“From now on the bankers will rule”
ciaoant1 | 11.01.2012 23:16 | Analysis | History
After the July Revolution [of 1830], when the liberal banker Laffitte led his Compère, the Duke of Orleans, in triumph to the Hotel de Ville, he let fall the words: “From now on the bankers will rule”. Laffitte had betrayed the secret of the revolution.
It was not the French bourgeoisie that ruled under Louis Philippe, but one faction of it: bankers, stock-exchange kings, railway kings, owners of coal and iron mines and forests, a part of the landed proprietors associated with them – the so-called financial aristocracy. It sat on the throne, it dictated laws in the Chambers, it distributed public offices, from cabinet portfolios to tobacco bureau posts.
The industrial bourgeoisie proper formed part of the official opposition, that is, it was represented only as a minority in the Chambers. Its opposition was expressed all the more resolutely the more unalloyed the autocracy of the finance aristocracy became, and the more it imagined that its domination over the working class was insured after the revolts of 1832, 1834, and 1839, which had been drowned in blood.
[...]
The petty bourgeoisie of all gradations, and the peasantry also, were completely excluded from political power. Finally, in the official opposition or entirely outside the pays lιgal [electorate], there were the ideological representatives and spokesmen of the above classes, their savants, lawyers, doctors, etc., in a word, their so-called men of talent.
Owing to its financial straits, the July Monarchy was dependent from the beginning on the big bourgeoisie, and its dependence on the big bourgeoisie was the inexhaustible source of increasing financial straits. It was impossible to subordinate the administration of the state to the interests of national production without balancing the budget, without establishing a balance between state expenditures and revenues. And how was this balance to be established without limiting state expenditures – that is, without encroaching on interests which were so many props of the ruling system – and without redistributing taxes – that is, without shifting a considerable share of the burden of taxation onto the shoulders of the big bourgeoisie itself?
On the contrary, the faction of the bourgeoisie that ruled and legislated through the Chambers had a direct interest in the indebtedness of the state. The state deficit was really the main object of its speculation and the chief source of its enrichment. At the end of each year a new deficit. After the lapse of four or five years a new loan. And every new loan offered new opportunities to the finance aristocracy for defrauding the state, which was kept artificially on the verge of bankruptcy – it had to negotiate with the bankers under the most unfavorable conditions. Each new loan gave a further opportunity, that of plundering the public which invested its capital in state bonds by means of stock-exchange manipulations, the secrets of which the government and the majority in the Chambers were privy to. In general, the instability of state credit and the possession of state secrets gave the bankers and their associates in the Chambers and on the throne the possibility of evoking sudden, extraordinary fluctuations in the quotations of government securities, the result of which was always bound to be the ruin of a mass of smaller capitalists and the fabulously rapid enrichment of the big gamblers. As the state deficit was in the direct interest of the ruling faction of the bourgeoisie, it is clear why the extraordinary state expenditure in the last years of Louis Philippe's reign was far more than double the extraordinary state expenditure under Napoleon, indeed reached a yearly sum of nearly 400,000,000 francs, whereas the whole average annual export of France seldom attained a volume amounting to 750,000,000 francs. The enormous sums which in this way flowed through the hands of the state facilitated, moreover, swindling contracts for deliveries, bribery, defalcations, and all kinds of roguery.
The defrauding of the state, practiced wholesale in connection with loans, was repeated retail in public works. What occurred in the relations between Chamber and government became multiplied in the relations between individual departments and individual entrepreneurs.
The ruling class exploited the building of railways in the same way it exploited state expenditures in general and state loans. The Chambers piled the main burdens on the state, and secured the golden fruits to the speculating finance aristocracy. One recalls the scandals in the Chamber of Deputies when by chance it leaked out that all the members of the majority, including a number of ministers, had been interested as shareholders in the very railway constructions which as legislators they had carried out afterward at the cost of the state.
On the other hand, the smallest financial reform was wrecked through the influence of the bankers. For example, the postal reform. Rothschild protested. Was it permissible for the state to curtail sources of revenue out of which interest was to be paid on its ever increasing debt?
The July Monarchy was nothing other than a joint stock company for the exploitation of France's national wealth, whose dividends were divided among ministers, Chambers, 240,000 voters, and their adherents. Louis Philippe was the director of this company – Robert Macaire on the throne. Trade, industry, agriculture, shipping, the interests of the industrial bourgeoisie, were bound to be continually endangered and prejudiced under this system. Cheap government, governement ΰ bon marchι, was what it had inscribed on its banner in the July days.
[...]
Since the finance aristocracy made the laws, was at the head of the administration of the state, had command of all the organized public authorities, dominated public opinion through the actual state of affairs and through the press, the same prostitution, the same shameless cheating, the same mania to get rich was repeated in every sphere, from the court to the Cafι Borgne to get rich not by production, but by pocketing the already available wealth of others, Clashing every moment with the bourgeois laws themselves, an unbridled assertion of unhealthy and dissolute appetites manifested itself, particularly at the top of bourgeois society – lusts wherein wealth derived from gambling naturally seeks its satisfaction, where pleasure becomes crapuleux [debauched], where money, filth, and blood commingle. The finance aristocracy, in its mode of acquisition as well as in its pleasures, is nothing but the rebirth of the lumpenproletariat on the heights of bourgeois society.
And the nonruling factions of the French bourgeoisie cried: Corruption! The people cried: ΐ bas les grands voleurs! ΐ bas les assassins! [Down with the big thieves! Down with the assassins!] when in 1847, on the most prominent stages of bourgeois society, the same scenes were publicly enacted that regularly lead the lumpenproletariat to brothels, to workhouses and lunatic asylums, to the bar of justice, to the dungeon, and to the scaffold. The industrial bourgeoisie saw its interests endangered, the petty bourgeoisie was filled with moral indignation, the imagination of the people was offended, Paris was flooded with pamphlets – “The Rothschild Dynasty,” “Usurers Kings of the Epoch,” etc. – in which the rule of the finance aristocracy was denounced and stigmatized with greater or less wit.
[...]
The eruption of the general discontent was finally accelerated and the mood for revolt ripened by two economic world events.
The potato blight and the crop failures of 1845 and 1846 increased the general ferment among the people. [...] The second great economic event that hastened the outbreak of the revolution was a general commercial and industrial crisis in England. Already heralded in the autumn of 1845 by the wholesale reverses of the speculators in railway shares, staved off during 1846 by a number of incidents such as the impending abolition of the Corn Laws, the crisis finally burst in the autumn of 1847 with the bankruptcy of the London wholesale grocers, on the heels of which followed the insolvencies of the land banks and the closing of the factories in the English industrial districts. The after-effect of this crisis on the Continent had not yet spent itself when the February Revolution broke out.
The devastation of trade and industry caused by the economic epidemic made the autocracy of the finance aristocracy still more unbearable.
[...]
Public credit and private credit were naturally shaken. Public credit rests on confidence that the state will allow itself to be exploited by the wolves of finance. But the old state had vanished and the revolution was directed above all against the finance aristocracy. The vibrations of the last European commercial crisis had not yet ceased. Bankruptcy still followed bankruptcy.
Private credit was therefore paralyzed, circulation restricted, production at a standstill before the February Revolution broke out. The revolutionary crisis increased the commercial crisis. And if private credit rests on confidence that bourgeois production in the entire scope of its relations – the bourgeois order – will not be touched, will remain inviolate, what effect must a revolution have had which questioned the basis of bourgeois production, the economic slavery of the proletariat, which set up against the Bourse the sphinx of the Luxembourg? The uprising of the proletariat is the abolition of bourgeois credit, for it is the abolition of bourgeois production and its order. Public credit and private credit are the economic thermometer by which the intensity of a revolution can be measured. The more they fall, the more the fervor and generative power of the revolution rises.
[...]
The financial embarrassment of the Provisional Government was naturally not lessened by a theatrical stroke which robbed it of its stock of ready cash. The financial pinch could no longer be concealed and petty bourgeois, domestic servants, and workers had to pay for the pleasant surprise which had been prepared for the state creditors.
It was announced that no more money could be drawn on savings bank books for an amount of over a hundred francs. The sums deposited in the savings banks were confiscated and by decree transformed into an irredeemable state debt. This embittered the already hard-pressed petty bourgeois against the republic. Since he received state debt certificates in place of his savings bank books, he was forced to go to the Bourse in order to sell them and thus deliver himself directly into the hands of the Bourse jobbers against whom he had made the February Revolution.
The finance aristocracy, which ruled under the July Monarchy, had its high church in the Bank. Just as the Bourse governs state credit, the Bank governs commercial credit.
Directly threatened not only in its rule but in its very existence by the February Revolution, the Bank tried from the outset to discredit the republic by making the lack of credit general. It suddenly stopped the credits of the bankers, the manufacturers, and the merchants. As it did not immediately call forth a counterrevolution, this maneuver necessarily reacted on the Bank itself. The capitalists drew out the money they had deposited in the vaults of the Bank. The possessors of bank notes rushed to the pay office in order to exchange them for gold and silver.
The Provisional Government could have forced the Bank into bankruptcy without forcible interference, in a legal manner; it would have had only to remain passive and leave the Bank to its fate. The bankruptcy of the Bank would have been the deluge which in an instant would have swept from French soil the finance aristocracy, the most powerful and dangerous enemy of the republic, the golden pedestal of the July Monarchy. And once the Bank was bankrupt, the bourgeoisie itself would have had to regard it as a last desperate attempt at rescue, if the government had formed a national bank and subjected national credit to the control of the nation.
The Provisional Government, on the contrary, fixed a compulsory quotation for the notes of the Bank. It did more. It transformed all provincial banks into branches of the Banque de France and allowed it to cast its net over the whole of France. Later it pledged the state forests to the Bank as a guarantee for a loan contracted from it. In this way the February Revolution directly strengthened and enlarged the bankocracy which it should have overthrown.
Meanwhile the Provisional Government was writhing under the incubus of a growing deficit. In vain it begged for patriotic sacrifices. Only the workers threw it their alms. Recourse had to be had to a heroic measure, to the imposition of a new tax. But who was to be taxed? The Bourse wolves, the bank kings, the state creditors, the rentiers, the industrialists? That was not the way to ingratiate the republic with the bourgeoisie. That would have meant, on the one hand, to endanger state credit and commercial credit, while on the other, attempts were made to purchase them with such great sacrifices and humiliations. But someone had to fork over the cash. Who was sacrificed to bourgeois credit? Jacques le bonhomme, the peasant.
[...]
Whereas the Revolution of 1789 began by shaking the feudal burdens off the peasants, the Revolution of 1848 announced itself to the rural population by the imposition of a new tax, in order not to endanger capital and to keep its state machine going.
There was only one means by which the Provisional Government could set aside all these inconveniences and jerk the state out of its old rut – a declaration of state bankruptcy.
[...]
By honoring the bills drawn on the state by the old bourgeois society, the Provisional Government succumbed to the latter. It had become the hard-pressed debtor of bourgeois society instead of confronting it as the pressing creditor that had to collect the revolutionary debts of many years. It had to consolidate the shaky bourgeois relationships in order to fulfill obligations which are only to be fulfilled within these relationships. Credit became a condition of life for it, and the concessions to the proletariat, the promises made to it, became so many fetters which had to be struck off. The emancipation of the workers – even as a phrase – became an unbearable danger to the new republic, for it was a standing protest against the restoration of credit, which rests on undisturbed and untroubled recognition of the existing economic class relations. Therefore, it was necessary to have done with the workers.
[...]
The workers were left no choice; they had to starve or let fly. They answered on June 22 with the tremendous insurrection in which the first great battle was fought between the two classes that split modern society. It was a fight for the preservation or annihilation of the bourgeois order. The veil that shrouded the republic was torn asunder.
[...]
The Paris proletariat was forced into the June insurrection by the bourgeoisie. This sufficed to mark its doom. Its immediate, avowed needs did not drive it to engage in a fight for the forcible overthrow of the bourgeoisie, nor was it equal to this task. The Moniteur had to inform it officially that the time was past when the republic saw any occasion to bow and scrape to its illusions, and only its defeat convinced it of the truth that the slightest improvement in its position remains a utopia within the bourgeois republic, a utopia that becomes a crime as soon as it wants to become a reality. In place of the demands, exuberant in form but still limited and even bourgeois in content, whose concession the proletariat wanted to wring from the February Republic, there appeared the bold slogan of revolutionary struggle: Overthrow of the bourgeoisie! Dictatorship of the Working class!"
It was not the French bourgeoisie that ruled under Louis Philippe, but one faction of it: bankers, stock-exchange kings, railway kings, owners of coal and iron mines and forests, a part of the landed proprietors associated with them – the so-called financial aristocracy. It sat on the throne, it dictated laws in the Chambers, it distributed public offices, from cabinet portfolios to tobacco bureau posts.
The industrial bourgeoisie proper formed part of the official opposition, that is, it was represented only as a minority in the Chambers. Its opposition was expressed all the more resolutely the more unalloyed the autocracy of the finance aristocracy became, and the more it imagined that its domination over the working class was insured after the revolts of 1832, 1834, and 1839, which had been drowned in blood.
[...]
The petty bourgeoisie of all gradations, and the peasantry also, were completely excluded from political power. Finally, in the official opposition or entirely outside the pays lιgal [electorate], there were the ideological representatives and spokesmen of the above classes, their savants, lawyers, doctors, etc., in a word, their so-called men of talent.
Owing to its financial straits, the July Monarchy was dependent from the beginning on the big bourgeoisie, and its dependence on the big bourgeoisie was the inexhaustible source of increasing financial straits. It was impossible to subordinate the administration of the state to the interests of national production without balancing the budget, without establishing a balance between state expenditures and revenues. And how was this balance to be established without limiting state expenditures – that is, without encroaching on interests which were so many props of the ruling system – and without redistributing taxes – that is, without shifting a considerable share of the burden of taxation onto the shoulders of the big bourgeoisie itself?
On the contrary, the faction of the bourgeoisie that ruled and legislated through the Chambers had a direct interest in the indebtedness of the state. The state deficit was really the main object of its speculation and the chief source of its enrichment. At the end of each year a new deficit. After the lapse of four or five years a new loan. And every new loan offered new opportunities to the finance aristocracy for defrauding the state, which was kept artificially on the verge of bankruptcy – it had to negotiate with the bankers under the most unfavorable conditions. Each new loan gave a further opportunity, that of plundering the public which invested its capital in state bonds by means of stock-exchange manipulations, the secrets of which the government and the majority in the Chambers were privy to. In general, the instability of state credit and the possession of state secrets gave the bankers and their associates in the Chambers and on the throne the possibility of evoking sudden, extraordinary fluctuations in the quotations of government securities, the result of which was always bound to be the ruin of a mass of smaller capitalists and the fabulously rapid enrichment of the big gamblers. As the state deficit was in the direct interest of the ruling faction of the bourgeoisie, it is clear why the extraordinary state expenditure in the last years of Louis Philippe's reign was far more than double the extraordinary state expenditure under Napoleon, indeed reached a yearly sum of nearly 400,000,000 francs, whereas the whole average annual export of France seldom attained a volume amounting to 750,000,000 francs. The enormous sums which in this way flowed through the hands of the state facilitated, moreover, swindling contracts for deliveries, bribery, defalcations, and all kinds of roguery.
The defrauding of the state, practiced wholesale in connection with loans, was repeated retail in public works. What occurred in the relations between Chamber and government became multiplied in the relations between individual departments and individual entrepreneurs.
The ruling class exploited the building of railways in the same way it exploited state expenditures in general and state loans. The Chambers piled the main burdens on the state, and secured the golden fruits to the speculating finance aristocracy. One recalls the scandals in the Chamber of Deputies when by chance it leaked out that all the members of the majority, including a number of ministers, had been interested as shareholders in the very railway constructions which as legislators they had carried out afterward at the cost of the state.
On the other hand, the smallest financial reform was wrecked through the influence of the bankers. For example, the postal reform. Rothschild protested. Was it permissible for the state to curtail sources of revenue out of which interest was to be paid on its ever increasing debt?
The July Monarchy was nothing other than a joint stock company for the exploitation of France's national wealth, whose dividends were divided among ministers, Chambers, 240,000 voters, and their adherents. Louis Philippe was the director of this company – Robert Macaire on the throne. Trade, industry, agriculture, shipping, the interests of the industrial bourgeoisie, were bound to be continually endangered and prejudiced under this system. Cheap government, governement ΰ bon marchι, was what it had inscribed on its banner in the July days.
[...]
Since the finance aristocracy made the laws, was at the head of the administration of the state, had command of all the organized public authorities, dominated public opinion through the actual state of affairs and through the press, the same prostitution, the same shameless cheating, the same mania to get rich was repeated in every sphere, from the court to the Cafι Borgne to get rich not by production, but by pocketing the already available wealth of others, Clashing every moment with the bourgeois laws themselves, an unbridled assertion of unhealthy and dissolute appetites manifested itself, particularly at the top of bourgeois society – lusts wherein wealth derived from gambling naturally seeks its satisfaction, where pleasure becomes crapuleux [debauched], where money, filth, and blood commingle. The finance aristocracy, in its mode of acquisition as well as in its pleasures, is nothing but the rebirth of the lumpenproletariat on the heights of bourgeois society.
And the nonruling factions of the French bourgeoisie cried: Corruption! The people cried: ΐ bas les grands voleurs! ΐ bas les assassins! [Down with the big thieves! Down with the assassins!] when in 1847, on the most prominent stages of bourgeois society, the same scenes were publicly enacted that regularly lead the lumpenproletariat to brothels, to workhouses and lunatic asylums, to the bar of justice, to the dungeon, and to the scaffold. The industrial bourgeoisie saw its interests endangered, the petty bourgeoisie was filled with moral indignation, the imagination of the people was offended, Paris was flooded with pamphlets – “The Rothschild Dynasty,” “Usurers Kings of the Epoch,” etc. – in which the rule of the finance aristocracy was denounced and stigmatized with greater or less wit.
[...]
The eruption of the general discontent was finally accelerated and the mood for revolt ripened by two economic world events.
The potato blight and the crop failures of 1845 and 1846 increased the general ferment among the people. [...] The second great economic event that hastened the outbreak of the revolution was a general commercial and industrial crisis in England. Already heralded in the autumn of 1845 by the wholesale reverses of the speculators in railway shares, staved off during 1846 by a number of incidents such as the impending abolition of the Corn Laws, the crisis finally burst in the autumn of 1847 with the bankruptcy of the London wholesale grocers, on the heels of which followed the insolvencies of the land banks and the closing of the factories in the English industrial districts. The after-effect of this crisis on the Continent had not yet spent itself when the February Revolution broke out.
The devastation of trade and industry caused by the economic epidemic made the autocracy of the finance aristocracy still more unbearable.
[...]
Public credit and private credit were naturally shaken. Public credit rests on confidence that the state will allow itself to be exploited by the wolves of finance. But the old state had vanished and the revolution was directed above all against the finance aristocracy. The vibrations of the last European commercial crisis had not yet ceased. Bankruptcy still followed bankruptcy.
Private credit was therefore paralyzed, circulation restricted, production at a standstill before the February Revolution broke out. The revolutionary crisis increased the commercial crisis. And if private credit rests on confidence that bourgeois production in the entire scope of its relations – the bourgeois order – will not be touched, will remain inviolate, what effect must a revolution have had which questioned the basis of bourgeois production, the economic slavery of the proletariat, which set up against the Bourse the sphinx of the Luxembourg? The uprising of the proletariat is the abolition of bourgeois credit, for it is the abolition of bourgeois production and its order. Public credit and private credit are the economic thermometer by which the intensity of a revolution can be measured. The more they fall, the more the fervor and generative power of the revolution rises.
[...]
The financial embarrassment of the Provisional Government was naturally not lessened by a theatrical stroke which robbed it of its stock of ready cash. The financial pinch could no longer be concealed and petty bourgeois, domestic servants, and workers had to pay for the pleasant surprise which had been prepared for the state creditors.
It was announced that no more money could be drawn on savings bank books for an amount of over a hundred francs. The sums deposited in the savings banks were confiscated and by decree transformed into an irredeemable state debt. This embittered the already hard-pressed petty bourgeois against the republic. Since he received state debt certificates in place of his savings bank books, he was forced to go to the Bourse in order to sell them and thus deliver himself directly into the hands of the Bourse jobbers against whom he had made the February Revolution.
The finance aristocracy, which ruled under the July Monarchy, had its high church in the Bank. Just as the Bourse governs state credit, the Bank governs commercial credit.
Directly threatened not only in its rule but in its very existence by the February Revolution, the Bank tried from the outset to discredit the republic by making the lack of credit general. It suddenly stopped the credits of the bankers, the manufacturers, and the merchants. As it did not immediately call forth a counterrevolution, this maneuver necessarily reacted on the Bank itself. The capitalists drew out the money they had deposited in the vaults of the Bank. The possessors of bank notes rushed to the pay office in order to exchange them for gold and silver.
The Provisional Government could have forced the Bank into bankruptcy without forcible interference, in a legal manner; it would have had only to remain passive and leave the Bank to its fate. The bankruptcy of the Bank would have been the deluge which in an instant would have swept from French soil the finance aristocracy, the most powerful and dangerous enemy of the republic, the golden pedestal of the July Monarchy. And once the Bank was bankrupt, the bourgeoisie itself would have had to regard it as a last desperate attempt at rescue, if the government had formed a national bank and subjected national credit to the control of the nation.
The Provisional Government, on the contrary, fixed a compulsory quotation for the notes of the Bank. It did more. It transformed all provincial banks into branches of the Banque de France and allowed it to cast its net over the whole of France. Later it pledged the state forests to the Bank as a guarantee for a loan contracted from it. In this way the February Revolution directly strengthened and enlarged the bankocracy which it should have overthrown.
Meanwhile the Provisional Government was writhing under the incubus of a growing deficit. In vain it begged for patriotic sacrifices. Only the workers threw it their alms. Recourse had to be had to a heroic measure, to the imposition of a new tax. But who was to be taxed? The Bourse wolves, the bank kings, the state creditors, the rentiers, the industrialists? That was not the way to ingratiate the republic with the bourgeoisie. That would have meant, on the one hand, to endanger state credit and commercial credit, while on the other, attempts were made to purchase them with such great sacrifices and humiliations. But someone had to fork over the cash. Who was sacrificed to bourgeois credit? Jacques le bonhomme, the peasant.
[...]
Whereas the Revolution of 1789 began by shaking the feudal burdens off the peasants, the Revolution of 1848 announced itself to the rural population by the imposition of a new tax, in order not to endanger capital and to keep its state machine going.
There was only one means by which the Provisional Government could set aside all these inconveniences and jerk the state out of its old rut – a declaration of state bankruptcy.
[...]
By honoring the bills drawn on the state by the old bourgeois society, the Provisional Government succumbed to the latter. It had become the hard-pressed debtor of bourgeois society instead of confronting it as the pressing creditor that had to collect the revolutionary debts of many years. It had to consolidate the shaky bourgeois relationships in order to fulfill obligations which are only to be fulfilled within these relationships. Credit became a condition of life for it, and the concessions to the proletariat, the promises made to it, became so many fetters which had to be struck off. The emancipation of the workers – even as a phrase – became an unbearable danger to the new republic, for it was a standing protest against the restoration of credit, which rests on undisturbed and untroubled recognition of the existing economic class relations. Therefore, it was necessary to have done with the workers.
[...]
The workers were left no choice; they had to starve or let fly. They answered on June 22 with the tremendous insurrection in which the first great battle was fought between the two classes that split modern society. It was a fight for the preservation or annihilation of the bourgeois order. The veil that shrouded the republic was torn asunder.
[...]
The Paris proletariat was forced into the June insurrection by the bourgeoisie. This sufficed to mark its doom. Its immediate, avowed needs did not drive it to engage in a fight for the forcible overthrow of the bourgeoisie, nor was it equal to this task. The Moniteur had to inform it officially that the time was past when the republic saw any occasion to bow and scrape to its illusions, and only its defeat convinced it of the truth that the slightest improvement in its position remains a utopia within the bourgeois republic, a utopia that becomes a crime as soon as it wants to become a reality. In place of the demands, exuberant in form but still limited and even bourgeois in content, whose concession the proletariat wanted to wring from the February Republic, there appeared the bold slogan of revolutionary struggle: Overthrow of the bourgeoisie! Dictatorship of the Working class!"
ciaoant1
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