V. Centre -Grandiose Hues
"We now come to the magnificent manifestations of the spirit of commerce, to the extensive operations which demonstrate the century's immense progress towards rebirth and perfectibility. Bankruptcy will here unfold its mastery and operate according to far-reaching plans, the exposition of which will prove the wisdom of the principle: Let the merchants do their job, leave them complete freedom for their lofty conceptions of deceit and plunder."
The Tacticians
"13. Fat bankruptcy is that of speculators of high standing who possess the genius of trade. Banker Dorante has two million and wishes to achieve as soon as possible by some means a fortune of four to five million. By virtue of his known capital he receives credit amounting to eight million in bills of exchange, goods, etc., so he has a fund of ten million to play with. He plunges into grand speculation and deals in goods and state securities. At the end of the year he may have lost his two million instead of doubling them; you consider him as ruined — not at all, he will have the four million just as if he had transacted good business; for he still has the eight million that he has received and by means of an 'honest' bankruptcy he arranges to pay half of this over several years. So it happens that after losing his own two million he finds himself in possession of four million that he has abstracted from the public. What a wonderful thing, this free trade! Do you now grasp why one hears it said every day of a merchant: 'He is doing very well since his bankruptcy'?
"A further opportunity for the bankrupt: Dorante, after a peculation of four million, retains intact his honour and public respect, not as a lucky villain, but as an unlucky merchant. Let us explain this.
"Dorante obtained control over public opinion while he was pondering his bankruptcy: his fêtes in town, his country parties secured him warm supporters; the gilded youth is for him; the belles sympathise with his misfortune — misfortune today is a synonym for bankruptcy; there is praise for his noble character, which deserves a better lot. It almost seems, according to what his defenders say, that the bankrupt has come off worse than those whose fortune he has destroyed. It is all blamed on political events, the unfavourable conditions and other verbiage current among notaries who are adepts at holding off attacks by irate creditors. After the first storm Dorante brings in a few middlemen, a few opportunely distributed wads of money, and soon public opinion is so well hedged in that anybody who dares to speak against Dorante is declared to be a cannibal. And besides, those whom he robbed of the biggest sums are a hundred or two hundred miles[3] away, in Hamburg or in Amsterdam; they will cool down in time, they do not matter much, their distant yapping does not affect opinion in Paris. Moreover, Dorante only causes them to lose half of their money, and custom has it that he who steals only half is more unfortunate than guilty; so that in the public mind Dorante stands clean from the start. After a month public attention is diverted by other bankruptcies which create a bigger sensation and in which between two-thirds and three-quarters went west. New splendour for Dorante, who took only half, and then it is an old forgotten story. Dorante's house begins gradually to open to the public again, his cook recovers his old sway over hearts and minds and unheeded are the cries of some black-galled creditors who have no sympathy for misfortune and have no regard for the consideration due to good society.
"Thus in less than six months ends the operation by which Dorante and those of his kind rob the public of millions, ruin families whose fortunes they hold in their hands, hurl honest merchants into bankruptcy which assimilates them to villains. Bankruptcy is the only social crime which spreads epidemically and plunges the honest man into the same disgrace as the rascal. The more honest merchant who has suffered from the bankruptcies of twenty knaves is himself forced in the end to cease his payments.
"Hence it comes that the villainous bankrupts, i.e., nine-tenths of the tribe, claim to be honest people who have been unfortunate and shout in chorus: We are to be pitied more than blamed. If you listen to them, they are all little saints, like galley-slaves, who all claim to have done nothing wrong.
"To this the supporters of free commerce will retort with talk of repressive laws, of tribunals; yes, indeed! Tribunals for people who steal several million at one go! Incidentally, the saying that petty thieves are hanged while the big ones go scot-free(1) is false as regards trade, for even the smallest bankruptcy evades justice under the protection of the merchants.
"14. Cosmopolitan bankruptcy. This is an alliance of the commercial mind with the philosophical. A bankrupt is a true cosmopolite if after exploiting one kingdom he goes through a series of bankruptcies in several others. This is a safe speculation. On arrival one is unknown, if necessary one changes one's name, as Jews do, and receives credit at once on the strength of the capital amassed as a result of an earlier bankruptcy. It is a delightful idea of modern politics to hand over the general administration of the industrial product to people who are not tied by any solid link, any big landed estate to their native country and who, as cosmopolites, can reckon on half a dozen successive bankruptcies in Paris, London, Hamburg, Trieste, Naples and Cadiz. I shall depict this bankruptcy under the heading of running fire, which has a cosmopolite as the pivotal point of its manoeuvre.
"15. Hopeful bankruptcy. This dates really from after the revolution and is hardly half a century old. Young people formerly did not make their debut in commerce so early, they were never chiefs before their thirtieth year. Now at the age of eighteen they run a house and at twenty they can have their first bankruptcy, which justifies great hopes for the future. There are some who before they are thirty have already been bankrupt three times and more than once got through one hundred talers belonging to their sleeping partner. When one sees them one says: 'he is very young to have such fame, but we are living in the age of young people.'
"16. Transcendent bankruptcy requires a far-reaching plan, an immense upswing, an office with thirty to forty clerks, numerous ships, colossal interests in all countries, then a sudden crash, a terrible somersault the counterblasts of which echo in the four corners of the world, and a chaos of liquidations on the fat of which businessmen can thrive for ten years. It is an operation in which the mercantile genius is unfolded in all its brilliance; it must entail a loss of at least three-quarters, for in this mighty picture everything must be laid out magnificently.
"17. Graded bankruptcy is that of a speculator who, by wisely directing his operation, can achieve a career of seven or eight successive bankruptcies. In this case he must adopt a different course than the one who aims at only one or two.
"The principles are:
"1) in the first bankruptcy to plunder only with measure; 50 per cent is sufficient, one must not make the people wild from the start, and the second bankruptcy would be too difficult if one discredited oneself at the first trial stroke through too great covetousness;
"2) in the second bankruptcy to plunder only very little, not more than 30 per cent, in order to prove that the bankrupt has learned something, that he already operates more skilfully and cautiously, and that he will become an accomplished merchant, a worthy 'friend of trade' , when he has recovered from this second blow;
"3) in the third to plunder abundantly, at least 80 per cent, claiming that it is no ordinary deficit, but one caused by extraordinary mischance; to see it through by pleading some critical circumstances, to draw attention to one's good behaviour in the second bankruptcy in order to prove that the blame lies entirely with events;
"4) in the fourth to plunder only 50 per cent in order to prove that one is a cautious man and knows how to remain within the appropriate bounds when not swept away by circumstances;
"5) in the fifth one can go as far as 60 per cent, because the public is accustomed to it; 10 per cent more or less spoils no speculation of this kind when public opinion has become accustomed to it; for it is known that whoever has had four bankruptcies will also have a fifth and a sixth. I have seen one bankrupt who was laughed at after his fourth bankruptcy because he wore a clerical hat as a sign of piety and good morals; he did not let himself be put off and prepared the fifth.
"The sixth and seventh are ad libitum, one has them only as age draws on and when one thinks of resting on one's laurels. Nothing is easier than to excuse a sixth bankruptcy; one is too old to change, nobody is surprised any longer. For the rest, it is argued that the government refuses to protect trade and is the cause of these little setbacks of honest businessmen.
"Let no one be surprised if I give here a few principles to be used in bankruptcy; it is a quite new art which, like economics, from which it sprang, has as yet no fixed principles, nor even a methodical nomenclature. For instance, titles have been given only to the first four stages in graded bankruptcy.
"The man who has had his first bankruptcy is simply a 'Knight', 'At the second he receives the title of 'Prince', "At the third the title of 'King', "At the fourth 'Emperor'. "For the fifth, sixth and seventh grade there are not yet any names among the members of the trade. A true 'friend of trade' must rise to the full octave. In order to be a 'harmonious' bankrupt one must have had seven tionest' bankruptcies with average losses of 50 per cent, and then a reinforced, a complete bankruptcy, as the pivotal point in the series; it is then allowed to plunder to the extent of at least 80 per cent as an indemnity for the moderation shown in the others; the fifty per cent of earlier bankruptcies is only the honest tariff, a quite small slice, giving nobody the right to censure, because it is the accepted rate for bankruptcies, a fixed price, exactly like the price of tartlets or coach fares."
bulk of readers. We shall take one of the cosmopolitan artists, whose definition I have postponed, as the pivotal point of the running fire manoeuvre.
"Judas. Iscariot arrives in France with 100,000 francs[3] capital, which he earned in his first bankruptcy; he establishes himself as a merchant in a town where he has six respected and accredited houses as rivals. In order to take away their clientele and their good reputation, Iscariot immediately begins to sell his wares at cost price, a sure way of attracting the multitude. Soon his rivals clamour in a most pitiful way about him; he laughs at their complaints and continues all the more to sell off everything at cost price.
"Thereupon the people shout so that it is a pleasure to hear them: Long live competition, long live the Jews, long live philosophy and fraternity! All commodities have become cheaper since Iscariot's arrival, and the public say to his rivals: You, Gentlemen, are the real Jews, you want to earn too much; Iscariot alone is an honest man, he is content with a moderate profit, because he runs no brilliant household as you do.—Vain are all the representations made by the old houses that Iscariot is a villain in disguise who sooner or later will come to grief; the public accuse them of jealousy and calumny and crowd more and more to the Jew.
"The calculation that this thief makes is as follows: By selling at cost price he loses only the interest on his capital, let it come to 10,000 francs annually, but ensures a good outlet for himself, makes a name for himself in the maritime towns as a good consumer and by prompt payment gets big credit. This trick is pursued for two years, after which Iscariot has earned nothing, though he has sold enormous quantities. His manoeuvre remains undetected, because Jews have only Jewish office staff, people who are the secret enemies of all nations and will never betray a villainy thought up by their 'own' people.
"When all is ripe for development, Iscariot puts in his whole credit, places giant orders in all maritime towns, buys goods on credit for the sum of 5-600,000 francs. He sends his wares abroad and sells his whole stock dirt cheap. When he has exchanged everything for money the good Iscariot vanishes with his briefcase and returns to Germany, where he has despatched the goods he bought on credit, sells them quickly and is four times as rich when he leaves France as he was on his arrival; he has 400,000 francs, and he goes to London or Leghorn to get a third bankruptcy under way.
"Now the veil suddenly falls and people come to their senses in the town where he struck his blow. People realise how dangerous it is to permit Jews to trade, those vagabonds who are not tied to anything. But this bankruptcy of Iscariot is only the first act of the farce; let us follow the running fire.
"The Jew has six rivals; we shall call them A, B, C, D, E, F. "A had been in straits for a long time, he held out without capital, only by virtue of his good reputation; but through the arrival of the Jew he is robbed of all his clients, he could pursue the race only for a year, and, not mature for these new philosophical systems which protect vagabonds, he finds himself compelled to bow down before Iscariot's tactics and to declare himself bankrupt.
"B endured the blow longer; he already saw the Jew's villainy from afar and waited for the storm to pass in order to win back his clientele which the rascal Iscariot had taken away. But meanwhile he is involved in a bankruptcy abroad; that is enough to accelerate his fall; he thought he could hold out for two years but he is obliged to go bankrupt after only fifteen months.
arid after making sacrifices for eighteen months to hold out against the competition from the Jewish blackguard, he finds himself forced to go bankrupt.
"D seems more honest than he is in reality. He still has the means to hold out, although he has been suffering from the Jew's competition for twenty months; but embittered by the losses which the latter has caused him, he lets himself be carried away by the vice of which he sees so many examples. He realises that three of his confraternity have opened up the march and that he will pass as a fourth in the alliance, pretexting real or fictitious misfortunes. Thus D, wearied by twenty months of struggle against Iscariot, sees that there is nothing cleverer for him than to go bankrupt.
"£ had advanced considerable sums to his four successively bankrupt colleagues; he thought they were all solvent, and they were indeed, until Iscariot's manoeuvre spoilt their business for them. £ finds himself stripped by the bankruptcies of these four houses; besides, he himself has no more clients; the entire public crowd to Iscariot, who sells off goods at cost price. £ sees his funds annihilated, his credit destroyed, he is pressed, and as he can no more meet his commitments, he puts an end to it by going bankrupt.
"F has sufficient means, but as a result of the five previous bankruptcies, which warrant the conclusion that his will soon follow, he has lost his credit in all the maritime towns. Moreover, some of the bankrupts, having achieved a composition, are now selling at very low prices to be able to afford their payments when the first terms expire. In order to accelerate their sales, they lose one-tenth of the value and yet earn four-tenths, because they settled at 50 per cent. This entirely crushes F, and there is nothing left for him but to go bankrupt like his rivals.
"So the establishment of one vagabond or one Jew is sufficient to disorganise the whole merchant body of a large town and to draw the most honest people into crime; for every bankruptcy is more or less a crime, no matter how much it is extenuated by excellent pretexts such as those with which I have tinted these six bankruptcies, and there is hardly ever a word of truth in any of them. The truth of the matter is that everybody avidîy seizes the opportunity to commit a theft if it remains unpunished.
"Occasionally running fire takes the form of ricochet fire, which is effective at a distance and involves a dozen houses in different countries simultaneously. They have common interests and the fall of the main house causes all the subsidiary houses concerned to crash, like a row of tin soldiers when the man at the end of the row is pushed.* This is a serious combination, worthy of figuring among the great manoeuvres, and in any case this ricochetting at a distance will have to form a special genus in a more accurate classification.
"19. Close-column bankruptcy requires favourable circumstances which serve as excuses, and prompt masses of merchants to risk the fateful leap. In this case they find support one in the other and are saved because of their number, like a regiment in close-column formation forces a way for itself with bayonets. Thus, when a favourable opportunity presents itself, bankrupts must close their ranks and post up a column of bankruptcies every day at the Stock Exchange; they must have them succeeding one another so quickly that public opinion is confused and compositions become easy to achieve in consideration of the difficult circumstances. These bankruptcies are seen occurring periodically in London; Paris too made a very beautiful attempt in close column in 1800, and it ended very happily for many 'friends of trade'.
"20. Marching-in-file bankruptcy is a series of bankruptcies which are linked together, but break out at suitable intervals of two to three months. Contrary to the close columns, which follow one another day after day, marching-in-file bankruptcies require mutual agreement so that one goes bankrupt when one's turn comes, at the very instant when the predecessor has squared his composition. For instance, A has achieved his composition three months after bankruptcy and B must instantaneously declare himself insolvent because the mediators now find the public well disposed and can say: it is the same story as in the case of A, one was bound to lead to the other, the same composition must be made. Just the same for C, who will go bankrupt three months later, then D, E, F, and G; if they maintain their co-operation properly and succeed in keeping to the interval, they achieve the same composition for all. Marching in file is a very safe manoeuvre when it is cleverly directed; but it does not fit all circumstances, and only the genius of the pros-pective bankrupt can determine in which cases it is applicable.
"21. Skirmisher bankruptcy involves at the start those starving wretches who initiate a great movement and here and there cause small bankruptcies in their retail trade. From this one concludes that business will be difficult and the campaign a fierce one. And indeed soon after that the heavy artillery is heard, bankruptcies involving millions break out and hold public attention for a long time. Then the movement ends with the rearguard skirmishers, the retailer bankrupts, the grocers in small towns, who bring the session to an end with their plunges."
The Agitators
"What! Is there not yet enough vexation and can you show us something still worse than the litany already described?
"I have only named the most honest. We are approaching the descending, despicable wing and can place here the bankrupts who operate according to far-reaching plans but disregard moral methods and compromise the lofty corporation.
"22. Bankruptcy in grand style affects all classes of society down to the smallest people, domestics and others, who deposit their modest savings with a hypocrite. Soon bankruptcy plunders landowners, the smaller middle class and the good-natured people in their hundreds. An entire town becomes involved. In general this type of bankruptcy affects particularly the non-trading classes of society and does significant harm to the corporation by arousing in the people and the petty bourgeoisie reflections which are hardly flattering for the respectable confraternity of the merchants.
"23. Large-scale bankruptcy is that of some obscure upstart who, without funds or backing, succeeds in breaking into big business and pulls off just as enormous a bankruptcy as the high and mighty bankers. It is generally wondered how this camp-follower could manage to strike up such acquaintances and to organise such a fat bankruptcy.
"This individual is the opposite of the preceding one; he takes a different road to attain the same goal, namely to excite public opinion against the tricks of the merchants and the preposterous laws which leave this scum complete freedom.
According to detailed reports, he had carried out his scheme so well that he had hoodwinked and plundered all classes, from rich capitalists to poor domestics who had saved a few talers3 in their whole life and deposited them with the mercantile dealer and let themselves be robbed by him — under the protection of the fine principle: Let the merchants do their job, they know best what is in their interest. "What robberies! What multiformity of crime in a single branch of commercial heroism! A single one, for let it be noted that bankruptcy is only the thirty-first feature of this lying trade for which science demands complete freedom under the pretext that the merchants know best what is in their interest — they know that indeed all too well, but they know only too little what is in the interest of the state and of industry, and so we are mystified by science and its theories on the absolute freedom of merchants. "
Endnotes
[3] Here and elsewhere Engels quotes Reichardt's reviews of C. Briiggemann's book, Preussens Beruf in der deutschen Staats-Entwickelung, und die nächsten Bedingungen zu seiner Erfüllung, Berlin, 1843 and A. Benda's Katechismus für wahlberechtigte Bürger in Preussen, Berlin, 1843. Both reviews were published in the Allgemeine Literatur-Zeitung, Heft VI, May 1844.