Grand Pursuit

by Sylvia Nasar

  The Exhibition season of 1862 coincided with another low point in Marx’s financial affairs. Horace Greeley, the publisher of the New York Tribune, had dropped his column, which, though entirely ghostwritten by Engels, had supplied Marx with extra cash. At one point, his money woes became so dire that he applied for a job as a railway clerk, only to be rejected for “bad handwriting” and not speaking English, and briefly considered immigrating to America. Luckily, he was like an oyster that needed a bit of grit to make his pearls. With his mind on money, he was soon writing a long essay on economics and filling up notebooks again, complaining all the while that he felt like “a machine condemned to devour books and then throw them, in a changed form, on the dunghill of history.”117 He also decided on a title for his great work: Das Kapital.118

  The hoopla surrounding the Exhibition continued to depress Marx. He would have sympathized with Fyodor Dostoyevsky’s reaction; the Russian novelist called the glass palace “a Biblical sight, something to do with Babylon, some prophecy out of the Apocalypse being fulfilled before your very eyes.”119 Yet within a year or two, Marx’s fortunes turned up again. Thanks to several unexpected legacies as well as a £375 annual subsidy from Engels, he was able to move his family to an even bigger and more imposing town house and was soon spending £500 to £600 a year, something that more than 98 percent of English families could not afford to do.120

  • • •

  Marx had almost forgotten about the Day of Judgment when it dawned.

  The launch of the eleven-thousand-ton warship the HMS Northumberland on April 17, 1866, ought to have been a day of pride, a reminder of Great Britain’s industrial and commercial domination of the world. Instead it was a fiasco. The Northumberland had been on the slips in the Millwall Iron Works yard for nearly five years. On the day of the launch, her unusually heavy weight caused her to slip off the railing—a portent, people understood later, of the precarious condition of the shipping firms and shipbuilders.

  Less than a month later, on Thursday afternoon, May 10, in the first week of the London boating season, a frightful rumor swirled through the city. The Rolls-Royce of merchant banks, Overend, Gurney & Company, considered by the average citizen to be as solid as the Royal Mint, had failed. “It is impossible to describe the terror and anxiety which took possession of men’s minds for the remainder of that and the whole of the succeeding day,” wrote the London Times’s financial correspondent. “No man felt safe.” By ten o’clock the following morning, a horde of “struggling and half frantic creditors” of both sexes and seemingly all stations of life invaded the financial district. “At noon the tumult became a rout. The doors of the most respectable Banking Houses were besieged . . . and throngs heaving and tumbling about Lombard Street made that narrow thoroughfare impassable.”121

  The New York Times bureau chief dashed off a telegram to his editors to convey that this was “a more fearful panic than has been known in the British metropolis within the memory of man.” Before an extra battalion of constables could be called out to control the crowd and before the Chancellor of the Exchequer could authorize the suspension of the Bank Charter Act, the Bank of England had lost 93 percent of its cash reserves, the British money market was frozen solid, and scores of banks and businesses that lived on credit were facing ruin. “Englishmen have been running mad on speculation . . . The day of reckoning has arrived and blank panic and blue dismay sit on the faces of all our bankers, capitalists and merchants.”122

  Among the first victims of the panic were the owners of the Millwall shipyard. The boom in shipbuilding, fueled by a worldwide arms race and trade, had more than doubled employment in London shipyards between 1861 and 1865.123 “The magnates of this trade had not only over-produced beyond all measure during the overtrading time, but they had, besides, engaged in enormous contracts on the speculation that credit would be forthcoming,” Marx gloated.124

  By the time of the Overend collapse, new orders were drying up. In fact, Overend may have been pushed over the edge because “they covered the seas with their ships” and “were incurring huge losses on their fleet of steamships.” Other casualties included the legendary railway contractors Peto and Betts. True, the most immediate victims of the panic were gullible investors and “countless swindling companies” that had sprung up to take advantage of cheap money. But the crisis of confidence forced the Bank of England to raise its benchmark interest rate from 6 percent to a crushing 10 percent, “the classic panic rate,”125 which persisted through the summer. A play called One Hundred Thousand Pounds closed after a brief run. The Times didn’t even bother to review it. The boom was over.

  When news of Black Friday reached Marx via his afternoon paper, he was in his study in North London pondering a financial crisis closer to home. One Modena Villas, where he and his family had recently moved, was a pretentious affair of the kind sprouting up all over London’s periphery, far too pricey for an unemployed journalist who had long since stopped accepting assignments in order to finish his book. Marx had rationalized the extravagance as necessary for his teenage daughters “to establish themselves socially.” Now, alas, he was broke again and his rent was overdue. So, unfortunately, was Das Kapital.

  For nearly fifteen years, Marx had been assuring his best friend and patron that his grandiose “Critique of Political Economy” was “virtually finished, that he was ready to “reveal the law of motion of modern society,” that he would drive a stake through the heart of English “political economy.” Now Engels, who had kept his nose to the grindstone in Manchester for fifteen years to support him, was becoming restive.

  In truth, the glitter of England’s prosperity had cast a pall on Marx’s project. He had written very little since 1863. A series of windfalls had purchased temporary spells of independence, but now he was back on Engels’s dole, and, for the first time, the angelic Engels was showing signs of impatience. Marx had been putting him off with graphic descriptions of a series of afflictions worthy of Job: rheumatism, liver trouble, influenza, toothache, impudent creditors, an outbreak of boils of truly biblical proportions—the list went on and on. In April 1866, Marx confessed, “Being unwell I am unable to write.” On the day after Christmas, he complained of “not writing at all for so long.” Around Easter, writing from the seaside in Margate, he admitted to having “lived for my health’s sake alone” for “more than a month.”126

  Engels suspected, accurately as it turns out, that the real source of Marx’s troubles was “dragging that damned book around” for too long: “I hope you are happily over your rheumatism and faceache and are once more sitting diligently over the book,” he wrote on May 1. “How is it coming on and when will the first volume be ready?”127 Since Das Kapital was not coming on, Marx retreated into a sulky silence.

  Like a shot of adrenaline, Black Friday had a galvanizing effect that no amount of nagging by Engels had ever achieved. Within days, the prophet was back at his desk writing furiously. In early July, he was able to report to Engels, “I have had my nose properly to the grindstone again over the past two weeks,” and to predict that he would be able to deliver the tardy manuscript “by the end of August.”128

  Who can blame the author of an apocalyptic text holding back until the time was right? By the time Marx was composing it, his melodramatic prophecy, “The death knell of capitalist private property sounds. The expropriators will be expropriated,” sounded almost plausible. Yet when he composed his famous penultimate chapter on “The General Law of Capitalist Accumulation,” he felt forced to fudge in order to make his case that the poor had gotten poorer. Quoting Gladstone on the “astonishing” and “incredible” surge in taxable income between 1853 and 1863, Marx has the liberal prime minister referring to “this intoxicating augmentation of wealth and power . . . entirely confined to classes of property.”129 The text of the speech, printed in the Times of London, shows that Gladstone actually said the opposite:

  “I should look with some degree of pain, and with much apprehe
nsion, upon this extraordinary and almost intoxicating growth, if it were my belief that it is confined to the class of persons who may be described as in easy circumstances,” he said, adding that, thanks to the rapid growth of untaxed income, “the average condition of the British laborer, we have the happiness to know, has improved during the last 20 years in a degree which we know to be extraordinary, and which we may almost pronounce to be unexampled in the history of any country and of any age.”130

  Marx’s prediction that his manuscript would be finished by the end of the summer proved wildly optimistic, but fifteen months after Black Friday, in August 1867, he was able to report to Engels that he had put the final set of galleys in the mail to the German publisher. In his note, he alluded in passing to a famous short story by the French novelist Honoré de Balzac. An artist believes a painting to be a masterpiece because he has been perfecting it for years. After unveiling the painting he looks at it for a moment before staggering back. “‘Nothing! Nothing! After ten years of work.’ He sat down and wept.”131 Alas, as Marx feared, “The Unknown Masterpiece” was an apt metaphor for his economic theory. His “mathematical proof” was greeted by an eerie silence. And in the worst economic crisis of the modern age, the great twentieth-century economist John Maynard Keynes would dismiss Das Kapital as “an obsolete economic textbook which I know to be not only scientifically erroneous but without interest or application to the modern world.”132

  Chapter II

  Must There Be a Proletariat? Marshall’s Patron Saint

  The horseman serves the horse,

  The neat-herd serves the neat,

  The merchant serves the purse,

  The eater serves his meat;

  ’Tis the day of the chattel,

  Web to weave, and corn to grind;

  Things are in the saddle,

  And ride mankind.

  —Ralph Waldo Emerson, from “Ode, Inscribed to William H. Channing”1

  The desire to put mankind into the saddle is the mainspring of most economic study.

  —Alfred Marshall2

  During the severe winter of 1866–1867, as many as a thousand men congregated daily at one of several buildings in London’s East End. When the doors parted, the crowd surged forward, shoving and shouting, to fight for tickets. From the frenzied assault and the bitter expressions of those who were unsuccessful, a passerby might have assumed that a boxing match or dogfight was starting. But there was no brightly lit ring inside, only the muddy courtyard of a parish workhouse. The yard was divided into pens furnished with large paving stones. A ticket entitled the bearer to sit on one of these slabs, seize a heavy hammer, and break up the grime-encrusted granite. Five bushels of macadam earned him three pennies and a loaf of bread.3

  The men who besieged the workhouses that January were not typical of the sickly, ragged clientele ordinarily associated with these despised institutions. They were sturdy fellows in good coats. Until a few months earlier, they had been earning a pound or two a week in the shipyards or railway tunnels and highways—more than enough to house a family of five, eat plenty of beef and butter, drink beer, and even accumulate a tiny nest egg.4 That was before Black Friday brought building on land and sea and underground to an eerie standstill and an avalanche of bankruptcies deprived thousands of their jobs; before a cholera epidemic, a freak freeze that shut down the docks for weeks, and a doubling of bread prices; before the savings of a lifetime were drained away, the last of the household objects pawned, and help from relatives exhausted.

  The poorest parishes were turning away hundreds every day while hard-pressed taxpayers like Karl Marx worried that the rising poor rates would ruin them too. Despite an outpouring of donations, private charities were overwhelmed. “What that distress is no one knows,” wrote Florence Nightingale, the heiress and hospital reformer, to a friend in January 1867:

  It is not only that there are 20,000 people out of employment at the East End, as it is paraded in every newspaper. It is that, in every parish, not less than twice and sometimes five times the usual number are on the Poor Law books. It is that all the workhouses are hospitals. It is that the ragged schools instead of being able to give one meal a day are in danger of being shut up. And this all over Marylebone, St. Pancras, the Strand, and the South of London.5

  Bread riots broke out in Greenwich, and bakers and other small shopkeepers threatened to arm themselves against angry mobs.6 In May, thousands of East End residents battled mounted police in Hyde Park, ostensibly to show their support for the Second Reform Act and the workman’s right to vote, but mostly to vent their frustration and fury at the rich.7

  Middle-class Londoners could hardly avoid knowing of the distress in their midst, for they were living in the new information age, bombarded by mail deliveries five times a day, newspapers, books, journals, lectures, and sermons. A new generation of reporters inspired by the examples of Henry Mayhew, Charles Dickens, and other journalists of the 1840s filled the pages of the Daily News, the Morning Star, the Pall Mall Gazette, the Westminster Review, Household Words, the Tory Daily Mail, and the liberal Times with sensational eyewitness accounts and firsthand investigations in the East End. Reporters disguised themselves as down-and-out workmen and spent nights in the poorhouse in order to describe its horrors. Robert Giffen, editor at the liberal Daily News, was becoming one of the foremost statisticians of his day. His first major academic article had celebrated the tripling of national wealth between 1845 and 1865, but his second, written in 1867, was markedly different in tone and point of view, an attack on harshly regressive tax proposals that fell on the “necessaries of the poor.” What upset Giffen about the 1866–67 depression, writes his biographer Roger Mason, is that its chief victims had mostly worked, had saved, and had obeyed the law while the more fortunate had donated generously to charity. But virtue had not sufficed to prevent widespread misery.8

  The resurgence of hunger, homelessness, and disease in the midst of great wealth radicalized the generation that had grown up during the boom and had taken affluence and progress for granted. Playwrights wrote dramas with proletarian heroes. Poets published works of social criticism. Professors and ministers used their pulpits to denounce British society. Typical of such jeremiads was that of the blind Liberal reformer Henry Fawcett, who held a chair in political economy at the University of Cambridge:

  We are told that our exports and imports are rapidly increasing; glowing descriptions are given of an Empire upon which the sun never sets, and of a commerce which extends over the world. Our mercantile marine is ever increasing; manufactories are augmenting in number and in magnitude. All the evidences of growing luxury are around us; there are more splendid equipages in the parks and the style of living is each year becoming more sumptuous . . . But let us look on another side of the picture; and what do we then observe? Side by side with this vast wealth, closely contiguous to all this sinful luxury there stalks the fearful specter of widespread poverty, and of growing pauperism! Visit the greatest centres of commerce and trade, and what will be observed? The direst poverty always accompanying the greatest wealth!9

  Filled with Christian guilt and the desire to do good, university graduates who had earlier anticipated becoming missionaries in remote corners of the empire were discovering that a great deal of good needed to be done at home. William Henry Fremantle, the author of The World as the Subject of Redemption, became the vicar in one of London’s poorest parishes, St. Mary’s, that year. A walk through the East End during the cholera epidemic convinced Thomas Barnardo, a member of an evangelical sect, to build orphanages for pauper children instead of going to China to convert the Chinese. A similar experience inspired “General” William Booth, the author of In Darkest England and the Way Out, to organize a Salvation Army. Samuel Barnett, an Oxford scholar, founded the University Settlers Association to encourage university students to live among the poor running soup kitchens and evening classes.

  Missionaries in their own land, these young men and women st
rove to be scientific rather than sentimental. Their vocation was not dispensing charity but converting the poor to middle-class values and habits. As Edward Denison, an Oxford graduate, remarked in 1867: “By giving alms you keep them permanently crooked. Build school-houses, pay teachers, give prizes, frame workmen’s clubs; help them to help themselves.”10

  • • •

  A young man with delicate features, silky blond hair, and shining blue eyes boarded the Glasgow-bound Great Northern Railway at London’s Euston Station. It was early June 1867. He was carrying only a walking stick and a rucksack crammed with books. His fellow passengers might have taken him for a curate or schoolmaster on a mountaineering holiday. But when the train reached Manchester, the young man put his rucksack on, jumped down onto the platform, and disappeared in the crowd.

  Before resuming his journey north to the Scottish highlands, Alfred Marshall, a twenty-four-year-old mathematician and fellow of St. John’s College in Cambridge, spent hours walking through factory districts and the surrounding slums “looking into the faces of the poorest people.” He was debating whether to make German philosophy or Austrian psychology his life’s work. These were his first steps away from metaphysics and the beginning of a dogged pursuit of social reality. He later said that these walks forced him to consider the “justification of existing conditions of society.”11