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 situation. In consequence of the cessation of business, and the extreme cheapness of merchandise, the manufacturer finds it impossible to pay the interest on his borrowed capital; whereupon his frightened creditors hasten to withdraw their funds. Production is suspended, and labor comes to a standstill. Then people are astonished to see capital desert commerce, and throw itself upon the Stock Exchange; and I once heard M. Blanqui bitterly lamenting the blind ignorance of capitalists. The cause of this movement of capital is very simple; but for that very reason an economist could not understand it, or rather must not explain it. The cause lies solely in competition.

I mean by competition, not only the rivalry between two parties engaged in the same business, but the general and simultaneous effort of all kinds of business to get ahead of each other. This effort is to-day so strong, that the price of merchandise scarcely covers the cost of production and distribution; so that, the wages of all laborers being lessened, nothing remains, not even interest for the capitalists.

The primary cause of commercial and industrial stagnations is, then, interest on capital,—that interest which the ancients with one accord branded with the name of usury, whenever it was paid for the use of money, but which they did not dare to condemn in the forms of house-rent, farm-rent, or profit: as if the nature of the thing lent could ever warrant a charge for the lending; that is, robbery.

In proportion to the increase received by the capitalist will be the frequency and intensity of commercial crises,—the first being given, we always can determine the two others; and vice versa. Do you wish to know the regulator of a society? Ascertain the amount of active capital; that is, the capital bearing interest, and the legal rate of this interest.