This article was written in 1973. It was a key article in developing the theoretical base of the newly emerging politics of working-class autonomy.
The Crédit Mobilier, as we know, was established as an explicit move on the part of the regime to counter the dominant influence of the big private banks and the Orleanist nobility. We read in Gille that the statutes of the new Crédit Mobilier had raised considerable apprehension in ministry circles - in the Finance, Commerce and Public Works ministries especially. There were fears of the the kind of privileges being accorded to the founders, and doubts were expressed over the fact that the bank was allowed to issue shares up to five times the amount of its capital; and there was already a sense of the kind of speculative activities that it might engage in.
Behind this division of opinion lay two different conceptions of economic policy, which more or less corresponded to the present-day opposition in capitalist countries between treasury ministries and central banks. According to Péreire it was the shortage of liquidity that brought about the collapse of Louis Philippe's finances. But this view was not shared by other powerful interests. The Minister of Internal Affairs, replying on 24 October 1852 to notes from the other ministers, underlined the need for a credit institution to relaunch investment, and added: "At a time when industrial shares are multiplying and circulation is becoming more sustained, in which share prices are bound to fluctuate, this company can regularise and sustain their rate, preventing in this case those crises which are so prolific and disastrous."
But the most impressive document was the note which the greatest of the private bankers, James de Rothschild, sent to Napoleon on the very day government authorisation was given to the Crédit (15 November 1852). In his view, the future directors of the Crédit "would throw into circulation, with the backing and authorisation of the government, a considerable quantity of credit bonds dependent on changeable and uncertain guarantees." If the issue of shares were also taken into account, the result would be a flood of paper money "which at times of crisis will drag public wealth to the edge of an abyss". There should be no illusion that the basic capital and portfolio of stocks would be maintained to cover its liabilities: this would mean a severe blow in times of crisis and pure speculation in times of prosperity. Deprived of deposits or reserves, the Crédit would "either go to ruin or will take recourse to the dangerous expedient of imposing confidence by forced currency measures, which never remove disasters but only lessen their effects". Moreover, "a prey to their own caprices and interests, the irresponsible directors of this bank will come to control all the enterprises... manipulating share values, exalting one firm, humiliating another, they will impose their own conditions on all. Because of the number of shares in their possession they will be able to dictate laws over the market, laws without control or competition...
The bank will penetrate the managing boards of railways, mines and canals, appointing its own agents, and controlling these bodies with people of its choosing. It will bring into its hands and under its authority the greater part of public wealth. More than a danger, this would be a calamity, eliminating all competition, destroying all individual powers... The prosperity of the country will be made to depend on the will, ability, inexperience or interests of a small number of men who will be involved in their investment stock only indirectly, and will not have to carry the burden of responsibility for the mistakes they commit." But the greatest dangers, he concluded, were those which threatened the public finances, the regime itself. In issuing Treasury bonds the state would find itself up against a single competitor in the market, the Crédit: state loans would be faced by a single buyer. This would aggravate the effects of crisis still further. And there was always the chance that the Crédit would fall into the hands of those hostile to the regime.
The lucidity and foresight of this judgement is remarkable and was borne out by subsequent events. It is also strikingly similar to Marx's own views in the NYDT articles. Marx may well have been aware of Rothschild's public campaign against the Péreire brothers in the international press at the time when he was writing his own articles.
The epic character of the conflict between Rothschild and the Péreires has left its traces on all later historiography. From Sée to Dupont-Ferrier, the contrast between the old and new type of bank has become a common theme among historians. Landes was the first to put forward a different interpretation: he argued that the thesis of a conscious conflict between two banking systems was inexact and that their functions were complementary (private merchant banks dealing with short-term commercial credit, the joint-stock investment bank with long-term fixed capital loans). It is true that in the first board of directors of the Crédit we find key protagonists of the old school of banking. Rothschild himself associated in common ventures with the Péreires after the 1857 crisis.
Nevertheless, it was the associationist ideology of the Péreires that forced the pace, that obliged the old banks to undertake new ventures that otherwise they would not have dared embark on, and to experiment with new techniques. In a sense their ideology gave them more power and influence than their capital. Even Landes has to admit that they were the real protagonists of the banking revolution of the mid-century.
At the first board meeting of the Crédit, Isaac Péreire spoke of "putting into circulation a new agent, a new promissory money which will become the bearer of its everyday interest and which will allow the smallest of savings and the largest of capitals to bear fruit." In other words, to fill the vacuum next to ordinary bank notes, to create a "valore omnium" with an interest accruing on a day by day basis, and with rent coming out of simple circulation - these were the ambitious plans of the two Péreire brothers, whose powers of imagination and inventiveness went well beyond their actual possibilities of realisation.
Their "valore omnium" was never to be convertible, though some of the bonds of the Crédit, while remaining shares, did circulate as portable money or bank notes. The Crédit shares represented, rather, a utopian symbol of the average rate of interest, of the tendential law of capitalism. "In general, when we become involved in a particular sector of industry, we want to promote its development, not by means of competition, but by association and fusion, by the more economical use of resources, not by their opposition and mutual destruction," Péreire told the Board in 1855.
What we have here is not a utopia, but a concrete practice which gave a decisive direction to the process of capitalist concentration and which thus expressed a tendential law of capitalism. Even the devotees of the old-style banking were obliged to adapt to the moving times: in 1857 the syndicate which later gave rise to the Société Générale was formed to counteract the Crédit, under the patronage of Rothschild.
The new sectors of high organic composition, with heavy industry in pride of place, made a process of fusion and concentration indispensable. In this context the expansive capacity of the bank, its ability to extend its operations beyond French frontiers, especially to newly developing countries that were poor in resources (Italy for example), depended on the principle of association. Another idée force of the Péreires was the creation of a world capital market, a single unified monetary zone: "One of the most important results we should aim for is the possibility of creating credit shares, the interest on which would be met in all the major markets of Europe on the basis of fixed rates to be established between the currencies of all the states." The ultimate aim was an international super-money which could substitute for banknotes, commercial notes and letters of credit. "It is not gold but the force of association that is the real financial power of France in the world," was another of Péreire's maxims. This monetary objective, to replace money with credit money, showed an anticipation of capitalist tendencies which is remarkable. It represented a measured response of capital to the working-class challenge of 1848, a mature theorisation of a fully socialised capital based on the world market.
That the Bonapartist regime had to carry out this leap, and thereby disappoint the hopes of its theoretical originators, is not surprising. At the end of 1855, the government prohibited the Crédit Mobilier from launching a long-term loan by the issue of bonded notes. On 9 March 1856 a decree prohibited the issue of all new shares to the public. The activities of the Crédit were paralysed and the way was open for Rothschild's counter-attack. On 21 July 1856, the Péreires wrote to the Emperor of their bitter predicament: "The jealousies that unbridled competition have aroused against us and against the Crédit Mobilier have paralysed everything... There is a concerted campaign of attacks, lies and calumnies, not only against the Crédit Mobilier but against all the enterprises that it has promoted since its foundation."
We do not know Bonaparte's reply, but the fact that the regime conceded openings to the Rothschilds and to British capital (especially in new railway concessions) certainly does not suggest any attempt to curtail the structural transformation the Péreires had theorised and promoted. It was more a matter of running it in a way that could involve the whole financial world and the top banks, in other words all sections of the capitalist class, in a common enterprise extending beyond personal rivalries. The fruits of this were soon to become apparent: the period up to 1866 saw one of the most sustained cycles of development in particular key sectors, prior to the depression which led to the collapse of the Empire, the war of 1870 and the Commune.
But quite apart from their anticipatory role, the Péreires and the Crédit were in line with one of the key choices of the regime from the very start: that regarding monopolies. On this question there were endless battles and polemics against the imperial record, its interventionism in the economy, and its suffocation of free enterprise: this was to be the favoured ground of the radical bourgeois tradition which was to last so long in France. From this viewpoint, the relation between the new investment banks and the regime was more specific than a mere convergence or a simple acceleration of objective tendencies of capitalism. The oligarchic and monopolistic tendencies towards concentration, separation of ownership and control etc, were given an irreversible push. State power and economic power became closely linked: they were identified as such by the working class, so that the question of the relation between the class movement and insurrection became more immediate and direct. The final verdict on the Crédit was to be given by Marx in Capital Volume Three:
"If the credit system appears as the principal lever of overproduction and excessive speculation in commerce, this is simply because the reproduction process, which is elastic by nature, is now forced to its utmost limit; and this is because a great part of the social capital is applied by those who are not its owners, and who therefore proceed quite unlike owners who, when they function themselves, anxiously weigh the limits of their private capital. This only goes to show how the valorisation of capital founded on the antithetical character of capitalist production permits actual free development only up to a certain point, which is constantly broken through by the credit system. The credit system hence accelerates the material development of the productive forces and the creation of the world market, which it is the historical task of the capitalist mode of production to bring to a certain level of development, as material foundations for the new form of production. At the same time, credit accelerates the violent outbreaks of this contradiction - crises - and with these the elements of dissolution of the old mode of production.
"The credit system has a dual character immanent in it: on the one hand it develops the motive of capitalist production, enrichment by the exploitation of others' labour, into the purest and most colossal system of gambling and swindling, and restricts ever more the already small number of the exploiters of social wealth; on the other however it constitutes the form of transition towards a new mode of production. It is this dual character that gives the principal spokesmen for credit, from Law through to Isaac Péreire, their nicely mixed character of swindler and prophet." (Capital Vol. III, pp 572-3)
On 26 September 1856, Marx wrote to Engels: "This time, by the by, the thing has assumed European dimensions such as have never been seen before, and I don't suppose we'll be able to spend much longer here merely as spectators. The very fact that I've at last got round to setting up house again and sending for my books seems to me to prove that the 'mobilisation' of our persons is at hand" .
The "two-man party" (as they were described by Engels's biographer, Mayer) was preparing to move into action. Marx's attention in this letter is focussed on the price of money, the market in precious metals and their reciprocal relation. "What do you think of the aspect of the money market? There is no doubt that the increases in the discount rate on the Continent are partly associated with the appreciation of silver against gold due to the Californian and Australian gold and hence bullion dealers everywhere where gold and silver are the legal STANDARD are withdrawing the latter from the banks. But whatever the reason for the increases in the discount rate, these are at least precipitating the downfall of the vast speculative transactions and, more specifically, of the grand pawningshop at Paris. I don't believe that the great monetary crisis will outlast the winter of 1857."
The important development in the course of the later articles for the NYDT is the focus on the European ramifications of the fact that Paris was operating as a centre of speculation, and especially the effect on Britain. Marx takes up a favourite theme of his - the illusion whereby the English capitalist class considered themselves to be outside the "unsound" speculation on the Continent. John Bull is a dreamer if that's what he thinks, because he forgets that a good part of his capital - of English capital - is invested in Parisian commercial circles. The difference, if anything, is this: whereas the French speculation takes the refined forms of Saint-Simonianism, the English variety returns to the primitive form of fraud.
Marx now widens the field of his vision. It is no longer the French aspect of speculation that occupies the stage, but its relationship to the rest of the capitalist world; the object of inquiry becomes the internal nerve-system and the interconnections of the world market. In the view of the "two-man party", the prospects become increasingly optimistic: it is not only that the Bonapartist link is about to break, but that the whole chain of the European post-1848 restoration is shaking under the impact of the crisis. In his next letter, Engels enthusiastically adopts an apocalyptic view of events: "This time there'll be a dies irae such as has never been seen before: the whole of Europe's industry in ruins, all markets over-stocked (already nothing more is being shipped to India), all the propertied classes in the soup, complete bankruptcy of the bourgeoisie, war and profligacy to the nth degree. I, too, believe that it will all come to pass in 1857, and when I heard that you were again buying furniture, I promptly declared the thing to be a dead certainty and offered to take bets on it
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