and transformations of credit, industry, and property, whereby negotiable values have acquired such a prodigious development as to constitute nothing less than a complete revolution in social economy." *

It is a revolution, however peaceably and silently effected. It is a grand coup d'etat achieved for the advantage of the reigning dynasty. We will not venture to say that it furthers the permanent interests of commerce or capital, for the declaration would be precipitate, though this appears to be the general belief. But it does enure to the benefit of the present pets of fortune. Instead of simply admiring the change, with the crowd of unreflecting and unsuspicious eulogists, we will endeavour to understand it, and, if possible, to explain its character and auguries.

That all wealth is only transmuted and consolidated labour, and that the amount of labour actually applied is the exact measure of production, are fundamental tenets of political economy, which no one in these days pretends to deny. It is equally confessed that all commerce is the exchange of products, and that products can only be bought with products; and yet, all the great operations of speculation, the whole routine by which immense fortunes are made in a few hours, or days, or weeks, or months, or years, as the case may be, add no additional production of any sort to the values with which they are connected, but only shuffle them, or more frequently the titles to them, from hand to hand. But the winning speculators contrive always to turn up a trump card, and to sweep the stakes from the board. They have studied. and mastered one lesson of scripture, and have detected a new sense in the text, "Consider the lilies of the field, how they grow they toil not, neither do they spin; and yet, I say unto you, that even Solomon, in all his glory, was not arrayed like one of these."

During the month of September, 1855, we noticed this statement in the papers :

"GREAT OPERATION.-The most magnificent speculation recorded in modern times, is one recently made by Emile Péreire, President of the Crédit Mobilier, of Paris. This distinguished financier entered recently into a negotiation with the gas companies, now supplying Paris with light, purchasing the whole of them for thirty-five million francs, or about seven million dollars. He then procured from the Emperor a concession, or charter, of consolidations, converting the whole into one company. This charter and property he afterwards disposed of to his company (Crédit

* Manuel du Spéculateur á la Bourse. Advertissement des Editeurs. p. 5. This announcement may probably be ascribed with propriety to MM. Garnier Frères, the publishers, who, throughout their neat, but inaccurately printed edition of the "Euvres de Proudhon," append very piquant, and not always complimentary, remarks to the text.

Mobilier) for the sum of fifty million francs, thus realizing a profit of fifteen million francs, or three million dollars."*

Who were the beneficiaries in this transaction? Obviously M. Emile Pèreire and his immediate associates in the enterprise. It is more doubtful, whether the stockholders of the Crédit Mobilier gained anything, for we are informed in the next paragraph, that the shares of that company would sink to fifty per cent. below par, if they were not upheld by the financial reputation of M. Emile Péreire. Do the citizens of Paris gain anything by the monopoly of gas? It is scarcely to be expected. Is there any addition to the trade or to the aggregate values of France? It is undiscoverable; the natural inference would point to an exactly opposite conclusion. What production? What increase of values has resulted from the operation? There is none apparent. All that is discernible is, that M. Emile Péreire, the illustrious Jew, who is becoming a worthy rival of the Rothschilds, has pocketed or distributed the snug profit of $3,000,000, and that nothing has been added to the quantity, the value, or the accessibility of the gas manufacture. To us this great operation suggests, among other things, the necessity for a new definition, or for a precise limitation, of the meaning of production and value, in the science of political economy. In the sense in which political economy employs these terms, there was neither production nor increase of value, yet all the principal operations of trade in our times partake of the essential character of this financial operation. Financiering has rather a discreditable import in the English language, which is not likely to be obliterated by the recent tendencies of the art.

It is not always the case, however, that the objects of speculation receive no addition of value from the manipulations of the speculators. But in those cases where the smaller fry do add some little productive value to the materials with which they operate, there is such a preposterous disproportion between the productive service rendered and the advanced price claimed, that the increase of the market value cannot be attributed to the addition of labour, or of capital, the representative of labour, but simply to the success of the speculation. In the highest and most profitable form of speculation, however, there is neither augmentation of value, nor the pretence of such augmentation. All that is done is to shuffle the cards, and deal them out; the croupier then counts the losses and gains of those that have taken part in the game. Often there is no exchange of products; no productive service or similitude of service whatever, nothing but a transfer of titles. Even this

* Numerous examples of this same character are given by the Manuel du Spéculateur, and they are familiar to all, from their daily occurrence everywhere.

exchange is frequently dispensed with, and the whole operation consists in the payment of forfeitures and the receipt of premiums. Here political economy is completely at fault, and jurisprudence is equally impotent and blind. * Instead of the exchange of

values, there is only an interchange of chances and risks. Instead of giving employment to labour, and tending towards new production, the whole transaction is limited to a brief memorandum, and a prompt settlement at the moment of maturity. The substance of the trade embraces no material reality, but the most shadowy and fluctuating contingencies; and the whole force of the machinery is expended in transferring to A, a sum of money previously in the pockets of B. The speculator on 'change offers or accepts a bid for the possibilities of the future; he trades entirely on eventualities; he discounts the fears and hopes of his brethren. But this is not his whole function; and this very important part of his vocation is to influence or control the hopes and the fears of men, so that he may gain, by every revolution of the wheel of fortune. There are laws almost everywhere against lotteries, yet the dealings of the exchange form the grandest of lotteries. In nearly every State, there is legislation against gambling; yet in despite of legislation and law, the dangers of the faro bank and of rouge et noir, are exceeded by the daily routine in the highest chambers of commerce.

The true nature of speculation, though remaining essentially the same, is disguised when it is concerned about material realities, such as the opening and improvement of mines, with the intention of a sale, at an inordinate advance; the proposals for public contracts, with the design of sub-letting, or underselling at a high profit; the organization of companies, for the sake of the anticipated premiums on the shares; the purchase of invoices with the purpose of reselling, without ever taking possession of the goods invoiced; the engrossing of sugar, cotton, tobacco, wheat, &c. &c., not for use, or immediate delivery to consumers, but with the prospect of selling out wholesale, on a rising market; the buying of lands and town-lots, with the hope or assurance of a suddenly augmented value; these, and a thousand similar examples, which are of daily occurrence, and seem to be in the regular channel of business, are all instances of speculation, and partake in a greater or less degree of its essential characteristics; but these are obscured by their combination, a trifling and partial admixture it may be, with the exchange of material values.

The intrinsic character of commercial speculation is most clearly manifested in those instances where the whole object of

*The violations of law in France by the stock-brokers and others are pointed out in the Manuel du Spéculateur, &c. Similar violations occur everywhere.

the trade is limited to the casual variations of price. When the Dutch merchants, and indeed the whole Dutch community, were bitten by the tulip mania, in 1634-1637, and sold and resold, at immense prices, tulip roots which they never owned, and even of whose existence they had frequently no assurance; or when the morus multicaulis fever raged in this country two centuries later, the folly and inanity of pure speculation were very apparent: "During the time of the tulip mania, a speculator often offered and paid large sums for a root, which he never received, and never wished to receive. Another sold roots which he never possessed or delivered. Oft did a nobleman purchase of a chimney-sweep, tulips to the amount of two thousand florins, and sell them at the same time to a farmer; and neither the nobleman, chimney-sweep, or farmer, had roots in their possession, or wished to possess them."* What was sold and purchased, in each case, was a naked expectation; and at this game of hazard large sums of money were won and lost, and the whole society was for the time demoralized. This tulip folly appears very ridiculous in modern eyes; and yet we repeated the same delusion, with equal zest, and a more extended credulity, in regard to the mulberry; and the same routine is regularly pursued, as an established business, in all the principal cities of the world. The identity between the operations of the Bourse and the transactions in tulips, was recognized by the worthy Herr Beckmann, in the latter part of the last century. "The whole of this trade was a game at hazard, as the Mississippi trade was afterwards, and as stock-jobbing is at present. The only difference between the tulip trade and stock-jobbing is, that at the end of the contract, the price in the latter is determined by the stock exchange; whereas, in the former it was determined by that at which most bargains were made." A large part of the business-if business it can be called-in which the stock-broker is engaged, consists virtually in betting on the future and contingent prices of the commodities in which he deals, or pretends to deal. In such cases the object of his trade is not the stocks, shares, or other interests which constitute the nominal subject of the bargain, but merely the rise or fall of the price as determined by the increase or diminution of the competition, and the concomitant fluctuation of the opinion, real or pretended, of their value. The intrinsic value of the stocks and shares remains for the most part unchanged during the period of the transaction; they represent identically the same property, producing exactly the same revenues, at the expiration of the term, that they did at its commencement. Their productive capacity has been neither increased nor dimin

* Beckmann, Hist. of Inventions, vol. 1, p. 27-8. Ed. Bohn. The whole article on tulips is exceedingly interesting, and merits careful and frequent consideration

ished; but the estimate of that capacity in some cases, and the market price in all, vary in consequence of the play of two influences-the law of supply and demand, and the oscillations of fancy. The latter of these considerations, though much the more important, has been entirely excluded from the treatises of political economy, thereby vitiating the science.

The changes in the relation between the supply and the demand, and also in the vibrations of the public pulse, admit of being artificially or artfully produced, and are often simultaneously generated by the same artifice. A panic is occasioned by the rapid dissemination of false intelligence, and the estimation of the stocks, bonds, or shares affected by the rumour is depressed, and thus the holders are tempted to sell out at the first opportunity, whereby the market is overstocked. At the same time other stocks are thus brought into greater demand, are more tenaciously retained, and their price is enhanced. Unfounded reports of an opposite character are also industriously circulated, the newspapers are deceived or bought, the telegraph wires are bribed or falsified, the expectation of a sudden enhancement of value is sedulously implanted, and the desired rise takes place in consequence. For, in this event, holders are anxious to retain their promising stocks, and to purchase more of the same kind, in the confident hope of the premeditated advance, the expectations of all are inflamed, and the supply of the share market, with the particular stocks so carefully manipulated, is reduced nearly to the amount designed to be sold with advantage to the operators in the game.

These changes may be produced by concert between several stockbrokers, or they may be effectuated by the action of one or two large capitalists. The actual value of the funds, stocks, shares, or whatever else may be the nominal element of the trade, undergoes no alteration; all that can be altered is the accidental or market value. When we speak of the actual value, we mean neither value in use nor value in exchange, so far as the latter is habitually identified with price. What we mean by actual value, is productive value-capacity to produce other commodities by the exchange of the annual or quarterly returns. This value undergoes no change in the hands of the stockbrokers. Either no such value exists, as in the case of uncertain and contingent railroads; or it does exist, but is not affected by or during the transactions of the exchange. As has been already remarked, the sole object of the stockbroker is to make a profit by the fluctua

* See Mill's Political Economy. B. ii, ch. 1, § 2, vol. 1, p. 516. 1st Engl. Ed. The want of definite terms, and even of definite ideas in regard to this branch of inquiry, only reveals the entire absence of any settled doctrine among political economists on the subject of value. This indecision is the capital of the stockbroker.