Imperialism, the Last Stage of Capitalism/Chapter 5
CHAPTER V.
The Division of the World Among Capitalist Groups
The capitalist monopoly groups—cartels, syndicates, trusts—divide among themselves first of all the whole internal trade of a country, grasping the whole of industry more and more firmly. But in capitalist society, internal trade is connected with foreign trade. Capitalism has long ago created a world market. In proportion as the export of capital increases, and as foreign and colonial relations—"the spheres of influence" of the largest monopolist associations—extend on every side, things tend "naturally" towards an international agreement among these associations and towards the formation of international cartels.
This is a new degree of world concentration of capital and production, infinitely higher than any predecessor. Let us see how this super-monopoly develops.
The electrical industry is the most typical of the latest victories of technical skill, i.e., of capitalism at the end of the nineteenth and beginning of the twentieth centuries. It has developed most in the two most advanced of the new capitalist countries, the United States and Germany. In Germany, the crisis of 1900 had a particularly great effect on its concentration. The banks, already by this time deeply interested in industry, forced on, during this crisis, the collapse of unimportant firms and their absorption by the large ones. "The banks," writes Jeidels, "refused a helping hand to the companies which needed it most—bringing on, after a frenzied boom, the inevitable failure of the companies which were not closely enough attached to them."[1]
After 1900, concentration in Germany proceeded as a result by leaps and bounds. Up to 1900, there had been seven or eight groups in the electrical industry. Each was formed of many companies—amounting altogether to twenty-eight—and each was supported by from 2 to 11 banks. Between 1908 and 1912 all the groups were united into two, or possibly one. This shows the process:
| (i) In 1900: | |||
| Felten & Gillaume Lahmeyer | Union A.E.G. |
Siemens-Schuckert Halske & Co. |
Bergman Kuymer |
| Felten & Lahmeyer (General Electrical Company) |
A.E.G. |
Siemens-Halske -Schuckert |
Bergman Failed in 1900 |
| (ii) In 1912: | |||
| A.E.G. (Gen. Elec. Co.) | Siemens-Halske-Schuckert | ||
| (In close collaboration since 1908) | |||
The famous A.E.G. (General Electrical Company), thus constituted, controls 175 to 200 companies (through shares) and directs altogether a capital of 1,500,000,000 marks. Abroad, it has 35 direct representatives of which twelve are joint stock companies, in more than ten States. In 1904, German capital, invested in the electric industry abroad, was already estimated at 233,000,000 marks. Of this sum, 62 millions were invested in Russia. There is no need to say that the A.E.G. is a huge combine. Its industrial companies number no less than sixteen, and their factories make the most varied articles, from cables and insulators to motor-cars and aeroplanes.
But concentration in Europe is only a part of the process of concentration in America, which has developed thus:
| G.E.C. | ||
| United States | Thomson-Houston & Co. establish a firm in Europe |
Edison & Co. establish in Europe the French Edisson Co. which sends on its patents to the German firm A.E.G. |
| Germany | Union Electrical Company | |
| General Electrical Company (A E.G.) | ||
Thus two "Great Powers" in the electrical industry were formed. "There is not an electrical company in the world which can be independent of them," wrote Heinig in his article on The Paths of the Electricity Trust. As to the total business and the size of the enterprises of the two trusts, the following figures will give us at least an idea:
| Total Business in mills. of marks |
Employees | Net profits in mills. of marks. | ||
| America: | ||||
| General Elec. Co. | ... | 1907 — 252 | 28,000 | 35.4 |
| 1910 — 298 | 32,000 | 45.6 | ||
| Germany: | ||||
| A.E.G. ... | ... | 1907 — 216 | 30,700 | 14.5 |
| 1911 — 362 | 60,800 | 21.7 |
In 1907, the German and American trusts divided up the world by agreement. Competition between them ceased. The American General Electricity Company "received" the United States and Canada. The A.E.G. "received" Germany, Austria, Russia, Holland, Denmark, Switzerland, Turkey and the Balkans. Special agreements, naturally secret, laid down the rules for the branch companies exploiting new branches of production or new countries not yet allotted. The two trusts were to exchange their discoveries and their experiences.
It is easy to understand how difficult competition is becoming against this trust, which is practically world-wide—controlling a capital of several milliard marks, provided with branches, agencies, representatives in every country in the world. But the division of the world between two powerful trusts does not do away with the possibilities of re-division if the balance of forces changes, because of unequal developments, wars, bankruptcies, etc.
The oil industry supplies us with a curious example of such a revision, or rather of a struggle for the revision of agreements.
"The world market for oil," wrote Jeidels in 1905, "is already divided between two great financial groups, the Standard Oil Co. of Rockefeller and the controllers of Russian oil, Rothschild and Nobel. The two groups are in alliance. But for many years, five enemies have been threatening their monopoly.
"(i) The exhaustion of the American wells: (ii) the competition of the firm of Mentacheff of Baku; (iii) the Austrian wells; (iv) the Roumanian wells; (v) the wells of the Dutch colonies (the extremely rich firms, Samuel and Shell, connected with English capital also). The three last groups are connected with the great German banks, principally the Deutsche Bank. These banks have systematically developed on their own the extraction of oil, especially in Roumania. In 1907, 185,000,000 francs of foreign capital was invested in the Roumanian oil industry, of which 74 million came from Germany.[1]
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, founded a daughter company in Holland, and set out to acquire the wells of the Dutch Indies, thus attempting to strike at its principal enemy, the Anglo-Dutch Shell trust. On the other side, the Deutsche Bank and other German banks aimed at "keeping" Roumania and at uniting it with Russia against Rockefeller. The latter controlled far more capital and an excellent system of oil transport, put at the disposal of the consumers. The struggle had to end, and it ended in 1907 with the defeat of the Deutsche Bank which could only choose between two alternatives: 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." A clause of the agreement cancelled it if Germany should establish a State monopoly of oil.
Then "the comedy of oil" began. One of the German oil-kings, von Gwinner, a director of the Deutsche Bank, began, through his private secretary, Strauss, a campaign for the State control of oil. The whole great machine of the largest German bank and all its "connections" were set in motion. The press showed a "patriotic" indignation against the "yoke" of the American trust, and the Reichstag passed, on March 15th, 1911, by an almost unanimous vote, a motion asking the government to bring forward a plan for oil monopoly. The government hastened to acquiesce in the desire of the nation; and the Deutsche Bank, which hoped to deceive its American partner and improve its business by a State monopoly, appeared to have won. Already the German oil magnates saw visions of wonderful profits, which would not be less than those of the great Russian sugar growers. . . But the great German banks quarrelled among themselves over the division of the spoil. The Disconto Gesellschaft exposed the aims of the Deutsche Bank; secondly, the government took fright at the idea of a struggle with Rockefeller. The Roumanian supply was not very large; would it be possible to get oil without Mr. Rockefeller? Finally (1913) a milliard was required for armaments. The project of the oil monopoly was put aside. The Rockefeller trust came out of the struggle temporarily victorious.
The Berlin review Die Bank said in this connection, that Germany could only fight the oil trust by establishing an electricity monopoly and by converting water power into electricity cheaply. "But," it added, "the electricity monopoly will come when the producers need it more definitely; when the next great failure in the electrical industry is at hand; and when the powerful electric workshops, so costly, constructed now almost everywhere by private concerns and for which these concerns receive already partial monopolies from towns, from the State, etc., can no longer work at a profit. Water power then must be used. But this cannot be converted into cheap electricity at State expense; all the same it must be handed over to 'a private monopoly controlled by the State,' because private industry has already concluded a series of contracts and secured heavy compensation. . . . So it was with the monopoly of potash, so it is with the oil monopoly, so it will be with the monopoly of electricity. It is time for our State-Socialists, who let themselves be blinded by beautiful principles, to understand once and for all that in Germany the monopolies have never had as their aim or effect the advantage of the consumer or even a share of the profits of industry for the State, but have only served to revive, at the expense of the State, private industry which was 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, both being only differing stages in the imperialist struggle between the largest monopolists for the division of the world.
In the mercantile marine, the tremendous development of concentration has ended also in the division of the world. In Germany, two powerful companies have raised themselves to the first rank, the Hamburg-Amerika and the Nord-Deutscher-Lloyd, both with a capital of 200 million marks in stocks and shares, and possessing 185-189 million marks' worth of shipping tonnage. On the other side, in America, on January 1st, 1903, the Morgan trust—the International Company of Maritime Trade—was formed which united nine British and American navigation companies, and which controlled a capital of 120 million dollars (480 million marks).
As early as 1903, the German giants and the Anglo-America 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 traffic. The German and American ports were carefully allotted to each, a common committee of control was appointed. This contract was concluded for twenty years. But a clause rendered it invalid in case of war.
Extremely instructive also is the story of the creation of the International Rail Combine. The first attempt of the British, Belgian and German rail manufacturers to create such a cartel was made in 1884, at the moment of a serious business crisis. The manufacturers agreed not to compete with one another for the internal markets of the countries involved, and they divided the foreign markets in the following proportions: Britain 66 per cent.; Germany 27 per cent.; Belgium 17 per cent. India was reserved entirely for Britain. A British firm which remained outside the cartel was fought by it; the costs of this economic war were met by a percentage levied on all the sales. But in 1886 two British firms came out of the cartel, which collapsed. It is characteristic that the agreement could not be maintained in the periods of industrial prosperity which followed.
At the beginning of 1904, the German steel syndicate was founded. In November, 1904, the international rail cartel was renewed, with the following proportions for foreign trade: England 53.5 per cent.; Germany, 28.83 per cent.; Belgium 17.67 per cent. France came in later with successively 4.8 per cent., 5.8 per cent., and 6.4 per cent. in the first, second and third years, exceeding the 100 per cent. limit, i.e., when the total was 104.8 per cent. of the 1904 total, etc. In 1905, the United States Steel Corporation entered the cartel, then Austria, then Spain. "At this moment," wrote Vogelstein in 1910, "the division of the world is at an end, and the great consumers, in the first place the State railways—since the world is divided up without their interests being considered—must live like the poet in the palace of Jupiter."[2]
Or we may refer also to the International Zinc Syndicate, established in 1909 which divided production exactly between five groups of factories: German, Belgian, French, Spanish and British. Then there is the International Power Trust, of which Liefmann says that it is "a quite modern close alliance between all the German manufacturers of explosives who have divided up the whole world, so to speak, with the English and French manufacturers, organised in a similar manner."[3]
Altogether, Liefmann counted in 1897, more than forty international cartels in which Germany had a share, while in 1910 there were about 100.
Certain bourgeois writers express the opinion that the international cartels, representing one of the most striking forms of the internationalisation of capital afford us the hope of the maintenance of peace under the capitalist system. Theoretically this opinion is absurd, while in practice it is a sophism and a dishonest defence of the worst opportunism. The international cartels show to what point capitalist monopolies have developed, and what is the object of the struggle between capitalist groups. This last circumstance is the most important; it alone shows us the historico-economic direction of events. For the forms of the struggle can change, and do change constantly, because of various relatively temporary and special causes, but the essence of the struggle, its class content, cannot change while classes exist. It is easy to understand, for example, that it may be useful for the interests of the German bourgeoisie to hide the reason for the actual economic struggle (the division of the world) and to emphasise one form or another of it. Kautsky makes the same mistake. And it is a question not of the German bourgeoisie, but of the bourgeoisie throughout the world. The capitalists divide up the world, not because of original sin, but because the degree of concentration which has been reached forces them to take this road in order to get profits. And they divide it in proportion to capital, to "strength," because there cannot be any other system of division in a system of commodity production and capitalism. But the forces vary with economic and political development. In order to understand what takes place, it is necessary to know what questions are effected by this change of forces. Whether these changes are "purely" economic or non-economic (e.g., military), is in any case secondary and cannot change at all the fundamental view of the most recent phase of capitalism.
To substitute for the object of the struggles and agreements between capitalist groups the question of the form of these struggles and agreements (to-day peaceful, to-morrow bellicose, the next day peaceful once more), is to descend into sophistry.
The latest period of capitalism shows us that definite relations are being established amongst capitalist groups, relations based on the economic partition of the world; whilst, parallel with this fact and in connection with it, definite relations are being established between political groups, between States, on the basis of the territorial division of the world, of the struggle for colonies, of the "struggle for economic territory."