Letter to Karl Marx, December 7, 1857

ENGELS TO MARX

IN LONDON

Manchester, 7 December 1857

Dear Marx,

Last week, what with prices eternally fluctuating and stocks building up, I was forced by the crisis to do a great deal of quill-pushing and so couldn't write to you but only send you Guardians.

In your last there's a SLIGHT MISTAKE. YOU say that if 'the price of corn, sugar, etc., is currently being maintained it is because their OWNERS are discounting the bills drawn on them for the same instead of selling the commodities'.^[1] They, as the drawees, cannot discount the bills; all they have to do with bills is accept them and pay them when they fall due. The HOLDERS of commodities can only protect themselves against forced selling by obtaining advances on the commodities. UNDER THE CIRCUMSTANCES this will be difficult, and in any case the amount of these advances will be reduced by the tremendous fall in the price of commodities (35% in the case of sugar!) and the certain knowledge that, as soon as some degree of forced selling becomes unavoidable, the value of the commodities will fall still further. So whereas the HOLDERS formerly received advances amounting to 2'/s or 3At of the higher value of the commodities, they will now receive at most V2 of the reduced value, i.e. about half the previously obtainable advance. This will inevitably precipitate the crash. But there is also a possibility that the MINCING LANE AND MARK LANE TRADE^[2] will continue a little longer in a slow decline before a few major bankruptcies occur. And come they will, as surely as in Liverpool and other ports. The amounts being lost on sugar, coffee, cotton, hides, dye-stuffs, silk, etc., etc., are colossal. The whole LOT of the 1857 cotton crop, estimated at 3 mill, bales (will be 3 V4), is now worth £15,000,000 less than in September. One of the houses here has in transit 35,000 sacks of coffee on each of which there will be a loss of £1. The loss on Indian cotton is just as great—33%. As the bills drawn in respect of these goods fall due, bankruptcies cannot fail to occur.

T h e big American house which, after 2 days of negotiation with the Bank of England, recently obtained a million-pound advance, thereby saving its skin, belonged to Mr Peabody, the 4TH JULY ANNIVERSARY DINNER man. 246 Latterly even Suse & Sibeth, the soundest of houses and the only people besides Frühling & Göschen whose bills continued to be negotiable in India after 1847 without a bill of lading as guarantee, have allegedly been compelled to appeal to the Bank for help. This firm, S. & S., are the greatest skinflints and so easily scared that they'd rather do no business at all than run any kind of risk.

Here things still look much as they did before. Some 8 to 10 days ago Indian and Levantine buyers suddenly appeared in the market, procured what they wanted at the lowest prices and thus helped some manufacturers heavily overstocked with cotton, yarn and cloth out of the worst of their predicament. Since Tuesday (Nov. 4th?^[3] ) everything has been quiet again. As for the manufacturers their expenses go on, SHORT time AND FULL TIME, coal and lubricants, etc., etc., remain just as before, and only WAGES have been reduced by Vs to '/2- Moreover, nothing is being sold, most of our SPINNERS AND MANUFACTURERS are getting very short of FLOATING CAPITAL and many of them are rotten to the core. 8 to 9 of the smaller ones have already come a cropper in the past few days, but that is only the first sign that the crisis has caught u p with this class. Today I heard that the Cookes, who own the huge factory in Oxford Road (Oxford Road Twist Company), have sold their HUNTERS, FOXHOUNDS, GREYHOUNDS, etc., etc., and that one of them has dismissed his servants and left his palace, which is now TO BE LET. They haven't gone bust yet, but will undoubtedly be in for it soon. Another fortnight, and the dance will really be in full swing here.

Sewell's and Neck's failure will have serious repercussions in Norway, which has not been affected hitherto.

Things in H a m b u r g look splendid. Ulberg and Cramer (Swe- den), whose debts when they failed amounted to 12,000,000 banco marks (of which 7 mill, were bills on themselves!), had a capital of not more than 300,000 marks!! A whole lot of chaps have got into hot water simply for want of sufficient cash when a single bill fell due, although they might have had in their desks a h u n d r e d times that amount in currently worthless bills. Never has panic assumed so perfect and classic a form as in H a m b u r g just now. Everything is worthless, utterly worthless, save for silver and gold. Last week also saw the failure of Christ. Matth. Schröder, a very old and wealthy house. J. H. Schröder & Co., London (his brother), telegraphed saying that if 2 million banco marks would be enough, he would send the equivalent in silver. Came the reply: 3 millions or nothing. He couldn't spare the 3 millions and Christian Matthias crashed.^[4] We have debtors in Hamburg and have no idea whether they still exist or whether they've gone bust. In Hamburg the whole imbroglio is the result of the most colossal kite-flying operations that have ever been seen. They were at their most outrageous in the dealings between Hamburg, London, Copenhagen and Stockholm. Then, with the American CRASH and the fall in the price of goods, the whole business came to light and, for the moment, Hamburg is done for commercially. The German industrialists, especially those in Berlin, Saxony and Silesia, will be very hard hit.

Cotton is now 6⁹/i6d for MIDDLING and will no doubt soon come down to 6d. But the mills here will only be able to go on full time again provided increased production does not promptly force the price above 6d. Yet that is what would immediately happen just now.

Among our local philistines the crisis has induced a strong desire for the bottle. No one can bear to stay at home alone with his cares and his family. The clubs are livening up and the consumption of LIQUOR is rising sharply. The worse of a jam a chap is in, the more frenzied his efforts to cheer himself up. And then, the morning after, what more striking example of remorse, both alcoholic and moral!

This week I shall again apply myself to the Cyclopaedia and do as many of the C articles as possible. Just now I can't work much or for very long at a stretch, but I'll do what I can.

Warmest regards to your wife and children.

Your

F. E.

Lupus is also involved in the crisis—but it will be his luck: his Samson has gone bankrupt, so his mornings are free.