Imperialism, the Highest Stage of Capitalism  

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"The core–periphery model of global capitalist exploitation, developed by Lenin in the early 20th century, exerted much intellectual influence upon world-systems theory. World-systems theory was developed by the social scientist Immanuel Wallerstein and emphasises world systems of international labour, that divide the world into core countries, semi-periphery countries, and periphery countries. The core–periphery model also influenced dependency theory, which proposes that natural resources flow from a periphery of poor and underdeveloped countries to a core of wealthy and developed countries, enriching the latter at the expense of the former, because of how the poor countries are integrated to the global economy." --Sholem Stein

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Imperialism, the Highest Stage of Capitalism (1917), by Vladimir Lenin, describes the function of financial capital in generating profits from imperialist colonialism as the final stage of capitalist development to ensure greater profits. The essay is a synthesis of Lenin's modifications and developments of economic theories that Karl Marx formulated in Das Kapital (1867).



In his Prefaces, Lenin states that the First World War (1914–1918) was "an annexationist, predatory, plunderous war" among empires, whose historical and economic background must be studied "to understand and appraise modern war and modern politics".

In order for capitalism to generate greater profits than the home market can yield, the merging of banks and industrial cartels produces finance capitalism—the exportation and investment of capital to countries with underdeveloped economies. In turn, such financial behaviour leads to the division of the world among monopolist business companies and the great powers. Moreover, in the course of colonizing undeveloped countries, business and government eventually will engage in geopolitical conflict over the economic exploitation of large portions of the geographic world and its populaces. Therefore, imperialism is the highest (advanced) stage of capitalism, requiring monopolies (of labour and natural-resource exploitation) and the exportation of finance capital (rather than goods) to sustain colonialism, which is an integral function of said economic model. Furthermore, in the capitalist homeland, the super-profits yielded by the colonial exploitation of a people and their economy permit businessmen to bribe native politicians, labour leaders and the labour aristocracy (upper stratum of the working class) to politically thwart worker revolt (labour strike).

Theoretical development

Lenin's socio–political analysis of empire as the ultimate stage of capitalism derived from Imperialism: A Study (1902) by John A. Hobson, an English economist, and Finance Capital (Das Finanzcapital, 1910) by Rudolf Hilferding, an Austrian Marxist, whose synthesis Lenin applied to the new geopolitical circumstances of the First World War, wherein capitalist imperial competition had provoked global war among the German Empire, the British Empire, the French Empire, the Tsarist Russian Empire, and their respective allies.

Three years earlier, in 1914, rival Marxist Karl Kautsky proposed a theory of capitalist coalition, wherein the imperial powers would unite and subsume their nationalist and economic antagonisms to a system of ultra-imperialism, whereby they would jointly effect the colonialist exploitation of the underdeveloped world. Lenin countered Kautsky by proposing that the balance of power among the imperial capitalist states continually changed, thereby disallowing the political unity of ultra-imperialism, and that such instability motivated competition and conflict, rather than co-operation:

"Half a century ago, Germany was a miserable, insignificant country, if her capitalist strength is compared with that of the Britain of that time; Japan compared with Russia in the same way. Is it "conceivable that in ten or twenty years' time the relative strength will have remained unchanged?" It is out of the question."

The post-War edition of Imperialism, the Highest Stage of Capitalism (1920) identified the territorially punitive Russo–German Treaty of Brest-Litovsk (1918) and the Allied–German Treaty of Versailles (1919) as proofs that empire and hegemony—not nationalism—were the economic motivations for the First World War. In the preface to the French and German editions of the essay, Lenin proposed that revolt against the capitalist global system would be effected with the "thousand million people" of the colonies and semi-colonies (the system's weak points), rather than with the urban workers of the industrialised societies of Western Europe. He proposed that revolution would extend to the advanced (industrial) capitalist countries from the underdeveloped countries, such as Tsarist Russia, where he and the Bolsheviks had successfully seized political command of the October Revolution of 1917. In political praxis, Lenin expected to realise the theory of Imperialism, the Highest Stage of Capitalism via the Third International (1919–1943), which he intellectually and politically dominated in the July and August conferences of 1920.

Intellectual influence

The core–periphery model of global capitalist exploitation, developed by Lenin in the early 20th century, exerted much intellectual influence upon world-systems theory. World-systems theory was developed by the social scientist Immanuel Wallerstein and emphasises world systems of international labour, that divide the world into core countries, semi-periphery countries, and periphery countries. The core–periphery model also influenced dependency theory, whose proponents Raúl Prebisch, Andre Gunder Frank and Fernando Henrique Cardoso propose that natural resources flow from a periphery of poor and underdeveloped countries to a core of wealthy and developed countries, enriching the latter at the expense of the former, because of how the poor countries are integrated to the global economy.

Publication history

In 1916, Lenin wrote Imperialism, the Highest Stage of Capitalism, in Zürich, during the January–June period. The essay was first published by Zhizn i Znaniye (Life and Knowledge) Publishers, Petrograd, in mid 1917. After the First World War, he added a new Preface (6 July 1920) for the French and German editions, which was first published in the Communist International No. 18 (1921).

  • Владимир Ленин (1917), Империализм, как Высшая Стадия Капитализма, Петроград: Жизнь и Знание.
  • Vladimir Lenin (1948), Imperialism, the Highest Stage of Capitalism, London: Lawrence and Wishart.
  • Vladimir Lenin (2000), Imperialism, the Highest Stage of Capitalism, with Introduction by Prabhat Patnaik, New Delhi: LeftWord Books
  • Vladimir Lenin (2010), Imperialism, the Highest Stage of Capitalism, Penguin Classics.

See also

Full text



The pamphlet here presented to the reader was written in Zurich in the spring of 1916. In the conditions in which I was obliged to work there I naturally suffered somewhat from a short- age of French and English literature and from a serious dearth of Russian literature. However, I made use of the principal English work, Imferialiim, J. A. Hobson’s book, with all the care that, in my opinion, that work deserves.

This pamphlet was written with an eye to the tsarist censorship. Hence, I was not only forced to confine myself strictly to an exclusively theoretical, mainly economic analysis of facts, but to formulate the few necessary observations on politics witli extreme caution, by hints, in that Aesopian language— in that cursed Aesop- ian language — ^to which tsarism compelled all revolutionaries to have recourse whenever they took up their pens to write a “legal” work.*

It is very painful, in these days of liberty, to read these cramped passages of the pamphlet, crushed, as they seem, in an iron vise, distorted on account of the censor. Of how imperialism is the eve of the Socialist revolution; of how social-chauvinism (Sociah’sm in words, chauvinism in deeds) b tlie utter betrayal of Socialism, ~ “ •• "" .

  • “Aesopian,” after the Greek fable writer Aesop, was the terra applied

to the allusive and roundabout style adopted in '^egal” publications by revolutionaries in order to evade the censorship.—^//.



complete desertion to the side of the bourgeoisie; of how the split in the labour movement is bound up with the objective conditions of imperialism, etc., I had to speak in a “slavish” tongue, and I must refer the reader who is interested in the question to the volume, which is soon to appear, in which are reproduced the articles I wrote abroad in the years 1914-17. Special attention must be drawn, however, to a passage on pages 119-20. In order to show, in a guise acceptable to the censors, how shamefully the capitalists and the social-chauvinist deserters (whom Kautsky op- poses with so much inconsistency) He on the question of annexations; in order to show with what cynicism they screen the annexations of thea- capitalists, I was forced to quote as an example— Japan! The careful reader will easily substitute Russia for Japan, and Finland, Poland, Courland, the Ukraine, Khiva, Bokhara, Estho- nia or other regions peopled by non-Great Russians, for Korea.

I trust that this pamphlet will help the reader to understand the fundamental economic question, viz., the question of the eco- nomic essence of imperialism, for unless this is studied, it will be impossible to imderstand and appraise modern war and modern politics.



April 26 , 1917



As was indicated in the preface to the Russian edition, this pamphlet was written in 1916, with an eye to the tsarist censorship. I am unable to revise the whole text at the present time, nor, perhaps, is this advisable, since the main purpose of the book was and remains: to present, on the basis of the summarized returns of irrefutable bourgeois statistics, and the admissions of bourgeois scholars of all countries, a general fieture of the world capitalist system in its international relationships at the beginning of the twentieth century — on the eve of the first world imperialist war.

To a certain extent it will be useful for manjr Communists in advanced capitalist countries to convince themselves by the exam- ple of this pamphlet, legal from the standpoint of the tsarist censor ^ of the possibility~and necessity — of making use of even the .sh’ght remnants of legality which still remain at the disposal of the Com- munists, say, in contemporary America or France, after the recent wholesale arrests of Communists, in order to explain the utter falsity of social-pacifist views and hopes for “world democracyv" The most essential of what should be added to this censored pam- phlet I shall try to present in thfe preface.

1 .'



In the pamphlet I proved that the war of 1914-18 was impe- rialistic (that is, an annexationist, predatory, plunderous war) on the part of both sides; it was a war for the division of the world, for the partition and repartition of colonies, “spheres of influence” of finance capital, etc.

Proof of what was the true social, or rather, the true class character of the war is naturally to be found, not in the diplomatic history of the war, but in an analysis of the objective position of the ruling classes in all belh'gerent countries. In order to depict this objective position one must not take examples or isolated data (in view of the extreme complexity of social life it is always quite easy to select any number of examples or Separate data to prove any point one desires), but the whole of the data concerning the basis of economic life in all the belligerent countries and the whole world.

It b precisely irrefutable summarized data of this kind that I quoted in describing the fariition of the world in the period of 1876 to 1914 (in Chapter VI) and the distribution of the railways all over the world in the period of 1890 to 1913 (in Chapter VII). Railways combine within themselves the basic capitalist industries: coal, iron and steel; and they arc the most striking index of the development of international trade and bourgeois-democratic civil- ization. In the preceding chapters of the book I showed how the railways are linked up with large-scale industry, with monopolies, indicates, cartels, trusts, banks and the financial oligarchy. The uneven distribution of the railways, their uneven development — sums up, as it were, modern world monopolist capit^ism. And this summing up proves that imperialist wars are absolutely inevitable under such an economic system, as long as private property in the means of production exists.

The building of railways seems to be a simple, natural, dem- ocratic, tultaral and civilizing enterprise; that is what it is in the


)pinion of bourgeois professors, who arc paid to depict capitalist Javery in bright colours, and in the opinion of petty-bourgeois ihilistines. But as a matter of fact the capitalist threads, which in housands of different inter-crassings bind these enterprises with jrivate property in the means of production in general, have •onverted this work of construction into an instrument for oppres- ing a thousand million people (in the colonics and semi-colonies), hat is, more than half the population of the globe, which inhabits he subject countries, as well as the wage-slavesi of capital in the ands of “civilization.”

Private property based on the labour of the small proprietor, free competition, democracy, i.e., all the catchwords with which he capitalists and their press deceive the workers and the peasants — are things of the past. Capitalism has grown into a world system of colonial oppression and of the financial strangulation of the overwhelating majority of the population of the world by a handful of “advanced” countries. And this “booty” is shared between two or three powerful world marauders armed to the teeth (America, Great Britain, Japan), who involve the whole world in their war over the sharing of their booty.


The Brest-Litovsk Peace Treaty dictated by monarchist Ger- many, and later on, the much more brutal and despicable Versailles Treaty dictated by the “democratic” republics of America and France and also by “free” England, have rendered very good service to humanity by exposing both the hired coolies of the pen of imperialism and the petty-bourgeois reactionaries, although they call themselves pacifists and Socialists, who sang praises to “Wil- sonism,” and who insisted that peace and reforms were possibjp under imperialism.

The tens of miUions of dead and maimed left by the wai' — a^



war for the purpose of deciding whether the British or German group of financial marauders is to receive the lion’s share — and the two “peace treaties,” mentioned above, open the eyes of the mil- lions and tens of millions of people, who are downtrodden, oppressed, deceived and duped by the bourgeoisie, with unprecedented rapidity. Thus, out of the universal ruin caused by the war a world- wide revolutionary crisis is arising which, in spite of the protracted and difficult stages it may have to pass, cannot end in any other way than in a proletarian revolution and in its victory.

The Basle Manifesto of the Second International which in 1912 gave an appraisal of the war that ultimately broke out in 1914, and not of war in general (there are all kinds of wars, in- cluding revolutionary wars), this Manifesto is now a monument exposing the shameful bankruptcy and treachery of the heroes of the Second International.

Tliat is why I reproduce this Manifesto* as a supplement to. the present edition and again I call upon the reader to note that the heroes of the Second International are just as assiduously avoid- ing the passages of this Manifesto which speak precisely, clearly and definitely of the connection between that impending war and the proletarian revolution, as a thief avoids the place where he has committed a theft.

Special attention has been devoted in this pamphlet to a criti- cism of “Kautskyism,” the international ideological trend repre- sented in all countries of the world by the “prominent theoreti- cians” and leaders of the Second International (Otto Bauer and Co, in Austria, Ramsay MacDonald and others in England, Al- bert Thomas in France, etc., etc.) and multitudes of Socialists, reformfatSj, pacifists, bourgeois-democrats and parsons.

Omitted in this edition, — Ed,


This ideological trend is, on the one hand, a product of the disintegration and decay of the Second International, and, on the other hand, it is the inevitable fruit of the ideology of the petty bourgeoisie, who, by the whole of their conditions of life, are held captive to bourgeois and democratic prejudices.

The views held by Kautsky and his like are a complete renun- ciation of the very revolutionary principles of Marxism which he championed for decades, especially in his struggle against Socialist opportunism (Bernstein, Millerand, Hyndman, Gompers, etc.). It is not a mere accident, therefore, that the “Kautskyans” all over the world have now united in practical politics with the extreme opportunists (through the Second, or the Yellow International) and with the bourgeois governments (through bourgeois coalition governments in which Socialists take part).

The growing world proletarian revolutionary movement in general, and the Communist movement in particular, demands that the theoietical errors of “Kautskyism” be analysed and ex- posed. The more so since pacifism and “democracy” in general, which have no claim to Marxism whatever, but which, like Kaut- sky and Co., are obscuring the profundity of the contradictions of imperiah'sm and the inevitable revolutionary crisis to which it gives rise, are still very widespread all over the world. It is the bounden duty of the Party of the proletariat to combat these tend- encies and to win away from the bourgeoisie tlie small proprietors who are duped by them, and the millions of toilers’ who live in more or less petty-bourgeois conditions of life.


A few words must be said about Chapter VIII entitled: “The Parasitism and Decay of Capitalism.” As already pointed out in the text, Hilferding, ex-“Marxist,” and now a comrade-in-arms of Kautsky, one of the chief exponents of bourgeois reformist 'pol-



icy in the Independent Social-Democratic Party of Germany, has taken a step backward compared with the jrankly pacifist and re- foraist Englishman, Hobson, on this question. The international split of the whole labour movement is now quite evident (Second and Third Internationals). Armed struggle and civil war be- tween the two trends is now a recognized fact: tlie support given to Kolchak and Denikin in Russia by the Mensheviks and “So- cialist-Revolutionaries” against the Bolsheviks; the fight the Schei- demanns, Noskes and Co. have conducted in conjunction with the bourgeoisie against the Spartacists in Germany; the same thing in Finland, Poland, Hungary, etc. What is the economic basis of this historically important world phenomenon?

Predsely the parasitism and decay of capitalism which are the characteristic features of its highest historical stage of develop- ment, imperialism. As has been shown in this pamphlet, capi- tabsm has now brought to the front a handful (less than one-tenth of the inhabitants of the globe; less than one-fifth, if the most “generous” and liberal calculations were made) of very rich and very powerful states which plunder the whole world simply by “clipping coupons.” Capital exports produce an income of eight to ten billion francs per annum, according to pre-war prices and pre-war bourgeois statistics. Now, of course, they produce much more than that.

Obviously, out of such enormous sufer-frofits (since they are obtained over and above the profits which capitalists squeeze out of the workers of their “home” country) it is quite fossible to bribe the labour leaders and the upper stratum of the labour aristocracy, And the capitalists of the "advanced” countries are bribing them; they bribe them in a thousand different ways, direct and indirect, overt and covert.

, This stratum of bourgeoisified workers, of the “labour aris- tocracy,” who are quite philistine in their mode of life, in the size

their earningjs and in their outlook, serves as the principal prop


ol the Second International, and in our days, the principal iocial (not military) ‘prop of the bourgeoisie. They are the leal agents of the bourgeoisie in the labour movement, the labour lieutenants of the capitalist class, teal channels of reformism and chauvinism. In the civil war between the proletariat and the bourgeoisie they inevitably, and in no small numbers, stand side by side with the bourgeoisie, witn tne “Versaillcse” against the “Communards.”

Not the slightest progress can be made toward the solution of the practical problems of the Communist movement and of the impending social revolution unless the economic roots of this phe- nomenon are understood and unless its political and sociological sig- nificance is appreciated.

Imperialism is the eve of the proletarian social revolution. This has been confirmed since 1917 on a world -wide scale.


July fi, 1920

During the last fifteen or twenty years, especially since the Spanish-American War (1898), and the Anglo-Boer War (1899- 1902), the economic and also the political literature of the two hemispheres has more and more often adopted the term “impe- rialism” in order to define the present era. In 1902, a book by the English economist J. A. Hobson, Imfenalism, was published in London and New York. This author, who adopts the point of view of bourgeois social reformism and pacifism which, in essence, is identical with the present point of view of the ex-Marxist, K. Kautsky, gives an excellent and comprehensive description of the principal economic and political characteristics of imperialism. In 1910, there appeared in Vienna the work of the Austrian Marxist, Rudolf Hilferding, Finance Capital (Russian edition: Moscow, 1912). In spite of the mistake the author commits qn the theory of money, and in spite of a certain inclination on his part to rec- oncile Marxism with opportunism, this work gives a very valuable theoretical analysis, as its sub-tide’ tells us, of “the latest phase of capitalist development.” Indeed, what has been said of imperialism during the last few years, especially in a great many magazine and newspaper articles, and also in the resolutions, for example, of the Chemnitz and Basle Congresses which took place in the autumn at 1912, has scarcely gone beyond the ideas put forward, or, more exactly, summed up by the two writers mentioned above.



Later on we shall try to show briefly, and as simply as pos- sible, the connection and relationships between the frincipal eco- nomic features of imperialism. We shall not be able to deal with non-economic aspects of the question, however much they deserve to be dealt with. We have put references to literature and other notes which, perhaps, would not interest all readers, at the end of this pamphlet.


The enormous growth of industry and the remarkably rapid process of concentration of production in ever-larger enterprises represent one of the most characteristic features of capitalism, Mod- ern censuses of production give very complete and exact data on this process.

In Germany, for example, for every 1,000 industrial enter- prises, large enterprises, ie., those employing more than 50 work- ers, numbered three in 1882, six in 1895 and nine in 1907} and out of every 100 workers employed, this group of enterprises em- ployed 22, 30 and 37 respectively. Concentration of production, however, is much more intense than the concentration of workers, since labour in the large enterprises is much more productive. This is shown by the figures available on steam engines and electric motors.

If we take what in Germany is called industry in the broad sense of the term, that is, including commerce, transport", etc., we get the following picture: Large-scale enterprises 30,588 out of a total of 3,265,623, that is to say, 0.9 per cent. These large-scale enterprises employ 5,700,000 workers out of a total of 14-, 400,000, that is 39.4 per cent; they use 6,660,000 steam horse power ^5Ut of a total of 8,800,000, that is 75.3 per cent and 1,200,000 kilo-



watts of electricity out of a total of 1,500,000, that is, 77.2 per cent.

Less than one-hundredth of the total enterprises utilize more than three-fourths of the steam and electric power! Two million nine hundred and seventy thousand small enterprises (employing up to five workers), representing 91 per cent of the total, utilize only 7 per cent of the steam and electric power. Tens of thou- sands of large-scale enterprises are everything; millions of small ones are nothing.

In 1907, there were in Gennany 586 establishments employ- ing one thousand and more workem. They employed nearly one- tenth (1,380,000) of the total number of workers employed in industry and utilized almost one-tUrd. (32 per cent) of tlie total steam and electric power employed. As we sihall see, money cap- ital and the banks make this superiority of a handful of the largest enterprises still more overwhelming, in the most literal sense of tlie word, since millions of small, medium, and even some big "masters” are in fact in complete Subjection to some hundreds of millionaire financiers.

In another advanced country of modern capitalism, the United States of America, the growth of the concentration of production is still greater. Here statistics single out industry in the narrow sense of the word and group enterprises according to the viilue of their annual output. In 1904 large-scale ’enterprises with an annual output of one milh'on dollars and over numbered 1,900 (out of 216,180, Le., 0.9 per cent). These employed 1,400,000 workers (out of 5,500,000, *.c., 25.6 per cent) and their com- bined annual output was valued at $5,600,000,000 (out of $14,800,000,000, i.e,^ 38 per cent). Five years later, in 1909, the corresponding figures were: large-scale enterprises: 3,060 out of — - ■ ■

• AnnOen its DmS’chtn Reicies (Annals of the German Empire)’, WfU Eshn, pp. 16<-69.


268,491, M., 1.1 per cent, employing; 2,000,000 workers out of 6,600,000, «.<?., 30.5 per cent, output: $9,000,000,000 out of $20,700,000,000, i.c., 43.8 per cent.-**

Almost half the total production of all the enterprises of the country was carried on by a hundredth part of those enterprises! These 3,000 giant enterprises embrace 268 branches of industiy. From this it can be seen that, at a certain stage of its development, concentration itself, as it weie, leads right to monopoly; foi a score or so of giant enterprises can easily arrive at an agreement, while on the other hand, the difficulty of competition and the tendency towards monopoly arise from the very dimensions of the enter- prises. This transformation of competition into monopoly is one of the most important — if not the most important — phenomena of modern capitalist economy, and we must deal with it in greater de- tail. But first we must clear up one possible misunderstanding.

American statistics say: 3,000 giant enterprises in 250 branches of industry, as if there were only a dozen large-scale enterprises for each branch of industry.

But tin's is not the case. Not in every branch of industry are there large-scale enterprises; and moreover, a very important fea- ture of capitalism in its highest stage of development is so-called combined 'production, that is to say, the grouping in a single en- terprise of different branches of industry, which either represent the consecutive stages in the working up of raw materials (for ex- ample, the smelting of iron ore into pig iron, the conversion of pig iron into steel, and then, perhaps, the manufacture of steel goods) — or are auxiliary to one another (for example, the utiliza- tion of waste, or of by-products, the manufacture of packing ma- terials, etc.).

“Combination,” writes Hilfcrding, '‘levels out the fluctua- tions of trade and therefore assures to the combined enterprise

  • Statistical Abstract of the Visited Stales, 1912, p. 292j^



a more stable rate of profit. Secondly, combination has the ef- fect of eliminating trading. Thirdly, it has the effect of ren- dering possible technical improvements, and, consequently, the acquisition of super-profits over and above those obtained by the ‘pure’ (i.e., non-combined) enterprises. Fourthly, it strengthens the position of the combined enterprises compared with that of ‘pure’ enterprises in the competitive struggle in periods of serious depression, when the fall in prices of raw materials does not keep pace with the fall in prices of mann- factured articles.”'’

The German bourgeois economist, Heymann, who has writ- ten a book especially on “mixed,” that is, combined, enterprises in the German iron industry, says: “Pure enterprises perish, crushed between the high price of raw material and the low price of the finished product.” Thus we get the following picture:

“There remain, on the one hand, the great coal companies, producing millions of tons yearly, strongly organized in their coal syndicate, and on the other, the great steel works, closely allied to the coal mines, having their own steel syndicate. These giant enterprises, producing 400,000 tons of steel per annum, with correspondingly extensive coal, ore and blast fur- nace plants, as well as the manufacturing of finislied good.s, em- ploying 10,000 workers quartered in company houses, yome- times owning their own ports and railroads, are today the standard type of German iron and steel plant. And concentra- tion still continues. Individual enterprises are becoming larger and larger. An ever-increasing number of enterprises in one given industry, or in several different industries, join together in giant combines, backed up and controlled by half a dozen Berlin batiks. In the German mining industry, the truth of

  • Kvdolf Hilferdiag, 0<u Ftiutnukafiidl (Finance Capital), Vienna,

p, ZH.


the teachings of Karl Marx on concentration is definitely proved, at any rate in a country like ours where it is protected by tariffs and freight rates. The German mining industiy is ripe for expropriation.”*

Such is the conclusion which a conscientious bourgeois econo- mist, and such are exceptional, had to arrive at. It must be noted that he seems to place Germany in a special category because her industries are protected by high tariffs. But the concentration of industry and the formation of monopolist manufacturers’ combines, cartels, syndicates, etc., could only be accelerated by these circum- stances. It is extremely important to note that in free-trade Eng- land, concentration also leads to monopoly, although somewhat later and perhaps in another form. Professor Hermann Levy, in his .special work of research entitled Monopolies, Cartels tmd Trusts, based on data on British economic development, writes as follows:

“In Great Britain it is the size of the enterprise and its capacity which harbour a monopolist tendency. This, for one thing, is due to the fact that the great inve.stmenl of capital per enterprise, once the concentration movement has commenced, gives rise to increasing demands for new capital for the new enterprises and thereby renders their launching more diflScult. Moreover (and this seems to us to be the more important point) every new enterprise that wants to keep pace with the gigantic • enterprises that have arisen on the basis of the.„process of con- centration would produce such an enormous quantity of surplus goods that it could only dispose of them either by being able to sell them profitably as a result of an enormous increase in demand or by immediately forcing down prices to a level that would be unprofitable both for itself and for the monopoly combines.”

  • Hans Gideon Heymann, Bit gemischten Werke im deutsc/ten G?o«-

eisengewerbe {Combined Plants in the Gentian Big Iron Itidiislrv), Sti'ttgart, 1904, pp. 2S6 .uul :7S.



In England, unlike other countries where protective tariffs facilitate the formation of cartels, monopolist alliances of enterfre- neurs, cartels and trusts, arise m the majority of cases only when the number of competing enterprises is reduced to “a couple of dozen or so.” “Here the influence of the concentration movement on the formation of large industrial monopolies in a whole sphere of industry stands out with crystal clarity.”*

Fifty years ago, when Marx was writing Cafital, free competi- tion appeared to most economists to be a ‘‘natural law.” OflBcial science tried, by a conspiracy of silence, to kill the works of Marx, which by a theoretical and historical analysis of capitalism showed that free competition gives rise to the concentration of production, which, in turn, at a certain stage of development, leads to mo- nopoly. Today, monopoly has become a fact. The economists are writmg mountains of hooks in which they describe tlie diverse manifestations of monopoly, and continue to declare in chorus that “Marxism is refuted.” But facts are stubborn things, as the English proverb says, and they have to be reckoned with, whether wc like it or not. The facts show that differences between capitalist coun- tries, e.g,, in the matter of protection or free trade, only give rise to insignificant variations in the form of monopolies or in the mo- ment of their appearance; and that the rise of monopolies, as the result of the concentration of production, is a general and funda- mental law of ^he present stage of development of capitalism. * For Europe, the time when the new capitalism definitely super- seded tile old can be established with fair precision; it was the be- ginning of the twentieth century. In one of the latest compilations on the history of the “formation of monopolies,” we read;

“A few isolated examples of capitalist monopoly could be cited from the period preceding I 860 ; in these could be dis-

  • Hentiann I.evy, Mam foie, Kartelle und Trmti (M onofolies, Car~

'■tit aiid Tnut*)- Jena, 1909, pp. 2S6, 290, 298.


cerned the embryo of the forms that are common today; but all this undoubtedly represents pre-history. The real beginning of modern monopoly goes back, at the earliest, to the ’sixties. The firs? important period of development of monopoly com- menced with the international industrial depression of the ’sev- enties and lasted until the beginning of the ’nineties. ... If we examine the question on a European scale, we will find that the development of free competition reached its apex in the ’sixties and ’seventies. Then it was that England completed the construction of its old style capitalist organization. In Germany, tliis organization had entered into a fierce struggle with handi- craft and domestic industry, and had begun to create for itself its own forms of existence. . . .”

“The great revolutionization commenced with the crash of 1873, or rather, the depression which followed it and which, with hjirdly discernible interruptions in the early ’eighties, and the unusually violent, but short-lived boom about 1889, marks twenty-two years of European economic history. . . . During the short boom of 1889-90, the system of cartels was widely resorted to in order to take advantage of the favourable busi- ness conditions. An ill-considered policy drove prices still higher than would have been the case otherwise and nearly all these cartels perished ingloriously in the smash. Another five-year period of bad trade and low prices followed, but a new spirit reigned in industry; the depression was no longer regarded as something to be taken for granted; it was regarded as nothing more than a pause before another boom.

“The cartel movement entered its second epoch: instead of being a transitory phenomenon, the cartels became one of the foundations of economic life. They are winning one field after another, primarily, the raw materials industry. At thj beginning of the ’nineties die cartel system had already acquired — in the organization of tfie coke .syndicate on the model of



In England, unlike other countries wheie protective tariffs lacilitate the formation of cartels, monopolist alliances of enterfre- neursy cartels and trusts, arise in the majority of cases only when the number of competing enterprises is reduced to “a couple of dozen or so.” “Here the influence of the concentration movement on the formation of large industrial monopolies in a whole sphere of industry stands out with crystal clarity.”*

Fifty years ago, when Marx was writing Cafital, free competi- tion appeared to most economists to be a “natural law.” OflScial science tried, by a conspiracy of silence, to kill the works of Marx, which by a theoretical and historical analysis of capitalism showed that free competition gives rise to the concentration of production, which, in turn, at a certain stage of development, leads to mo- nopoly. Today, monopoly has become a fact. The economists are writing mountains of hooks in which they describe the diverse manifestations of monopoly, and continue to declare in chorus that "Marxism is refuted.” But facts are stubborn things, as the English proverb says, and they have to be reckoned with, whether we like it or not. The facts show that differences between capitalist coun- tries, e,g., in the matter of protection or free trade, only give rise to insignificant variations in the form of monopolies or in the mo- ment of their appearance; and that the rise of monopolies, as the result of the concentration of production, is a general and funda- mental law of -^he present stage of development of capitalism. • For Europe, the time when the new capitalism definitely super- seded the old can be established with fair predsion; it was the be- ginning of the twentieth century. In one of the latest compilations on the history of the “formation of monopolies,” we read:

“A few isolated examples of capitalist monopoly could be cited from the period preceding 1860 ; in these could be dis-

• Hermann Levy, Monofofe, Kartelle und Trusts (^Monofolies, Car- Ittlt mi Trustt)- Jena, 1909, yp. 2S6, 290, 298,


cerned the embryo of the forms that are common today; but all this undoubtedly represents pre-history. The real beginning of modern monopoly goes back, at the earliest, to the ’sixties. The first' important period of development of monopoly com- menced with the international industrial depression of the ’sev- enties and lasted until the beginning of the ’nineties. ... If we examine the question on a European scale, we will find that the development of free competition reached its apex in the ’sixties and ’seventies. Then it was that England completed the construction of its old style capitalist organization. In Germany, this organization had entered into a fierce struggle with handi- craft and domestic industry, and had begun to create for itself its own forms of existence. . .

“The great revolutionization commenced with the crash of 1873, or rather, the depression which followed it and which, with hardly discernible interruptions in the early ’eighties, and the unusually violent, but short-lived boom about 1889, marks twenty-two years of European economic history. . . . During the short boom of 1889-90, the system of cartels was widely resorted to in order to take advantage of the favourable busi- ness conditions. An ill-considered policy drove prices still higher than would have been the case otherwise and nearly all these cartels perished ingloriously in the smash. Another five-year period of bad trade and low prices followed, but a new spirit reigned in industry; the depression was no longer regarded as something to be taken for granted: it was regarded as nothing more than a pause before another boom.

“The cartel movement entered its second epoch: instead of being a transitory phenomenon, the cartels became one of the foundations of economic life. They are winning one field after another, primarily, the raw materials industry. At thf beginning of the ’nineties the cartel system had already acquired — in the organization of the coke syndicate on the model of



which the coal syndicate was later formed — a cartel technique which could hardly be improved. For the first time the great boom at the close of the nineteenth century and the crisis of 1900-03 occurred entirely — in the mining and iron industries at least — ^under the aegis of the cartels. And while at that time it appeared to be something novel, now the general public takes it for granted^ that large spheres of economic life have been, as a general rule, systematically removed from the realm of free competition.”*

Thus, the principal stages in the history of monopolies are the following; 1) 1860-70, the highest stage, the apex of development of free competition; monopoly is in the barely discernible, em- biyonic stage. 2) After the crisis of 1873, a wide zone of develop- ment of cartels; but they are still the exception. They are not yet durable. They are still a transitory phenomenon. 3) The boom at the end of the nineteenth century and the crisis of 1900-03. Cartels become one of the foundations of the whole of economic life. Capi- talism has been transformed into imperialism.

Cartels come to an agreement on the conditions of sale, terms of payment, etc. They divide the markets among themselves. They fix the quantity of goods to be produced. They fix prices. They divide the profits among the various enterprises, etc.

The number of cartels in Germany was estimated at about 250 in 1896 andrat 385 in 1905, with about 12,000 firms participat-


  • Th. Vogelstein; Hie [imnsueile Orgamsatioa der ka^talistiscfien

Industrie wid die Monopolbildmgen {Financial Organisation of the Capi- talist Industry and. the Formation of Monopolies) in Grundriss der Sosial- Skottotnik (Outline of Social Econotnics), Tubingen, 1914, Sec. VI, p, 222 et seq. See also by the wme author; Kapitahstische Organisationsformen in der wodernen Grossindustrie (Capitalist Organteatiomd Forms in Modem Fig Industry, Vol, I). Organisationsformen der Bisemndustrie und der TesttHindttSirie in England md America (The Organisational Forms of the frtm and Textile Industry of England and America, Vol. I, 'Leipzig,


ifig.* But it is generally recognized that these figures are underes- tiinations. From the statistics oX German industry for 1907 we quoted above, it is evident tliat even 12,000 large enteiprises control certainly more than half the steam and electric power used in the country. In the United States of America, the number of trusts in 1900 was 185 and in 1907, 250. American statistics divide all industrial enterprises into three categories, according to whether they belong to individuals, to private firms or to corporations. These latter in 1904 comprised 23.6 per cent, and in 1909, 25.9 per cent more than one-fourth of the total industrial enterprises in the country). These employed in 1904, 70.6 per cent, and in 1909, 75.6 per cent (*.e., more than three-fourths) of the total wage earners. Their ovitput amounted at these two dates to S10,900,000,000 and to 116,300,000,000, U, to 73.7 per cent .and 79.0 per cent of the total Respectively,

Not infrequently cartels and trusts concentrate in their hands seven or eight-tenths of the total output of a given branch of industiy. The Rhinc-Westphalian Coal Syndicate, at its foundation in 1893, controlled 86.7 per cent of tlie total coal output of the area. In 1910, it controlled 95.4 per cent.’’”" The monopoly so created assures 'enormous pi'ofits, and leads to the formation of technical productive units of formidable magnitude.

'■ Dr. Riesser, Die deutschen Grossbanken und ihre Honzentration im Zusammenhange mit der Entiukklung der Getafntwirtsekaft in Deutschland {The German Big Banks and Their Concentration in Connection with the Develoftnent of the General Economy in Germany), fourth edition, 1912, pp. 14S-+9 1 cf, also Robert Liefmanu, Kartelle und Trusts und die Weiter- bildung der ‘oolkswirtsc/mftlichen Organisation {Cartels and Tiu,ts and tlte Further Develofment of Economic Organkation), second edition, 1910, p. 25.

  • '•' Dr. Frite Kestner, Der Organisatiomstviang. Bine Untersuehmg

fiber die Kamffe snoitchen Koriellen und d ussenseitern {The Compulsion To Organize. An hvoestigation of the Struggles Between Cartels and Out- siders), Berlin, 1912, p. 11, ,,



The famous Standard Od Company in the United States was founded in 1900:

“It has an authorized capital of 8150,000,000. It issued

8100.000. 000 common and 8106,000,000 preferred stock. From 1900 to 1907 the following dividends were paid on this stock 48, 48, 45, 44, 36, 40, 40, 40 per cent in the respec- tive years, i.e., in all, 8367,000,000. From 1882 to 1907, out of a total net profits to the amount of 8889,000,000,

8606.000. 000 were distributed in dividends, and the rest went to reserve capital. . , .* In 1907 the various works of the United States Steel Corporation employed no less than 210,180 workers and other employees. The largest enterprise in the German mining industry, the Gelsenkirchen Mining Company {Gelsenklrchener Bergiverksgesellschaft) employed in 1908, 46,048 peisons.”’*"*' In 1902, the United States Steel Corpora- tion had already produced 9,000,000 tons of steel.*"'** *** Its out- put constituted in 1901, 66.3 per cent, and in 1908, 56,1 per cent of the total output of steel in the United States.**** The output of mineral ore was 43.9 per cent and 46.3 per cent respectively.

The report of tlie American Government Commission on Trusts states:

“The superiority of the trust over competitors is due to the magnitude of its enterprises and their excellent technical equipment. Since its inception, the Tobacco Trust has devoted all its efforts to the substitution of mechanical for manual labour

  • Robert Liefmann, BiltHigmgs- unA Finamienmgtgesellschaften,

Bhit Studit iiber de» modemen Kafifalisnuts und das Effektemuessn {Bolding and Finance Companies — A Study in Modem Capitalism and Seemties), first edition, Jena, 19*09, p. 212.

•• m., p. 218.

      • Dr, S. Tsebierschky, Kariellt und Trusts, GSttingen, 1903, p. 13.
  • •** Th. Vogdstein, OrganUationsformen {Fomts of Organization),


on an extensive scale. Witii this end in view it bought up all patents that had anything to do with the manufacture of tobacco and spent enormous sums for this purpose. Many of these patents at first proved to be of no use, and had to be modified by the engineers employed by the trust. At the end of 1906, two subsidiary companies were formed solely to acquire patents. With the same object in view, the trust built its own foundries, machine shops and repair shops. One of these estab- lishments, that in Brooklyn, employs on the average 300 work- ers; here experiments are carried out on inventions concerning the manufacture of cigarettes, cheroots, snuff, tinfoil for pack- ing, boxes, etc. Here, also, inventions are perfected. . , .* Other trusts also employ so-called developing engineers whose busi- ness it is to devise new methods of production and to test technical improvements. The United States Steel Corporation grants big bonuses to its workers and engineers for all inven- tions suitable for raising technical efficiency, or for reducing cost of production,”**

In German large-scale industry, e.g.^ in tire chemical industry, which has developed so enormously during these last few decades, the promotion of technical improvement is organized in the same way. By 1908 the process of concentration of production had al- ready given rise to two main “groups” which, in their way, were in the nature of monopolies. First these groups represented “dual alb'ances” of two pairs of big factories, each having a capital of from twenty to twenty-one miUion marks: on the one hand, the former Meister Factory at HSchst and the Cassella Factory at

• Refort of the Commission of Corforations on tise Tobacco Issisistry, Washington, 1909, p. 266, cited according to Dr. Paul Tafel, Die nordame- rikantschen Trusts und Hire Wirkungen auf den Fortschritt der Technik {North American Trusts and Their Effect on Technical Progress), Statt- gart, 1913, p. 48.

•* Dr P Tafel. ibid., on. 48-49.



Frankfuit-am-Main; and on the otlier liand, the aniline and soda factory at Ludwigshafen and the former Bayer factory at Elberfeld, In 1905, one of these groups, and in 1908 the other* group, each concluded a separate agreement with yet another big factory. The result was the formation of two “triple alliances,” each with a capitiil of from forty to fifty million marks. And these “alliances” began to come “close” to one another, to reach “an understanding” about prices, etc.*

Competition becomes transformed into monopoly. The result is immense progress in the socialization of production. In particular, the process of technical invention and improvement becomes so- cialized.

This is no longer the old type of free competition between manufacturers, scattered and out of touch with one another, and producing for an unknown market. Concentration has reached the point at which it is possible to make an approximate estimate of all sources of raw materials (for example, the iron ore deposits) of a country and even, as we shall see, of several countries, or of the whole world. Not only are such estimates made, but these sources are captured by gigantic monopolist combines. An approxi- mate estimate of the capacity of markets is also made, and the com- bines “divide” them up amongst themselves by agreement. Skilled labour is monopolized, the best engineers are engaged; the means of transport a^ captured: railways in America, shipping companies in Europe and America. Capitalism in its imperialist stage arrives at the thresliold of the most complete socialization of production. In spite of themselves, the capitalists are dragged as it were, into a new social order, a transitional social order from complete free competition to complete socialization.

Production becomes social, but appropriation remains private.

  • Biemr, op, ei#., third edition, pp, S+7-+8. The newspapers (June

t<^rt the formation of a new gigantic trust which is to combine infdustxy of Germany.


The social means of pioductKin icmain tlic private [iropeity ol a few. I’he general framework of lormally recognr/ed fiec compe- tition remains, but the yoke of a few monopolists on the rest of the population becomes a hundred times heavier, moic burdensome and intolerable.

The German economist, Kcstnei, has written a book especially on the subject of “the struggle between the cartels and outsiders,” %.e.y enterprises outside the cartels. He entitled his work Com^ulmy Organizntiony although, m older to present capitalism in its true light, he should have given it the title; “Compulsory Submission to Monopolist Combines.” This book is edifying if only for the list it gives of the modem and civilized methods that monopolist combines resort to in their striving towards “organization.” 'I'licy are as follows: I. Stopping supplies of raw materials ("one of the most important methods of compelling adherence to tlie cartel”);

2. Stopping the supply of laboiii by means of “alliances” (f.e., of agreements between employers and the trade unions by which t'lc latter permit their members to work only in cartelized enterprises);

3. Cutting off deliveries; 4. Closing of tr.ade outlets; 5. Agree- ments with the buyers, by which the latter undertake to trade only with the cartels; 6. Systematic price cutting (to ruin “outside” firms, ie,, those which refuse to submit to the monopolists. Millions are spent in order to sell goods for a certain time below tlrcir cost price; there were instances when the price of benzine was tlius lowered from 40 to 22 marks, i.r., reduced almost by h.alf ! ) ; 7. Stopping credits; 8. Boycott.

This is no longer competition between small and large-scale industry, or between technically developed and backward enter- prises. We see here the monopolies throttling those which do not submit to them, to their yoke, to their dictation. This is how this process is reflected in the mind of a bourgeois economist:

“Even in the purely economic sphere,” writes Kestner,

“a certain chanac is taking place from commercial activity in

3 ],


the old sense of the word towards organizational-speculative activity. The greatest success no longer goes to the merchant whose technical and commercial experience enables him best of all to understand the needs of the buyer, and who is able to discover and effectively ‘awaken’ a latent demand j it goes to the speculative genius [?!] who knows how to estimate, or even only to sense in advance the organizational development and the possibilities of connections between individual enter- * prises and the banks.”*

Translated into ordinary human language this means that the development of capitah'sm has arrived at a stage when, although commodity production still “reigns” and continues to be regarded as the basis of economic life, it has in reality been undermined and the big profits go to the “geniuses” of financial manipulation. At the basis of these swindles and manipulations lies socialized produc- tion; but the immense progress of humanity, which achieved this socialization, goes to benefit the speculators. We shall see later how “on these grounds” reactionary, petty-bourgeois critics of capitalist i imperialism dream of going back to “free,” “peaceful,” and : “honest” competition.

“The prolonged raising of prices which results from the formation of cartels,” says Kestner, “has hitherto been observed only in relation to the most important means of production, particularly coal, iron and potassium, but has never been ob- served for any length of time in "relation to manufactured goods. Similarly, the increase in profits resulting from tliat has been limited only to the industries which produce means of produc- tion. To this observation we must add that the raw materials industry not only has secured advantages from the cartel for- ^ mation in regard to the growth of income and profitableness, to the detriment of the finished goods industry, but that it has

  • 0^, «<., p, 24.1. — Ei,


secured also a dominating fosition over the latter, which did

not exist under free competition.”*

The words which we have italicized reveal the essence of the case which the bourgeois economists admit so rarely and so unwill- ingly, and which the modern defenders of opportunism, led by K. Kautsky, so zealously try to evade and brush aside. Domination, and violence that is associated with it, such are the relationships that are most typical of the “latest phase of capitalist development”; this is what must inevitably result, and has resulted, from the formation of all-powerful economic monopolies.

We will give one more example of the methods employed by the cartels. It is particularly easy for cartels and monopolies to arise when it is possible to capture all the sources of raw materials, or at least, the most important of them. It would be wrong, how- ever, to assume that monopolies do not arise in other industries in which it is impossible to corner the sources of raw materials. The cement industry, for mstance, can find its vaw materials every- where. Yet in Germany it is strongly cartelized. The cement manufacturers have formed regional syndicates: South German, Rhine-Westphalian, etc. The prices fixed are monopoly prices: 230 to 280 marks a carload (at a cost price of 180 marks! ). The enterprises pay a dividend of from 12 per cent to 16 per cent — and let us not forget that the "geniuses” of modern speculation know how to pocket big profits besides those they, draw by way of dividends. Now, in order to prevent competition in such a profit- able industiy, the monopolists resort to sundry stratagems. For example, they spread disquieting rumours about the situation in their industry. Anonymous warnings are pubb'shed in the news- papers, like the following: “Investors, don’t place your capital in the cement industry!” They buy up “outsiders” (those outside the syndicates) and pay them “indemnities” of 60,000, 80,000 and

  • [bid,, p. 254.

3 (>


even 150,000 itwiksi."' Monopoly everywhere hews a path for itself without scruple as to the means, from “modestly” buying off competitors to tlie Ameiican device of “employing” dynamite against them.

^'he statement that caitels can abolish crises is a fable spread by bourgeois economists who at all costs desire to place capitalism in a favourable light. On the contrary, when monopoly appears in ariiiiu branches of industry, it increases and intensifies the anarchy inherent in capitalist production as a whole. The disparity between the development of agriculture and that of industry, which is characteristic of capitalism, is increased. The privileged position of the most highly cartelized industry, so-called heav^ industiy, especially coal and iron, causes “a still greater lack of concerted organization” in other blanches of production — as Jeidels, the author of one of the best works on the “relationship of the German big banks to industry,” admits. ■* •* "

“The more developed an economic system is,” writes Liefmann, one of the most unblushing apologists of capitalism, “the more it resorts to risky enterprises, or enterprises abroad, to those which need a great deal of time to develop, or finally, to those which are only of local importance.”***

The increased risk is connected in the long run with the pro- digious increase of capital, which overflows the brim, as it were, flows abroad/- etc. At the same time the extremely rapid rate of technical progress gives rise more and more to disturbances in the

  • Luflwig Eschwcgc. Zement in Die Bank, 1909, Vol. I, p. 115 et seq.

•* Otto Jeidels, Das Verh&ltnis der deutschen Grossbanken aur Industrie, suit besonderer Beriicksichtigang der -Eisenindustrie (The Relationship of thjs German Big Banks la Industry, with Special Reference to the Iron Muttry), Leipzig:, 1905, p. 271.

•“* Ulofaert Liefmann, Seteiligungs- tmd Finanssierungsgesellschaften (HaUing smd fttsumce Companies^ p. 434,


co-ordination between the various spheres of national economy, to anarchy and crises. Liefmann is obliged to admit that:

“In all probability mankind will see further important technical revolutions in the near future which will also affect the organization of the economic g^stem. . . , (For example, electric- ity and aviation). ... As a general rule, in such periods of radi- cal economic change, speculation develops on a large scale.”'** Crises of every kind — economic crises more frequently, but not only these — in their turn increase very considerably the tendency towards concentration and monopoly. In this connection, the following I'eflections of Jeidels on the significance of the crisis of 1900, which, as we have already seen, marked the turning point in the history of modern monopofy, are exceedingly instructive.

“Side by side with the giant plants in the basic industries, the crisis of 1900 found many plants organized on lines that today would be considered obsolete, the ‘pure’ [non-combined] plants, which had arisen on the crest oi the industrial boom. The fall in pikes and the falling off in demand put these ‘pure’ enterprises into a precarious position, which did not affect the big combined enterprises at all or only affected them for a very short time. As a consequence of this the crisis of 1900 lesulted in a far greater concentration of industry than former crises, like that of 1873. The latter crisis also produced a sort of selection of the best equipped enterprises, but owing to the level of technical development at that time, this selection could not place the firms which successfully emerged from the crisis in a position of monopoly. Such a durable monopoly exists to a high degree in the gigantic enterprises in the modern iron and steel and electrical industries, and to a lesser degree, in the engineering industry and certain metal, transport and other

  • Robert Liefmann, BetelUguugs- mid Fmanziemytgsgesellscfiaftm

{Holding and Finanie Companies), p *166. ^



branches in consequence of their complicated technique, their extensive organizations and the magnitude of their capital.”* Monopoly! This is the last word in the “latest phase of capital- ist development.” But we shall only have a very insufficient, in- complete, and poor notion of the real power and the significance of modern monopolies if we do not take into consideration the part played by the banka.

  • TftSfliBli. eii. ft. fflft


The principal and primary function of banks is to serve as an ntermediaiy in the making of payments. In doing so they trans- form inactive money capital into active capital, tliat is, into capital producing a profit; they collect all kinds of money revenues and ilace them at the disposal of the capitalist class.

As banking develops and becomes concentrated in a small lumber of establishments the banks become transformed, and instead of being modest intermediaries they become powerful monopolies having at their command almost the whole of the money capital of all the capitalists and small businessmen and also r large part of the means of production and of the sources of raw materials of the given country and in a number of countries. The iransformation of numerous modest intermediaries i^tto a handful if monopolists represents one of tlie fundamental processes in the transformation of capitalism into capitalist imperialism. For this •eason we must first of all deal with the concentration of banking.

In 1907-08, the combined deposits of the German joint-stock lanks, each having a capital of more than a million marks, amount- id to 7,000,000,000 marks, while in 1912-13, they amounted 0 9,800,000,000 marks. Thus in five years their deposits increased y 40 per cent. Of the 2,800,000,000 increase, 2,750,000,000 vas divided amongst 57 banks, each having a capitaLof more than




U),(H)(),i)iU) inarkb. 'Jlic distrilnilion i>f tlie deposits between big iiml small banks was as follows:"*



In ') bb» Ileilin bunks

In the othci

4S b.inkb with .1 c.tpitil of mote than ill) million m.uks


In 115 banks with a capital of 1 to 10 mil- lion marks

In the small banks with a capital of less than 1 million marks










Tile small banks are beimr pushed aside by the big banks, of winch nine concentrate in their hands almost half the total deposits. Hut we luu'e left out of account many important details, for in- stance, the transformation of numerous small banks practically into Iiranches of big banks, etc. Of this we shall speak later on.

At the end of 1913, Schulze-Gaevernitz estimated the deposits in the nine big Berlin banks at 5,100,000,000 marks, out of a total of about 10,000,(100,1)00 marks. Taking into account not only the deposits, but the total resources of these banks, this author wrote:

“At the end of 1909, the nine big Berlin banks, together -Mith their affiliated banks controlled 11,276,000,000 marks, that is, about 83 per cent of the total German bank capital. The Deutsche Bank, tvhich together vjith its affiliated banks controls nearl}' 3,000,000,000 marks, represents, parallel with the Prussian State Railway Administration, the biggest and also the most decentralized accumulation of capital in the old world.”

We have emphasized the reference to the “affiliated” banks becaii'-e this is one of the most impoitant features of modern

Alfred Laiisliurgh, FUaf Jalue deufsches Saukviesen (Five Yeats of (le/mais in Die Bank, 1913, II, pp. 726-28.

Sehulae-Gaevernhz, Die deiitscAe Kreditbank, Grmidriss der Soztal- Skttttanuk (The (ietman Credit Bank in Outline of Social Economics^, ^ S*cv V, Pm I^ThbitiReii, 1915, pp- 12 and 137.


capitalist concentration. Large-scale enterprises, especially the banks, not only completely absorb small ones, but also “join” them to themselves, subordinate them, bring them into their “own” group or “concern” (to use the technical term) by having “holdings” in their capital, by purchasing or exchanging shares, by controlling them through a system of credits, etc., etc. Professor Liefmann has written a voluminous “work” of about 500 pages describing modern “holding and finance companies, ”'*■ unfortunately adding “theoretical” reflections of a very poor quality to what is frequently partly digested raw material. To what results this “holding” system leads in regard to concentration is best illustrated in the book written on the big German banks by the banker Riesser. But before examin- ing his data, we will quote an example of the “holding” system.

The Deutsche Bank “group” is one of the biggest, if not the biggest banking group. In order to trace the main threads whirli connect all the banks in this group, it is necessary to distinguish between “holdings” of the first, second and tliird degree, or what amounts to the same thing, between dependence (of the lesser establishments on the Deutsche Bank) in the first, siecond and third degree. We then obtain the following picture:"’'




For an indcOnite peiiod



lit degree . . 2nd degree, .

in 17 banks of which 9 par- ticipate in 34 others

in 5 banks

in 8 banks ^ of which 5 participate in 14 others

in 30 banks of which 14 participate in 48 others

3rd degree. .

of which 4 par- ticipate in 7 otheis

of which 2 par- ticipate in 2 others

of which 6 participate in 9 others

'• Robert Liehiam, Sete'titgtmgt- ii/iil FhmtKuerimgsgesellschajtfn Eiiie Studie uber den moderneu Kapitalismus uni las Effektetmesen (Jiold- iiig ami Finance Comf antes — A Study in Modern CaJ^italism and Securities’), first edition, Jena, 1909, p. 212.

A. Laitsbnrgh, Das Beieiliyungssystcm tm deutsclien Bmikwesen ('The


Included m the eight banks dependent on the Deutsche Bank in the “first degree,” “occasionally,” there are three foreign banks: one Austrian (the Wiener Bankverein) and two Russian (the Siberian Commercial Bank and the Russian Bank for Foreign Trade). Altogether, the Deutsche Bank group comprises, directly and indirectly, partially and totally, no less than 87 banks; and the capital — its own and others which it controls — is estimated at between two and three billion marks.

It is obvious that a bank which stands at the head of such a group, and which enters into agreement with half a dozen other banks only slightly smaller than itself for the purpose of conducting big and profitable operations like floating state loans is no longer a mere “intermediary” but a combine of a handful of mono- polists.

The rapidity with which the concentration of banh'ng proceeded in Germany at the end of the nineteenth and the beginning of tlie twentieth centuries is shown by the following data which we quote in an abbreviated form from Ricsser:



Deposit banks and exchange oflSccs

Constant hold- ings in German joint-stock banks

Total estab- lishments








t 21









We see the rapid extension of a close network of canals which cover the whole country, centralizing all capifal and all revenues,

SytUm in Qtmm Sanhing), in DU Bank^ {910, I, pp. 500 rt 1*9. r

imperialism, the highest stage of capitalism 48

transforming thousands and thousands of scattered economic enter- prises into a single national, capitalist, and then into an international, capitalist, economic unit. The “decentralization” tliat Schulze- Gaevernitz, as an exponent of modern bourgeois political economy, speaks of in the passage previously quoted, really means the subor- dination of an increasing number of formerly relatively “independ- ent,” or rather, strictly local economic units, to a single centre. In reality it is centralization, the increase in the ro-le, the importance and the power of monopolist giants.

In the older capitalist countries this “banking network” is still more close. In Great Britain (including Ireland), in 1910, there were in all 7,151 branches of banks. Four big banks had more than 400 branches each (from 447 to 689); four had more than 200 branches each, and eleven more than 100 each.

In France, three big banks (Credit Lyonnais, the Comptoir National d’Escompte and the Soci6t6 Gendrale) extended their operations and their network of branches in the following manner.*


1 Number of branches and offices |

1 Capital in miilion francs

In the provinces

In Paris


Own ' capital



1870 .. .






1890 . . .





» 1,245

1909 ,






In order to sliow the “connections” of a big modern bank, Riesser gives the following figures of the number of letters dis- patched and received by the Disconto-Gesellschaft, one of the

  • Eugen Kaufmann, Das franzSsische Banhwesm, mit besandertr

BtrieksieAtigung der drei Defositin-Grossbanken (French Banking"), Tfibin- gen, 1911, pp. 3S$ and 362. « 



biggetit banks in Gurniany and in the wurlJ, the capital of which anioiinteJ to 300,000,000 maiks in 1914:















III 1H75, the big Paris bank, the Credit Lyonnais, had 28,535 account'.. In 1912 it had 633, 539.

'riuse simple figures show perhaps better than long explanations how the concentration of capital and the growth of their turnover is radically changing the significance of the banks. Scattered capi- talists aie transformed into a single collective capitalist. When carry- ing tlic current accounts of a few capitalists, the banks, as it were, transact a purely technical and exclusively auxiliary operation. When, however, those operations grow to enormous dimensions we find a handful of monopolists control all the operations, both commercial and industrial, of the whole of capitalist society. They can, by means of their banking connections, by running cur- rent accounts and transacting other financial operations, first ascertmn exactly the position of the various capitalists, then control them, influence them by restricting or enlarging, facilitating or hindering their credits, and finally they can entirely determine their fate, determine their income, deprive them of capital, or, on the other hand, permit them to increase their capital rapidly and to enormous dimensions, etc.

We h.ave just mentioned the 300,000,000 marks’ capital of the Disconto-Gesellschaft of Berlin. The increase of the capital of this bank was one of the incidents in the struggle for hegemony bclweeri two of the biggest Berlin banks— the Deutsche Bank and the Disconto.

  • Jean Letcurc, Vepargne en franie {Savings in France), Paris, 1914,

imperialism, TIIK IllOIIRS'r S'I’AGK 01' CAPl'I'AMSM If)

In 1870, the Ueiithchc Bank, a new cnterpiisc, liacl a capital of only 15,000,000 marks, while that of the Uisconto was 30,000,000 marks. In 1908, the fust had a capital ol 200,000,000, while the second had 170,000,000. la 1914, the Deutsche Bank increased its capital to 250,000,000 and the Disconto, by merging with a very important bank, the Schaflhauseiischcr Bankverein, increased its capital to 300,000,000. And of course, while this struggle for hegemony goes on the two banks more and more frequently conclude “agreements” of an increasingly durable char- acter with each other. This development of banking compels spe- cialists in the study of banking questions — who regard economic questions from a standpoint which does not in the least exceed the bounds of the most moderate and cautious bourgeois reformism —to anive at the following conclusions;

The German review. Die Bank^ commenting on the inciease of the capital of the Disconto-Gesellschaft to 300,000,000 marks writes;

“Other banks will follow this same path and in time the three hundred men, who today govern Germany economically, will gradually be reduced to fifty, twenty-five or still fewer. It cannot be expected that this new move towards concentra- tion will be confined to banking. The close relations that exist between certain banks naturally involve the bringing together of the manufacturing concerns which they favour^. . . One fine morning we shall wake up in surprise to see nothing but trusts before our eyes, and to find ourselves faced with the necessity of Substituting state monopolies for private monopolies. How- ever, we have nothing to reproach ourselves with, except with us having allowed things to follow their own course, slightly accelerated by the manipulation of stocks.”"'

A. Lansburgh, Bte Bank mit dm 300 Millionm (TJie'300 Million Mark Batik), in Die Bank, 1914, I, p. 426.



This is an example of the impotence of bourgeois journalism which differs from bourgeois science only in that the latter is less sincere and strives to obscure essential things, to conceal the wood by trees. To be “surprised” at the results of concentration, to “reproach” the government of capitalist Germany, or capitalist “society” (“us”), to fear that the introduction of stocks and shares might “accelerate” concentration in the same way as the German “cartel specialist” Tschierschky fears the American trusts and “pre- fers” the German cartels on the grounds that they may not, like the trusts, “accelerate technical and economic progress to an exces- sive degree’”*' — is not this impotence?

But facts remain facts. There are no trusts in Germany; there are “only” cartels — but Germany is governed by not more than three hundred magnates of capital, and the number of these is constantly diminishing. At aU events, banks in all capitalist coun- tries, no matter what the law in regard to them may be, greatly intensify and accelerate the process of concentration of capital and the formation of monopoUes.

The banking system, Marx wrote half a century ago in Cafital, “presents indeed the form of common bookkeeping and distribution of means of production on a social scale, but only the form.” The figures we have quoted on the growth of bank capital, on the increase in the number of the branches and offices of the biggest banks, the increase in the number of their accounts, etc., present a concrete picture of this “common bookkeeping” of the whole capitalist class; and not only of the capitalists, for the banks collect, even though temporarily, all kinds of financial revenues of small businessmen, ofiice clerks, and of a smaE upper stratum of the working class. It is “common distribution of means of production” that, from the formal point of view, grows out of the development of modern banks, the most important of which, numbering from

  • $. TKbienchky, of, tit,, p. 128

imperialism, the HIGHESl S'l'AGE OE CAPITALISM 47

three to six in France, and from six to eight in Germany, control billions and billions. In faint of fact, however, the distribution of means of production is by no means “common,” but private, i.e,, it conforms to the interests of big capital, and primarily, of very big monopoly capital, which operates under conditions in which the masses of the population live in want, in which the whole development of agriculture hopelessly lags behind the development of industry, while within industry itself the “heavy industries” exact tribute from all other branches of industry.

The savings banks and post offices are beginning to compete with the banks in the matter of socializing capitalist economy; they are more “decentrah'zed,” t.e., their influence extends to a greater number of localities, to more remote places, to wider sections of the population. An American commission has collected the follow- ing data on the comparative growth of deposits in banks and savings banks:*




I France






Savings Banks j






1880 . .









1888 , .








1908 . .








As they pay interest at the rate of 4 per cent and 4^ per cent on deposits,, the savings banks must seek “profitable” investments for their capital, they must deal in bills, mortgages, etc. The bound- aries between the banks and the savings banks “become more and more obliterated.” The Chambers of Commerce at Bochum and

  • Cf, Statistics of tht Natiotial Monetary Commission, quoted in Die

Bank, 1910, I, p. 1200.



Erfuit, (or example, clemund that savings hanks be prohibited from engaging in “purely” banking business, such as discounting bills, They demand the limitation of the “banking” operations of the post oflice.”' 'J'he hanking magnates seem to be afraid that state monopoly will steal upon them from an unexpected quaitcr. It goes without sa}’ing, however, that this fear is no more than the expression, as it were, of the rivalry between two department managers in the same office; for, on the one hand, tlic liillions entrusted to the savings banks are m the final analysis actually contiolled liy thew very same bank magnates, while, on the other hand, state monopoly in capitalist society is nothing more than a means of increasing and guaranteeing the income of millionaires on the verge of bankruptcy in one branch of industry or another.

The change from the old tj'pc of capitalism, in which free competition predominated, to the new capitalism, in which monop- oly reigns, is expressed, among other things, by a decrease in the importance ol the Stock Exchange. The German review, Dir wrote :

‘Tor a long time now, the Stock Exchange has ceased to be' the indispensable intermediary of circulation that it was formerly when the banks were not j'et able to place the bulk of new issues with their clients.”*"*'

“Every bank is a Stock Exchange, and the bigger the bank, and the piore successful the concentration of banking, the truei does this proverb become.

“While formerly, in the ’seventies, the Stock Exchange, flushed with the c.xuherance of youtli” (a “subtle” allusion to the crash of 187.^, and to the company promotion scandals), “opened the

nif Sauk, 1913, n, pp. 811, 1022, 19'H, p 7+3.

Dif Sauk, 1914, I, p. 316.

Dr. O^dcar StitUch, Geld- unit Smiktueseii {Money and Banking), 1907, p, 169.


era of the industrialization of Gerniany, nowadays lire banks and industry are able to ‘do it alone.’ The domination of our big banks over the Stock Exchange ... is nothing else than the expression of the completely organized German industrial stale. If the domain of the automatically functioning economic laws is thus restricted, and if the domain consciously regulated by the banks is considerably increased, the national economic responsibility of a very small num- ber of guiding heads is infinitely increased,”* so wrote Professor Schulze-Gaevernitz, an apologist of German imperialism, who is regarded as an authority by the imperialists of all countiics, and who tries to gloss over a “detail,” viz., that the ‘‘conscious regu- lation” of economic life by the banks consists in the fleecing of the public by a handful of “completely organized” monopolists. For the task of a bourgeois professor is not to lay bare the mechanism of the financial system, or to divulge all the machinations of the finance monopolists, but, rather to present them in a favourable light.

In the same way, Riesser, a still more authoritative economist and himself a bank man, makes shift with meaningless phrases in order to explain away undeniable facts. He writes:

“. . . The Stock Exchange is steadily losing the feature which is absolutely essential for national economy as a whole and for the circulation of securities in particular' — that of being an exact measuring-rod and an almost automatic regulator of the economic movements which converge on it.”**

In other words, the old capitalism, the capitalism of free com- petition, and its indispensable regulator, the Stock Exchange, are passing away. A new capitalism has come to take its place, which bears obvious features of something transitory, which is a mixture

  • Schulze-Gaeveinitz, Die ieuUche Kreditbank, GrunJiiss der Sossial-

okommik {Gennan Credit Bank in Outline of Social Economics'), Tiibingen, 1915, pp. 12 and 137.

    • Riesser, op. cit,, fourth edition, p. 630. ,



of free competition and monopoly. The question naturally arises: to what is this new, “transitory” capitalism leading? But the bour- geois scholars are afraid to raise this question.

“Thirty years ago, employers, freely competing against one another, performed nino-tenths of the work connected with their businesses other than manual labour. At the present time, nine-tetiths of this business ‘brain work’ is performed by officials. Banking is in the forefront of this evolution.

'ritis admission by SchulVie-Gaevcrnilz brings us once again to the question as to what this new capitalism, capitalism in its impe- rialist stage, is leading to.

Among the few banks which remain at the head of all capitalist economy as a result of the ptocess of concentration, there is natu- rally to be obsen'ed an increasingly marked tendency towards mo- nopolist agreements, towards a bank trust. In America, there are not nine, but two big banks, those of the billionaires Rockefeller and Morgan, which control a capital of eleven billion marks,• ** In Germany the absorption of the Schaffhausenscher Bankverein by the Disconto-Gesellschaft to which we referred above, was commented on in the following terms by the Frankfurter Zeitung, one of the organs of the Stock Exchange interests:

“The concentration movement of the banks is narrowing the circle of establishments from which it is possible to obtain credits, a^d is consequently increasing the dependence of big industry upon a small number of banking groups. In view of the internal links between industry and finance, the freedom of movement of manufacturing companies in need of bank capital is restricted. For this reason, big industry is watching the growing trustification of the banks with mixed feelings. Indeed, we have repeatedly seen the beginnings of certain

• Die Bank, 1912, 1, p. 43 S,

    • Schulae-Gaevernita, Die deutsche KredHhank, Gntndriss ier Soeid-

(lAowMtt, TtiHngen, 191S, pp, 12 and 137.


agreements between the individual big banking concerns, which aim at limiting competition.” '•

Again, the final word in the development of the banks is mo- nopoly.

Tlie close ties that exist between the banks and industry are the veiy things that bring out most strikingly the new role of the banks. When a bank discounts a bill for an industrial firm, opens a current account for it, etc., these operations, taken separately, do not in the least diminish the independence of the industrial firm, and the bank plays no other part than that of a modest intermediary. But when such operations are multiplied and become an established practice, when the bank “collects” in its own hands enormous amounts of capital, when the nmning of a current account for the firm in question enables the bank — ^and this is what happens — to become better informed of the economic position of the client, then the result is that the industrial capitalist becomes more completely dependent on the bank.

At the same time a very close personal union is established between the banks and the biggest industrial and commercial enter- prises, the merging of one with another through the acquisition of shares, through the appointment of bank directors to the Super- visory Boards (or Boards of Directors) of industrial and commer- cial enterprises, and vice versa. The German economist, Jeidels, has compiled very complete data on this form of concentration of capital and of enterprises. Six of the biggest Berlin banks were represented by their directors in 344 industrial companies; and by their board members in 407 other companies. Altogether, they supervised a total of 7.51 companies. In 289 of these companies they either had two of their representatives on each of the respective Supervisory Boards, or held the posts of chairmen. These industrial and commercial companies are engaged in the most varied branches

  • Quoted by Schnlze-Gaevernita, ibid,, p. 155.



of iiidiistr) : in insurance, tiansport, restaurants, iheatics, ait indus- tiy, etc. On tlic other hand, on the Supervisory Boards of these six banks (in 1910) were fifty-one of the biggest manufacturers, including the director of Krupp, of the powerful “Hapag” (Hain- burg-America Line), etc. Fi'om 1895 to 1910, each of these six banks participated in tlie share and bond issues of many hundreds of industrial companies (the number ranging from 281 to 419)," The “personal union” between the banks and industry is com- pleted by the “personal union” between both and the state.

“Seats on the Supervisoiy Board,” writes Jeidels, “are freely offered to persons of title, also to ex-civil servants, who are able to do a great deal to facilitate” ( ! ! ) “relations with the authorities. . . . Usually, on the Supervisory Board of a big bank, there is a member of parliament or a Berlin city coun- cillor.”

The building, so to speak, of the great capitalist monopolies is therefoie going on full steam ahead in all “natural” and “super- natural” ways. A sort of division of labour amongst some hundreds of kings of finance who reign over modern capitalist society is being systematically developed.

“Simultaneously with this widening of the sphere of activity of certain big industrialists” (sharing in the management of banks, etc.) “and together with the allocation of provincial bank mackagers to definite industrial regions, there is a growth of specialization among the managers of the banks. . . . Gener- ally speaking, this specialization is only conceivable when bank- ing is conducted on a large scale, and particularly when it has widespread connections with bdustr}^ This division of labour proceeds along two lines: on the one hand, tlie relations with industrj' as a whole are entrusted to one manager, as his special function} on the other, each manager assumes the supervision

  • cit.i Riesser, of. at. — Ei.


of several isolated enterprises, or enterprises with allied interests, or in the same branch of industry, sitting oji their Boaids of Diiectors” (capitalism has reached the stage of organized control. ol individual enterprises). “One specializes m Geiman industry, sometimes even in West German industry alone” (the West is the most industrialized part of Germany). “Others specialize in relations with foreign states and foreign industjy, in information about manufacturers, in Stock Exchange ques- tions, etc. Besides, each bank manager is often assigned a special industry or locality, where he has a say as a member of the Boaid of Directors; one works mainly on the Board of Direc- tois of electric companies, another in the chemical, brewing or sugar beet industry; a third in a few isolated industrial enter- prises, but at the same time in non-industrial, insurance companies. ... It is certain that, as the extent and diversification of the big banks’ operations increase, tlie division of labour among their directors also spreads, with the object and icsult of lifting them somewhat out of pure banking and making them better experts, better judges of the general problems of indus- try and the special problems of each branch of industry, thus making them more capable of action within the respective bank’s industrial sphere of influence. This system is supplemented by the banks’ endeavours to have elected to their own Supervisory Boards, or to those of their subsidiary banks, i«men who are experts in industrial affairs, such as manufacturers, former officials, especially those formerly in the railway stervice or in mining,” etc.*

We find the same system, with only slight difference, in French banking. For instance, one of the three biggest French banks, the Credit Lyonnais, has organized a “financial research service” (service des etudes finanderes), which permanently employs over

  • Jeidels, op. c!(., pp, I5S-S7.



fifty engineers, statisticians, economists, lawyers, etc., at a cost of six or seven hundred thousand francs annually. The service is in turn divided into eight sections, of which one deals with industrial establishments, another with general statistics, a third with railway and steamship companies, a fourth with securities, a fifth with financial reports, etc.*

The result is twofold; on the one hand the merging, to an ever greater extent, or, as N. Bukharin aptly calls it, the coalescence of bank and industrial capital; and on the other hand, a transforma- tion of the banks into institutions of a truly “universal character.” On this question we think it necessary to quote the exact terms used by Jeidels, who has best studied the subject:

“An examination of the sum total of industrial relationships reveals the universal character of the financial establishments working on behalf of industry. Unlike other kinds of banks and contrary to the requirements often laid down in literature — according to which banks ought to specialize in one kind of business or in one branch of industry in order to maintain a firm footing — the big banks are striving to make their indus- trial connections as varied and far-reaching as possible, accord- ing to locality and branch of business, and are striving to do away with the inequalities in the distribution of capital among localities and branches of business resulting from the historical developmrat of individual banking houses. . . . One tendency is to make the ties with industry general; another tendency is to make these ties durable and close. In the six big banks both these tendencies are realized, not in full, but to a considerable extent and to an equal degree.”**

Quite often industrial and commercial circles complain of the

  • Eugen Kaufmann, Die Organisation der framsosischen DefosUen-

Ctostianken (firganhsatioa of ilte Big French Deposit Banks'), in Die Bank, 1903, II, pp. SU and .*’1*.

    • JeUrfs, *op. cit, p. 1 8rt.


"terrorism” of the banks. And it is not surprising that such com- plaints are heard, for the big banks “command,” as will be seen from the following example: on November 19, 1901, one of the big Berlin “D” banks (such is the name given to the four biggest banks whose names begin with the letter 0'“) wrote to the Board of Directors of the German Central Northwest Cement Syndicate in the following terms:

“As we learn from the notice you published in the Reichs- anzeiger of the 1 8th instant, we must reckon with the possibility that the next general meeting of your company, fixed lor the 30th of this month, may decide on measures which are likely to effect changes in your undertakings which are unac- ceptable to us. We deeply regret that, lor these reasons, we are obliged henceforth to withdraw the credit which had been hitherto allowed you. . . . But if tlie said next general meeting does not decide upon measures which are unacceptable to us and if we receive suitable guarantees of this matter for the future, we shall be quite willing to open negotiations with you on the grant of a new credit.”* **

As a matter of fact, this is small capital’s old complaint about being oppressed by big capital, but in this case' it was a whole syndicate that fell into the category of “small” capital. The old struggle between big and small capital is being resumed on a new .Hid higher stage of development. It stands to reason that under- takings, financed by big banks handling billions, can accelerate technical progress in a way that cannot possibly be compared with the past. The banks, for example, set up qiecial technical research societies, and only “friendly” industrial enterprises benefit from their work. To this category belong the Electric Railway Research

  • Deutsche Bank, Disconto-Geecllschaft, Dreadner Bank and Darm-

stkdtet Bank. — Bil.

  • " Dr. Oskar Stillich. Geld- itnd Banhviesen. Berlin. 1907, vj. 147. ^



Association anti tlie Cciitral Bureau of Scientific and Technical Research.

The directors of the big banks themselves cannot fail to see that new conditions of national economy are being created. But they .ire powerless in the face of these phenomena.

“Anyone who has watched, in recent years,” writes Jeidels, “the changes of incumbents of directorships and seats on the Supeivisory Boards of the big banks, cannot fail to have noticed tliat power is gradually passing into the hands of men who consider the active intervention of the big banks in the gcneial development of industry to be indispensable and of increasing importance. Between these new men and the old bank direc- tors, disagreements of a business and often of a personal nature are growing on this subject. The question that is in dispute is whether or not the banks, as credit institutions, will suffer from this intervention in industry, whether they are sacrificing tried principles and an assured profit to engage in a field of activity which has nothing in common with their role as inter- mediaries in providing credit, and which is leading the banks into a field where they are more than ever before exposed to the blind forces of trade fluctuations. This is the opinion of many of the older bank directors, while most of the young men consider active intervention in industry to be a necessity as great as that which gave rise, simultaneously with big modern in- dustry, to the big banks and modern industrial banking. The two parties to this discussion are agreed only on one point: and that is, that as yet there are neither firm principles nor a concrete aim in the new activities of the big banks.”*

The old capitalism has had its day. The new capitalism repre- sents a transition towards something. It is hopeless, of course, to seek for “firm principles and a concrete aim” for the purpose of “reconciling” monopoly with free competition. The admission of

  • Jruleh, “oil. ciL, pp. U3-g+.


the practical men has quite a different ring from the oflicial piaises (if the charms of “organized” capitalism sung by its apologists, Schulze-Gaevernitz, Liefmann and similar “theoreticians.”

At precisely what period were the “new activities” of the big h-inlfs finally established? Jeidels gives us a faiily exact answer to tin's important question:

“The ties between the banks and industrial enterprises, with their new content, their new forms and their new oigans, namely, the big banks which are organized on both a central- ized and a decentralized bass, were scarcely a characteristic economic phenomenon before the ’nineties; in one sense, indeed this initial date may be advanced to the year 1897, when the important ‘mergers’ took place and when, for the first time, the new form of decentralized organization was introduced to suit the industrial policy of the banks. This starting point could perhaps be placed at an even later date, for it was the crisis (of 1900) that enormously accelerated and intensified the process of concentration of industry and banking, consolidated tliat process, for the first time transformed the connection with industry into the monopoly of the big banks, and made this connection much closer and more active.”*

Thus, the beginning of the twentieth century marks the turning point from the old capitalism to the new, from the domination of capital in general to the domination of finance capital

" Ibtd,.. D. 1 S I


“A steadily increasing proportion of capital in industry,” Hilferding writes, “does not belong to the industrialists who employ it. They obtain the use of it only through the medium of the banks, which, in relation to them, represent the owners of the capital. On the other hand, the bank is forced to keep an increasing share of its funds engaged in industry. Thus, to an increasing degree the banker is being transformed into an in- dustrial Ciipitalist. This bank capital, i.e., capital in money foim which is thus really transformed into industrial capital, I call ‘finance capital’.” Finance capital is “capital controlled by banks and employed by industrialists.”’"

This definition is incomplete in so far as it is silent on one ex- tremely important fact: the increase of concentration of production and of capital to such an extent that it leads, and has led, to mo- nopoly. But throughout the whole of his work, and particularly in the two chapters which precede the one from which this de- finition is taken, Hilferding stresses the part played by cafitalist ^onofolies.

The concentration of production; the monopoly arising there-

  • R. Hil&rdinsr, Dai Fituinzkai>ilal, second edition. 'p. 301 .


from; the merging or coalescense of banking with industry — this is the history of the rise of finance capital and what gives the term “finance capital” its content.

We now have to describe how, under the general conditions of commodity production and private property, the “domination” of capitalist monopolies inevitably becomes the domination of a finan- cial oligarchy. It should be noted that the representatives of German bourgeois science — and not only of German science — like Ricssler, Schulze-Gaevernitz, Liefmann and others are all apologists of im- perialism and of finance capital. Instead of revealing the “mechan- ics” of the formation of an oligarchy, its methods, its revenues “innocent and sinful,” its connections with parliaments, etc., tliey conceal, obscure and embellish them. They evade these “vexed questions” by a few vague and pompous phrases: appeals to the “sense of responsibility” of bank directors, praising “the sense of duty” of Prussian ofiicials} by giving serious study to petty details, to ridiculous bills of parliament — ^for the “supervision” and "reg- ulation” of monopolies; by playing with theories, like, for ex- ample, the following “scientific” definition, arrived at by Professor Liefmann: “• • • Commerce is an occupation having for its object: collecting goods, storing them and making them available.”* (The Professor’s bold -face italics.) From this it would follow that commerce existed in the time of primitive man, who knew nothing about exchange, and that it will exist under Socialism!

But the monstrous facts concerning the monstrous role of the financial oh'garchy are so strib'ng that in all capitalist countries, in America, France and Germany, a whole literature has sprung up, written from the bourgeois point of view, but which, nevertheless, gives a fairly accurate picture and criticism — petty-bourgeois, nat- urally — of this oligarchy.

The “holding system,” to which we have already briefly re-

  • R. Liefmann, Beteiligungsgesellschaftenj p. 476.



ferred above, should be considered tlie cornerstone. The Geiman economist, Heymann, probably the first to call attention to this matter, describes it in this way:

The head of the concern controls the parent company; the latter reigns over the subsidiary companies which in their turn control still other subsidiaries. Thus, it is possible with a comparatively small capital to dominate immense spheres of production. As a matter of fact, if holding 50 per cent of the capital is always sufficient to control a company, the head of the concern needs only one million to control eight millions in the second subsidiaries. And if this ‘interlocking’ is extended, it is possible with one million to control sixteen, thirty-two or more millions.”*

Experience shows that it is sufficient to own 40 per cent of the shares of a company in order to direct its affairs,** since a cer- tain number of small, scattered shareholders find it impossible, in practice, to attend general meetings, etc. The “democratization” of the ownei'ship of Shares, from which the bourgeois sophists and opportunists, “would-be” Social-Democrats expect (or declare that they expect) the “democratization of capital,” the strengthening of the role and significance of small-scale production, etc., is, in fact, one of the ways of increasing the power of the financial oligarchy. Incidentally, this is why, in the more advanced, or in the older and more “experienced” capitah’st countries, the law allows the issue of shares of very small denomination. In Germany, it is not per- mitted by the law to issue shares of less value than one thousand marks, and the magnates of German finance look with an envi- ous eye at England, where the issue of one-pound shares is per- mitted. Siemens, one of the biggest industrialists and “financial kings” in Germany, told tlie Reichstag on June 7, 1900, that “the

  • Hans Gideon Heymann, JDitf gtmischttn Werke im deutschen Gross-

tutUKewerhe, StuttRart, 1904, p. 269.

    • Llefmafm, BtfeiligungsgosellscAafion, first edition, p. 2S8.


one-pound shaie is the basis of IJiiiish imperulisni.”* This mer- chant has a much deeper and more “Marxian” understanding of imperialism than a certain disreputable writer, generally held to be one of the foundei^s of Russian Marxism, who believes that imperialism is a bad habit of a cerlam nation. . . .

But the “holding system” not only serves to increase enor- mously the power of the monopolists; it also enables them to resort with impunity to all sorts of shady tricks to cheat the public, for the directors of the parent company are not legally responsible for the subsidiary companies, which are supposed to be “independent,” and through the medium of which they can “pull off” anything. Here is an example taken from the German review. Die Bank, for May 1914:

“The Spring Steel Company of Kassel was regarded some years ago as being one of the most profitable enterprises in Germany. Through bad management its dividends fell within the space of a few years from 15 per cent to nil. It appears that the Board, without consulting the shareholders, had loaned six million marks to one of the subsidiary companies, the Has- sia. Ltd., which had a nominal capital of only some hundreds of thousands of marks. This commitment, amounting to nearly treble the capital of the parent company, was never mentioned in its balance sheets. This omission was quite legal and could be kept up for two whole years because it did jmt violate any provision of company law. The chairman of the Supervisory Board, who as the responsible head had signed the false bal- ance sheets, was, and still is, the president of the Kassel Cham- ber of Commerce. The shareholders only heard of the loan to the Hassia, Ltd., long afterwards, when it had long been proved to have been a mistake” (this word the writer shouW

Schulze-Gaeverm'tr in op. eii., p. 110.

^ Tlif» rflffirpnrp lif»rn tn H V PlflfJiflnnv ^



here put in quotation maiks), “and when Spring Steel shares had dropped nearly 100 points, because those in the know had got rid of tliem. . . .

“This tyfical example of balance-sheet jugglery, quite com- ?non in joint-stock companies, explains why their Boards of Directors are more willing to undertake risky transactions than individual dealers. Modern methods of drawing up balance slieels not only make it possible to conceal doubtful undertak- ings from the aveiage shareholder, but also allow the people most concerned to escape the consequence of unsuccessful speculation by selling their shares in time while the individual dealer risks his own skin in everything he does. . . ,

"The balance sheets of many joint-stock companies put us in mind of the palimpsests of the Middle Ages from which the visible inscription had first to be erased in order to discover be- neath it another inscription giving tire real meaning of the docu- ment.” (Pah'mpsests are parchment documents from which the original inscription has been obliterated and another inscription imposed.)

“The simplest and, therefore, most common procedure for making balance sheets indecipherable is to divide a single busi- ness into several parts by setting up subsidiary companies — or by annexing such. The advantage of this system for various objects — ^Jegal and illegal — is so evident that it is now quite unusual to find an important company in which it is not actually in use.”*

As an example of an important monopolist company widely employing this system, the author quotes the famous General Electric Company (Allgemeine Elektrizitats Gesellschaft — A..E.G.) to which we shall refer below. In 1912, it was calculated

  • Ludwig Eachwege, Toehtergesellsc/iaffm {Subsidiary Companies),

in Dit Bank, fSU, I, pp. 54•4-‘^6.


that this company held sliares in from 1 7S to 200 other companies, controlling them, of course, and thus Itaving control of a total capital of 1,500,000,000 maiks."*’

All rules of control, the publication of balance sheets, the draw- ing up of balance sheets according to a definite form, the public auditing of accounts, etc., the things about which well-intentioned professors and officials — that is, those imbued with the good inten- tion of defending and embellishing capitalism — discourse to the public, are of no avail. For private property is sacred, and no one can be prohibited from buying, selling, exchanging or mortgaging shares, etc.

The extent to which this “holding system” has developed in the big Russian banks may be judged by the figures given by E. Agahd, who was for fifteen years an official of the Russo-Chinese Bank and who, in May 1914, published a book, not altogether correctly entitled 5/g Bmh and the World Market,** The author divides the big Russian banks into two main categories: a) banks that come under a “holding system,” and b) “independ- ent” banks — “independence,” however, being arbitrarily taken to mean independence of foreign banks. The author divides the first group into three sub-groups: 1) German participation, 2) British participation, and 3) French participation, having in view the “par- ticipation” and domination of the big foreign banks of the particular country mentioned. The author divides the capital of ,jhe banks into “productively” invested capital (in industrial and commercial un-

  • Kurt Heining, Der Weg dei Blektrotrnsts (The Path of the Electric

Trust) in Die Neue Zeit, 1912, Vol. II, p. 484.

    • E. Agahd, Grossbankert und Weltmarkt, Die imrtschaftliche uni

folitische Bedeutung der Grossbankert im Weltmarkt unter BerUcksichtigung ihres Einflusses auf Russlands V olksmnrtschaft md die deutsch-rtsssischen^ Beziehungeit. (Big Banks and the World Market, The economic and political significance of the big banks on the world market, with reference to their influence on Russia’s national economy and Gcrman-Russian rela- tions. Berlin, 1914, pp. 11-17.)



(luitakmgs), and "speculalivelj ” invested capital (in Stock JE\- ciiange and financial operations), assuming, from his pettj’-bour- gcois refoimist point of view, that it is possible, under capitalism, to separate the first form of investment from the second and to abolish the second form.

Heic are tlie figures he supplies;


(According to Reports for October-November, 1913, in millions of rubles)

Capita] invested

Groups of Russian Banks ; ; Total

Productive | Speculative

a 1) Four banks: Siberian Commercial Bank, Rus- sian Bunk, Internation- al Bank, and Discount

Bank 413.7 859.1 1,272.8

a 2) Two banks: Commercial and Industrial, and

Russo-British 239.3 169.1 408.4

a 3) Five banks: Russian-

Asiatic, St. Petersburg Private, Azov-Don,

Union Moscow, Russo-

French Commercial . . 711.8 661.2 1,373.0

Total:(llbank8)a==.. 1,364.8 1,689.4 3,054.2

b Eight hanks: Moscow

Merchants, Volga-Kama,

Junker £nd Co., St. Pe- tersburg Commercial formerly Wawelbcrg),

Bank of Moscow

(formerly Riahushinsky),

Moscow Discount, Mos- cow Commercial, Private

Bank of Moscow , , 504.2 391.1 895.3

Total : (19 banks) , .[ 1,869.0 j 2,080.5 j 3,949.5

According to these figures, of the approximately four billion rubles making up the "working” capital of the big banks, more


than three- fourths, more tliaii thiee billion, belonged to banks which in reality were only “subsidiary companies” of foreign banks, and chiefly of the Paris banks {the famous trio: Union Parisienne, Paris et Pays-Bas and Societe Generale), and of the Berlin banks (particularly the Deutsche Bank and Disconto-Gesellschaft). Two of the most important Russian banks, the Russian Bank for For- eign Trade and the St. Petersburg International Commercial, be- tween 1906 and 1912 increased their capital from 44,000,000 to

98.000. 000 rubles, and their reserve from 15,000,000 to

39.000. 000 “employing three-fourths German capital.” The first belongs to the Deutsche Bank group and the second to the Dis- conto-Gesellschaft. The worthy Agahd is indignant at the fact tliat the majority of the shares are held by the Beidin banks, and that, therefore, the Russian shareholders are powerless. Naturally, the country which exports capital skims the cream: for example, the Deutsche Bank, while introducing the shares of the Siberian Commercial Bank on the BerUn market, kept them in its portfolio for a whole year, and then sold them at the rate of 193 for 100, that is, at nearly twice their nominal value, “earning” a profit of nearly 6,000,000 rubles, which Hilferding calls “promoters’ profits.”

Our author puts the total “resources” of the principal St. Pe- tersburg banks at 8,235,000,000 rubles, about 8% billions, and the ‘lioldings,” or rather, the extent to which foreign^banks dom- inated them, he estimates as follows: French banks, 55 per cent; English, 10 per cent; German, 35 per cent. The author calculates that of the total of 8,235,000,000 rubles of functioning capital,

3.687.000. 000 rubles, or over 40 per cent, fall to the share of the syndicates, Produgol* and Prodamet** — and the syndicates in the

  • Coal Sytidicaie — “The Russian Society for Trading- in the Mineral ■<

Fuel of the Donetz Basin,” otherwise known by its abbreviated Russian name “Produgol." The syndicate was founded in I90fi,—

    • Metal Syndicate — “Society for the Sale and the Manufacture of

V. 1. LEM IN


oil’, metallurgical and cement industries. 'I'hus, the merging of hant - and industrial capital has also made great strides in Russia owing to the formation of capitalist monopolies.

Finance capital, concentrated in a few hands and exercising a virtual monopoly, exacts enormous and ever-increasing profits from the floating of companies, issue of stock, state loans, etc., tightens the grip of financial oligarchies and levies tribute upon the whole of society for the benefit of monopolists. Here is an example, taken from a multitude of others, of the methods of “business” of the American trusts, quoted by Hilferding: in 1887, Havermeyer founded the Sugar Trust by amalgamating fifteen small firms, whose total capital amounted to $6,500,000. Suitably “watered” as the Americans say, the capital of the trust was increased to $50,000,000. This “over-capitalization” anticipated the monopoly profits, in the same way as the United States Steel Corporation anticipated its profits by buying up as many iron fields as possible. In fact, the Sugar Trust set up monopoly prices on the market, which secured it such profits that it could pay 10 per cent dividend on capital “watered” sevenfold, or about 70 fer cent on the caf- ital actually imjested at the time of the creation of the trust\ In ' 1909, the capital of the Sugar Trust was increased to 90,000,000. In twenty-two years, it had increased its capital more than tenfold.

In France the role of the “financial oligarchy” {^Against the Firumaal Oligarchy in France, the title of the well-known book by Lysis, the fifth edition of which was published in 1908) assumed a form that was only slightly different. Four of the most power- ful banks enjoy, not a relative, but an “absolute monopoly” in the issue of bonds. In reality this is a “trust of the big banks.” And their monopoly ensures the monopolist profits from bond issues. Usually a country borrowing from France does not get more than 90 per cent of the total of the loan, the remaining 10 per cent

the Russian Iron and Steel Plants,” otherwise knovm by its abbreviated Rthwhtn naffi* J'ProduweS.” The syndicate was founded in 1901,' — Ei,


goes to the banks and other middlemen. The profit made by the banks out of the Russo-Chinese loan of 400,000,000 francs amount- ed to 8 per cent; out of the Russian (1904) loan of 800,000,000 francs the profit amounted to 10 per cent; and out of the Moroc- can (1904) loan of 62,500,000 francs, to 18.75 per cent. Capital- ism, which began its development with petty usury capital, ends its development with gigantic usury capital. “The French,” says Lysis, “are the usurers of Europe.” All the conditions of economic life are being profoundly modified by this transformation of capi- talism. With a stationary population, and stagnant industry, com- merce and shipping, the “country” can grow rich by usury. “Fifty persons, representing a capital of 8,000,000 francs can control 2^000 fiOOyOOO francs deposited in four banks.” The “holding sys- tem,” with which we are already familiar, leads to the same result. One of the biggest banks, the Societe Generale, for instance, issues 64,000 bonds for one of its subsidiary companies, the Egyptian Sugar Refineries. The bonds are issued at 150 per cent, <.c., the bank gaining 50 centimes on the franc. The dividends of the new company are then found to be fictitious. The “public” lost from 90 to 100 million francs. One of the directors of the Societe Gen- erale was a member of the board of directors of the Egyptian Sugar Refineries. Hence, it is not surprising that the author is driven to the conclusion that “the French Republic is a financial monarchy”; “it is the complete domination of the financial oligar<^y; the latter controls the press and the government.”*

The extraordinarily high rate of profit obtained from the issue of securities, which is one of the principal functions of finance capital, plays a large part in the development and consolidation of the financial oligarchy.

  • Lysis, Centre I’oligarchie ^nanciire en France (Against the Finan~

cml Oligarchy in France), fifth edition, Paris, 1908, pp, 11, 12, 26, 39, 40, 47-48. AJ’Sffe-.



“There fe not a single business of this type witliin the coun- try that brings in profits even approximately equal to those ob- tained from the flotation of foreign loans”* (says the German magazine, Die Bank).

“No banking operation brings in profits comparable with those obtained from the issue of securities!”** ***

According to the German Economist, the average annual piofits made on the issue of industrial securities were as follows:

Pet cent

Pet cent

1895. . . .

.... 38.6

1898 . . .

. . . . 67.7

1896. . . .

.... 36.1

1899 . . .

. . . . 66.9

1897 . . .

. . . . 66.7

1900 . . .

. . . . 55.2

“In the ten years from 1891 to 1900, more than a billion marks of profits were ‘earned’ by issuing German industrial securities.”*'^*

While, during periods of industrial boom, the profits of finance capital are disproportionately large, during periods of depression, smaE and unsound businesses go out of existence, while the big banks take “holdings” in their shares, which are bought up cheaply or in profitable schemes for their “reconstruction” and “reorganiza- tion.” In the “reconstruction” of undertakings which have been running at a loss,

“the share-capital is written down, that is, profits are distributed on a smaller capital and subsequently are calculated on this smaller basis. If the income has fallen to zero, new capital is called in, which, combined 'with the old and less remunerative

  • Die Sank, 1913, No. 7, p. 630.

» *♦ Stillich, op. cit,, p, H3. — Ed,

      • Stillich, ibid,, also 'Wemer Sombart, Die deutsebe Volksmrtschajt

hn 19, Jahrhuttiert und im Anfang des 20, Jahrhundrts (German National Economy in tie Nineteenth and the Beginning of the Twentieth Centuries), ttcond e4itwn/>Berlin, 1909, p. 326, 8th Appendix.


capital, will bring in an adequate return. Incidentally,” adds Hilferding, “these reorganizations and reconstructions have a twofold significance for the banks: first, as profitable trans- actionsj and secondly, as opportunities for Securijig cojitrol of the companies in difficulties.”'^

Here is an instance. The Union Mining Company of Dort- mund, founded in 1872, with a share capital of nearly 40,000,000 marks, saw the market price of shares rise to 170 after it had paid a 12 per cent dividend in its first year. Finance capital skimmed the cream and earned a trifle of something like 28,000,000 marks. The principal sponsor of this company was that very big German Disconto-Gesellschaft which so successfully attained a capital of 300,000,000 marks. Later, the dividends of the Union declined to nil: the shareholders had to consent to a “writing down” of capital, that is, to losing some of it in order not to lose it all. By a series of “reconstructions,” more than 73,000,000 marks werje written off the books of the Union in the course of thirty years.

“At the present time, the original shareholdei's of the com- pany possess only 5 per cent of the nominal value of their shares.”* **

But the banks “made a profit” out of every “^construction.” Speculation in land situated in the suburbs of rapidly growing towns is a particularly profitable operation for finance capital. The monopoly of the banks merges here with the monopoly of ground rent and with monopoly in the means of communication, since the increase in the value of the land and the possibility of selling it prof- itably in allotments, etc., is mainly dependent on good means of communication with the centre of the town; and these means of communication are in the hands of large companies which are con- nected by means of the holding system and by the distribution of

  • Hilferding, Das Fimmhapital, second edition, p. liZ,

Stillich, of, cit,, p. 138 and Liefmann, p. 31. I



positions on the directorates, with the interested banks. As a lesult we get what the German writer, L. Eschwege, a contributor to Die Bank, who has made a special study of real estate business and mortgages, etc., calls the formation of a “bog.” Frantic speculation in suburban building lots; collapse of building enterprises (like that of the Berlin firm of Boswau and Knauer, which grabbed

100.000. 000 marks with the help of the “sound and solid” Deutsche Bank — the latter acting, of course, discreetly behind the scenes through the holding system and getting out of it by losing “only”

12.000. 000 marks), then the ruin of small proprietors and of workers who get nothing from the fraudulent building firms, un- derhand agreements with the “honest” Berlin police and the Berlin administration for the purpose of getting control of the issue of building sites, tenders, building licenses, etc.’*'

“American ethics,” which the European professors and well- meaning bourgeois so hypocritically deplore, have, in the age of finance capital, become the ethics of literally every large city, no matter what country it is in.

At the beginning of 1914, there was talk in Berlin of the pro- posed formation of a "transport trust,” i.e,, of establishing “com- munity of interests” between the three Berlin passenger transport undertakings: The Metropolitan electric railway, the tramway company and the omnibus company.

“We kiTow,” wrote Die Bank, “that this plan has been con- templated since it became known that the majority of the shares in the bus company has been acquired by the other two trans- port companies. ... We may believe those who are pursuing this aim when they say that by uniting the transport services, they will secure economies part of which will in time benefit •• the public. But tKe question is complicated by the fact that

  • Lodwig Eachwege, Beh Svfitpf (TAs Bog), in Die Bank, 1913, II,

p. xa, at iCid., reta, I, p. a23, 0l


behind the transport trust that is being formed are the banks, which, if they desire, can subordinate the means of transporta- tion, which they have monopolized, to the interests of their real estate business. To be convinced of the reasonableness of such a conjecture, we need only recall that at the very forma- tion of the Elevated Railway Company the traffic interests became interlocked witli the real estate interests of the big bank which financed it, and this interlocking even created the pre- requisites for the formation of the transport enteiprise. Its eastern line, in fact, was to run through land which, when it became certain the line was to be laid down, this bank sold to a real estate firm at an enormous profit for itself and for several part- ners in the transactions.”*

A monopoly, once it is formed and controls thousands of mil- lions, inevitably penetrates into evevj sphere of public life, regardless of fhe form of government and all other “details.” In the eco- nomic literature of Germany one usually comes across the servile praise of the integrity of the Pru^ian bureaucracy, and allusions to the French Panama scandal and to political corruption in America. But the fact is that even the bourgeois literature devoted to German banking matters constantly has to go far beyond the field of purely banking operations and to speak, for instance, of “the attraction of the banks” in reference to the increasing frequency with which public officials take employment with the banks. ’t

"How about the integrity of a state official who in his in- most heart is aspiring to a soft job in die Behrenstrasse”** (the street in Berlin in which the head office of the Deutsche Bank is situated).

In 1909, the publisher of Die Bank^ Alfred Lansburgh, wrote an article entitled ^‘The Economic Significance of Byzantinism,” ^

  • V erkekrstmst (,Trnnsfori Trust) in Die Bank, 1914, 1. pp. 89*90.
    • A. Lansburgh, Der Zisg ssur Bank {The Attractton af the Bank),

in Die Bank, 1909, I, p. 79,



in which he incidentally I'eferred to Wilhelm II’s tour o£ Palestine, and to “the immediate result of this journey,” the construction of the Bagdad railway, that fatal “standard product of German en- terprise, which is more responsible for the ‘encirclement’ than all our political blunders put together. (By encirclement is meant the policy of Edward VII to isolate Germany by surrounding her with an imperialist anti-German alliance.) In 1912, another con- tributor to this magazine, Eschwege, to whom we have already referred, wrote an article entitled “Plutocracy and Bureaucracy,” in which he exposes the case of a German official named Volker, who was a zealous member of the Cartel Committee and who, some time later, obtained a lucrative post in the biggest cartel, i.e., the Steel Syndicate.*'*' Similar cases, by no means casual, forced this bourgeois author to admit tlrat “the economic liberty guaran- teed by the German Constitution has become in many depart- ments of economic life, a meaningless phrase” and that under the existing rule of the plutocracy, “even the widest political liberty cannot save us from being converted into a nation of unfree people.”* **

As for Russia, we will content ourselves by quoting one example. Some years ago, all the newspapers announced that Davidov, the director of the Credit Department of the Treasury, had resigned his post to take employment witli a certain big bank at a salary which, according to the contract, was to amount to over one mil- lion rubles in the course of several years. The function of the Credit Department is to “co-ordinate the activities of all the credit institutions of the country”; it also grants subsidies to banks in St. Petersburg and Moscow amounting to between 800 and, 1,000 million rubles.****

^ ' ^

  • W/i., p. 301.
    • Dw Bank, 1912, II, p. 821.— £<2.

♦** Ibid,, 1913, II, p. 962.

E, Agahd, of. at., pp. 201 and 202,


It is characteristic of capitalism in general that the ownership of capital is separated from the apph'cation of capital to production, that money capital is separated from industrial or productive capital, and that the rentier who lives entirely on income obtained from money capital, is separated from the entrepreneur and from all who are dirw^tly concerned in the management of capital. Imperialism, or the domination of finance capital, is that highest stage of capi- talism in which this separation reaches vast proportions. The suprem- acy of finance capital over all other forms of capital means the predominance of the rentier and of the financial oligarchy; it means the crystallization of a small number of financially “powerful” states from amoirg aU the rest. The extent to which this process is going on may be judged from tlie statistics on emissions, the issue of all kinds of securities.

In the Bulletin of the International Statistical Institute, A. Ney- marck'" has published very comprehensive and complete compara- tive figures covering the issue of securities all over the world, which have been repeatedly quoted in part in economic literature. The following arc the totals he gives for four decades;


1871-1880 76.1


1891-1900 100.4

1901-1910 197.8

In the 1870’s, the total amount of issues for the whole world was high, owing particularly to the loans floated in connection with the Franco-Prussian War, and the company-promoting boom

'* A. Neymai'cfc, Bulletin de Pimtitui intetitntiaiial dt tiatistiqiie {Bulletin of the International Statistical Institute), Vol. XIX, Book II, The Hague, 1913. Data concerning small states, second colj^mn, are approxi- mately calculated by adding 20 per cent to the 1902 figures.



which set in in Germany after the war. In general, the increase is not very rapid during the three last decades of the nineteenth century, and only in the first ten years of the twentieth century is an enormous increase observed of almost 100 per cent. Thus the beginning of the twentieth century marks the turning point, not only in regard to the growth of monopolies (cartels, syndicates, trusts), of which we have already spoken, but also in regard tc the development of finance capital.

Neymarck estimates the total amount of issued securities cur- rent in the world in 1910 at about 815,000,000,000 francs. De- ducting from this amounts which might have been duplicated, he reduces the total to 575-600,000,000,000 which is distributed among the various countries as follows: (We will take 600,000,000,000.)

FINANCIAL SECURITIES CURRENT IN 1910 (In billions of francs)

Great Britain

United States

France. . ,



Austria-Hungary ......

Italy ...



Bcl^uyi ......



Denmark .

Sweden, Norway, Rumania, etc .











7.5 6.25 3.75



Total, . . 600.00

From these figures we at once see standing out in sharp relie’ four of the richest capitalist countries, each of which controls se- curities to amounts ranging from 100 to 150 billion francs. Two o{ these countries, England and France, are the oldest capitalist j countries, and. as we sbnll


two, the United States and Germany, sue in the fiont lank as regards rapidity of development and the degree ol extension of capitalist monopolies in industry. Together, these four countries own 479,000,000,000 fiancs, that is, nearly 80 per cent of the woild’s finance capital. Thus, in one way or another, nearly the whole world is more or less the debtor to and tributary of these four international banker countries, the four “pillais” of world finance capital.

It is particularly impoitant to examine the pait which export of capital plays in creating the international network of depend- ence and ties of finance capital.


Under the old capitalism, when free competition prevailed, the export of goods was the most typical feature. Under modern cap- italism, when monopolies prevail, the export of capital has become the typical feature.

Capitalism is commodity production at the highest stage of de- velopment, when labour power itself becomes a commodity. The growth of internal exchange, and particularly of international ex- change, is the characteristic distinguishing feature of capitalism. The uneven and spasmodic character of the development of in- dividual enterprises, of individual branches of Industry and individual countries, is inevitable under the capitalist system. England became a capitalist country before any other, and by the middle of the nineteenth century, having adopted free trade, claimed to be the “workshop &. the world,” the great purveyor of manufactured goods to all countries, which in exchange were to keep her supplied with raw materials. But in the last quarter of the nineteenth century, this monopoly was already undermined. Other countries, protecting themselves by tariff walls, had developed into independent capitalist states. On the threshold of the twentieth century, we see a new

  • type of monopoly coming into existence. Firstly, there are monopolist

capitalist combines in all advanced capitalist countries; secondly, a few rich coimtries, in which the accumulation of capital reaches ^ gigantic proportions, occupy a monopolist position. An enormous


“super-abundance of capital” has accumulated in the advanced countries.

It goes without saying that if capitalism could develop agricul- ture, which today lags far behind industry eveiywhere, if it could raise the standard of living of the masses, who are everywhere still poverty-stricken and underfed, in spite of the amazing advance in technical knowledge, there could be no talk of a superabundance of capital. This “argument” tlie petty-bourgeois critics of capitalism advance on every occasion. But if capitalism did these things it would not be capitalism; for luieven development and wretched conditions of the masses are fundamental and inevitable conditions and premises of this mode of production. As long as capitalism re- mains what it is, surplus capital will never be utilized for the pur- pose of raising the standard of living of the masses in a given coun- try, for this would mean a decline in profits for the capitalists; it will be used for the purpose of increasing those profits by exporting capital abroad to the backward countries. In these backward coun- tries profits are usually high, for capital is scarce, the price of land is relatively low, wages are low, raw materials are cheap. The pos- sibility of exporting capital is created by the fact that numerous backward countries have been drawn into international capitalist intercourse; main railways have either been built or are being built there; the elementary conditions for industrial development have been created, etc. The necessity for exporting capital arises from the fact that in a few countries capitalism has become “over-ripe” and (owing to the backward state of agriculture and the im- poverished state of the masses) capital cannot find "profitable” investment.

Here are approximate figures showing the amount of capital

invested abroad by the three principal countries:*

- ■ .. - -- — — - ■■ ■ ■■ _

Hobson, Imfertalum, London, 1902, p. 58 3 Riesser, of, eit., pp. 395 and +045 P. Arndt in WeUwktscAaJtlicAes Anhh (World Economc Ar~ ehhi), Vol. VII, 1916, p. 353 Neymarck in Bitlhtin de Vinstim hUemattotial


CAPITAL INVESTED ABROAD (In billions of ftancs)


Great Britain







10 (1869)



16 (1880)




20 (1890)










This table shows that die export of capital reached formidable dimensions only in the beginning of the twentieth centuiy. Before the war the capital invested abroad by the three principal countries amounted to between 175,000,000,000 and 200,000,000,000 francs. At the modest rate of 5 per cent, this sum should have brought in from 8 to 10 billions a year. This provided a solid basis for imperialist oppression and the exploitation of most of the countries and nations of the world; a solid basis for the capitalist parasitism of a handful of wealthy states 1

How is this capital invested abroad distributed among the vari- ous countries? Where does it go? Only an approximate answer can be given to this question, but suflScient to dirow light on cer- tain general relations and ties of modern imperiab'sm,


ie tiathtique; Hilferding, Dot Finamskafital, p, 437 s Lloyd George, Speech in the House of Commons, May 4, 1915, reported in the Daily TeUgrafh, May 5, 1915} B. Harms, frohUnte der W eltwtrtschaft {Problems of World Economy)^ Jena, 1912, p. 235 et isg.} Dr. Siegmund Schilder, Eittwick- Imgstendensien der Weltwirtschaft {Trends of Development of World Economy) i Berlin, 1912, Vol. I, p. 150} George Paish, Great Britain’s Capital Investments, etc. in Journal of the Royal Statistical Society, yol. LXXIV, 1910-11, p. Ifi el j«g.} Georges Diouritch, Uenpansion des banquet alltmandes d I’itranger, ses rapports aoec le developfement eco- iiomiqm ie PAlletnagne {Expansion of German Banks Abro^ in Connec- tfofs "ontik the Economic Development of Germany), Paris, 1909, p. 84.



(In billions of marks)














Asia, Africa and Austra- lia . 1





Total ....


1 36

1 35


The principal spheres of investment of British capital are the British colonies, which are very large also in America (for ex- ample, Canada) not to mention Asia, etc. In this case, enormoas exports of capital are bound up with the possession of enormous colonies, of the importance of which for imperialism we shall speak later. In regard to France, the situation is quite different. J'rench capital exports are invested mainly in Eui'ope, particularly in Rus- sia (at least ten billion francs). This is mainly /oa» capital, in the form of government loans and not investments in industrial under- takings. Unlike British colonial imperialism, French imperialism might be termed usury imperialism. In regard to Germany, we have a third type; the German colonies are inconsiderable, and German capital invested abroad is divided fairly evenly between Europe and America. -»

The export of capital greatly affects and accelerates the devel- opment of capitalism in those countries to which it is exported. While, therefore, the export of capital may tend to a certain ex- tent to arrest development in the countries exporting capital, it can only do so by expanding and, deepening the further development of capitalism throughout the world.

The countries which export capital are nearly always able to obtain “advantages,” the chardcfer'of tvhich throws light on the



peculiarities of the epoch of finance capital and monopoly. The fol- lowing passage, for instance, occurred in the Berlin review, Die Bank, for October 1913:

“A comedy worthy of the pen of Aristophanes is being played just now on the international capital market. Numerous foreign countries, from Spain to the Balkan states, from Russia to the Argentine, Brazil and China, are openly or secretly ap- proaching the big money markets demanding loans, some of which are very urgent. The money market is not at the mo- ment very bright and the political outlook is not yet promising. But not a single money market dares to refuse a foreign loan for fear that its neighbour might first anticipate it and so se- cure some small reciprocal service. In these international trans- actions the creditor nearly always manages to get some special advantages; an advantage of a commercial-political nature, a coaling station, a contract to construct a harbour, a fat conces- sion, or an order for guns.”*

Finance capital has created the epoch of monopolies, and mo- nopolies introduce everywhere monopolist methods: the utilization of “connections” for profitable transactions takes the place of com- petition on the open market. The most usual thing is to stipulate that part of the loan that is granted shall be spent- on purchases in the country of issue, particularly on orders for war materials, or for ships, etc. In the course of the last two decades (1890- 1910), France^ often resorted to this method. The export of cap- ital abroad thus becomes a means for encouraging the export of commodities. In these circumstances transactions between pai'ticu- larly big firms assume a form “bordering on corruption,” as Schil- der** "delicately” puts it. Krupp in Germany, Schneider in France, Armstrong in England are instances* of firms which have close

  • DU Bank, 1913, Xl, p. 1024-25.
  • • ScWldet, of.eit., Vol, I, pp, $46, 349, 350 and 371.


connectioub with powerful banks and governments and cannot be “ignored” when arranging a loan.

France granted loans to Russia m 1905 and by the commei' cial tieaty of September 16, 1905, she “squeezed” concessions out of her to run till 1917. She did the same thing when the Fianco- Japanese commercial treaty was concluded on August 19, 1911. The taiiff war between Austria and Serbia, which lasted with a seven months’ interval, from 1906 to 1911, was partly caused by competition between Austria and France for supplying Serbia with war materials. In January 1912, Paul Dcschanel .stated in the Chamber of Deputies that from 1908 to 1911 Fiench firms had supplied war materials to Serbia to the value of 45,000,000 'francs.

A report from the Atistio-Hungarian Constd at Sao-Paulo (Brazil) states:

“The construction of the Brazilian railways is being carried out chiefly by French, Belgian, British and German capital. In the financial operations connected with the construction of these railways the countries involved also stipulate for orders for the necessary railway materials.”

Thus finance capital, almost literally, one might say, spreads its net over all countries of the world. Banks founded in the colonies, or their branches, play an important part in these operations. Ger- man imperiah’sts look with envy on the “old” colonizing nations which are “well established” in this respect. In 190^, Great Brit- ain had 50 colonial banks with 2,279 branches (in 1910 there were 72 banks with 5,449 branches) ; France had 20 with 136 branches; Holland 16 with 68 branches; and Germany had a “mere” 13 with 70 branches.’*’ The American c.apitalists, in their turn, are jealous of the English and German : “In South America,” they complained in 1915, “five German banks have forty branches'

' Ricsser, of. cit., fourth edition, pp. 17^-75; Uiouritcb, p. 2*3,



and five English banks have seventy branches. . , . England and Germany have invested in the Argentine, Brazil, and Uruguay in the last twenty-five yearn approximately four thousand million dollars, and as a result enjoy together 46 per cent of the total trade of these three countries.”*

The capital exporting countries have divided the world among themselves in the figurative sense of the term. But finance capital has also led to the actual division of the world.

  • The AnnaU of the American Academy of Political and. Social Science,

,Vol. LIX, May 191S, p. 301. In the aame volume on p. 13 1, we read that the well-known statistician Paish, in the last annual issue of the finan- cial magazine Statist, estimated the amount of capital exported by Eng- land, Germany, France, Belgium and Holland at $+0,000,000,000, i.e., 200,000,000,000 francs.


Monopolist capitalist combines — cartels, syndicates, trusts — di- vide among themselves, first of all, the whole internal market of a country, and impose their control, more or less completely, upon the industry of that country. But under capitalism the home mai- ket is inevitably bound up with the foreign market. Capitalism long ago created a world market. As the export of capital in- creased, and as the foreign and colonial relations and the “spheres of influence” of the big monopolist combines expanded, things “naturally” gravitated towards an international agreement among these combines, and towards the formation of international cartels.

This is a new stage of world concentration of capital and pro- duction, incomparably higher than the preceding stages. Let us see how this supermonopoly develops. ^

The electrical industry is the most typical of the modern tech- nical achievements of capitalism of the end of the nineteenth and beginning of the twentieth centuries. This industry has developed most in the two most advanced of the new capitalist countries, the United States and Germany. In Germany, the crisis of 1900 gave a particularly strong impetus to its concentration. During the crisis, the banks, which by this time had become fairly well merged with industry, greatly accelerated and deepened the collapse of relatively small firms and their absorption by the large ones,.



“The banks,” wiites Jeidels, “m lefusing a helping hand to the very companies which are in greatest need of capital bring on first a frenzied boom and then the hopeless failure of the companies which have not been attached to them closely long enough,”'^

As a result, after 1900, concentration in Germany proceeded by leaps and bounds. Up to 1900 there had been seven or eight “groups” in the electrical industiy. Each was formed of several companies (altogether there were twenty-eight) and each was sup- poited by from two to eleven banks. Between 1908 and 1912 all the gioups were merged into two, or possibly one. The diagram below shows the process;


Priot Feltcn <& Lah- Union Siemens Schuckert Berg- Kum-

to Guillaume meyet A.E.G. & Halske <& Co. mann mcr

1900: I • I I

Felten & Lahmcyet A.E.G. Siemens & Halske- Berg- Failed

Schuckert mann in 1900

A.E.G Siemens &

By 1912: (General Electric Co.) Halske-Schuckert

(In close “co-operation" since 1908)

The famous A.E.G. (General Electric Company), which grew up in this wa;^, controls 175 to 200 companies (through sharehold- ings), and a total capital of approximately 1 , 500 , 000,000 marks. Abroad, it has thirty-four direct agencies, of which twelve are joint- stock companies, in more than ten countries. As early as 1904 the amount of capital invested abroad by the German electrical industry was estimated at 233,000,000 marks. Of this sum, 62,000,000 'Were invested in Russia. Needless to say, the A.E.G. is a huge com- bine. Its manufacturing companies alone number no less than six-

• JeidtVol’- «/.. p. 212.



teen, and their factoiies make the most varied articles, fioni cables and insulators to motor cars and aeroplanes.

But concentration in Europe was a part of the process of con- centration in America which developed in the following way:

General Electric Cumpanji

United States:

Thomson-Houston Co. establishes a firm In Eutopc

Edison Co. establishes in Europe the French Edi- son Co. which transfers its patents to the German litm


Union Electiic Co.

Gcn'l Electric Oi. (A.E.G.)

General Elcctiic Co. (A.E.G.)

Thus, two “Great Powers” in the electrical industry were formed. “There are no other electric companies in the world com- fletely independent of them,” wrote Heinig in his article “The Path of the Electric Trust.” An idea, although far from com- plete, of the turnover and the size of the entei-prises of the two “trusts” can be obtained from the following figures:

Turnover (Mill, marks)

No. of employees

Net profits' (Mill, marks)

America; General Elec-






trie Co. (G.E.C.).





GcrmanyiGenetal Elec-





trie Co. (A.E.G.).






In 1907, the German and American trusts concluded an agree- ment by which they divided the world between themselves. Com- petition between them ceased. The American General Electric-’ Company (G.E.C.) “got” the United States and Canada. The German General Electric Company (A.E.G.) “got” Germany, Austria, Russia, Holland, Denmark, Switzerland, Turkey and the



Balkans, Special agreements, naturally secret, were concluded re- garding the penetration of “subsidiary” companies into new branches of industry, into “new” countries formally not yet allotted. The two trusts were to exchange inventions and experiments.*

It is easy to understand how difficult competition has become against this trust, which is practically world-wide, which controls a capital of several billion, and has its “branches,” agencies, rep- resentatives, connections, etc., in every corner of the world. But the division of the world between two powerful trusts does not remove the possibility of redivision if the relation of forces changes as a result of uneven development, war, bankruptcy, etc.

The oil industry provides an instructive example of attempts at such a redivision, or rather of a struggle for redivision.

“The world oil market,” wrote Jeidels in 1905, “is even today divided in the main between two great financial groups — Rockefeller’s American Standard Oil Co., and the controlling interests of the Russian oilfields in Baku, Rothschild and Nobel. The two groups are in close alliance. But for sev- eral years five enemies have been threatening their monop- oly:”**

1) The exhaustion of tlie American oil wells; 2) the competi- tion of ffie firm of Mantashev of Baku; 3) the Austrian weUsj 4) the Rumanian wells; 5) the overseas oilfields, particularly in the Dutch edionies (the extremely rich firms, Samuel and Shell, also connected with British capital). The three last groups are con- nected with the great German banks, principally, the Deutsche Bank. These banks independently and ^stematically developed the oil industry in Rumania, in order to have a foothold of their “own.” In 1907, 185,000,000 francs of foreign capital were invested in


  • Eiesier, of, cit.} Diouritch, of. cit., p. 239 j Kurt Heinig', of. cit.,

p. 474.

•* Jeldebi,*e/^. cb., pp. 192-93.


the Rumanian oil industry, of which 74,000,000 came from Ger- many.*

A struggle began, which in economic literature is fittingly called “the struggle for the division of the world.” On one side, the Rockefeller trust wishing to conquer everything, formed a subsi- diary company right in Holland, and bought up oil wells in the Dutch Indies, in order to strike at its principal enemy, the Anglo- Dutch Shell trust. On the other side, the Deutsche Bank and the other German banks aimed at “retaining” Rumania “for them- selves” and at uniting it with Russia against Rockefeller. The lat- ter controlled far more capital and an 'excellent system of oil trans- port and distribution. The stmggle had to end, and did end in 1907, with the utter defeat of the Deutsche Bank, which was con- fronted with the alternative: either to liquidate its oil business and lose millions, or to submit. It chose to submit, and concluded a very disadvantageous agreement with the American trust. The Deutsche Bank agreed “not to attempt anything which might injure American interests.” Provision was made, however, for the an- nulment of the agreement in the event of Germany establishing a state oil monopoly.

Then the "comedy of oil” began. One of the German finance kings, von Gwinner, a director of the Deutsche Bank, began through his private secretary, Stauss, a campaign for a state oil monopoly. The gigantic machine of the big Germafi* bank and all its wide “connections” were set in motion. The press bubbled over with “patriotic” indignation against the “yoke” of tlie American trust, and, on March 15, 1911, the Reichstag by an almost unani- mous vote, adopted a motion asking the government to introduce a bill for the establishment of an oil monopoly. The government seized upon this “popular” idea, and the game of the Deutsche's Bank, which lioped to cheat its American partner and improve its


  • Dioui'itcb) of, cit., p. 27 S,



business by a state monopoly, appealed to have been won. The German oil magnates saw visions of wonderful profits, which would not be less than those of the Russian sugar refiners. . . . But, fiistly, the big Geimaii banks quarrelled among themselves over the division of the spoils. The Disconto-Gesellschaft exposed the covetous aims of the Deutsche Bank; secondly, the government took flight at the prospect of a struggle with Rockefeller; it was doubtful whether Germany could be sure of obtaining oil from other sources. (The Rumanian output was small.) Thirdly, just at that time the 1913 credits of a billion marks were voted for Ger- many’s war preparations. The project of the oil monopoly was postponed. The Rockefeller trust came out of the stiuggle, for the time being, victorious.

The Berlin review. Die Banky said in this connection that Ger- many could only fight the oil trust by establishing an electricity monopoly and by converting water power into cheap electricity.

“But,” the author added, “the electricity monopoly will come when the producers need it, that is to say, on the eve of the next great crash in the electrical industry, and when the powerful, expensive electric stations which are now being put uj. at great cost everywhere by private electrical concerns, which obtain partial monopolies from the state, from towns, etc., can no longer work at a profit. Water power will then have to be used. But'lt will be impossible to convert it into cheap electric- ity at state expense; it will have to be handed over to a ‘pri- vate monopoly controlled by the state,’ because of the immense compensation and damages that would have to be paid to pri- vate industry, ... So it was with the nitrate monopoly, so it i' with the oil monopoly; so it will be with the electric powei

  • ' monopoly. It is time for our state socialists, who allow them-

selves to be blinded by beautiful principles, to understand onc( and for aU that in Germany monopolies have never pursued the aim, horTiave they had the result, of benefiting the consumer


or of handing over to the state part of the entrefrcneurs^ prof- its; they have served only to facilitate at the expense of the state, the recovery of private industries which were on the verge of bankruptcy.”"

Such are the valuable admissions which the German bourgeois economists are forced to make. We see plainly here how private monopolies and state monopolies are bound up together in the age of finance capital; how both are but separate links in the imperial- ist struggle between the big monopolists for the division of the world.

In mercantile shipping, the tremendous development of con- centration has ended also in the division of the world. In Germany two powerful companies have raised themselves to firet rank, the Hamburg-Amerika and the Norddeutscher Lloyd, each having a capital of 200,000,000 marks (in stocks and bonds) and possessing 185 to 189 million marks worth of shipping tonnage. On the other side, in America, on Januaiy 1 , 1903 , the Morgan trust, the International Mercantile Marine Co., was formed which united nine British and American steamship companies, and which con- trolled a capital of 120 , 000,000 dollars ( 480 , 000,000 marks). As early as 1903 , the German giants and the Anglo-American trust concluded an agreement and divided the world in accordance with the division of profits. The German companies undertook not to compete in the Anglo-American trafiSc. The por5 were carefully “allotted” to each; a joint committee of control was set up, etc. This contract was concluded for twenty years, with the prudent provision for its annulment in the event of war.""'"

Extremely instructive also is the story of the creation of the In- ternational Rail Cartel. The first attempt of the British, Belgian and German rail manufacturers to create such a eartel was made

  • Die Bank, 1912, I, p. 1036| cf. also 1912, 11, p. 629 at wy.j

1913, 1, p. 388.

  • Riesscr, of, cit,, third edition, pp. 114-16.



as early as 1884, at the time of a severe industrial depression. The manufacturers agreed not to compete with one another for ' the home markets of the countries involved, and they divided the for- eign markets in the following quotas: Great Britain 66 per cent; Germany 27 per cent; Belgium 7 per cent. India was reserved entirely for Great Britain. Joint war was declared against a British firm which remained outside the cartel. The cost of this economic war was met by a percentage levy on all sales. But in 1886 the cartel collapsed when two British firms retired from it. It is cliaracteristic that agreement could not be achieved in the period of industrial prosperity which followed.

At the beginning of 1904, the German steel syndicate was formed. In November 1 904, the International Rail Cartel was re- vived, with the following quotas for foreign trade; England 53.S per cent; Germany 28.83 per cent; Belgium 17.67 per cent. France came in later with 4.8 per cent, 5.8 per cent and 6.4 per cent in the first, second and third years respectively, in excess of the 100 per cent limit, i.e,, when the total was 104.8 per cent, etc. In 1905, the United States Steel Corporation entered the car- tel; then Austria; then Spain.

“At the present time,” wrote Vogelstein in '1910, “the division of the world is completed, and the big consumers, primarily the state railways— since the world has been par- celled out f^ithout consideration for their interests — can now dwell like the poet in the heaven of Jupiter.”*

We will mention also the International Zinc Syndicate, estab- lished in 1909, which carefully apportioned output among three groups of factories: German, Belgian, French, Spanish and British.

■ *' Then there is the International Dynamite Trust, of which Liefmann says that it is

lv< * Vogdfeein, Orgamsatiamjormen (Fffrw of Organmfion),^. 100.


“quite a modern, close alliance of all the German manufac- turers of explosives who, with the French and American dy- namite manufacturers who have organized in a similar man- ner, have divided the whole world among themselves, so to speak.”*

Liefmann calculated that in 1897 there were altogether about forty international cartels in which Germany had a share, while in 1910 there were about a hundred.

Certain bourgeois writers (with whom K. Kautsky, who has completely abandoned the Marxist position he held, for example, in 1909, has now associated himself) express the opinion that in- ternational cartels are the most striking expressions of the interna- tionalization of capital, and, therefore, give the hope of peace among nations under capitalism. Theoretically, this opinion is absurd, while in practice it is sophisti 7 and a dishonest defence of tlic worst opportunism. International cartels show to what point capitalist monopolies have developed, and they reveal the object of the struggle between the various capitalist groups. This last cir- cumstance is the most important; it alone shows iis the histon'eo- economic significance of events; for the jorms of the struggle may and do constantly change in accordance with varying, relatively particular, and temporary causes, but the essence of the struggle, its class content, cannot change while classes exist. It is easy to understand, for example, that it is in the interests Tif the German bourgeoisie, whose theoretical arguments have now been adopted by Kautsky (we will deal with this later), to obscure the content of the present economic struggle (the division of the world) and to emphasize this or that jorm of the struggle. Kautsky makes the same mistake. Of course, we have in mind not only the German bourgeoisie, but the bourgeoisie all over the world. The capitalist divide the world, not out of any particular malice, but because the

R, Liefmann, Kortelle und Trusts, aecond edition, i). 161.



degree of concentration which has been reached forces them to adopt this method in order to get profits. And they divide it in proportion to “capital,” in proportion to “strength,” because there cannot be any other system of division under commodity production and capitalism. But strength varies with the degree of economic and political development. In order to understand what takes place, it is necessary to know what questions are settled by this change of forces. The question as to whether these changes are “purely” cronomic or Mo«-economlc (e.g., military) is a secondary one, which does not m the least affect the fundamental view on the latest epoch of capitalism. To substitute for the question of the content of the stiuggle and agreements between capitalist combines the question of the form of struggles and agreements (today peaceful, to-morrow war-like, the next day war-like again) is to sink to the role of a sophist.

The epoch of modern capitalism shows us that certain relations are established between capitalist alliances, based on the economic division of the world; while parallel with this fact and in connec- tion with it, certain relations are estabh'shed between political al- liances, between states, on the basis of the territorial division of the world, of the struggle for colonies, of the “struggle for economic territory.”


In his hook, The Territorial Development 0/ the European Colonies^ A. Supan,'*' the geographer, gives the following brief siimmar}' of this development at the end of the nineteenth cen- tury:


(Including United States)



Increase or Decrease













+ 6.1








— 0.3

  • A. Supan, Die territgriale B/itwickhmg Jer ettropbhehen Kolonien,

Gntha, 1905, p. 254.




“The characteristic feature of this period,” he concludes, “is, therefore, the division of Africa and Polynesia.”

As there are no unoccupied territories — that is, territories that do not belong to any state — in Asia and America, Mr. Supan’s conclusion must be carried further, and we must say that the char- acteristic feature of this period is the final partition of the globe — not in the sense that a new fartition is impossible — on the contrary, new partitions are possible and inevitable — ^but in the sense that the colonial policy of the capitalist countries has completed the seizure of the unoccupied territories on our planet. For the first time the world is completely divided up, so that in tlie future only redivision is possible; territories can only pass from one “owner” to another, instead of passing as unowned territory to an “owner.”

Hence, we are passing through a peculiar period of world co- lonial policy, which is closely associated with the “latest stage in the development of capitalism,” with finance capital. For this rea- son, it is essential first of all to deal in detail with the facts, in order to ascertain exactly what distinguishes this period from those preceding it, and what the present situation is. In the first place, two questions of fact arise here. Is an intensification of colonial policy, an intenafication of the struggle for colonies, observed pre- cisely in this period of finance capital? And how, in this respect, is the world divided at the present time?

The American writer, Morris in his book on the history of colonization, has made an attempt to compile data on tlie colonial possessions of Great Britain, France and Germany during different periods of the nineteenth century. The following is a brief sum- mary of the results he has obtained:

  • Henry C. Morris, The Hittory of Cohniscacion, New York, 1900,

If, p. 88) I, pp. 304, +19.


COLONIAL POSSESSIONS (Million squai'c miles and million inhabitants)

Great Britain










1816-30 . . .







146.1 ■








1899 ... .







For Great Britain, the period of the enormous expansion of colonial conquests is that between 1860 and 1880, and it was also very considerable in the last twenty yeai^ of the nineteenth cen- tury. For France and Germany this period falls precisely in these last twenty years. We saw above that the apex of pre-monopoly capitalist development, of capitalism in which free competition was predominant, was reached in the ’sixties and ’seventies of the last century. We now see that it is frecisely ajter that ferlod that the “boom” in colonial annexations begins, and that the struggle for the territorial division of the world becomes extraordinarily keen. It is beyond doubt, therefore, that capitalism’s transition to the stage of monopoly capitalism, to finance capital,^ is bound with the intensification of the stiniggle for the partition of the world.

Hobson, in his work on imperialism, marks the ye.rrs 1884- 1900 as the period of the intensification of the colonial “expansion” of the chief European states. According to his estimate, Gi‘eat Brit- ain during these years acquired 3,700,000 square miles of ter- ritory with a population of 57,000,000; France acquired 3,600,000 square miles ^with a population of 36,500,000; Ger- many 1,000,000 square miles with a population of, 16,700,000;



Belgium 900,000 square miles with 30,000,000 inhabitants; Portugal 800,000 square miles with 9,000,000 inhabitants. The quest for colonies by all the capitalist states at the end of the nine- teenth century and particularly since the 1880’s is a commonly known fact in the history of diplomacy and of foreign affairs.

When free competition in Great Britain was at its zenith, i.e., between 1840 and 1860, the leading British bourgeois politicians were opposed to colonial policy and were of the opinion that the liberation of the colonies and their complete separation from Britain was inevitable and dcsiiable, M. Beer, in an article, “Modern Brit- ish Imperialism,”'"' published in 1898, shows that in 1852, Disraeli, a statesman generally inclined towards imperialism, declared : “The colonies are millstones roimd our necks.” But at the end of tlie nmeteenth century the heroes of the hour in England were Cecil Rhodes and Joseph Chamberlain, open advocates of impeiialism, who applied the imperialist policy in the most cynical manner.

It is not without interest to observe that even at that time these leading British bourgepis politidans fully appreciated the connec- tion between what might be called the purely economic and the politico-social roots of modern imperialism. Chamberlain advocated imperialism by calling it a “true, wise and economical policy,” and he pointed particularly to the German, American and Belgian com- petition which Great Britain was encountering in the world mar- ket. Salvation {[.ies in monopolies, said the capitalists as they formed cartels, syndicates and trusts. Salvation lies in monopolies, echoed the political leaders of the bourgeoisie, hastening to appropriate the parts of the world not yet shared out. The journalist, Stead, re- lates the following remarks uttered by his close friend Cecil Rhodes, in 1895, regarding his imperialist ideas:

“I was in the East End of London yesterday and attended a meeting of the unemployed. I listened to the wild speeches,


DU Nevf Ztit, XVI, I, 1898, p. J02.


which were jiisl .1 cry hir ‘bieatl,’ ‘biead,’ ‘bnail,’ and mi uiy way home I pondered ovei the scene and I became moie tlian ever convinced oi the importance of imperialism. . . . My cherished idea is a sidiition for the social problem, i.e.y in order to save the 40,000,000 inhabitants of the United Kuigdom from a bloody civil war, we colonial statesmen must acquire new lands to settle the surplus population, to piovide new maikcts foi the goods produced by them in the factories and mines. The Empire, as I have always said, is a Inroad and butter question. If you want to avoid civil war, you must become impenalists.” " This is what Cecil Rhodes, millionaire, king of finance, the man who was mainly responsible for the Boer War, said in 1895. His defence of imperialism is just ciaide and cynical, but in sub- stance it does not differ from the “theory” advocated by Messrs. Maslov, Sildekum, Potresov, David and the founder of Russian Marxism""” and others. Cecil Rhodes was a somewhat more honest social-chauvinist. j

To tabulate as exactly as possible the territorial division of the world, and the changes which have occurred during the last de- cades, we will take the data furnished by Supan in the work al- ready quoted on the colonial possessions of all the powers of the world. Supan examines the years 1876 and 1900; we will take the j’ear 1876 — a year aptly selected, for it is precisely at that time that the pre-monopolist stage of development of West European capitalism can be said to have been completed, in the main, and we will take the year 1914, and in place of Supan’s figures we will quote the more recent statistics of Hubner’s Geographical and Sfa- tUtical Tables. Supan gives figures only for colonies: we think it useful in order to present a complete picture of the division of the world to add brief figures on non-colonial and semi-colonial conn- ,

' IbU., p. 30.1.

Tlic leference here is tn G. V. Plekbannv.



iuitl international lelations, that it is tapable of subordinating to itself, and actually does subordinate to itself even states enjoying complete political independence. We shall shoitly see examples of this. Naturally, however, finance capital finds it most “convenient,” and is able to extract the greatest profit from a subordination which involves the loss of the political independence of the subjected coun- tries and peoples. In this connection, the semi-colonial countries provide a typical example of the “middle stage.” It is natural that the struggle for these semi-dependent countries should have be- come particularly bitter during the period of finance capital, when the rest of the world had already been divided up.

Colonial policy and imperialism existed before this latest stage of capitalism, and even before capitalism. Rome, founded on sla- very, pursued a colonial poh'cy and achieved impel ialism. But “gen. eral” arguments about imperialism, which ignore, or put into the background the fundamental difference of social-economic systems, inevitably degenerate into absolutely empty banalities, or into grand- iloquent comparisons like: "Greater Rome and Greater Britain.”'*’ Even the colonial policy of capitalism in its frevious stages is es- sentially different from the colonial policy of finance capital.

The principal feature of modern capitalism is the domination of monopolist combines of the big capitalists. monopolies are most firmly established when aU tlie sources of raw materials are controlled by^the one group. And we have seen with what zeal the international capitalist combines exert every effort to make it im- possible for their rivals to compete with tliem; for example, by buying up mineral lands, oil fields, etc. Colonial possession alone gives complete guarantee of success to the monopolies against all the risks of the struggle with competitors, including the risk that - the latter will defend themselves by means of a law establishing

A. reference to the hook by C.P. Lucas, Greater Rome and Greater OtiMM, Oxioril, 1912, or the Bari of rramci’s /lih'iriil and Modern Imifmal'mit, London, 1911).


a State monopoly. 'I'lie mure capitalism is developed, tlio more the need for raw materials is felt, the more bitter competition becomes, and the more feverishly the hunt for raw materials proceeds thioughout the whole world, the more desperate becomes the strug- gle for the acquisition of colonies,

Schilder writes:

It may even be asserted, although it may sound paiadox- ical to some, that in the more or less discernible future the giowth of the urban and industrial population is more likely to be hindered by a shortage of raw materials for industry than by a shortage of food.”

lor example, there is a growing shortage of timber — the price of which is steadily rising — of leather, and raw materials for the textile industry.

“As instances of the efforts of associations of manufacturers to create an equilibrium between industry and agriculture in world economy as a whole, we might mention the Interna- tional Federation of Cotton Spinners’ Associations in the most important industrial countries, founded in 1904, and the European Federation of Flax Spinners’ Associations, founded on the same model in 1910.”*

The bourgeois reformists, and among them particularly the present-day adherents of Kautsky, of course, try to belittle the im- portance of facts of this kind by arguing that it “would be pos- sible” to obtain raw materials in the open market without a “costly and dangerous” colonial policy; and that it would be “possible” to increase the supply of raw materials to an enormous extent “simply” by improving agriculture. But these arguments arc merely an apology for imperialism, an attempt to embellish it, because they ignore the principal feature of modern capitalism, monopoly. Free ^ markets are becoming more and more a thing of the past; monop-

" Schildef, op. cit., pp. 38 and 42,



olist syndicates and trusts are restricting them more and more every day, and “simply” improving agriculture reduces itself to improving the conditions of the masses, to raising wages and reduc- ing profits. Where, except in the imagination of the sentimental reformists, are there any trusts capable of interesting themselves in the condition of the masses instead of the conquest of colonics?

Finance capital is not only interested in the already known sources of raw materials; it is also interested in potential sources of raw materials, because present-day technical development is ex- tremely rapid, and because land which is useless today may be made fertile to-morrow if new methods are applied (to devise these now methods a big bank can equip a whole expedition of engineers, agricultural experts, etc.), and large amounts of capital are invested. This also applies to prospecting for minerals, to new methods of working up and utilizing raw materials, etc., etc. Hence, the inevitable striving of finance capital to extend its eco- nomic territory and even its territory in general. In the same way that the trusts capitalize their property by estimating it at two or three times its value, taking into account its “potential” (and not present) returns, and the further results of monopoly, so finance capital strives to seize the largest possible amount of land of all kinds and in any place it can, and by any means, counting on the possibilities of finding raw materials there, and fearing to be left behind iivthe insensate struggle for the last available scraps of undivided territory, or for the repartition of that which has been already divided.

The British capitalists are exerting every effort to develop cot- ton growing in their colony, Egypt (in 1904, out of 2,300,000 hectares of land under cultivation, 600,000 or more than one- fourth, were devoted to cotton growing); the Russians are doing the same in their colony, Turkestan; and they are doing so be- cause in this way they will be in a bet;ter position to defeat their foreign competitors, to monopolize the sources of raw materials


and form a more economical and profitable textile trust in which all the processes of cotton production and manufacturing will be "combined” and concentiated m the hands of a single owner. The necessity of exporting capital also gives an impetus to the conquest of colonies, for in the colonial market it is easier to elim- inate competition, to make sure of orders, to strengthen the necessary “connections,” etc., by monopolist methods (and some- times it is the only possible way).

The non-economic superstructure which grows up on tin b.asis of finance capital, its politics and its ideology, stimulates the striv- ing for colonial conquest. “Finance capital does not want liberty, it wants domination,” as Hilferding very truly says. And a French bourgeois writer, developing and supplementing, as it were, the ideas of Cecil Rhodes, which wc quoted above,* writes that social causes should be added to the economic causes of modern colonial policy.

"Owing to the growing difficulties of life, which weigh not only on the masses of the woikers, but also on the middle classes^ one finds in all countries of the old civilization a cumulative impatience, rancour and hatred that represent a menace to public order, a cumulative energy of declassed forces . . , that must be diverted and given employment abroad, if an explosion is to be averted at home,”**

Since wc are speaking of colonial policy in the period of capital- ist imperialism, it must be observed that finance capital and its corresponding foreign policy, which reduces itself to the struggle of the Great Powers for the economic and political division of the world, give rise to a number of transitional forms of national dependence. The division of the world into two main groups —

See Ibis volume pp. 96-97, — EJ.

Wahl, La France aux colonies (France in the Colonies'), quoted by Henri Riissier, Le fatta^e tie FOcianie (The Farti/hn of Oceania's, Paris, 190?, pp. I6i-66.


10 1

of colony-owning countries on the one hand and colonies on the other — is not the only typical feature of this period; there is also a variety of fonns of dependent countries; countries which, officially, are politically independent, but which arc, m fact, en- meshed in the net of financial and diplomatic dependence. We have already referred to one form of dependence — the semi-colony. An- other example is provided hy the Argentine.

“South America, and es|>ccially the Argentine,” writes Schul/e- Gaevernitz in his work on British imperialism, “is so dependent financially on London that it ought to be described as almost a British commercial colony.””

Basing himself on the leport of the Austro-Hungarian consul at Buenos Aires for 1909, Schilder estimates the amount of British capital invested in the Argentine at 8,750,000,000 francs. It is not difficult to imagine the solid bonds that are thus created bet- ween British finance capital (and its faithful “friend,” diplomacy) and the Argentine bourgeoisie, with the leading businessmen and politicians of that countiy.

A somewhat different form of financial and diplomatic depend- ence, accompanied by political independence, is presented by Portu- gal. Portugal is an independent sovereign state. In actual fact, I'.owever, for more than two hundred years, since the war of the Spanish Succession (1700-14), it has been a British protectorate. Great Britain has protected Portugal and her colonies in order to fortify her own positions in the fight against her rivals, Spain and France. In return she has received commercial advantages, pre- ferential import of goods, and, above all, of capital into Portugal

Schulzc-Gaevernitz, Britischer Imperialismus uml englischer Frei/uui- M «tt Beginn de$ ZO. Jalirhmdsrts (firithh Imperialism and. English Free Trade at the Beginning of the Twentieth Century), Leipzig, 1906, p. 318. Sartorius von Waltershausen says the same in Das volkssmrischaftUche Svstem der KapitaUmlage im Auslamle ( The ~ National Economh System of Capital Irwdltments Ahtood), Berlin, 1917, p. 46.


and the Poitugucse coloiiiei, the right to use the ports and islands of Poitugal, her telegraph cables, etc.' Relations of this kind have always existed between big and little states. But during the period of capitalist imperialism they become a general system, they form part of the process of “dividing the world,” they become a link in the chain of operations of world finance capital.

In order to complete our examination of the question of the diyision of the world, we must make the following obseivatioji. This question was laised quite openly and definitely not only in American literature after the Spanish- American War, and in English literature after the Boer War, at the very end of the nine- teenth century and the beginning of the twentieth; not only has German literature, which alw.iys “jealously” watches “British im- perialism,” s)'stematically given its appraisal of this fact, but it has also been raised in French bourgeois literature in terms as wide and clear as they can be made from the bourgeois point of view. We will quote Driault, the historian, who, in Ins book, PoU^d anil Social Problems at the End of the Nineteenth Century , in the chap- ter “The Great Powers and the Division of the World,” wrote the following:

“During recent years, all the free territory of the globe, with the exception of China, has been occupied by the powers of Europe and North America. Several conflicts and displace- ments of influence h.ave already occurred ovsr this matter, which foreshadow more terrible outbreaks in the near future. For it is necessary to make haste. The nations which have not yet made provision for themselves run the risk of never receiv- ing their share and never participating in the tremendous ex- ploitation of the globe which will be one of the essential features of the next century” {i.e., the twentieth). “That is ^hy all. Europe and America has lately been afflicted with the fever of

^ fit Vol T Till



colonial expaniiion, of ‘imperialisnij’ that mo&L chai'acteri^ilic feature of the end of the nineteenth century.”

And the author added:

“In this paitition of the world, in this furious pursuit of the treasures and of the big markets of the globe, the relative power of the empires founded in this nineteenth century is totally out of proportion to the ‘place occupied in Europe by the nations which founded them. The dominant powers in Europe, those which decide the destinies of the Continent, are not equally preponderant in the whole world. And, as colonial power, the hope of controlling hitherto unknown wealth, will obviously react to influence the lelative strength of the European powers, the colonial question — ‘imperialism,’ if you will — which has already modified the political conditions of Europe, will modify them more and more.”"

Rd. Dnault, Problems folitiqiies el soeiaiix, Paris, 1907, p. 289.


We must now try to sum up and put together what has been said above on the subject of imperialism. Imperialism emerged as the development and direct continuation of the fundamental at- tributes of capitalism in general. But capitalism only became capital- ist imperialism at a definite and very high stage of its development, when certain of its fundamental attributes began to be transformed into their opposites, when the features of a period of transition from capitalism to a higher social and economic sj’stem began to take shape and reveal themselves all along the line. Economically, the main thing in this process is the substitution of capitalist mo- nopolies for capitalist free competition. Free competition is the fundamental attribute of capitalism, and of commodity production generally. Monopoly is exactly the opposite of free competition; but we have seen the latter being transformed into monopoly before our eyes, creating large-scale industiy and eliminating small industry, replacing large-scale industry by still largcr-scale industry, finally leading to such a concentration of production and capital that monopoly has been and is the result: cartels, .syndicates and trusts, and merging with them, the capital of a dozen or so banks m;i- nipulating thousands of millions. At the same time monopoly, whicli has grown out of free jompetition, does not abolish the latter, but exists over it and alongside of it, and thereby gives rise to a number

Ol \n\ .luuc, inifiiv .nitai>..iiiM»is, liiaii.i, .ind conflicts. Munop- |'l^ i, the u.niMtiiiii Iroin c;ipil:iIiMii to a higher system.

If it wcu' ncicssiiij 111 gi\c tlu' hnVlcst poiisible definition of inipcrialiMii we .'ihmilil h.ivc tu s:iy chat imperialism is the monop- oly stage 111 capit.ilism. Sm-h a ilefinitmn would include what is must unportam. fur, on the one hiuul, finance capital is the bank itipital of a few big nuuinpolist banks, merged with the capital of the monopolist combines of manufacturers; and, on the other hand, ilie division of the worhl k the transition from a colonial policy which has extended without hindrance to territories unocciip'ed hy aiij capitalist power, to a colonial policy of monopolistic pos- session of the territory ot the world which has been completely divided up.

Hut verj- brief definitions, aUhough convenient, for they sum 0(1 the main points, arc iu'verlhcles.s inadequate, because very im- portniu fcalures of the phenomenon that has to be defined have (o lie fspt’ciiilly (kaluoed. .'\iul .so, without forgetting the conditional .utd rclntiw value of .dt definitions, which can never include all thu concntcniiiions of a phenomenon in its complete development, uc nuist give a definition of imperialism that will embrace the following five essential features:

n 'J'lic concentrntion of production and capital developed to such a liigh .stage that it created monopolies which play a decisive lolc in economic life.

2 ) 'I'hc merging of bank capital with industrial capital, and the creation, on the basis of this “finance capital,” of a financitd oligarchy.

3 ) I'he export of capital, which has become extremely impor- tant, as distinguished from the exqjort of commodities.

4 ) The formation of international capitalist monopolies which share the world among themselves.

5 ) The territorial division of the wjjolc world among the greatest capitalist powers is completed,


IiiHWfialiwn is capnaJjwij w that stage of devcJopjuc-nt in wJiicii the dominance of monopolies and ‘finance capital has established itself; in which the export of capital has acquired pronounced im- portance; in which the division of tlie world among the interna- tional trusts has begun; in which the division of all territories of the globe among the great capitah'st powers has been completed.

We shall see later that imperialism can and must be defined dififerently if consideration is to be given, not only to the basic, purely economic factors — to which the above definition is limited — but also to the historical place of this stage of capitalism in rela- tion to capitalism in general, or to the relations between imperialism and the two main trends in the woi king-class movement. The point to be noted just now is that imperialism, as interpreted above, undoubtedly represents a special stage in the development of cap- italism. In order to enable the reader to obtain as well grounded an idea of imperialism as possible, we deliberately quoted largely from bourgeois economists who are obliged to admit the particu- larly incontrovertible facts regarding modern capitalist economy. With the same object in view, we have produced detailed statistics which reveal the 'extent to which bank capital, etc., has developed, showing how the transformation of quantity into quality, of de- veloped capitalism into impciialism, has expressed itself. Needless to say, all boundaries in natiue and in society are conditional and changeable, and, consequently, it would be absui’d to discuss the exact year or tlie decade in which imperialism “definitely” became e.stablis}ied.

In this matter of defining imperialism, however, we have to enter into controversy, primarily, with K. Kautsky, tlie principal Marxian theoretician of the epoch of the so-called Second Interna- tional — that is, of the twenty-five years between 1889 and 1914^

Kautsky, in 1915 and even in November 1914, very emphati- cally attacked the fundamental ideas expressed in our definition of imperialism. Kautsky said that imperialism must not be regarded as


V T. T,F,NtN

of very acute, intense aittagonisms, friction aiul conflicts. Monop- oly is the transition from capitalism to a higher system.

If it were necessary to give the briefest possible definition of imperialism we should have to say that imperialism is the monop- oly stage of capitalism. Such a definition would include what is most important, for, on the one hand, finance capital is the bank capital of a few big monopolist banks, merged with the capital of the monopolist combines of manufacturers; and, on the other hand, the division of the world is the transition from a colonial policy which has extended without hindrance to territories unoccup'ed by any capitalist power, to a colonial policy of monopolistic pos- session of the territory of the world which has been completely divided up.

But very brief definitions, although convenient, for they sum up the main points, are nevertheless inadequate, because very im- portant features of the phenomenon that has to be defined have to be especially deduced. And so, without forgetting the conditiojial and relative value of all definitions, which can never include all the concatenations of a phenomenon in its complete development, we must give a definition of imperialism that will embrace the following five essential features:

1) The concentration of piodiiction and capital developed to such a high stage that it created monopolies which play a decisive role in economte life.

2) The merging of bank capital with industrial capital, and the creation, on the basis of this “finance capital,” of a financial oligarchy.

3) The export of capital, which has become extremely impor- tant, as distinguished from the export of commodities.

4) The formation of international capitalist monopolies whicli share the world among themselves.

3) The territorial division of the whole world among the ^ greatest capitalist powers is completed.


Lnpurialisa} js t-apnaJiwi] in that stage ul tlevelcjpiiient iii wliicii the dominance of monopolies and’ finance capital has established itself; in which the export of capital has acquired pronounced im- portance; in which the division of die world among the interna- tional trusts has begun ; in which the division of all territories of the globe among the great capitalist powers has been completed.

We shall see later that imperialism can and must be defined differently if consideration is to be given, not only to the basic, purely economic factors — to which the above definition is limited — but also to the historical place of this stage of capitalism in rela- tion to capitalism in general, or to the relations between imperialism and the two main trends in the working-class movement. The point to be noted just now is that imperialism, as interpreted above, undoubtedly represents a special stage in the development of cap- italism. In order to enable the i-eader to obtain as well grounded an idea of imperialism as possible, we deliberately quoted largely from bourgeois economists who are obliged to admit the particu- larly incontrovertible facts regarding modem capitalist economy. With the same object in view, we have produced detailed statistics which reveal the extent to which bank capital, etc., has developed, showing how the transformation of quantity into quality, of de- veloped capitalism into imperialism, has expressed itself. Needless to say, all boundaries in nature and in society are conditional and changeiible, and, consequently, it would be absurd to discuss the exact year or the decade in which impel ialism "definitely” became established.

In this matter of defining imperialism, however, wc have to enter into controversy, primarily, with K. K.autsky, the princip.'il Marxian theoretician of the epoch of die so-called Second Interna- tional — ^that is, of the twenty-five years between 1889 and 1914^

Kautsky, in 1915 and even in November 1914, very emph.ati- rally attacked the fundannental ideas expressed in our definition of imperialism. Kautsky .said that imperialism must not be regarded as



a “phase” or stage of economy, but as a policy; a definite policy “pref cried” by finance capital; that imperialism cannot be “identi- fied” with “contemporary capitalism”; that if imperialism is to be understood to mean “all the phenomena of contemporai y capital- ism” — cartels, protection, the domination of die financiers and colonial policy — then the question as to whether imperialism is necessary to capitalism becomes reduced to the “flattest tautology”; because, in that case, “imperialism is naturally a vital necessity for capitalism,” and so on. The best way to present Kautsky’s ideas is to quote his own definition of imperialism, which is diametrically opposed to the substance of the ideas which we have set forth (for the objections coming from the camp of the German Marxists, who have been advocating such ideas for many years already, have been long known to Kautsky as the objections of a definite trend in Marxism).

Kautsky’s definition is as foUows:

“Imperialism is a pioduct of highly developed industrial capitalism. It consists in the striving of every industrial capital- ist nation to bring under its control or to annex increasingly big agrarian” (Kautsky’s italics) “regions irrespective of what na- tions inhabit those regions.”*

This definition is utterly worthless because it one-sidedly, arbitrarily, brings out the national question alone (although this is extremely important in itself as well as in its relation to imperial- ism), it arbitrarily and inaccurately relates this question only to in- dustrial capital in the countries which annex other nations, and in an equally arbitrary and inaccurate manner brings out the annexa- tion of agrarian regions.

Imperialism is a striving for annexations — this is what the ical part of Kautsky’s definition amounts to. It is correct, but very incomplete, for politically, imperialism is, in general, a striving

• Die Neitt Zeh, 32ad year (1913-14), 11,' Sept. 11, 1914, p. 909; cf. a,l»o 34th year (tSti-lS), II, p. 107 tt seq.


towards violence and reaction. I<'tn tire moment, liowevei, wc are interested in the economic atpect of the question, which Kautsky h'umelj introduced into his definition. The inaccuracy of Kautsky’s definition is strikingly obvious. The characteristic feature of im- perialism is not industrial capital, but finance capital. It is not an accident that in France it was precisely the extraordinarily rapid development of finance capital, and the weakening of industrial capital, that, from 1880 onwards, gave rise to the extreme ex- tension of annexationist (colonial) policy. The characteristic fea- ture of imperialism is precisely that it strives to annex not only agri- cultural regions, but even highly industrialized regions (Geiman appetite for Belgium; French appetite for Lorraine), because 1) the fact that the world is already divided up obliges those con- templating a nriu division to reach out for any bind of territory, and 2) because an essential feature of imperialism is the rivalry between a number of great powers in the striving for hegemony, i.e., for the conquest of territory, not so much directly for them- selves as to weaken the adversary and undermine bis hegemony. (Belgium is chiefly necessary to Germany as a base for operations against England; England needs Bagdad as a base for opcr.ntions against Germany, etc.)

Kautsky refers especially — and repeatedly — to English writers who, he alleges, have given a purely political meaning to the word “imperialism” in the sense that Kautsky understands it. We take up the work by the Englishman Hobson, Imferialismj which ap- peared in 1902, and therein we read:

“The new imperialism differs from the older, first, in substituting for tlie ambition of a single growing empire the theory and the practice of competing empires, each motivated by similar lusts of political aggrandisement and conwnercia^ gain; secondly, in the dominance of financial or investing over mercantile interests.”.*

  • J, A, Hobson, Imferialism — a Study, London, 1904, p, 324.




We sec, therefoie, that Kiiulsky is :il)soliiul)’ wiongiii rcfening to Englisli writers geneially (unless he meant the vulgar English imperialist writers, or tlie avowed apologists for iinpeiialisin). We see that Kautsky, while claiming that he continues to defend Marx- ism, as a matter of fact takes a step backward compared with the social-liberal Hobson, who more correctly takes into account two “historically concrete” (Kautsky’s definition is a mockery of his- torical concreteness) features of modern imperialism: 1) the com- petition between several imperialisms, and 2) the predominance of the financier over the merchant. If it were chiefly a question of the annexation of agrarian countries by industrial countries, the role of the merchant would be predominant.

Kautsky’s definition is not only wrong and un-Marxian. It serves as a basis for a whole system of views whiclt run counter to Marxian theory and Marxian practice all along the line. We shall refer to this again later. The argument about words which Kautsky raises as to whether the modern stage of capitalism should be called “imperialism” or “the stage of finance capital” is of no im- portance. Call it what you will, it matters little, The fact of the matter is that Kautsky detaches the politics of imperialism from its economics, speaks of annexations as being a policy “preferred” by finance capital, and opposes to it another bourgeois poUcy which, he alleges, is possible on this very basis of finance capital. According to his argument, monopolies in economics are compatible with non- monopolistic, non-violent, non-annexationist methods in politics. According to his argument, tlie territorial division of the world, which was completed precisely during the period of finance capital, and which constitutes the basis of the present peculiar forms of rivalry between the biggest capitalist states, is compatible with a non- niiperiidist policy. The result is a slurring-over and a blunting of the most profound contradictions of the latest stage of capitalism, instead of an exposure of their deptii; the result is bourgeois re- formism instead of Marxism.


Kautsky enters into controversy with tlic German apologiat of imperialism and annexations, Cunow, who clumsily and cynically argues that imperialism is modern capitalism; the development of capitalism is inevitable and progressive; therefore itnperialism is progressive; therefore, we sliould cringe before and eulogize it. This is something like the caricature of Russian Marxism which the Narodniks drew in 1894-95. They used to argue as follows: if the Marxists believe that capitah'sm is inevitable in Russia, that it is progressive, then they ought to open a public house and begin to implant capitalism! Kautsky’s reply to Cunow is as follows: im- perialism is not modern capitalism. It is only one of the forms of the policy of modern capitalism. This policy we can and should fight; we can and should fight against imperialism, annexations, etc.

The reply seems quite plausible, but in effect it is a more subtle and more disguised (and therefore more dangerous) propaganda of conciliation with imperialism ; for unless it strikes at the eco- nomic basis of the trusts and banks, the “stmggle” against the policy of the trusts and banks reduces itself to bourgeois reform- ism and pacifism, to an innocent and benevolent expression of pious hopes. Kautsky’s theory means refraining from mentioning existing contradictions, forgetting the most important of them, in- stead of revealing them in their full depth; it is a theojy that has nothing in common with Marxism. Naturally, such a "theory” can only serve the purpose of advocating unity with the Cunows. Kautsky writes:

“from the purely economic point of view it is not impos- sible that capitalism will yet go through a new phase, that of the extension of the policy of the cartels to foreign policy, the phase of ultra-imperialism,”* * i

i.«., of a super-imperialism, a imion of world imperialisms and not

  • Die Neue Zeit, 32nd year (1913-1+), 11, Sept. 11, J9I+, p, 921;

c/. also 34th year fl91i-l(j), 11, p. 107 el seq.


il I

struggles among imperialisms; a phase when wars shall cease under capitalism, a phase of

“the joint exploitation of the world by internationally com- bined finance capital.”-^

We shall have to deal with this “theory of ultra-imperialism” later on in order to show in detail how definitely and utterly it departs from Marxism. In keeping with the plan of the present work, we shall examine the exact economic data on this question. Is “ultra-imperialism” possible “from the purely economic point ot view” or is it ultra-nonsense?

If, by purely economic point of view a “pure” abstraction is meant, then all that can be said reduces itself to the following prop- osition: evolution is proceeding towards monopoly; therefore the trend is towards a single world monopoly, to a universal tnist. This is indisputable, but it is also as completely meaningless as is the statement that “evolution is proceeding” towards the manu- facture of foodstuffs in laboratories. In this sense the “theory” of ultra-imperialism is no less absurd than a “theory of ultra-agricul- ture” Would be.

If, on the other hand, we are discussing the “purely economic” conditions of the epocli of finance capital as a historically concrete epoch, which opened at the beginning of the twentieth century, then the best reply that one can make to the lifeless abstractions of “ultra-imperialism” (which serve an exclusively reactionary aim: that of diverting attention from the depth of existing antagonisms) is to Contrast them with the concrete economic realities of present- day world economy. Kautsky’s utterly meaningless talk about ultra-imperialism encourages, among other things, that profoundly mistaken idea which only brings grist to the mill of the apologists of imperialism, inz.) that the rule’of finance capital lessens the une- venness and contradictions inherent in world economy, whereas in reality it increases them.

• Die Neu Zeil, J3rd year, I, April 30, 1915, p, 14+.


R. Calwer, in his little book, An I nt)'oductlon to World Eco- nomics,* attempted to compile the main, purely economic, data required to understand in a concrete way the internal relations of world economy at the end of the nineteenth and beginning of the twentieth centuries. He divides the world into five “main economic areas,” as follows: 1) Central Europe (the whole of Europe with the exception of Russia and Great Britain); 2) Great Britain; 3) Russia; 4) Eastern Asia; 5) America; he includes the colonies in the “areas” of the state to which they belong and “leaves out” a few countries not distributed according to areas, such as Persia, Afghanistan and Arabia in Asia; Morocco and Abyssinia in Africa, etc.

Here is a brief summaiy of the economic data he quotes on these regions:























Mercantile fleet (million tons)

Imports & exports (bil- lion marks)

Output of coal (million tons)



"s 2


S-B? 3 P S 0.3 2

No. of cotton spindles (mil- lions)

1) Ccnttal Euro- pean , . .











2) British. . .








3) Russian. . .




1 i





4) East Asian .









5) American .








  • R. Calwer, Einfuirung in die W eltwirtschaft, Berlin, 190fi.» ,

■"* The figures in parentheses show the area and population of the colonies.

8 *



We notice three areas of highly developed capitalism with a high development of means of transport, of trade and of industry; the Central European, the British and the American areas. Among these are tlirce states which dominate the world: Germany, Great Britain, the United States. Imperialist rivalry and the struggle between these countries have become very keen because Germany has only a restricted area and few colonies (the creation of “Cen tral Euiope” is still a matter for the future; it is being born in the midst of desperate struggles). For the moment the distinctive feature of Europe is political disintegration. In the British and American areas, on the other hand, political concentration is very highly developed, but there is a tremendous disparity between the immense colonies of the one and the insignificant colonies of the other. In the colonies, capitalism is only beginning to develop. The struggle for South America is becoming more and more acute.

There are two areas where capitalism is not strongly devel- oped: Russia and Eastern Asia. In the former, tJie density of pop- ulation is very low, in the latter it is very high ; in the former polit- ical concentration is very high, in the latter it does not exist. The partition of China is only beginning, and the struggle between Japan, U.S.A., etc., in connection therewith is continually gaining in intensity.

Compare this reality, the vast diversity of economic and polit- ical conditions^* the extreme disparity in the rate of development of the various countries, etc., and the violent struggles of the im- perialist states, with Kautsky’s silly little fable about “peaceful’* ultra-imperialism. Is this not the reactionary attempt of a fright- ened philistine to hide from stern reality? Are not the international cartels which Kautsky imagines are the embryos of "ultra-im- ■perialism” (with as much reason as one would have for describ- ing the manufacture of tabloids in a laboratory as ultra-agriculture in embryo) an example of the division and the redmnon of the world, the transition from peaceful division to non-peaceful diri-


Sion and wca versai Is not American and other finance capital, which divided the whole world peacefull)', with Germany’s par- ticipation, for example, in the international rail syndicate, or in the international mercantile shipping trust, now engaged in redividing the world on the basis of a new jelalion of forces, which is being clianged by methods by no means peaceful?

Finance capital and the trusts are increasing instead of diminish- ing the differences in the rate of development of the various parts of the world economy. When the relation of forces is changed, hovv else, under cnfitalism, can the solution of contradictions be found, except by resorting to violence} Railway statistics* provide remnk- ably exact data on the different rates of development of capitalism and fiiiance capital in world economy. In the last decades of im- perialist development, the total length of railw.'iys, has changed as follows:

RAILWAYS (Thousand kilomclrts)












Colonies (total)


910 '


Independent and scml-depcii- dent states of Asia and

, 126

. 347












Thus, tile development of railways has been more rapid in the colonies and in the independeiit (and semi-dependent) states of

Statisthches Jahrbttch fiir das Denische Reich (Statistical Yearbook for the Geiman Empire')'. 1915, Appendix pp. 46-47, Arehh fOr Eiseit- bahnweseii, 1892 (Rathoad Archive). Minoi detailed figures for the distri- bution of railways among the colonies of the various countries in 1890 bad to be estimated approximately.



Asia and America. Here, as we know, the finance capital of the four or five biggest capitalist states reigns undisputed. Two hundred thousand kilometres of new railways in the colonies and in the other countries of Asia and America represent more than 40,000,000,000 marks in capital, newly invested on particularly advantageous terms, with special guarantees of a good return and with profitable orders for steel works, etc., etc.

Capitalism is growing with the greatest rapidity in the colonies and in overeeas countries. Among the latter, new imperialist powers arc emerging {e.g., Japan). The struggle of world imperialism is becoming more acute. The tribute levied by finance capital on the most profitable colonial and overseas enterprises is increasing. In sharing out this “booty,” an exceptionally large part goes to countries which, as far as the development of productive forces is concerned, do not always stand at the top of the list. In the case of the biggest countries, considered with their colonies, the total length of railways was as follows (m thousands of kilometres) :



iins 1


U. s. A




British Empire








Germany . .




France , . . .'




Total for 5 Gicat Powers ...




Thus, about 80 per cent of the total existing railways are con- centrated in the hands of the five Great Powere. But the concen- ,trarion« of the ownership of these railways, of finance capital, is much greater still: French and English millionaires, for example, own an enormous amount of stocks and, bonds in American, Rus^ aan and othar railways.


'I'hanks to hex colonies, Great Britain has increased the length of “her” railways by 100,000 kilometres, four times as much as Germany. And yet, it is well known that the development of productive forces in Germany, and especially the development of the coal and iron industries, has been much more rapid during this period than in England — not to mention France and Russia. In 1892, Germany produced 4,900,000 tons of pig iron and Great Britain produced 6,800,000 tons; in 1912, Geimany produced 17,600,000 tons and Great Britain, 9,000,000 tons. Germany, therefore, had an overwhelming superiority over England in this respect. We ask, is there under cafitalism any means of removing the disparity between the development of productive forces and die accumulation of capital on the one side, and the division of colonies and “spheres of influence” for finance capital on the other side — other than by resorting to war?

Cf. also Edgar Crummond, “The Economic Relations of the Britislt and German Empires” in jQurrtal of the Royal Stoftsticol Society^ July 1914,


We liiive to examine yet another very important aspect of im- perialism to which, usually, too little importance is attached in most of the arguments on this subject. One of the shortcomings of the Marxist Hilfcrding is that he takes a step backward com- pared with the non- Marxist Hobson. V'‘o lefcr to parasitism, which is a feature of imperialism.

As we have seen, the most deejr-rooted economic foundation of imperialism is monopoly. This is capitalist monopoly, he., monop- oly whiclt has grown out of capitalism and exists in the general environment of capitalism, commodity production and competition, and remains in permanent and insoluble contradiction to this general environment. Nevertheless, like all monopoly, this capitalist monopoly inevitably gives rise to a tendency to stagnation and decay. As monopoly prices become fixed, even temporarily, so the stimulus to technical and, consequently, to all progress, disappears to a certain extent, and to that extent, also the economic possi- bility arises of deliberately retarding technical progress. For in- stance, *n America, a certain Mr. Owens invented a machine which revolutionized the manufacture of bottles. The German bottle manufacturing cartel purchased Owens’ patent, but pigeon-holed it, refrained fsom utilizing it. Certainly, monopoly under capital-


imperialism, the highest stage of capitalism 121

ism can never completel)', and for a long period of time, eliminate competition in the world maiket (and this, bj^ the by, is one of the reasons why the theoiy of ultra-imperialism is so absurd). Cei- tainly, the possibility of reducing cost of production and increasing profits by introducing technical improvements operates in the di- lection of change. Nevertheless, the tendency to stagnation and decay, which is the featui-e of monopoly, continues, and in certain branches of industry, in certain countries, for certain periods of time, it becomes predominant.

The monopoly of ownership of very extensive, rich or well- situated colonics, operates in the same direction.

Further, imperialism is an immense accumulation of money capital in a few countries, which, as we have seen, amounts to 1 00- 1 50 billioir francs in various securities. Heirce the extraordi- nary growth of a class, or rather of a category, of bondholders (rentiers), i.A., people who live by “clipping coupons,” who take no part whatever m production, whose profession is idleness. Th.i export of capital, one of the most essential economic bases of im- perialism, still more completely isolates the rentiers fi'om produc- tion and sets the seal of parasitism on the whole coiurtry that lives by the exploitation of the labour of several overseas cortntries and colonies.

“Tit 1893, writes Hobson, “the British capital invested abroad represented aborrt 15 per cerrt of the "total wealth of the United Kingdom.”'*'

Let us remember that by 1915 this capital had increased about two and a half times.

“Aggressive imperiaUsm?” says Hobsoit further on, “which costs the taxpayer so dear, which is of so little value to the manufacturer and trader ... is a source of great gaid to th» investor. . . . The annual income Great Britain derives from

Ilobsott, 0/. e//., p. 59. — Ed ,


V. I. I.EN1N

commissions in her whole foreign and colonial trade, import and export, is estimated by Sir R. Giffen at £18,000,000 for 1899, taken at 2V2 per cent, upon a turnover of iSOO.OOO.OOO.”-*

Great as this sum is, it does not explain the aggressive impe- rialism of Gicat Britain, This is explained by the 90 to 100 mil- lion pounds sterling income from “invested” capital, the incom; of the rentiers.

The income of the bondholders is five tUnes greater than the income obtained fiom the foreign trade of the greatest “trading” country in the world! This is the essence of imperialism and im- perialist parasitism.

For that reason the teim, “rentier state” {Rentnerstaat), or usurer state, is passing into current use in the economic literature that deals with imperialism. The world has become divided into a handful of usurer states on the one side, and a vast majority of debtor states on the other.

“The premier place among foreign investments,” says Schulze-Gaevernitz, “is held by those placed in politically de- pendent or closely allied countries. Great Britain grants loans to Egypt, Japan, China and South America. Her navy plays here the part of bailiff in case of necessity. Great Britain’s political power protects her from the indignation of her debt- ors.”** *'

Sartorius von Waltershausen in his book, The National Eco- nomic System of Foreign Investments, cites Holland as the model “rentier state” and points out that Great Britain and Fiance have taken the same mad.*** Schildef believes that five industrial na-

  • ' Qp. cit,, pp. 62-63.~Ed.

•* Schulze-Gaevernitz, Britischer Imperialismus, pp. 246, 301, 317, 323, 324, 361, ^ ‘ t

    • • Sartonm von Waltershausen, Dtn volks^u’rtschaftUch System, etc,

Ka/ww Scommk Jystem, etc.). Book IV, Berl., 1907.


tions have become “pronounced ci editor nations”: Great Britain, France, Germany, Belgium and Switzerland. Holland does not appear on this list simply because she is “industrially less devel- oped,”'*' The United States is creditor only of the American countries.

  • “Great Britain,” says Schulze-Gaevernitz, “js gradually

becoming transfoimed from an industrial state into a creditor state. Notwithstanding the absolute increase in industrial output and the export of manufactured goods, the relative importance of income fi'om interest and dividends, issues of securities, com- missions and speculation is on the increase in the whole of the national economy. In my opinion it is precisely this that forms the economic basis of imperialist ascendancy. The cred- itor is more permanently attached to the debtor than the seller is to the buyer.”'*"

In regard to Germany, A. Lansburgh, the editor of Die Bank, I'n ffff, I'n an arti'c/e enti'ti'erf "Germany — a fSenti'er §tate/ wrote the following:

“People in Germany are ready to sneer at the yearning to become rentiers that is observed among the people in France. But they forget that as far as the middle class is concerned the situation in Germany is becoming more and more like that in France.”**'*'

The rentier state is a state of parasitic, decaying capitalism, and this circumstance cannot fail to influence all the sociaKpolitical con- ditions of the countries affected generally, and the two fundamental trends in the working-class movement, in particular. To demon- strate this in the clearest possible manner we will quote Hobson, who will be regarded as a more “reliable” witness, since he cannot

  • Gcbilder, o^. ciU, p. 393,
    • Si'hulze-Gaevernitz, 'op. at., p. 122. — M,

■>•** Dh Bank, 1911, I, pp. lO-ll,



be suspected of leanings towards “orthodox Marxism’'; moreover, he is an Englishman who is very well acquainted with the situation in the country which is richest in colonies, in finance capital, and in impsnslist experience.

With the Boer War fresh in his mind, Hobson describes the connection between imperialism and the. interests of the “finan- ciers,” the growing profits from contracts, etc., and writes;

“While the directors of this definitely parasitic policy are capitalists, the same motives appeal to special classes of the workers. In many towns, most important trades are dependent upon government employment or contracts; the imperialism of the metal and shipbuilding centres is attributable in no small degree to this fact.”*

In this writer’s opinion there are two causes which weakened the older empires: 1) “economic parasitism,” and 2) the formation of armies composed of subject races.

“Tlierc is first the habit of economic parasitism, by which the ruling state has used its provinces, colonies, and depend- encies in order to enrich its ruling class and to bribe its lower classes into acquiescence.”’’ ^

And we would add that the economic possibility of such cor- ruption, wluatever its form may be, requires high monopolist profits. As for the second cause, Hobson writes:

“One '*of the strangest symptoms of the blindness of im- perialism is the reckless indifiference with which Great Britain, France .and other imperial nations are embarking on this perilous dependence. Great Britain has gone farthest. Most of the fighting by which we have won our Indian Empire has been done bv natives; in India, as more recently in Egypt, great ' standing armies are placed under British commanded; almost

  • Udlison, o/i. fi/., yi, 103. — h'J.

tild., pf a05.


all tlio lighting associated with our Afiican dominions, except in the southern part, has been done for us by natives.” ' Hobson gives the following economic appraisal of the prospect of the partition of China:

“The greater part of Western Europe might then assume the appearance and character already exhibited by tracts of country m the South of England, in the Riviera, and in the tourist-ridden or residential parts of Italy and Switzerland, little clusters of wealthy aristocrats drawing dividends and pensions from the Far East, with a somewhat larger group of professional retainers and tradesmen and a large body of per- sonal servants and workers in the transport trade and in the final stages of production of the more perishable goods; all the main arterial industries would have disappeared, the staple foods and manufactures flowing in ns tribute from Asia and Africa.”* **

“Wc have foresliadowed the possibility of even a larger alliance of Western States, a European federation of great powers which, so far from forwarding the cause of world civilization, might introduce the gigantic peril of a Western parasitism, a group of advanced industrial nations, whose upper classes drew vast tribute from Asia and Africa, with which they supported great, tame masses of retainers, no longer engaged in the staple industries of agriculture ai^d manufacture, but kept in the performance of personal or minor industrial services under the control of a new financial aristocracy. Let those who would scout such a theory” (it would be better to say: prospect) “as undeser,ving of consideration examine the economic and social condition of districts in Southern England today which are already reduced to this condition, and reflect

  • Hobson, op. cif,, p. >44.

Ibid., p, 33S.

V. 1. 'LENIN


upon the vast extension of such a System which might be rendered feasible by the subjection of China to the economic control of similar groups of financiers, investors, and political and business officials, draining the greatest potential reservoir of profit the world has ever known, in order to consume it in Europe. The situation is far too complex, the play of world forces far too incalculable, to render this or any other single interpretation of the future very probable: but the influences which govern the imperialism of 'Western Europe today are moving in this direction, and, unless counteracted or diverted, make towards some such consummation.

Hobson is quite right. Unless the forces of imperialism are counteracted they will lead predsely to what he has described. He correctly appraises the significance of a “United States of Europe” in the present conditions of imperialism. He should have added, however, that, even within the working-class movement, the opportunists, who are for the moment predominant in most countries, are “working” systematically and undeviatingly in this very direction. Imperialism, wliich means the pai tition of the world, and the exploitation of other countries besides China, which means high monopoly profits for a handful of very rich countries, creates the economic possfibility of corrupting the upper strata of the pro- letariat, and thereby fosters, gives form to, and strengthens oppor- tunism. Howevey, we must not lose sight of the forces which coun- teract imperialism in general, and oppoi'tunism in particular, which, naturally, the social-liberal Hobson is unable to perceive.

The German opportunist, Gerhard Hildebrand, who was expelled from the Party for defending imperialism, and who would today make a leader of the so-called “Social-Democratic” Party of Germany, serves as a good supplement to Hobson by his advo- cacy of a “Unite4 States of Western Europe” (without Russia)

, • Hobwn, cit., pp. 385-86,

I i f ' i >

IMPERIALUSM, the highest stage of capitalism lii7

lor the purpose o£ “joint” action . . . against the African Negroes, against the “great Islamic movement,” for the upkeep of a “power- ful army and navy,” against a “Sino- Japanese coalition,”* etc.

The description of “British imperialism” in Schulze-Gaever- nitz’s book reveals the same parasitical traits. I'he national income of Great Britain approximately doubled from 1865 to 1898, while the income “from abroad” increased ninefold in the same period. While the “merit” of imperiahsm is that it “trains the Negro to habits of industry” (not without coercion of course...), the “danger” of imperialism is tliat:

“Europe will shift the burden of physical toil — first agricul- tural and mining, then the more arduous toil in industry — on to the coloured races, and itself be content with the role of rentier, and in this way, perhaps, pave the way for the econom- ic, and later, the political emancipation of the coloured races.” An increasing proportion of land in Great Britain is being taken out of cultivation and used for sport, for the diversion of the rich.

Scotland, sport-and hunting-ground, the most aristocratic in the world, is said “to live on its past and on Mr. Carnegie.” On horse-racing and fox-hunting alone Britain annually spends £14,000,000. The number of rentiers in England is about one million. The percentage of the productively employed population to the total population is becoming smaller.



No. of ' workers in basic indus- tries

per cent of

total popu- lation








  • Gerhard Hildebrand, ,Die EnchOaening itr Inirntnehermhaft nnd

des IndustnestmalismuS) Jena, 1910, p. 229, t1 seq,


And in speaking of the British working class the bourgeois student of "British imperialism at the beginning of the twentieth century” is obliged to distinguish systematically between the “upper stratum'^ of the woikers and the “lower stratum- of the proletariat proper," The upper stratum furnishes the main body of members of co-operatives, of trade unions, of sporting clubs and of numerous tcligious sects. The electoral ^'stem, which in Great Britain is still “sufficiently restricted to exclude the lower stratum of the prole- taritii proper" is adapted to their level! In order to present the con- dition of tlic British working class in the best possible light, only tin's upper stratum — which constitutes only a minonty of the pro- letariat — is generally spoken of. For instance, “the problem of uncmplnj ment is mainly a London problem and that of the lower proletarian stratum, which Is of little political moment for politi- cians, It would be better to say: which is 'of little political moment for the bourgeois politicians and the “Socialist” opportu- nists.

Another special feature of imperialism, which is connected with the facts we arc describing, is the decline in emigration from imperialist countries, and the increase in immigi'ation into these countries from the backward countries where lower wages are paid. As Hobson observes, emigration from Great Britain has been declining since 1884. In that year the number of emigrants was 242,000, while^in 1900, the number was only 169,000. German emigration reached the highest point between 1881 and 1890, with a total of 1,453,000 emigrants. In the course of the following two decades, it fell to 544,000 and even to 341,000. On the other hand, there was an increase in the number of workers entering Germany from Austria, Italy, Rusaa and other countries. Accord- ing to l^e 1907 census, there were 1,342,294 foreigners in Ger-

  • SehuUe-Gaevemit?, BrUischer Imperklismn^, pp. 246, 301, 317,

323, 334, 361. „


many, of whom 440,800 were industrial workers and 257,329 were agricultural workers.'” In France, the workers employed in the mining industry are, “in great part,” foreigners: Polish, Italian and Spanish.** In the United States, immigrants from Eastern and Southern Europe are engaged m the most poorly paid occupa- tions, while American workers provide the highest percentage of overseers or of the better paid workers.*** Imperialism has the tendency to create privileged sections even among the workers, and to detach them from the main proletarian masses.

It must be observed that in Great Britain the tendency of imperialism to divide tlie workers, to encourage opportunism among them and to cause temporary decay in the working-class movement, revealed itself much earlier than the end of the nineteenth and the beginning of the twentieth centuries} for two important distinguish- ing features of imperialism were observed in Great Britain in the middle of the nineteenth century, vk., vast colonial possessions and a monopolist position in the world market. Marx and Engels systematically traced this relation between opportunism in the labour movement and the imperialist features of British capitah’sm for several decades. For example, on October 7, 1858, Engels wrote to Marx:

“The English proletariat is becoming more and more bourgeois, so that this most bourgeois of all nations is apparently aiming ultimately at the possession of a bourgeois aristocracy, and a bourgeois proletariat ar well as a bourgeoisie. For a nation which exploits the whole world this is, of course, to a certain extent justifiable.” (Marx-Engels, Briejwechsel Ge~ samtausgahey Section 3, Vo^, II, p. 340.)

  • StaAstik ies Deulschen Reiches (Siathtks of the German ^m^re\

Vol. 211.

Henger, hie Kafitaheeilage der FroMsosen {French Imvestmenls'), Stuttgart, 1913, p. 75. « 

      • Hourwich, Immigration and Laionr, New Vork, W3,




Almost a quarter of a century later, in a letter dated August 1 1, 1881, Engels speaks of . .those very worst English ones (trade unions) which allow themselves to be led by men sold to, or at least paid by the middle class.”* In a letter to Kautsky, dated September 12, 1882, Engels wrote;

“You ask me what the Englisli workers think about colo- nial policy? Well, exactly the same as they think about politics in general. . . . There is no workers’ party here, there are only Conservatives and Liberal-Radicals, and the workers merrily share the feast of England’s monopoly of the colonies and the world market. . . .”** (Engels expressed similar ideas in the press in his preface to the second edition of The Condition of the Working Class in England, which appeared in 1892.)

We. thus see clearly the causes and effects. The causes arc:

1) Exploitation of the whole world by this country. 2) Its monop- olistic position in the woild market, 3) Its colonial monopoly, The effects are: 1) A section of the British proletariat becomes bour- geois. 2) A section of the proletariat permits itself to be led by men sold to, or at least, paid by the bourgeoisie. The imperialism of the beginning of the twentieth century completed the division of the world among a handful of states, each of which today exploits {i.e., draws super-profits from) a part of the world only a L’ttle ■ smaller th.m that which England exploited in 1858. Each of them, by means of iruSts, cartels, finance capital, and debtor and creditor relations, occupies a monopoly position in the world market. Each of them enjoys to some degree a colonial monopoly. (We have seen that out of the total of 75,000,000 sq. km. which comprise the whole colonial world, 65fi00ft00 sq. km., or 86 per cent,

■* Maix-Engels, BrUfiaechsel, Gesamtansgabe, Vol. IV, p. 5l\.—Bd. Cf. Karl Kautsky, Soaialismsts and, KolonialfolUik, Berlin, 1907, p, 79 1 this pamphlet was written by Kautsky intho3e infinitely distant days ^ yrtien he was sdK a Marxist.


belong to six great powers; 61 , 000,000 sq. km,, or 81 per cent belong to three powers.)

The distinctive feature of the present situation is the prevalence of economic and political conditions which could not but increase the irreconcilability between opportunism and the general and vital interests of the working-class movement. Embryonic imperialism has grown into a dominant system; capitalist monopolies occupy first place in economics and politics; tlie division of tlie world has been completed. On the other hand, instead of an undisputed mo- nopoly by Great Britain, we see a few imperialist powers contending for the right to share in this monopoly, and this struggle is charac- teristic of the whole period of the beginning of the twentieth cen- tury. Opportunism, therefore, cannot now triumph in the work- ing-class movement of any country for decades as it did in Eng- land in the second half of the nineteenth century. But, in a num- ber of countries it has grown ripe, over-ripe, and rotten, and has become completely mcigcd with bourgeois policy in the form of “social chauvinism.


■" Russian social-chauvinism represented by Messrs. Potresov, Chfchen. keli, Maslov, etc., in its avpwed form as well as in its tacit form, as repre- sented by Messrs. Chkkeidze, Skobelev, Axelrod, Martov, «tc., also emergec from the Russian variety of oppoitimism, namely, Liquidatorism.


By the critique o£ impel ialism, in the broad sense of the term, we mean the attitude towards imperialist policy of the different classes of society as part of their general ideology.

The enormous dimensions of finance capital concentrated in a few hands and creating an extremely extensive and close network of ties and relationsliips which subordinate not only the small and medium, but also even the very small capitalists and small masters, on the one hand, and the intense struggle waged against other national state groups of financiers for the division of the world and domination over other coimtries, on the other hand, cause the wholesale transition of the posessing classes to the side of impe- rialism. The signs of the times are a “general” enthusiasm regard- ing its prospects, a passionate defence of imperialism, and every possible embellishment of its real nature. The imperialist ideology also penetrates the working class. There is no Chinese Wall be- tween it and the other classes. The leaders of the so-called “Social- Democratic” Party of Germany are today justly called “social-im- perialists,” that is. Socialists in wordS and imperialists in deeds; but as early as 1902, Hobson noted the existence of "Fabian imperialists” who belonged to the opportunist Fabian Society in England.

Bourgeois scholars and publicists usually come out in defence of imperialism in a somewhat veiled form, hnd obscure its complete domination amf its profound roots; they strive to concentrate atten-

IMPKJilAUSM, 'I IIK lllljlIKS'J SlWtJK 01' f M’l'I'ALKsM

lion on partial and secondary details and do their very best to distract attention Irom the main issue by means of ridiculous scliemes for “reform,” such as police supervision of the trusts and banks, etc. Less frequently, cynical and frank imperialists speak out and are bold enough to admit the absuuHty of the idea of refoiming the fundamental features of utiperiaHsm.

We will give an example. 'I’hc German impel ialists attempt, in the magaxine Archives of World Economy, to follow the movements for national emancipation in the colonics, particularly, of course, in colonics other than those belonging to Germany. They note the ferment and prote't movements m India, the movement in Natal (South Africa), the movement in the Dutch East Indies, etc. One of them, commenting on an English report of the speeches delivered at a conference of subject peoples and races, held an June 28-30, 1910, at which representatives of vaiious peoples subject to foreigit domination in Asia, Africa and Europe vrere present, writes as follows in appraising the speeches delivered at this conference;

“We are told that we must fight against imperialism; that the dominant states should recognize the right of subject peoples to home rule; that an international tribunal should supervise the fulfilment of treaties concluded between the great powers and weak peoples. One does not get any further than the expression of these pious wishes. We see no traje of understand- ing of the fact that imperialism is indissolubly bound up with capitalism in its present form and therefore ( ! ! ) also no trace of the realization that an open struggle against imperialism would be hopeless, unless, perhaps, the fight is confined to protests against certain of' its especially abhorrent excesses,”* Since the reform of the basis of imperialism is a dec;pption, a “pious wish,” since the bourgeois representatives of the oppressed

  • ■ Weltwirtschaitlichei Arclm fArcMsies of World Economv), Vol. 11,

pp. 194-95. ,



nations go no “further” forward, the bourgeois representatives of the oppressing nation go “further” backward, to servility, towards imperialism, concealed by the cloak of “science.” “Logic,” indeed!

The question as to whether it is possible to reform the basis of imperialism, whether to go forward to the further accentuation and deepening of the antagonisms which it engenders, or backwards, towards allaying these antagonisms, is a fundamental question in the critique of imperialism. As a consequence of the fact that the political features of imperialism are reaction all along the line, and increased national oppression, resulting from the oppression of the financial oligarchy and the elimination of free competition, a petty- bourgcois-democratic opposition has been rising against imperialism in almost all imperialist countries since the beginning of the twenti- eth century. And the desertion of Kautsky and of the broad inter- national Kautskyan trend from Marxism is displayed in the veiy fact that Kautsky not only did not trouble to oppose, not only was unable to oppose this pcfCy-boctrgeofs reformist opposition, which is really reactionary in its economic basis, but in practice actually became merged with it.

In the United States, the imperiahst war waged against Spain in 1898 stirred up die opposition of the “anti-imperialists,” the last of the Mohicans of bourgeois democracy. They declared this war to he “criminal”; they denounced the annexation of foreign terri- tories as being a,, violation of the Constitution, and denounced the “Jingo treacheiy" by means of which Aguinaldo, leader of the native Filipinos, was deceived (the Americans promised him the independence of his country, but later they landed troops and annexed it). They quoted the words of Lincoln:

"When the white man governs himself, that is self-gov- ernment; but when he governs himself and also governs others, it is no longer self-government; it is despotism.”’*’

Quoted by J. Fatouillet, Vimfirialimt, amerkain, Dijon, 1904,

p. 27a.


But while nil this criticism duank from recognizing the indis- soluble bond between imperialism and the trusts, and, therefore, between impeiialisni and the very foundations of capitalism; while it shrank from joining up with the forces engendcied by large- scale capitalism and its development — it remained a “pious Vi/isli.”

This is also, in the main, the attitude of Hobson in his criticism of imperialism. Hobson anticipated Kautsky in protesting against the “inevitability of imperialism” argument, and in urging the need to raise the consuming capacity of the “people” (under capitalism! ). The petty -bourgeois point of view in the critique of imperialism, the domination of the banks, the financial oligarchy, etc,, is that adopted by the authors we have often quoted, such as Agahd,

A. Lansburgh, L, Eschwege, and among the French writers, Victor Bdrard, author of a superficial book entitled England and Imferialism which appeared in 1900. All these authors, who make*" no claim to be Marxists, contrast imperialism with free competition and democracy; they condemn the B.igdad i-ailway scheme as lead- ing to disputes and war, utter “pious wishes” for peace, etc. This applies also to the compiler of international stock and share issue statistics, A. Neymarck, who, after calculating the hundreds of billions of francs representing “international” securities, exclaimed in 1912; “Is it possible to beh'eve tliat peace may be disturbed . . . that, in the face of these enormous figures, anyone would risk starting a war.?”*

Such simplicity of mind on the part of the bourgeois economists is not surprising. Besides, h is in their interest -to pretend to be so naive and to talk “seriously” about peace under imperialism. But what remains of Kautsky’s ^darxism, when, in 1914-15-16, he takes up the same attitude as the bourgeois reformists apd affirms that “eveiybody is agreed” (imperialists, pseudo-Socialists and

  • Bulletin ie V'lnstitijt intertiafhml de ilalitiigtie, Vol. XIX, Book II,

p. 225.



social pacifists) as regards peace? Instead of an analysis of impe> lialism and an exposure of the depths of its contradictions, we have nothing but a refoimist “pious wish,” to wave them aside, to evade them.

Here is an example of Kautsky’s economic ciiticism of imperial- ism. He takes the statistics of the British export and impoit ttade with Egypt for 1872 and 1912. These statistics show that this export and import trade had developed more slowly than British foreign trade as a whole. From this Kaulsky concludes that:

“We have no reason to suppose that British trade with Egypt would have been less developed simply as a result of the mere operation of economic factors, without military occupa- tion. . . . The urge of present-day Capital to expand . . . can be best promoted, not by the violent methods of imperialism, but by peaceful democracy.”*

This argument, which is repeated in every key by Kautsky’s Russian armour-bearer (and Russian protector of the social- chauvinists), Mr. Spectator, represents the basis of Kautskyan criticism of imperialism and that is why we must deal with it in greater detail. We will begin with a quotation from Hilferding, whose conclusions, as Kautsky on many occasions, and notably in April 1915, declared, have been “unanimously adopted by all Socialist theoreticians.”

“It is not^he business of the proletariat,” writes Hilferding, “to contrast the more progressive capitalist policy with that of the now by-gone era of free trade and of hostility towards the state. The 'reply of the proletariat to the economic policy of finance capital, to imperialisrp, cannot be free trade, but Socialism. The aim of proletarian policy cannot now be the

• Karl Kantsky, NatiomlstMt, imferiaUstischer Staat uni Staatenluni {tfaihnal Slate, Imperialist State and Union of States), Ntiremberg, 1915,

n, n. .


ideal of restoring fiec competition — which has now become a reactionary ideal — but the complete abolition of competition by the vanquishment of capitalism.”*

Kautsky departed from Maixism by advocating what is, in the period of finance capital, a “reactionary ideal,” “peaceful democ- lacy” “the mece operation of economic factors,” for objectively this ideal drags us back from monopoly capitalism to the non- inonopolist stage, and is a reformist swindle.

Trade with Egypt (or witli any other colony or semi-colony) “would have grown mote” without military occupation, without imperialism, and without finance capital. What does this mean? That capitalism would develop more rapidly if free competition were not restricted by monopolies in general, by the “connections” or the yoke (i.e.y also the monopoly) of finance capital, or by the monopolist possession of colonies by certain countries?

Kautsky’s argument can have no other meaning! and this “meaning” is meaningless. But suppose, for the sake of argument, free competition, without any sort of monopoly, would develop capitalism and trade more rapidly. Is it not a fact that the more rapidly ti'ade and capitalism develop, the greater is the concentra- tion of production and capital which gives rise to monopoly? And monopolies have already come into being — ^precisely out of free competition! Even if monopolies have now begun to retard pro- gress, it is not an argument in favour of free competition, which has become impossible since it gave rise to monopoly.

Whichever way one turns Kautsky’s argument, one will find nothing in it except reaction and bourgeois reformism.

Even if we modify this argument and say, as Spectator says, that the trade of the British colonies with the mother country is now developing more slowly than their trade with other it does not save Kautsky! for it is nZro monopoly and

Ililferding, o/>. «/., p. 50+,



that is beating Great Britain, only it is tlic monopoly and imperial- ism of another country (America, Get many). It is known that the cartels have given rise to a new and peculiar form of protective tariffs, i.e,, goods suitable for export are protected (Engels noted this in Vol. Ill of Capital ). It is known, too, that the cartels and finance capital have a system peculiar to themselves, that of “exporting goods at cut-rate prices,” or “dumping,” as the English caU it: within a given country the cartel sells its goods at a high price fixed by monopoly; abroad it sells them at a much lower price to undercut the competitor, to enlarge its own production to the utmost, etc. If Germany’s trade with the British colonies is developing more mpidly than that of Great Britain with the same colonies, it only proves that German imperialism, is younger, stronger and better organized than British imperialism, is superior to it. But this by no means proves the “superiority” of free trade, for it is not free trade fighting against protection and colonial dependence, but two rival imperiah'sms, two monopolies, two groups of finance capital that are fighting. The superiority of German imperialism over British imperialism is stronger than the wall of colonial frontiers or of protective tariffs. To use this as an “argu- ment” in favour of free trade and "peaceful democracy” is banal, is to forget the essential features and qualities of imperialism, to substitute petty-bourgeois reformism for Marxism.

It is interesting to note that even the bourgeois economist, A. Lansburgh, whose criticism of imperialism is as petty-bourgeois as Kautsky’s, nevertheless got closer to a more scientific study of trade statistics. He did not compare merely one country, chosen at random, and a colony, with the other countries; he examined the export trade of an imperialist countiy : 1 ) with countries which .^are financially dependent upon it, which borrow money from it;

  • See footnote by F. Engela to Cnpitei, Vol. Til, Part I, chap. VI,

Note \6,—Edr


and 2) with countries wliich are financially indcpendem. TTc nb- minerl the {ollowing results:

EXPORT TRADE OF GERMANY (Tn million marks)



Per cent inctease

To Countries Financially

Dependent on Germany





Portugal .




The Argentine

















234. S

431. S


To Countries Financially

Independent 0 / Germany

Great Britain


















Dutch East Indies




1,206.6 ( 1



Lansburgh did not draw conclusions and therefore, strangely enough, failed to observe that if the figures prove a^iything at all, they prove that he is wrongs for the exports to countries financially dependent on Germanny have grown more rapidly, if only slightly, than those to the countries which are financially independent. {We emphasize the “if,” for Lansburgh’s figures are far from complete.)

Tracing the connection between export trade and loans? Lans-.,, burgh writes:

“In 1890-91, a Rumanian loan was floated through the German banks, which had already in previous years made


V. 1. LtNIN

1 10

advances on this loan. The loan was used chiefly for purchases of railway materials in Germany. In 1891 German exports to Rumania amounted to 55,000,000 marks. The following year they fell to 39,400,000 marks; then with fluctuations, to 25,400,000 in 1900. Only in very recent years have they regained the level of 1891, thanks to two new loans.

“German exports to Portugal rose, following the loans of 1888-89, to 21,100,000 (1890); then fell, in the two follow- ing years, to 16,200,000 and 7,400,000; and only regained their former level in 1903.

“German trade with the Argentine is still more striking, Following tile loans floated in 1888 and 1890, German expoits to the Argentine leached, in 1889, 60,700,000 marks. Two years later they only reached 18,600,000 marks, that is to say, less than one-third of the previous figure. It was not until 1901 that they regained and surpassed the level of 1889, and then only as a result of new loans floated hy the state and by municipalities, with advances to build power stations, and with other credit operations.

“Exports to Chile rose to 45,200,000 marks in 1892, after the loan negotiated in 1889. The following year they fell to 22,500,000 marks. A new Chilean loan floated by the German banks in 1906 wss followed by a rise of exports in 1907 to 84,700,000 marks, only to fall again to 52,400,000 marks in 1908.”*

From all these facts Lansburgh draws the amusing petty- bourgeois moral of how unstable and irregular export trade is when it is bound up with loans, how fiad it is to invest capital abroad instead of “naturally” and “hai'moniously” ■ developing home ..industry, how “costly” is the backsheesh that Krupp has to pay in floating foreign loans, etc.! But the facts are clear. The inci'ease in

^ 711 * in An T7..1 TT

o 1 n

iMPlilUAt-lSM. 'rilK lllGliKST «'rA(^K OK (.'APn'ALISM tH

exports is closely connected with die swindling tricks of finance capital, which is not concerned with bourgeois morality, but with skjnning the ox twice — first, it pockets the profits from the loan; then it pockets odier profits from the same loan which the bor- rower uses to make purchases from Krupp, or to purchase railway- material from the Steel Syndicate, etc.

We repeat that we do not by any means consider Lansbingh’s figures to be perfect. But we had to quote them becaxJse they are moie scientific than Kautsky’s and Spectator’s, and because Lans- biirgh showed the correct way of approaching the question. In dis- cussing the significance of finance capital in regard to exports, etc,, one must be able to single out the connection of exports especially and solely with the tricks of the financiers, especially and solely with the sale of goods by cartels, etc. Simply to compare colonies with non-colonies, one imperialism with another imperialism, one semi-colony or colony (Egypt) with all other countries, is to evade and to tone down the very essence of the question.

Kautsky’s theoretical critique of imperialism has nothing in common witii Marxism and serves no odier purpose than as a preamble to propaganda for peace and unity with the opportunists and the social-chauvinists, precisely for the reason that it evades and obscures the very profound and radical contradictions of im- perialism: die contradictions between monopoly and frfe competi- tion that exists side by side with it, between the gigantic “opera- tions” (and gigantic profits) of finance capital and “honest” trade in the free market, the contradictions between cartels and trusts, on the one hand and non-cartelized industry, on the other, etc.

The notoi'ious theory of “iiltta-imperialism,” invented by Kaut- sky, is equally reactionary. Compare his arguments on this subject in 1915, with Hobson’s arguments in 1902. ' %


“Cannot the presgnt imperialist policy be supplfuted by a new, ultra-imperialist policy, which will introduce the com-



mon exploitation of the world by intci nationally united finance capital in place of tlie mutual rivalries of national finance cap- ital? Such a new phase of capitalism is at any rate conceivable. Can it be achieved? Sufiicient premises are still lacking to enable us to answer this question.”-’

Hobson :

“Christendom thus laid out in a few great federal empires, each with a retinue of uncivilized dependencies, seems to many the most legitimate development of present tendencies, and one which would offer the best hope of permanent peace on an assured basis of inter-imperialism.” '

Kaiusky called ultra-imperialism or super-imperialism what Hobson, thirteen years earlier, described as inter-impeiialism. Ex- cept for coining a new and clever word, replacing one Latin prefix by another, the only progress Kautsky has made in the sphere of “scientific” thought is that he has labelled as Marxism what Hob- son, in efiect, described as the cant of English parsons. Alter the Anglo-Boer War it was quite natural for this worthy caste to exert every effort to console the British middle class and the workers who had lost many of their relatives on the battlefields of South Africa and who were obliged to pay higher taxes in order to guar- antee still higher profits for the British financiers. And what better consolation could there be than the theory that imperialism is not so bad; that fe stands close to inter-(or ultra-) imperialism, which can ensure permanent peace? No matter what the good intentions of the Engh'sh parsons, or of sentimental Kautsky, may have been, the only objective, real, social significance Kautsky’s “theory” can have, is that of a most reactionary method of consoling the masses witli hopes of permanent peace being possible under capital- (dsm, detracting their attention from the sharp antagonisms and

  • Die Neut Zeh, April 3o, 1915, p. 1+4?
    • Hob«on,'* ** op, cit., p. 351.

IMPr.KIALlSM, 'ini', highest t,l AUK t)l I' \P1 TALIiiM I4;j

acute problems of the pieseiit era, and diucling it tuwaids illusoiy prospects of an imaginary “ultra-imperialism” of the future. Decep- tion of the masses — there is nothing but this in ECautsky’s “Marx- ian” theory.

Indeed, it is enough to compare well-known and indisputable facts to become convinced of the utter falsity of the prospects which Kautsky tries to conjure up before the German workers (and the workers of all lands). Let us consider India, Indo-China and China. It is known that these thi'ee colonial and semi-colonial countries, inhabited by six to seven hundred million human beings, are subjected to the exploitation of the finance capital of several impel ialist states; Great Britain, France, Japan, the U.S.A., etc. We will assume that these imperialist countries form alliances against one another in order to protect and extend their posses- sions, their interests and their “spheres of influence” in these Asiatic states; these alliances will be “inter-imperialist,” or “ultra-imperial- ist” alliances. We will assume that all the imperialist countries conclude an alliance for the “peaceful” division of these parts of Asia; this alliance would be an alliance of “internationally united finance capital.” As a matter of fact, alliances of this kind have been made in the twentieth century, notably with regard to China. We ask, is it “conceivable,” assuming that the capitalist system remains intact — and this is precisely the assumption that Kautsky does make — that such alliances would be more than tem- porary, that they would eliminate friction, conflicts and struggle in all and every possible form?

This question need only be stated clearly enough to make it impossible for any reply to be giv^n other than in the negative; for mere can be uo other conceivable basis under capitalism for the Kvision of spheres of influence, of interest, of colonies, etc*, than.., 1 calculation of the strength of the participants in the division, their leneral economic, financial, military strength^ etc. And the strength of these participants in the division does not chang* to an equal



degree, for under capitalism tlie development of different under- takings, trusts, branches of industry, or countries cannot be even. Half a century ago, Germany was a miserable, insignificant coun- try, as far as its capitalist strength was concerned, compared with the strength of England at that time. Japan was similarly insignifi- cant compared with Russia. Is it “conceivable” that in ten or twenty years’ time the relative strength of the imperialist powers will have remained /<wchanged? Absolutely inconceivable.

Therefore, in the realities of the capitalist system, and not in b.-inal philistine fantasies of EngUsh pareons, or of the German “Marxist,” Kautsky, “inter-imperialist” or “ultra-imperialist” al- liances, no matter what form they may assume, whether of one imperialist coalition against another, or of a general alliance em- bracing all the imperialist powers, are inevitably nothing more thai a “truce” in periods between wars. Peaceful alliances prepare the ground for wars, and in their turn grow out of warsj the one is the condition for the other, giving rise to alternating forms of peaceful and non-peaceful struggle out of orte and the same basis of imperialist connections and the relations between world eco- nomics and world politics. But in order to pacify the workers and to reconcile them witlt the social-chauvinists who have deserted to the side of the bourgeoisie, wise Kautsky separates one link of a single chain from the other, separates the present peaceful (and ultra-imperialisj:, nay, ultra-ultra-imperialist) alliance of all the powers for the “pacification” of China (remember the suppression of the Boxer Rebellion) from tlie non-peaceful conflict of to-mor- row, which will prepare the ground for another “peaceful” general alliance for the partition, say, of Turkey, on the day after to-mor- row, etc,i etc. Instead of showing t5ie vital coniifbction between peri-[ ^ds of .imperialist peace and periods of imperialist war, Kautslqj puts before the workers a lifeless abstraction solely in order tc^ reconcile them to their lifeless leaders. ^

An Ameriran writer Hill, in hie d ffitinrw nt T)Mntnarv Iti the


Iniemationol Development of Ewope points out in his picfacc the following periods of contemporaiy diplomatic histoij ; 1 ) The era of revolution; 2) "I'he constitutional movement; 3) The present era of “commercial imperialism.” ' Another writer divides the history of Great Britain’s foreign policy since 1870 into four pe- riods: 1) The first Asiatic period (that of the struggle against Russia’s advance in Central Asia towards Inilia) ; 2) The African period (approximately 1885-1902) : that of struggles against Fiance for the partition of Africa (the Fashoda incident of 1898 which brought France within a hair’s breadth of war with Gicat Britain) ; 3) The second Asiatic period (alliance with Japan again'-t Russia), and 4) The European period, chiefly anti-German. ‘ “The po- litical skirmishes of outposts take place on the financial field,” wrote Riesser, the banker, in 1905, in showing hov/ French finance capital operating in Italy was prcpaiing the way for a political al-^ liance of these countries, and how a coriflict was developing be- tween Great Britain and Germany over Persia, between all the European c.ipitalists over Chinese loans, etc. Behold, the living reality of peaceful “ultra-imperialist” alhances in their indissoluble connection with oi dinary imperialist conflicts!

Kautsky’s toning down of the deepest contradictions of impe- rialism, which inevitably becomes the embellishment of imperialism, leaves its traces in this writer’s criticism of the political features of imperialism. Imperialism is the epoch of finance capital and of monopolies, which introduce everywhere the striring for domination, not for freedom. The result of these tendencies is reaction all along the fine, whatever the political system, and an extreme intensificiftion of cxisfing antagonisms in this domain also.

  • Particularly acute becomes the yoke of n.ational oppression and the

I).ivid Jayne Hill, /I Uhtory of Diph/iiaiy in tfte InUrnatioml Development of Europe^ Vol. I, p. X.

    • Sdiilder. op. til., Vol. I, p. 178, *

jlu lam



Striving for annexations, i.c., the violation of national independence (for annexation is nothing but the violation of the right of nations to self-determination). Hilferding justly draws attention to the connection between imperialism and the growth of national op- pression.

“In the newly opened up countries themselves,” he writes, “the capitalism imported into them intensifies contradictions and excites the constantly growing resistance against the intruders of the peoples who are awakening to national consciousness. This resistance can easily become transformed into dangerous measures directed against foreign capital. The old social rela- tions become completely revolutionized. The age-long agrarian incrustation of ‘nations without history’ is blasted away, and they are drawn into the capitalist whirlpool. Capitalism itself gradually procures for the vanquished the means and resources for their emancipation and they set out to achieve the same goal which once seemed highest to the European nations: the crea- tion of a united national state as a means to economic and cul- tural freedom. This movement for national independence threatens European capital just in its most valuable and most promising fields of exploitation, and European capital can main- tain its domination only by continually increasing its means of exerting violence.’”*

To this musPbe added that it is not only in newly opened up countries, but also in the old, that imperialism is leading to an- nexation, to increased national oppression, and consequently, also to increasing resistance. While opposing the intensification of po- litical reaction caused by impcrialism,rICautsky obScures the question, which has become very serious, of tire impossibility of unity witlr the oppohunists in the epoch of imperialism. While objecting to annexations, he presents his objections in a form that will be most

op. cii., pp. 433-34-.


acceptable and least offensive to the opportunists. He addresses himself to a German audience, yet he obscures the most topical and important point, for instance, the annexation by Geimany of Alsace-Lorraine. In order to appraise this “lapse of mind” of Kautsky’s we will take the following example. Let us suppose that a Japanese is condemning the annexation of the Philippine Islands by the Americans. Will many believe that he is doing so because he has a horror of annexations as such, and not because he him- self has a desire to annex the Philippines? And shall we not be constrained to admit that the “fight” the Japanese is waging against annexations can be regarded as being sincere and politically honest only if he fights against the annexation of Korea by Japan, and urges freedom for Korea to secede from Japan?

Kautsky’s theoretical analysis of imperialism, as well as his economic and political criticism of imperialism, are permeated through and. through with a spirit, absolutely irreconcilable \yith Marxism, of obscuring and glossing over the most profound con- tradictions of imperialism and with a striving to preserve the crumbling unity with opportunism in the European labour move- ment at all costs.

10 *


We have seen that the economic quintessence of imperialism is monopoly capitalism. This very fact determines its place in history, for monopoly that grew up on the basis of free competition, and pi ecisely out of free competition, is the transition from the capitalist sjstera to a higher social-economic order, We must take special note of the four principal foims of monopoly, or the four principal manifestations of monopoly capitalism, which are characteristic of the epoch under review.

Firstly, monopoly arose out of the concentration of produc- tion at a very advanced stage of development. This refers to the monopolist capitah'st combines, cartels, syndicates and trusts. We have seen the important part that these play in modern economic life. At die beginning of the twentieth centuiy, monopolies acquired complete supremacy in the advanced countries. And although the first steps towards the formation of the cartels were first taken by countries enjoying the promotion of high tariffs (Germany, Amer- ica), Great Britain, with her system of frce,,trade, was not far behind in revealing the same basic phenomenon, namely, the birth •f monopoly out of the concentration of production.

Secondly, monopolies have accelerated the capture of the most important sources of raw materials, especially for the coal and iron industries, whifh arc the basic and most highly cartelized industries


in capitalist society. The monopoly o£ the most important sources of I'aw materials has enormously increased the power of big capital, and has sharpened the antagonism between cartelized and non-car- telized industry.

Thirdly, monopoly has sprung from the banks. The banks have developed from modest intermediary enterprises into the monopo- lists of finance capital. Some three or five of the biggest banks in each of the foremost capitalist countries have achieved the “per- sonal union” of industrial and bank capital, and have concentrated in their hands the disposal of thousands upon thousands of millions which form the greater part of the capital and income of entire countries. A financial oligarchy, which throws a close net of rela- tions of dependence over all the economic and political institutions of contemporary bourgeois society without exception — such is the most striking manifestation of this monopoly,

Fourthly, monopoly has grown out of colonial policy To the numerous “old” motives of colonial policy, finance capital has added the struggle for the sources of raw materials, for the export of capital, for “spheres of influence,” ».e., for spheres for profitable deals, concessions, monopolist profits and so on; in fine, for eco- nomic territory in general. When the colonies of the European pow- ers in Africa, for instance, comprised only one-tenth of that ter- ritory (as was the case in 1876), colonial policy, was able to de- velop by methods other than those of monopoly — bx the “free grab- bing” of territories, so to speak. But when nine-tentlis of Africa had been seized (approximately by 1900), wheh the whole world had been divided up, there was inevitably ushered in a period of colonial monopoly and, coniequently, a,perlod of particularly intense strug- gle for the division and the redivision of the world.

, The extent to which monopolist capiul has intensified all thfi contradictions of capitalism is generally known. It is sufficient to mention the high cost jf living and the oppression of the cartels. This intensification of contradictions constitutes tbs' most powerful



driving force of the transitional period of history, which began from the time of the definite victory of world finance capital.

Monopolies, oligarchy, the striving for domination instead of striving for liberty, the exploitation of an increasing number of small or weak nations by an extremely small group of the richest or most powerful nations — all these have given birth to those dis- tinctive characteristics of imperialism which compel us to define it as parasitic or decaying capitalism. More and more prominently there emerges, as one of the tendencies of imperialism, the creation gf the “bondholding” (rentier) state, the usurer state, in which the bourgeoisie lives on the proceeds of capital exports and by “clipping coupons.” It would be a mistake to believe that this tendency to decay precludes the possibility of the rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of industry', certain strata of the bourgeoisie and certain countries betray, to a more or less degree, one or other of these tendencies. On the whole, capitalism is growing far more rapidly than before. Hut this growth is not only becoming more and moi'e uneven in general 5 its unevenness also manifests itself, in particular, in tlie decay of the countries which are richest in capital (such as England).

In regard to the rapidity of Germany’s economic development, Riesscr, the author of the book on the big German banks states:

“The progress of the preceding period (1848-70), which had not been exactly slow, stood in about the same ratio to the rapidity with which the whole of Germany’s national economy, and with it German banking, progressed during this period " (1870-1905) as the mail coach of the Holy Roman Empire of

the German nation stood to the speed of the present-day auto- ^ mobile . . . which in whizzing past, it must be said, often enr dangers not only innocent pedestrians in its path, but also the occupants of the car.”*

• Rictaer, cit., third edition, n. 35+. — Ed.


In its turn, this finan:e capital which has giown so lapidly is. not unwilling (precisely because it has grown so quickly) to pass on to a more “tranquil” possession of colonies which have to be seized — and not only by peaceful methods — from richer nations* In the United States, economic development in the last decades has been even more rapid than in Germany, and jor this wry teasoti, the parasitic character of modern American capitalism has stood out with particular prominence. On the other hand, a com- parison of, say, the repubh'can American bourgeoisie with the mon- archist Japanese or German bourgeoisie shows that the most pro- nounced political distinctions diminish to an extreme degiec in the epoch of imperialism — not because they are unimportant in gen- era], but because in all these cases we are discussing a bourgeoisie which has definite features of parasitism.

The receipt of high monopoly profits by the capitalists in one^ of the numerous branches of industry, in one of numerous coun- tries, etc., makes it economically possible for them to corrupt cer- tain sections of the working class, and for a time a fairly consider- able minority, and win tliem to the side of the bourgeoisie of a given industry or nation against all the others. The intensification of antagonisms between imperialist nations for the division of the world increases this striving. And so there is created that bond between imperialism and opportunism, which revealed itself first and most clearly in England, owing to the fact that certain features of imperialist development were observable there much earlier than in other countries.

Some writers, L. Martov, for example, try to evade the fact that there is a <^nection between imperialism and opportuniShi in the labour movement — which is particularly striking at the pres- ent time — ^by resorting to “official optimistic” aigumc^ts Kautsky and Huysmans) like the following: the cause of the op- ponents of capitalism would b^ hopeless if it were precisely progres- sive capitalism that led to the increase oT opportunism, or, if it



were precisely the best paid workers who were inclined towards opportunism, etc. We must have no illusion regarding “optimism” of this kind, It is optimism in regard to opportunism; it is optimism which serves to conceal opportunism. As a matter of fact the ex- traordinary rapidity and the particularly revolting character of the Hevelopment of opportunism is by no means a guarantee that its victory will be durable: the rapid growth of a malignant abscess on a healthy body only causes it to burst more quickly and thus to relieve the body of it. The most dangerous people of all in this respect are those who do not wish to understand that the fight against imperialism is a sham and humbug unless it is inseparably bound up with the fight against opportunism.

From all that has been said in this book on the economic na- ture of imperialism, it follows that we must define it as capitalism in transition, or, more precisely, as moribund capitalism. It is very instiuctive in this respect to note that the bourgeois economists, in describing modern capitalism, frequently employ terms like "inter- locking,” “absence of isolation,” etc.; "in cpnformity with their functions and course of development,” banks are “not purely pri- vate business enterprises; they are more and more outgrowing the spliere of purely private business regulations.” And this very Ries- ser, who uttered the words just quoted, declares with all serious- ness that the “prophecy” of the Marxists concerning ‘'socializa- tion” has “not cyime true”!

What then does this word “interlocking” express? It merely e.xpresses the most striking feature of the process going on before ■our eyes. It shows that the observer counts the separate trees, but eSnnot see the wood. It slavishly cqpies the superficial, the fortui- tous, tlie chaotic. It reveals the observer as one who is overwhelmed

the nvnss of raw material and is utterly incapable of appreciating its meaning and importance. Ownership of shares and relations between owners of private property “huerlock in. a haphazard ^ way.** But the mnderlying factor of this interlocking, its very base,

IMPEEIALISM, the highest stage of capitalism 163

is the changing social relations of production. When a big enter- prise assumes gigantic proportions, and, on the basis of exact com- putation of mass data, organizes according to plan the supply of primary raw materials to the extent of two-thirds, or three-fourths of all that is necessai 7 for tens of millions of people; when the raw- materials are transported to tlie most suitable place of production, sometimes hundieds or thousands of miles away, in a systematic and organized manner; when a single centre directs all the suc- cessive stages of work right up to the manufacture of numerous varieties of finished articles; when these products arc distributed according to a single plan among tens and hundreds of millions of consumers (as in the case of the distribution of oil in America and Germany by the American “oil trust”) — then it becomes evid- ent that we have socialization of production, and not me’re "inter- locking”; that private economic relations and private property rela-" tions constitute a shell -which is no longer suitable for its contents, a shell which must inevitably begin to decay if its destruction be delayed by artificial means; a shell which may continue in a state of decay for a fairly long period (particularly if the cure of the opportunist abscess is protracted), but which will inevitably be re- moved.

The enthusiastic admirer of German imperialism, Schulze- Gaevernitz exclaims:

“Once the supreme management of th5 German banks has been entrusted to the hands of a dozen persons, their activ- ity is even today more significant for the public good than that of the majority of the Ministers of State.” (The “interlocking^ of bankers, i^nisters, magnates of industry and rentiers, » here conveniently forgotten.) ". . . If we conceive of Ihe ten- dencies of development which we have noted as realized to the utmost: the money capital of the nation imited in the banks; the banks themselves conf&ined into s«rte]s;^lhe investment japital of the nation cast in the* shape of securities, then the bril-



liant forecast of Saint-Simon will be fulfilled: ‘The present an- archjr of production caused by the fact that economic relations are developing without uniform regulation must make way for organization in production. Production will no longer be shaped by isolated manufacturers, independent of each other and ignorant ’of man’s economic needs, but by a social institution. A central body of management, being able to survey the large fields of social economy from a more elevated point of view, will regulate it for the benefit of the whole of society, will be able to put the means of production into suitable hands, and above all will take care that there be constant harmony between production and consumption. Institutions already exist which have assumed as part of their task a certain organization of econoiAic labour; the banks.’ The fulfilment of the forecasts of Saint-Simon still lies in the future, but we are on the way to its fulfilment — ^Marxism, different from what Marx im- .igined, hut different only in form,”*

A crushing “refutation” of Marx, indeed! It is a retreat from larx’s precise, scientific analysis to Saint-Simon’s guesswork, the iiesswork of a genius, but guesswork all the same.

Published originally as a separate pamphlet in April, 1917,

Pctiograd. ^

  • Grtnidruf^dtr SotsialSkonomii, pp. 145-46,

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