burned my fingers with these cursed Urquartites. You know - at least I think I wrote this to you - that I, for the sheer fun of mischiefmongering, put new fleas in your ear about the Peel Act of 1844 and its useful effect for Russia. (By the way, the thing is correct within certain limits.)" (Marx to Engels, November 23, 1868. In: MEGAdigital.) ↩
-
Marx excerpts from the "Money Market Review" of April 4, 1868, under the self-chosen heading "Crisis of 1866 and Nachwehn": "Never a period of dull suffering and depression so long and continuously felt." "(1869 I issue, p. 31.) ↩
-
The crisis had destroyed as much capital as a war: "Dissipation of Capital, during the Extension Mania, almost as complete as a war expenditure." [ "London. 1868," p. 132.) ↩
-
Integrating a passage from an Engels letter, Marx also wrote about this post-crisis overproduction in the first volume of Capital: "At this moment, March 1867, the Indo-Chinese market has already been completely overrun again by the consignments of the British cotton manufacturers." (Karl Marx: Das Kapital. Critique of Political Economy. Vol. 1. in: MEGA² II/5. p. 525. - See also ibid. S. 356.) ↩
-
"The cotton market, which had previously declined to a comparatively low point, has not been so much affected by the monetary crisis as might have been expected." ("London. 1868," p. 61.) ↩
-
Thus Marx excerpts from the "Economist" of October 6, 1866: "Four years ago our cottonsupply in jeopardy. This year larger than ever before. Already the aggregate importations during the first 9 months of the year exceed the average of the 2 years before the war, and we have still large quantities to receive" ("London. 1868", p. 101). ↩
-
Marx to Engels, November 14, 1868, in MEGAdigital. - Probably at this time, Jenny Marx also broadened the focus of her selection from economic stagnation to finance and joint-stock companies (see "Origin and Tradition" for the three issues.) ↩
-
Karl Marx: Das Kapital. Critique of political economy. Vol. 1. in: MEGA² II/5. p. 212. ↩
-
Karl Marx: Das Kapital 〈Economic Manuscript 1868-1870〉. Second book: the circulation process of capital (manuscript II). In: MEGA² II/11. p. 31/32. - Similarly, Marx excerpts from the "Money Market Review: "Under limited liability the nation has, during the last few years, been intoxicated with visions of rapidly acquired wealth." ("London. 1868," p. 284.) ↩
-
Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Third Book. In: MEGA² II/4.2. p. 325. ↩
-
Ibid. S. 505. ↩
-
Ibid. S. 503. ↩
-
After Marx had already been able to prove the verb in the parliamentary report of 1857 on the mode of operation of the "Bank Act", he disputed the assertion of the "Economist" in Manuscript II to the second book of "Capital": "So dieß Wort schon völliges Bürgerrecht 1857!" (MEGA² II/11. p. 185.20 u. Erl.) ↩
-
This case, extensively studied by Marx - he even excerpts the acceptance bills printed in the "Economist" ("London. 1868," pp. 102/103) - has later also been discussed in Philip L. Cottrell: Railway Finance and the Crisis of 1866: Contractors' Bills of Exchange, and the Finance Companies. In: The Journal of Transport History. N. S. 1975. no. III. pp. 20-40, here: S. 30/31. ↩
-
Karl Marx: Das Kapital. Critique of political economy. Vol. 1. 2nd ed. In: MEGA² II/6. p. 241.38. - In a booklet probably written in 1879, Marx excerpted Strousberg's writing "Dr. Strousberg und sein Wirken von ihm selbst geschildert" (Berlin 1876) (IISG, Marx-Engels Nachlass, Sign. B 154/B 138.) ↩
-
Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Third Book. In: MEGA² II/4.2. p. 624/625. ↩
-
Ibid. S. 505. ↩
-
It could be gathered from the organs of the money market that short selling was involved in the bankruptcies of the Agra and Masterman's Bank ("London. 1868," pp. 215 u. 254) and of Overend, Gurney and Company (ibid., p. 76). ↩
-
For instance, in his excerpts from [Thomas] Mortimer: Every Man His Own Broker (MEGA² IV/7. pp. 532/533) and [David Morier Evans:] The City or the Physiology of London Business (MEGA² IV/7. p. 589 .) Marx probably also read about the speculative technique of "bearing" in 1868/1869 in the two books by Malcolm Ronald Laing Meason, "The Bubbles of Finance" (London 1865) and "The Profits of Panics" (London 1866), which are in his reference library and have many marginal annotations by him (MEGA² IV/32. nos. 885 and 886.) ↩
-
Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Drittes Buch. In: MEGA² II/4.2. p. 504. ↩
-
Marx to Collet Dobson Collet, November 13, 1868. in: MEGAdigital. ↩
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Marx's criticism of the reporting of the "Economist" and the "Times" refers, for example, to the information in the "Money Market Review" that the "Times" denied the insolvency of the old firm ("London. 1868, .) As Marx records, although the "Economist" also acknowledged that shareholders had been deceived by the prospectus, it suggested that shareholders should first pay creditors and then sue the directors of the company for damages (ibid., p. 100). ↩
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Jenny Marx (daughter) to Louis Kugelmann, December 27, 1869. in: MECW. Vol. 43. p. 548. ↩
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Marx to Engels, April 11, 1868. in : MEGAdigital. ↩
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Marx to Engels, 28 January 1869 (IISG, Marx-Engels Nachlass, sign. L 4589). - On January 1, 1869, public hearings began at the Mansion House, the official residence of the Lord Mayor of London, on the business conduct of Overend, Gurney and Company. Marx was interested in the role of Edward Watkin Edwards ("great Edwards"), who was a commissioner of the London Bankruptcy Court and admitted at the Mansion House hearings to having acted for Overend, Gurney and Company as a lawyer and agent in various large transactions for several years as a sideline for an annual salary of £5,000. Edwards's testimony at the Mansion House, which the Daily News printed on January 23, 1868 ("Trade and Finance 1868," p. [51]), attracted considerable public attention (see "Origin and Lore" for the three issues of clippings). Later, Edwards had to admit to having received a yacht from Stefanos Xenos, the Greek writer and founder of the Greek and Oriental Steam Navigation Company financed by Overend, Gurney and Company (ibid., p. [60]). ↩
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Jenny Marx (daughter) to Louis Kugelmann, December 27, 1869. in: MECW. Vol. 43. p. 548. ↩
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Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Drittes Buch. In : MEGA² II/4.2. p. 603. ↩
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Ibid. S. 663. ↩
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Ibid. ↩
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Also in a contents register Marx notes under the subheading "3) Commercial Morality", among other things, the keyword "Bescheisse von workmen" ("1869 I Heft", p. 87). ↩
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"The incredible adulteration of bread, namely in London, was first revealed by the House of Commons Committee 'on the Adulteration of Food' (1855-56) and Dr. Hassall's paper 'Adulterations detected.' [...] The Bible-believing Englishman knew that man, if not by choice of grace capitalist or landlord or sinecure, is called to eat his bread by the sweat of his brow, but he did not know that in his bread he must eat daily a certain quantity of man's sweat, impregnated with pus-blotch, cobwebs, black beetle corpses, and putrid German yeast, apart from alum, sandstone, and other pleasant mineral ingredients. " (MEGA² II/5. P. 193/194.) ↩
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Karl Marx: The Commercial Crisis in England. In: New-York Daily Tribune, December 15, 1857. in: MEGA² I/16. p. 104. ↩
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In the preface to the first volume of "Capital," Marx stated in this sense: "Less than any other can my point of view, which conceives the development of the economic formation of society as a process of natural history, make the individual responsible for conditions of which he remains socially a creature, however much he may subjectively rise above them. (MEGA² II/5. P. 14.) ↩
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This refers to the suppression of an uprising in the city of Mold by the military. See "Origins and Tradition" for the three issues of newspaper clippings. ↩
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Marx to Engels, July 3, 1869 (IISG, Marx-Engels Nachlass, Sign. L 4614.) ↩
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See also Geoffrey Elliott, The Mystery of Overend and Gurney. A Financial Scandal in Victorian London. London 2006. p. 213. ↩
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Before its passage, about one million adult males (out of about seven million) in England and Wales had the right to vote; the Reform Act doubled the number of eligible voters and had a major impact on the composition of the House of Commons. The first general election to the British House of Commons after passage of the Reform Act resulted in a Liberal Party majority of 112 seats in the House of Commons: Gladstone prevailed over his Conservative challenger Benjamin Disraeli to become Chancellor of the Exchequer. Engels remarked, "What do you say to the factory district elections? The proletariat has once again made a ghastly fool of itself." (Engels to Marx, November 18, 1868. In: MEGAdigital.) ↩
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Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Third book. In: MEGA² II/4.2. p. 502. ↩
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Ibid. ↩
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Ibid. S. 503. ↩
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Karl Marx: Das Kapital (Economic Manuscript 1863-1865.) Third Book. In: MEGA² II/4.2. p. 504. see João Antonio de Paula, Hugo Eduardo da Gama Cerqueira, Leonardo Gomes de Deus, Carlos Eduardo Suprinyak, Eduardo da Motta e Albuquerque: Investigating Financial Innovation and Stock Exchanges. Marx's Notebooks on the Crisis of 1866 and Structural Changes in Capitalism. In: Contributions to Marx-Engels Research. N. F. 2014/2015. hamburg 2016. pp. 194-217. ↩
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The Economist referred to Indian railroads as "in fact state railroads" ("London. 1868," p. 50) and confessed, "As to the outline of arterial lines of railways, the plan more coherent and useful in proportion to the outlay than in England." (Ibid, p. 87.) ↩
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Marx mentioned this famine in three places in the first volume of "Capital" (MEGA² II/5. pp. 287, 419 u. 603) and examined it in more detail in about the summer of 1868 in "Heft 3. 1868" of the "Hefte zur Agrikultur" through excerpts from British parliamentary reports (MEGA² IV/18. pp. 670-676). More detailed on the famine in: MEGA² IV/18. PP. 1132-1136. ↩
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Marx notes a second example of the necessary state intervention in joint stock companies in the context of the expansion of Indian irrigation: To capitalize the East India Irrigation and Canal Company's irrigation project for the Behar region (now Bihar), the Indian government issued a guarantee to purchase from the company all the water supplied, which was tantamount to a guarantee of high dividends ("1869 I Issue," p. 37.) - The Money Market Review, meanwhile, saw the disastrous water supply as a common feature between the Indian province and the English metropolises, and attributed this deficiency to a common denominator: the incompetence of government and the mismanagement of the British state. Marx excerpts: "If we look to our legislation and administration, as affecting national defense, national finance, army and navy, Bk.o.E., railways etc, in all we shall see the same lamentable indications of utter incapacity. The 'ruling families' have lost the art of ruling, and the leading political parties the art of legislating and governing." ("London. 1868," p. 214.) ↩
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To the second edition of the "18th Brumaire of Louis Bonaparte" (1869), Marx also adds a sentence, the beginning of which recalls this comment: "The state centralization of which modern society needs rises only on the ruins of the military-bureaucratic machinery of government which was forged in opposition to feudalism." (MEGA² I/11. app. p. 734. var. 185.30-37) ↩
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Similarly, in view of the scandals in the workhouses, the "Economist" noted: "The main source and reason of all the barbarities now exciting so much just indignation has been the desire to save expense, to keep the rates as far as possible 'down'. The management of the workhouses is mean, but at the same time much waste, peculation etc.. Local boards are not good managers of money [...] and local boards working through contracts are peculiarly liable to imposition and jobbery." ("London. 1868", p. 176.) ↩
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Karl Marx: Das Kapital. Critique of Political Economy. Vol. 1. in: MEGA² II/5. p. 527. ↩
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Ibid. S. 540/541. ↩
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Marx also stated this outrageous writing of the press already in 1867 in the first volume of "Capital", where it says: "the barbarism in the treatment of the paupers, about which the English press (Times, Pall Mall Gazette, etc.) has been screaming so loudly during the last two years, is of old date. F. Engels states in 1844 quite the same atrocities and quite the same passing clamor belonging to 'sensational literature.'" (Ibid. p. 527.) ↩
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MEGA² I/25. app. S. 851. ↩
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Karl Marx: The Civil War in France (First Draft). In: MEGA² I/22. p. 58. ↩
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Ibid. S. 55. ↩
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Karl Marx: Das Kapital 〈Economic Manuscript 1868-1870〉. Book two: the circulation process of capital (manuscript II). In: MEGA² II/11. p. 39. ↩
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Ibid. S. 304-307. ↩
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Karl Marx: Das Kapital. Critique of political economy. Vol. 1. in: MEGA² II/5. p. 12. ↩
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Marx collects the majority of these excerpts under the bullet point "13) United States" of his excerpts from the 1866/1867 volumes of the "Economist" (for a description, see "Origin and Tradition" to the issue "London. 1868"). Also in the indexes to the excerpts from the 1866/1867 volumes of the "Money Market Review" in "London. 1868" and to the excerpts from the 1868 volumes of the two periodicals in "1869 I Heft" there is a bullet point "United States" in each case. - Probably also prompted by these excerpts, Marx added to his remarks on the United States in the French edition of "Capital." "la guerre civile américaine a entraîné à sa suite une énorme dette nationale, l'exaction fiscale, la naissance de la plus vile aristocratie financière, l'inféodation d'une grande partie des terres publiques à des sociétés de spéculateurs, exploitant les chemins de fer, les mines, etc., en un mot, la centralisation la plus rapide du capital. [...] La production capitaliste y marche à pas de géant" (Karl Marx: Le capital. In: MEGA² II/7. p. 688). ↩
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Ibenda. p. 549 u. 672. ↩