Imperialism, the Highest Stage of Capitalism
V.I. Lenin

Source: https://www.marxists.org/archive/lenin/works/1916/imp-hsc/

## PREFACE

The pamphlet here presented to the reader was written in the
spring of 1916, in Zurich. In the conditions in which I was
obliged to work there I naturally suffered somewhat from a
shortage of French and English literature and from a serious
dearth of Russian literature. However, I made use of the
principal English work on imperialism, the book by J. A. Hobson,
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, specifically economic
analysis of facts, but to formulate the few necessary observations on politics with extreme caution, by hints, in an
allegorical language—in that accursed Aesopian language—to
which tsarism compelled all revolutionaries to have recourse whenever they took up the pen to write a “legal”
work.

It is painful, in these days of liberty, to re-read the
passages of the pamphlet which have been distorted, cramped,
compressed in an iron vice on account of the censor. That the
period of imperialism is the eve of the socialist revolution;
that social-chauvinism (socialism in words, chauvinism in deeds)
is the utter betrayal of socialism, complete desertion to the
side of the bourgeoisie; that this split in the working-class
movement is bound up with the objective conditions of imperialism, etc.—on these matters I had to speak in a
“slavish” tongue, and I must refer the reader who is interested
in the subject to the articles I wrote abroad in 1914-17, a new
edition of which is soon to appear. In order to show the reader,
in a guise acceptable to the censors, how shamelessly untruthful
the capitalists and the social-chauvinists who have deserted to
their side (and whom Kautsky opposes so inconsistently) are on
the question of annexations; in order to show how shamelessly
they screen the annexations of their 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, Estonia
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, that of the economic essence
of imperialism, for unless this is studied, it will be impossible to understand and appraise modern war and modern
politics.

Author

Petrograd, April 26, 1917

### PREFACE TO THE FRENCH AND GERMAN EDITIONS [1]

### I

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, would this be advisable, since the main
purpose of the book was, and remains, to present, on the basis
of the summarised returns of irrefutable bourgeois statistics,
and the admissions of bourgeois scholars of all countries, a
composite picture 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 even be useful for many Communists
in advanced capitalist countries to convince themselves by the
example of this pamphlet, legal from the standpoint of the
tsarist censor, of the possibility, and necessity, of making use
of even the slight remnants of legality which still remain at
the disposal of the Communists, say, in contemporary America or
France, after the recent almost wholesale arrests of Communists,
in order to explain the utter falsity of social-pacifist views
and hopes for “world democracy”. The most essential of what
should be added to this censored pamphlet I shall try to present
in this preface.

### II

It is proved in the pamphlet that the war of 1914-18 was
imperialist (that is, an annexationist, predatory war of
plunder) on the part of both sides; it was a war for the division of the world, for the partition and repartition of
colonies and 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 the belligerent countries. In order to depict this
objective position one must not take examples or isolated data
(in view of the extreme complexity of the phenomena of social
life it is always possible to select any number of examples or
separate data to prove any proposition), but all the data on the basis of economic life in all the
belligerent countries and the whole world.

It is precisely irrefutable summarised data of this kind that I
quoted in describing the partition of the world in 1876
and 1914 (in Chapter VI) and the division of the world’s railways in 1890 and 1913 (in Chapter VII). Railways
are a summation of the basic capitalist industries, coal, iron
and steel; a summation and the most striking index of the
development of world trade and bourgeois-democratic civilisation. How the railways are linked up with large-scale
industry, with monopolies, syndicates, cartels, trusts, banks
and the financial oligarchy is shown in the preceding chapters
of the book. The uneven distribution of the railways, their
uneven development—sums up, as it were, modern monopolist
capitalism on a world-wide scale. And this summary 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,
democratic, cultural and civilising enterprise; that is what it
is in the opinion of the bourgeois professors who are paid to
depict capitalist slavery in bright colours, and in the opinion
of petty-bourgeois philistines. But as a matter of fact the
capitalist threads, which in thousands of different intercrossings bind these enterprises with private property in
the means of production in general, have converted this railway
construction into an instrument for oppressing a thousand
million people (in the colonies and semicolonies), that is,
more than half the population of the globe that inhabits the
dependent countries, as well as the wage-slaves of capital in
the “civilised” countries.

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

### III

The Treaty of Brest-Litovsk dictated by monarchist Germany, and
the subsequent much more brutal and despicable Treaty of
Versailles dictated by the “democratic” republics of America and
France and also by “free” Britain, have rendered a most useful
service to humanity by exposing both imperialism’s hired coolies
of the pen and petty-bourgeois reactionaries who, although they
call themselves pacifists and socialists, sang praises to
“Wilsonism,” and insisted that peace and reforms were possible
under imperialism.

The tens of millions of dead and maimed left by the war—a
war to decide whether the British or German group of financial
plunderers is to receive the most booty—and those two “peace treaties,” are with unprecedented rapidity opening the
eyes of the millions and tens of millions of people who are
downtrodden, oppressed, deceived and duped by the bourgeoisie. Thus, out of the universal ruin caused by the war a
world-wide revolutionary crisis is arising which, however
prolonged and arduous its stages may be, cannot end otherwise
than in a proletarian revolution and in its victory.

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

That is why I reproduce this Manifesto (This Manifesto is not given as an appendix to
this edition—Ed) as a supplement to the present edition, and again and again I urge the reader to note that
the heroes of the Second International are as assiduously
avoiding 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 scene of his crime.

### IV

Special attention has been devoted in this pamphlet to a
criticism of Kautskyism, the international ideological trend
represented in all countries of the world by the “most prominent
theoreticians,” the leaders of the Second International (Otto
Bauer and Co. in Austria, Ramsay MacDonald and others in
Britain, Albert Thomas in France, etc., etc.) and a multitude of
socialists, reformists, pacifists, bourgeois democrats and
parsons.

This ideological trend is, on the one hand, a product of the
disintegration and decay of the Second International, and, on
the other hand, the inevitable fruit of the ideology of the
petty bourgeoisie, whose entire way of life holds them captive
to bourgeois and democratic prejudices.

The views held by Kautsky and his like are a complete renunciation of those same revolutionary principles of Marxism
that writer has championed for decades, especially, by the way,
in his struggle against socialist opportunism (of Bernstein,
Millerand, Hyndman, Gompers, etc.). It is not a mere accident,
therefore, that Kautsky’s followers all over the world have now
united in practical politics with the extreme opportunists
(through the Second, or 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, cannot
dispense with an analysis and exposure of the theoretical errors
of Kautskyism. The more so since pacifism and “democracy” in
general, which lay no claim to Marxism whatever, but which, like
Kautsky and Co., are obscuring the profundity of the contradictions of imperialism and the inevitable revolutionary
crisis to which it gives rise, are still very widespread all
over the world. To combat these tendencies is the bounden duty
of the party of the proletariat, which must win away from the
bourgeoisie the small proprietors who are duped by them, and the
millions of working people who enjoy more or less petty-bourgeois conditions of life.

### V

A few words must be said about Chapter VIII, “Parasitism and
Decay of Capitalism.” As already pointed out in the text,
Hilferding, ex-“Marxist,” and now a comrade-in-arms of Kautsky
and one of the chief exponents of bourgeois, reformist policy in
the Independent Social-Democratic Party of
Germany , [2] has taken a step backward on this question compared with the frankly pacifist and reformist Englishman, Hobson. The
international split of the entire working-class movement is now
quite evident (the Second and the Third Internationals). The
fact that armed struggle and civil war is now raging between the
two trends is also evident—the support given to Kolchak
and Denikin in Russia by the Mensheviks and
Socialist-Revolutionaries against the Bolsheviks; the fight the
Scheidemanns and Noskes have conducted in conjunction with the
bourgeoisie against the Spartacists [3] in Germany; the same thing in Finland, Poland,
Hungary, etc. What is the economic basis of this world-historical phenomenon?

It is precisely the parasitism and decay of capitalism,
characteristic of its highest historical stage of development,
i.e., imperialism. As this pamphlet shows, capitalism has now
singled out a handful (less than one-tenth of the inhabitants of the globe; less than one-fifth at a most
“generous” and liberal calculation) of exceptionally rich and
powerful states which plunder the whole world simply by
“clipping coupons.” Capital exports yield an income of eight to
ten thousand million francs per annum, at pre-war prices and
according to pre-war bourgeois statistics. Now, of course, they
yield much more.

Obviously, out of such enormous superprofits (since they are obtained over and above the profits which capitalists
squeeze out of the workers of their “own” country) it is possible to bribe the labour leaders and the upper
stratum of the labour aristocracy. And that is just what the
capitalists of the “advanced” countries are doing: they are
bribing them in a thousand different ways, direct and indirect,
overt and covert.

This stratum of workers-turned-bourgeois, or the labour
aristocracy, who are quite philistine in their mode of life, in
the size of their earnings and in their entire outlook, is the
principal prop of the Second International, and in our days, the
principal social (not military) prop of the bourgeoisie . For they are the real agents of the
bourgeoisie in the working-class movement, the labour lieutenants of the capitalist class, real vehicles of reformism
and chauvinism. In the civil war between the proletariat and the
bourgeoisie they inevitably, and in no small numbers, take the
side of the bourgeoisie, the “Versaillese” against the “Communards.”

Unless the economic roots of this phenomenon are understood and
its political and social significance is appreciated, not a step
can be taken toward the solution of the practical problem of the
communist movement and of the impending social revolution.

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

N. Lenin

July 6, 1920

During the last fifteen to 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 “imperialism”
in order to describe the present era. In 1902, a book by the
English economist J. A. Hobson, Imperialism, was published in London and New York. This author, whose point of view
is that of bourgeois social-reformism and pacifism which, in
essence, is identical with the present point of view of the
ex-Marxist, Karl Kautsky, gives a very good and comprehensive
description of the principal specific economic and political
features 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 makes on the theory of money, and in spite of a
certain inclination on his part to reconcile Marxism with
opportunism, this work gives a very valuable theoretical analysis
of “the latest phase of capitalist development,” as the subtitle
runs. Indeed, what has been said of imperialism during the last
few years, especially in an enormous number of magazine and
newspaper articles, and also in the resolutions, for example, of
the Chemnitz and Basle congresses which took place in the autumn
of 1912, has scarcely gone beyond the ideas expounded, or more
exactly, summed up by the two writers mentioned above...

Later on, I shall try to show briefly, and as simply as
possible, the connection and relationships between the principal economic features of imperialism. I shall not
be able to deal with the non-economic aspects of the question, however much they deserve to be dealt with. References to
literature and other notes which, perhaps, would not interest all
readers, are to be found at the end of this pamphlet. [4]

## Notes

[1] 

[2] 

[3] 

[4] 

## I. CONCENTRATION OF PRODUCTION AND MONOPOLIES

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

In Germany, for example, out of every 1,000 industrial enterprises, large enterprises, i.e., those employing more than 50
workers, numbered three in 1882, six in 1895 and nine in 1907; and
out of every 100 workers employed, this group of enterprises
employed 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 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 enterprises employ 5,700,000 workers out of a
total of 14,400,000, i.e., 39.4 per cent; they use 6,600,000 steam
horse power out of a total of 8,800,000, i.e., 75.3 per cent, and
1,200,000 kilowatts of electricity out of a total of 1,500,000,
i.e., 77.2 per cent.

Less than one-hundredth of the total number of enterprises
utilise more than three-fourths of the total amount of steam and electric power! Two million nine hundred and seventy
thousand small enterprises (employing up to five workers),
constituting 91 per cent of the total, utilise only 7 per cent of
the total amount of steam and electric power! Tens of thousands of
huge enterprises are everything; millions of small ones are
nothing.

In 1907, there were in Germany 586 establishments employing one
thousand and more workers, nearly one-tenth (1,380,000)
of the total number of workers employed in industry, and they
consumed almost one-third (32 per cent) of the total amount of steam and electric
power. [1] As we shall see, money capital and the banks make this superiority of a handful of the largest
enterprises still more overwhelming, in the most literal sense of
the word, i.e., millions of small, medium and even some big
“proprietors” 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 classify enterprises according to the
value of their annual output. In 1904 large-scale enterprises with
an output valued at one million dollars and over, numbered 1,900
(out of 216,180, i.e., 0.9 per cent). These employed 1,400,000
workers (out of 5,500,000, i.e., 25.6 per cent) and the value of
their output amounted to $5,600,000,000 (out of $14,800,000,000,
i.e., 38 per cent). Five years later, in 1909, the corresponding
figures were: 3,060 enterprises (out of 268,491, i.e., 1.1 per
cent) employing 2,000,000 workers (out of 6,600,000, i.e., 30.5
per cent) with an output valued at $9,000,000,000 (out of
$20,700,000,000, i.e., 43.8 per cent). [2]

Almost half the total production of all the enterprises of the
country was carried on by one-hundredth part of these enterprises! These 3,000 giant enterprises embrace 258 branches of
industry. From this it can be seen that at a certain stage of its
development concentration itself, as it were, leads straight to
monopoly, for a score or so of giant enterprises can easily arrive
at an agreement, and on the other hand, the hindrance to
competition, the tendency towards monopoly, arises from the huge
size of the enterprises. 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 detail. But first we must clear up
one possible misunderstanding.

American statistics speak of 3,000 giant enterprises in 250
branches of industry, as if there were only a dozen enterprises of
the largest scale for each branch of industry.

But this is not the case. Not in every branch of industry are
there large-scale enterprises; and moreover, a very important
feature of capitalism in its highest stage of development is
so-called combination of production, that is to say, the
grouping in a single enterprise of different branches of industry,
which either represent the consecutive stages in the processing of
raw materials (for example, 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 utilisation of scrap, or of
by-products, the manufacture of packing materials, etc.).

“Combination,” writes Hilferding, “levels out the fluctuations
of trade and therefore assures to the combined enterprises a more
stable rate of profit. Secondly, combination has the effect of
eliminating trade. Thirdly, it has the effect of rendering
possible technical improvements, and, consequently, the
acquisition of superprofits over and above those obtained by the
‘pure’ (i.e,, non-combined) enterprises. Fourthly, it strengthens
the position of the combined enterprises relative to the ‘pure’
enterprises, strengthens them 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
manufactured goods.” [3]

The German bourgeois economist, Heymann, who has written a book
especially on “mixed,” that is, combined, enterprises in the
German iron industry, says: “Pure enterprises perish, they are
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 big coal companies, producing
millions of tons yearly, strongly organised in their coal
syndicate, and on the other, the big steel plants, closely allied
to the coal mines, having their own steel syndicate. These giant
enterprises, producing 400,000 tons of steel per annum, with a
tremendous output of ore and coal and producing finished steel
goods, employing 10,000 workers quartered in company houses, and
sometimes owning their own railways and ports, are the typical
representatives of the German iron and steel industry. And
concentration goes on further and further. Individual enterprises
are becoming larger and larger. An ever-increasing number of
enterprises in one, or in several different industries, join
together in giant enterprises, backed up and directed by half a
dozen big Berlin banks. In relation to the German mining industry,
the truth of the teachings of Karl Marx on concentration is
definitely proved; true, this applies to a country where industry
is protected by tariffs and freight rates. The German mining
industry is ripe for expropriation.” [4]

Such is the conclusion which a bourgeois economist who, by way
of exception, is conscientious, had to arrive at. It must be noted
that he seems to place Germany in a special category because her
industries are protected by higher tariffs. But this is a
circumstance which only accelerates concentration and the
formation of monopolist manufacturers’ associations, cartels,
syndicates, etc. It is extremely important to note that in
free-trade Britain, 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 and Trusts, based on data on British economic development, writes as follows:

“In Great Britain it is the size of the enterprise and its high
technical level which harbour a monopolist tendency. This, for one
thing, is due to the great investment of capital per enterprise,
which gives rise to increasing demands for new capital for the new
enterprises and thereby renders their launching more difficult. 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 been formed by concentration would
here produce such an enormous quantity of surplus goods that it
could dispose of them only by being able to sell them profitably
as a result of an enormous increase in demand; otherwise, this
surplus would force prices down to a level that would be
unprofitable both for the new enterprise and for the monopoly
combines.” Britain differs from other countries where protective
tariffs facilitate the formation of cartels in that monopolist
manufacturers’ associations, cartels and trusts arise in the
majority of cases only when the number of the chief competing
enterprises has been reduced to “a couple of dozen or so.” “Here
the influence of concentration on the formation of large
industrial monopolies in a whole sphere of industry stands out
with crystal clarity.” [5]

Half a century ago, when Marx was writing Capital, free competition appeared to the overwhelming majority of
economists to be a “natural law”. Official science tried, by a
conspiracy of silence, to kill the works of Marx, who by a
theoretical and historical analysis of capitalism had proved that
free competition gives rise to the concentration of production,
which, in turn, at a certain stage of development, leads to
monopoly. Today, monopoly has become a fact. Economists are
writing mountains of books 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 countries, e.g., in the matter of protection or free
trade, only give rise to insignificant variations in the form of
monopolies or in the moment of their appearance; and that the rise
of monopolies, as the result of the concentration of production,
is a general and fundamental law of the present stage of
development of capitalism.

For Europe, the time when the new capitalism definitely superseded the old can be established with fair precision; it
was the beginning of the twentieth century. In one of the latest
compilations on the history of the “formation of monopolies”, we
read:

“Isolated examples of capitalist monopoly could be cited from
the period preceding 1860; in these could be discerned the embryo
of the forms that are so common today; but all this undoubtedly
represents the prehistory of the cartels. The real beginning of
modern monopoly goes back, at the earliest, to the sixties. The
first important period of development of monopoly commenced with
the international industrial depression of the seventies 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. It
was then that Britain completed the construction of her old-style
capitalist organisation. In Germany, this organisation had entered
into a fierce struggle with handicraft and domestic industry, and
had begun to create for itself its own forms of existence.”

“The great revolution 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 round 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 favourable business conditions. An ill-considered policy drove prices up still more rapidly and still
higher than would have been the case if there had been no
cartels, 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 have become one of the
foundations of economic life. They are winning one field of
industry after another, primarily, the raw materials industry. At
the beginning of the nineties the cartel system had already
acquired in the organisation of the coke syndicate on the model of
which the coal syndicate was later formed—a cartel technique which has hardly been improved on. 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, removed from the realm of free
competition.” [6]

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,
embryonic stage. (2) After the crisis of 1873, a lengthy period of
development 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. Capitalism has been transformed into imperialism.

Cartels come to an agreement on the terms of sale, dates 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 and at 385 in 1905, with about 12,000 firms participating. [7] But it is
generally recognised that these figures are underestimations. From
the statistics of German industry for 1907 we quoted above, it is
evident that even these 12,000 very big enterprises probably
consume 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 estimated at 185 and in 1907, 250. American statistics
divide all industrial enterprises into those belonging to
individuals, to private firms or to corporations. The latter in
1904 comprised 23.6 per cent, and in 1909, 25.9 per cent, i.e.,
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, i.e., more than three-fourths of the total wage-earners. Their output at these two dates was valued at
$10,900,000,000 and $16,300,000,000, i.e., 73.7 per cent and 79.0
per cent of the total, respectively.

At times cartels and trusts concentrate in their hands seven-
or eight-tenths of the total output of a given branch of
industry. The Rhine-Westphalian Coal Syndicate, at its foundation
in 1893, concentrated 86.7 per cent of the total coal output of
the area, and in 1910 it already concentrated 95.4 per cent. [8] The monopoly
so created assures enormous profits, and leads to the formation of
technical production units of formidable magnitude. The famous
Standard Oil Company in the United States was founded in 1900: “It
has an authorised capital of $150,000,000. It issued $100,000,000
common and $106,000,000 preferred stock. From 1900 to 1907 the
following dividends were paid on the latter: 48, 48, 45, 44, 36,
40, 40, 40 per cent in the respective years, i.e., in all,
$367,000,000. From 1882 to 1907, out of total net profits
amounting to $889,000,000, $606,000,000 were distributed in
dividends, and the rest went to reserve capital. [9] “In 1907 the various
works of the United States Steel Corporation employed no less than
210,180 people. The largest enterprise in the German mining
industry, Gelsenkirchener Bergwerksgesellschaft, in 1908 had a
staff of 46,048 workers and office employees.” [10] In 1902, the United
States Steel Corporation already produced 9,000,000 tons of
steel. [11] Its output constituted in 1901, 66.3 per cent, and in 1908, 56.1
per cent of the total output of steel in the United
States. [12] The output of ore was 43.9 per cent and 46.3 per cent,
respectively.

The report of the American Government Commission on Trusts
states: “Their superiority over competitors is due to the
magnitude of their enterprises and their excellent technical
equipment. Since its inception, the Tobacco Trust has devoted all
its efforts to the universal substitution of mechanical for manual
labour. With this end in view it has bought up all patents that
have anything to do with the manufacture of tobacco and has 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 has built its own foundries, machine
shops and repair shops. One of these establishments, that in
Brooklyn, employs on the average 300 workers; here experiments are
carried out on inventions concerning the manufacture of
cigarettes, cheroots, snuff, tinfoil for packing, boxes,
etc. Here, also, inventions are perfected.” [13] “Other trusts also
employ what are called development engineers whose business 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 inventions that raise
technical efficiency, or reduce cost of production.” [14]

In German large-scale industry, e.g., in the chemical industry,
which has developed so enormously during these last few decades,
the promotion of technical improvement is organised in the same
way. By 1908 the process of concentration of production had
already given rise to two main “groups” which, in their way, were
also in the nature of monopolies. At first these groups
constituted “dual alliances” of two pairs of big factories, each
having a capital of from twenty to twenty-one million marks on the
one hand, the former Meister Factory in Hochst and the Casella
Factory in Frankfurt am Main; and on the other hand, the aniline
and soda factory at Ludwigshafen and the former Bayer Factory at
Elberfeld. Then, in 1905, one of these groups, and in 1908 the
other group, each concluded an agreement with yet another big
factory. The result was the formation of two “triple alliances,”
each with a capital of from forty to fifty million marks. And
these “alliances” have already begun to “approach” each other, to
reach “an understanding” about prices, etc. [15]

Competition becomes transformed into monopoly. The result is
immense progress in the socialisation of production. In
particular, the process of technical invention and improvement
becomes socialised.

This is something quite different from the old 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
associations. An approximate estimate of the capacity of markets
is also made, and the associations “divide” them up amongst
themselves by agreement. Skilled labour is monopolised, the best
engineers are engaged; the means of transport are captured—railways in America, shipping companies in Europe and
America. Capitalism in its imperialist stage leads directly to the
most comprehensive socialisation of production; it, so to speak,
drags the capitalists, against their will and consciousness, into
some sort of a new social order, a transitional one from complete
free competition to complete socialisation.

Production becomes social, but appropriation remains private. The social means of production remain the private
property of a few. The general framework of formally recognised
free competition remains, and the yoke of a few monopolists on the
rest of the population becomes a hundred times heavier, more
burdensome and intolerable.

The German economist, Kestner, has written a book especially
devoted to “the struggle between the cartels and outsiders”, i.e.,
the capitalists outside the cartels. He entitled his work Compulsory Organisation , although, in order to present
capitalism in its true light, he should, of course, have written
about compulsory submission to monopolist associations. It is
instructive to glance at least at the list of the methods the
monopolist associations resort to in the present-day, the latest,
the civilised struggle for “organisation”: (1) stopping supplies
of raw materials ... (“one of the most important methods of
compelling adherence to the cartel”); (2) stopping the supply of
labour by means of “alliances” (i.e., of agreements between the
capitalists and the trade unions by which the latter permit their
members to work only in cartelised enterprises); (3) stopping
deliveries; (4) closing trade outlets; (5) agreements with the
buyers, by which the latter undertake to trade only with the
cartels; (6) systematic price cutting (to ruin “outside” firms,
i.e., those which refuse to submit to the monopolists. Millions
are spent in order to sell goods for a certain time below their
cost price; there were instances when the price of petrol was thus
reduced from 40 to 22 marks, i.e., almost by half!); (7) stopping
credits; (8) boycott.

Here we no longer have competition between small and large,
between technically developed and backward enterprises. We see
here the monopolists throttling those who 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 change is taking place from commercial activity in the old
sense of the word towards organisational-speculative activity. The greatest success no longer goes to the merchant
whose technical and commercial experience enables him best of all
to estimate the needs of the buyer, and who is able to discover
and, so to speak, ‘awaken’ a latent demand; it goes to the
speculative genius [?!] who knows how to estimate, or even only to
sense in advance, the organisational development and the
possibilities of certain connections between individual
enterprises and the banks. . . .”

Translated into ordinary human language this means that the
development of capitalism 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 bulk of the profits go to the “geniuses” of financial
manipulation. At the basis of these manipulations and swindles
lies socialised production; but the immense progress of mankind,
which achieved this socialisation, goes to benefit . . . the
speculators. We shall see later how “on these grounds” reactionary, petty-bourgeois critics of capitalist 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 respect of the most important means of production,
particularly coal, iron and potassium, but never in respect of
manufactured goods. Similarly, the increase in profits resulting
from this raising of prices has been limited only to the
industries which produce means of production. To this observation
we must add that the industries which process raw materials (and
not semi-manufactures) not only secure advantages from the cartel
formation in the shape of high profits, to the detriment of the
finished goods industry, but have also secured a dominating
position over the latter, which did not exist under free
competition.” [16]

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

I shall give one more example of the methods employed by the
cartels. Where it is possible to capture all or the chief sources
of raw materials, the rise of cartels and formation of monopolies
is particularly easy. It would be wrong, however, 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 instance, can find its raw materials everywhere. Yet
in Germany this industry too is strongly cartelised. The cement
manufacturers have formed regional syndicates: South German,
Rhine-Westphalian, etc. The prices fixed are monopoly prices: 230
to 280 marks a car-load, when the cost price is 180 marks! The
enterprises pay a dividend of from 12 to 16 per cent—and it
must not be forgotten that the “geniuses” of modern speculation
know how to pocket big profits besides what they draw in
dividends. In order to prevent competition in such a profitable
industry, the monopolists even resort to various stratagems: they
spread false rumours about the bad situation in their industry;
anonymous warnings are published in the newspapers, like the
following: “Capitalists, don’t invest your capital in the cement
industry!”; lastly, they buy up “outsiders” (those outside the
syndicates) and pay them compensation of 60,000, 80,000 and even
150,000 marks. [17] Monopoly hews a path for itself everywhere without scruple as to the means, from paying a “modest”
sum to buy off competitors, to the American device of employing
dynamite against them.

The statement that cartels 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, the monopoly
created in certain branches of industry 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 in
general, is increased. The privileged position of the most highly
cartelised, so-called heavy industry, especially coal and
iron, causes “a still greater lack of co-ordination” in other
branches of industry—as Jeidels, the author of one of the
best works on “the relationship of the German big banks to
industry,” admits. [18] “The more developed an economic system is,” writes Liefmann, an
unblushing apologist of capitalism, “the more it resorts to risky
enterprises, or enterprises in other countries, to those which
need a great deal of time to develop, or finally, to those which
are only of local importance.” [19] The increased risk is connected in
the long run with a prodigious increase of capital, which, as it
were, overflows the brim, flows abroad, etc. At the same time the
extremely rapid rate of technical progress gives rise to
increasing elements of disparity 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 organisation of the economic system”... electricity and
aviation.... “As a general rule, in such periods of radical
economic change, speculation develops on a large scale.”... [20]

Crises of every kind—economic crises most frequently, but not only these—in their turn increase very considerably
the tendency towards concentration and towards monopoly. In this
connection, the following reflections 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 monopoly,
are exceedingly instructive:

“Side by side with the gigantic plants in the basic industries,
the crisis of 1900 still found many plants organised on lines that
today would be considered obsolete, the ‘pure’ (non-combined)
plants, which were brought into being at the height of the
industrial boom. The fall in prices and the falling off in demand
put these ‘pure’ enterprises in a precarious position, which did
not affect the gigantic combined enterprises at all or only
affected them for a very short time. As a consequence of this the
crisis of 1900 resulted in a far greater concentration of industry
than the crisis 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 owing to their very complicated
technique, far-reaching organisation and magnitude of capital,
and, to a lesser degree, in the engineering industry, certain
branches of the metallurgical industry, transport, etc.” [21]

Monopoly! This is the last word in the “latest phase of
capitalist development.” But we shall only have a very insufficient, incomplete, 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 banks.

## Notes

[1] Figures
taken from Annalen des deutschen Reichs , 1911, Zahn
— Lenin

[2] Statistical Abstract of the United States, 1912 , p. 202
— Lenin

[3] Finance Capital , Russ. ed., pp. 286-87
— Lenin

[4] Hans
Gideon Heymann, Die gemischten Werke im deutschen
Grosseiseugewerbe , Stuttgart, 1904, (S. 256, 278).

— Lenin

[5] Hermann
Levy, Monopole, Kartelle und Trusts , Jena, 1909,
S. 286, 290,
— Lenin

[6] Th. Vogelstein, “ Die finanzielle Organisation der
kapitalistischen Industrie und die Monopolbildungen ” in Grundriss der Sozialökonomik , VI. Abt., Tubingen,
1914. Cf., also by the same author: Organisationsformen der
Eisenindustrie und Textilindustrie in England und Amerika ,
Bd. 1, Lpz., 1910.
— Lenin

[7] Dr. Riesser, Die deutschen Grossbanken und ihre
Konzentration im Zusammenhange mit der Entwicklung der
Gesamtwirtschaft in Deutschland , 4. Aufl., 1912, S. 149;
Robert Liefmann, Kartelle und Trusts und die Weiterbildung
der volkswirtschaftlichen Organisation, 2. Aufl., 1910,
S. 25.
— Lenin

[8] Dr. Fritz Kestner, Der Organisationszwang. Eine Untersuchung
über die Kämpfe  zwischen Kartellen und
Aussenseitern , Berlin, 1912, S. 11.
— Lenin

[9] R. Liefmann, Beteiligungs- und
Finanziertingsgesellschaften. Eine Studie über den modernen Kapitalismus und das
Effektenwesen , 1. Aufl., Jena, 1909, S. 212.
— Lenin

[10] Ibid ., S. 218.
— Lenin

[11] Dr. S. Tschierschky, Kartell und Trust , Göttingen,
1903, S. 13.
— Lenin

[12] Tr. Vogelstein, Organisationsformen , S. 275.
— Lenin

[13] Report of the Commissioner of Corporations on the Tobacco
Industry , Washington, 1909, p. 266, cited according to
Dr. Paul Tafel, Die nordamerikanischen Trusts und ihre
Wirkungen auf den Fortschritt der Technik , Stuttgart, 1913,
S. 48.
— Lenin

[14] Dr. P. Tafel, ibid ., S. 49.
— Lenin

[15] Riesser, op. cit., third edition, p. 547 et seq. The newspapers
(June 1916) report the formation of a new gigantic trust which
combines the chemical industry of Germany.
— Lenin

[16] Kestner, op.cit., S. 254
— Lenin

[17] L. Eschwege, “Zement” in Die Bank , 1909, S. 115
et. seq.
— Lenin

[18] Jeidels, Das Verhältnis der deutschen Grossbanken zur
Industrie mit besonderer Berüchsichtigung der
Eisenindustrie , Leipzig, 1905, S. 271
— Lenin

[19] Liefmann, Beteiligungs- und Finanzierungsgesellschaften ,
S, 434.
— Lenin

[20] Ibid , S. 465-66
— Lenin

[21] Jeidels, op. cit., S. 108.
— Lenin

## II. BANKS AND THEIR NEW ROLE

The principal and primary function of banks is to serve as
middlemen in the making of payments. In so doing they transform
inactive money capital into active, that is, into capital
yielding a profit; they collect all kinds of money revenues and
place them at the disposal of the capitalist class.

As banking develops and becomes concentrated in a small number
of establishments, the banks grow from modest middlemen into
powerful monopolies having at their command almost the whole of
the money capital of all the capitalists and small businessmen
and also the larger part of the means of production and sources
of raw materials in any one country and in a number of countries. This transformation of numerous modest middlemen into
a handful of monopolists is one of the fundamental processes in
the growth of capitalism into capitalist imperialism; for this
reason we must first of all examine the concentration of
banking.

In 1907-08, the combined deposits of the German joint-stock
banks, each having a capital of more than a million marks,
amounted to 7,000 million marks; in 1912-13, these deposits
already amounted to 9,800 million marks, an increase of 40 per
cent in five years; and of the 2,800 million increase, 2,750
million was divided among 57 banks, each having a capital of
more than 10 million marks. The distribution of the deposits
between big and small banks was as follows: [1]

PERCENTAGE OF TOTAL DEPOSITS
| In 9 big Berlinbanks | In the other 48banks with
a capitalof more than 10million marks | In 115 bankswith a
capitalof 1-10million marks | In small banks(with a capitalof less than amillion marks)
1907-08..... | 47 | 32.5 | 16.5 | 4
1912-13...... | 49 | 36 | 12 | 3

The small banks are being squeezed out by the big banks, of
which only nine concentrate in their hands almost half the total
deposits. But we have left out of account many important
details, for instance, the transformation of numerous small
banks into actual branches of the big banks, etc. Of this I
shall speak later on.

At the end of 1913, Schulze-Gaevernitz estimated the deposits in
the nine big Berlin banks at 5,100 million marks, out of a total
of about 10,000 million marks. Taking into account not only the
deposits, but the total bank capital, this author wrote: “At the
end of 1909, the nine big Berlin banks, together with their
affiliated banks , controlled 11,300 million marks, that is,
about 83 per cent of the total German bank capital. The Deutsche
Bank, which together with its affiliated banks controls
nearly 3,000 million marks, represents, parallel to the Prussian
State Railway Administration, the biggest and also the most
decentralised accumulation of capital in the Old
World.” [2]

I have emphasised the reference to the “affiliated” banks
because it is one of the most important distinguishing features
of modern capitalist concentration. The big enterprises, and the
banks in particular, not only completely absorb the small ones,
but also “annex” them, subordinate them, bring them into their
“own” group or “concern” (to use the technical term) by
acquiring “holdings” in their capital, by purchasing or
exchanging shares, by a system of credits, etc., etc. Professor
Liefmann has written a voluminous “work” of about 500 pages
describing modern “holding and finance companies,” [3] unfortunately
adding very dubious “theoretical” reflections to what is
frequently undigested raw material. To what results this
“holding” system leads in respect of concentration is best
illustrated in the book written on the big German banks by
Riesser, himself a banker. But before examining his data, let us
quote a concrete example of the “holding” system.

The Deutsche Bank “group” is one of the biggest, if not the
biggest, of the big banking groups. In order to trace the main
threads which connect all the banks in this group, a distinction
must be made between holdings of the first and second and third
degree, or what amounts to the same thing, between dependence
(of the lesser banks on the Deutsche Bank) in the first, second
and third degree. We then obtain the following picture: [4]

The Deutsche
Bankhas holdings: | Direct or 1stdegree de-pendence | 2nd degreedepen-dence | 3rd degreedepen-dence
Permanently | in 17 otherbanks | 9 of the 17have holdings in34 other banks | 4 of the 9 haveholdings in 7other banks
For an indefiniteperiod.... | in 5 otherbanks | — | — Occasionally.... | in 8 otherbanks | 5 of the 8 haveholdings in 14other banks | 2 of the 5 haveholdings in 2other banks
Totals...... | in 30 otherbanks | 14 of the 30 haveholdings in 48other banks | 6 of the 14have holdingsin 9
otherbanks

Included in the eight banks “occasionally” dependent on the
Deutsche Bank in the “first degree”, 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, 87 banks; and the total
capital—its own and that of others which it controls—is estimated at between two and three thousand million
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 exceptionally big and profitable financial operations
like floating state loans, has already outgrown the part of
“middleman” and has become an association of a handful of
monopolists.

The rapidity with which the concentration of banking proceeded
in Germany at the turn of the twentieth century is shown by the
following data which we quote in an abbreviated form from
Riesser:

SIX BIG BERLIN BANKS
Year | Branches in Germany | Deposit banksand exchangeoffices | Constant holdings in German
joint-stock banks | Total establishments
1895... | 16 | 14 | 1 | 42
1900... | 21 | 40 | 8 | 80
1911... | 104 | 276 | 63 | 450

We see the rapid expansion of a close network of channels which
cover the whole country, centralising all capital and all
revenues, transforming thousands and thousands of scattered
economic enterprises into a single national capitalist, and then
into a world capitalist economy. The “decentralisation” that
Schulze-Gaevernitz, as an exponent of present-day bourgeois
political economy, speaks of in the passage previously quoted,
really means the subordination to a single centre of an
increasing number of formerly relatively “independent,” or
rather, strictly local economic units. In reality it is centralisation , the enhancement of the role, importance
and power of monopolist giants.

In the older capitalist countries this “banking network” is
still more close. In Great Britain and 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 very big banks, Crédit
Lyonnais, the Comptoir National and the Société
Générale extended their operations and their network of branches in the following
manner. [5]

Number of branches and offices | Capital(000,000 francs)
Year | In the prov-inces | In Paris | Total | Own Capital | Deposits usedas capital
1870 | 47 | 17 | 64 | 200 | 427
1890 | 192 | 66 | 258 | 265 | 1,245
1909 | 1,033 | 196 | 1,229 | 887 | 4,363

In order to show the “connections” of a big modern bank, Riesser
gives the following figures of the number of letters dispatched
and received by the Disconto-Gesellschaft, one of the biggest
banks in Germany and in the world (its capital in 1914 amounted
to 300 million marks):

Year | Lettersreceived | Lettersdispatched
1852... | 6,135 | 6,292
1870... | 85,800 | 87,513
1900... | 533,102 | 626,043

The number of accounts of the big Paris bank, the Crédit
Lyonnais, increased from 28,535  in 1875  to 633,539  in
1912. [6]

These simple figures show perhaps better than lengthy disquisitions how the concentration of capital and the growth of
bank turnover are radically changing the significance of the
banks. Scattered capitalists are transformed into a single
collective capitalist. When carrying the current accounts of a
few capitalists, a bank, as it were, transacts a purely
technical and exclusively auxiliary operation. When, however,
this operation grows to enormous dimensions we find that a
handful of monopolists subordinate to their will all the
operations, both commercial and industrial, of the whole of
capitalist society; for they are enabled by means of their
banking connections, their current accounts and other financial
operations—first, to ascertain exactly the financial position of the various capitalists, then to control them, to influence them by restricting or
enlarging, facilitating or hindering credits, and finally to entirely determine their fate, determine their income,
deprive them of capital, or permit them to increase their
capital rapidly and to enormous dimensions, etc.

We have just mentioned the 300  million marks capital of the
Disconto-Gesellschaft of Berlin. This increase of the capital of
the bank was one of the incidents in the struggle for hegemony
between two of the biggest Berlin banks - the Deutsche Bank and
the Disconto. In 1870, the first was still a novice and had a
capital of only 15  million marks, while the second had a
capital of 30  million marks. In 1908, the first had a capital
of  200 million, while the second had 170  million. In 1914, the
first increased its capital to 250  million and the second, by
merging with another first-class big bank, the
Schaaffhausenscher Bankverein, increased its capital to 300
million. And, of course, this struggle for hegemony went hand in
hand with the more and more frequent conclusion of “agreements”
of an increasingly durable character between the two banks. The
following are the conclusions that this development forces upon
banking specialists who regard economic questions from a
standpoint which does not in the least exceed the bounds of the
most moderate and cautious bourgeois reformism.

Commenting on the increase of the capital of the Disconto
Gesellschaft to 300 million marks, the German review, Die
Bank , wrote: “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 latest move towards
concentration will be confined to banking. The close relations
that exist between individual banks naturally lead to the
bringing together of the industrial syndicates which these banks
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. However, we have nothing to reproach ourselves with,
except that we have allowed things to follow their own course,
slightly accelerated by the manipulation of stocks.” [7]

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 the essence of the matter,
to hide the forest behind the trees. To be “surprised” at the
results of concentration, to “reproach” the government of
capitalist Germany, or capitalist “society” (“ourselves”), 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
“prefers” the German cartels on the grounds that they “may not,
like the trusts, excessively accelerate technical and economic
progress” [8] —is not all this a sign of 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 all events, banks greatly
intensify and accelerate the process of concentration of capital
and the formation of monopolies in all capitalist countries,
notwithstanding all the differences in their banking laws.

The banking system “possesses, indeed, the form of universal
book-keeping and distribution of means of production on a social
scale, but solely the form,” wrote Marx in Capital half a century ago (Russ. trans., Vol. III, part II,
p. 144. [24] )
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
“universal book-keeping” of the whole capitalist class;
and not only of the capitalists, for the banks collect, even
though temporarily, all kinds of money revenues—of small
businessmen, office clerks, and of a tiny upper stratum of the
working class. “Universal distribution of means of production”—that, from the formal aspect, is what grows out of the
modern banks, which, numbering some three to six of the biggest in France, and six to eight in Germany, control millions and
millions. In substance , however, the distribution of means of production is not at all “universal,” but private,
i.e., it conforms to the interests of big capital, and primarily, of huge, monopoly capital, which operates under
conditions in which the masses 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.

In the matter of socialising capitalist economy the savings-banks and post-offices are beginning to compete with the
banks; they are more “decentralised,” i.e., their influence
extends to a greater number of localities, to more remote
places, to wider sections of the population. Here is the data
collected by an American commission on the comparative growth of
deposits in banks and savings-banks: [9]

DEPOSITS (000,000,000 marks)
Year | Britain | France | Germany
1880... | 8.4 | 1.6 | ? | 0.9 | 0.5 | 0.4 | 2.6
1888... | 12.4 | 2.0 | 1.5 | 2.1 | 1.1 | 0.4 | 4.5
1908... | 23.2 | 4.2 | 3.7 | 4.2 | 7.1 | 2.2 | 13.9

As they pay interest at the rate of 4 per cent and 4 1/4 per
cent on deposits, the savings-banks must seek “profitable”
investments for their capital, they must deal in bills,
mortgages, etc. The boundaries between the banks and the
savings-banks “become more and more obliterated.” The Chambers
of Commerce of Bochum and Erfurt, for example, demand that
savings-banks be “prohibited” from engaging in “purely” banking
business, such as discounting bills; they demand the limitation
of the “banking” operations of the post-office. [10] The banking
magnates seem to be afraid that state monopoly will steal upon
them from an unexpected quarter. It goes without saying,
however, that this fear is no more than an expression of the
rivalry, so to speak, between two department managers in the
same office; for, on the one hand, the millions entrusted to the
savings-banks are in the final analysis actually controlled by these very same bank capital magnates, while, on the
other hand, state monopoly in capitalist society is merely a
means of increasing and guaranteeing the income of millionaires
in some branch of industry who are on the verge of bankruptcy.

The change from the old type of capitalism, in which free
competition predominated, to the new capitalism, in which
monopoly reigns, is expressed, among other things, by a decline
in the importance of the Stock Exchange. The review, Die
Bank , writes: “The Stock Exchange has long ceased to be the
indispensable medium of circulation that it formerly was when
the banks were not yet able to place the bulk of new issues with
their clients.” [11] “’Every bank is a Stock Exchange,’ and the bigger the bank, and
the more successful the concentration of banking, the truer does
this modern aphorism ring.” [12] “While formerly, in the seventies,
the Stock Exchange, flushed with the exuberance of youth” (a
“subtle” allusion to the Stock Exchange crash of 1873, the company promotion
scandals , [25] etc.), “opened the era of the industrialisation of Germany, nowadays the banks and industry
are able to ‘manage it alone.’ The domination of our big banks
over the Stock Exchange ... is nothing else than the expression
of the completely organised German industrial state. If the
domain of the automatically functioning economic laws is thus
restricted, and if the domain of conscious regulation by the
banks is considerably enlarged, the national economic responsibility of a few guiding heads is immensely increased,”
so writes the German Professor
Schulze-Gaevernitz, [13] an apologist of German imperialism, who is regarded as an authority
by the imperialists of all countries, and who tries to gloss
over the “mere detail” that the “conscious regulation” of
economic life by the banks consists in the fleecing of the
public by a handful of “completely organised” monopolists. The
task of a bourgeois professor is not to lay bare the entire
mechanism, or to expose all the machinations of the bank
monopolists, but rather to present them in a favourable light.

In the same way, Riesser, a still more authoritative economist
and himself a banker, makes shift with meaningless phrases in
order to explain away undeniable facts: “... 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 not only a most
exact measuring-rod, but also an almost automatic regulator of
the economic movements which converge on it.” [14]

In other words, the old capitalism, the capitalism of free
competition with its indispensable regulator, the Stock
Exchange, is passing away. A new capitalism has come to take its
place, bearing obvious features of something transient, a
mixture of free competition and monopoly. The question naturally
arises: into what is this new capitalism “developing”? But the
bourgeois scholars are afraid to raise this question.

“Thirty years ago, businessmen, freely competing against one
another, performed nine-tenths of the work connected with their
business other than manual labour. At the present time,
nine-tenths of this ‘brain work’ is performed by employees . Banking is in the forefront of this
evolution.” [15] This admission by
Schulze-Gaevernitz brings us once again to the question: into
what is this new capitalism, capitalism in its imperialist
stage, developing?

Among the few banks which remain at the head of all capitalist
economy as a result of the process of concentration, there is
naturally to be observed an increasingly marked tendency towards
monopolist agreements, towards a bank trust . In
America, not nine, but two very big banks, those of the
multimillionaires Rockefeller and Morgan, control a capital of
eleven thousand million marks. [16] In Germany the absorption of the
Schaaffhausenscher Bankverein by the Disconto-Gesellschaft to
which I referred above, was commented on in the following terms
by the Frankfurter
Zeitung , [26] an organ of Stock Exchange interests:

“The concentration movement of the banks is narrowing the circle
of establishments from which it is possible to obtain credits,
and is consequently increasing the dependence of big industry
upon a small number of banking groups. In view of the close
connection between industry and the financial world, the freedom
of movement of industrial companies which need banking 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 agreements
between the individual big banking concerns, which aim at
restricting competition.” [17]

Again and again, the final word in the development of banking is
monopoly.

As regards the close connection between the banks and industry,
it is precisely in this sphere that the new role of the banks
is, perhaps, most strikingly felt. When a bank discounts a bill
for a firm, opens a current account for it, etc., these
operations, taken separately, do not in the least diminish its
independence, and the bank plays no other part than that of a
modest middleman. 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 running of a
current account for a given firm enables the bank—and this is what happens—to obtain fuller and more detailed
information about the economic position of its client, the
result is that the industrial capitalist becomes more completely
dependent on the bank.

At the same time a personal link-up, so to speak, is established
between the banks and the biggest industrial and commercial
enterprises, the merging of one with another through the
acquisition of shares, through the appointment of bank directors
to the Supervisory Boards (or Boards of Directors) of industrial
and commercial enterprises, and vice versa. The German economist, Jeidels, has compiled most detailed 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 others,
making a total of 751 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. We
find these industrial and commercial companies in the most
diverse branches of industry: insurance, transport, restaurants,
theatres, art industry, etc. On the other hand, on the
Supervisory Boards of these six banks (in 1910) were fifty-one
of the biggest industrialists, including the director of Krupp,
of the powerful “Hapag” (Hamburg-Amerika Line), etc., etc. From
1895 to 1910, each of these six banks participated in the share
and bond issues of many hundreds of industrial companies (the
number ranging from 281 to
419). [18]

The “personal link-up” between the banks and industry is
supplemented by the “personal link-up” between both of them and
the government. “Seats on Supervisory Boards,” 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 councillor.”

The building and development, so to speak, of the big capitalist
monopolies is therefore going on full steam ahead in all
“natural” and “supernatural” ways. A sort of division of labour
is being systematically developed amongst the several hundred
kings of finance who reign over modern capitalist society:

“Simultaneously with this widening of the sphere of activity of
certain big industrialists (joining the boards of banks, etc.)
and with the assignment of provincial bank managers to definite
industrial regions, there is a growth of specialisation among
the directors of the big banks. Generally speaking, this
specialisation is only conceivable when banking is conducted on
a large scale, and particularly when it has widespread connections with industry. This division of labour proceeds
along two lines: on the one hand, relations with industry as a
whole are entrusted to one director, as his special function; on
the other, each director assumes the supervision of several
separate enterprises, or of a group of enterprises in the same
branch of industry or having similar interests.... (Capitalism
has already reached the stage of organised supervision of
individual enterprises.) One specialises in German industry,
sometimes even in West German industry alone (the West is the
most industrialised part of Germany), others specialise in
relations with foreign states and foreign industry, in information on the characters of industrialists and others, in
Stock Exchange questions, etc. Besides, each bank director is
often assigned a special locality or a special branch of
industry; one works chiefly on Supervisory Boards of electric
companies, another, on chemical, brewing, or beet sugar plants,
a third, in a few isolated industrial enterprises, but at the
same time works on the Supervisory Boards of insurance companies.... In short, there can be no doubt that the growth in
the dimensions and diversity of the big banks’ operations is
accompanied by an increase in the division of labour among their
directors with the object (and result) of, so to speak, lifting
them somewhat out of pure banking and making them better
experts, better judges of the general problems of industry and
the special problems of each branch of industry, thus making
them more capable of acting within the respective bank’s
industrial sphere of influence. This system is supplemented by
the banks’ endeavours to elect to their Supervisory Boards men
who are experts in industrial affairs, such as industrialists,
former officials, especially those formerly in the railway
service or in mining,” etc. [19]

We find the same system only in a slightly different form in
French banking. For instance, one of the three biggest French
banks, the Crédit Lyonnais, has organised a financial research service ( service des études
financières ), which permanently employs over fifty engineers, statisticians, economists, lawyers, etc. This costs
from six to seven hundred thousand francs annually. The service
is in turn divided into eight departments: one specialises in
collecting information on industrial establishments, another
studies general statistics, a third, railway and steamship
companies, a fourth, securities, a fifth, financial reports,
etc. [20]

The result is, on the one hand, the ever-growing merger, or, as
N. I. Bukharin aptly calls it, coalescence, of bank and
industrial capital and, on the other hand, the growth of the
banks into institutions of a truly “universal character”. On
this question I find 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 demand sometimes expressed in the
literature that banks should specialise in one kind of business
or in one branch of industry in order to prevent the ground from
slipping from under their feet—the big banks are striving
to make their connections with industrial enterprises as varied
as possible in respect of the locality or branches of industry
and are striving to eliminate the unevenness in the distribution
of capital among localities and branches of industry resulting
from the historical development of individual enterprises.” “One
tendency is to make the connections with industry general;
another tendency is to make them durable and close. In the six
big banks both these tendencies are realised, not in full, but
to a considerable extent and to an equal degree.”

Quite often industrial and commercial circles complain of the
“terrorism” of the banks. And it is not surprising that such
complaints are heard, for the big banks “command,” as will be
seen from the following example. On November 19, 1901, one of
the big, so-called Berlin “D” banks (the names of the four
biggest banks begin with the letter D) 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 a certain newspaper of the 18th inst., we must reckon with
the possibility that the next general meeting of your syndicate,
to be held on the 30th of this month, may decide on measures
which are likely to effect changes in your enterprise which are
unacceptable to us. We deeply regret that, for these reasons, we
are obliged henceforth to withdraw the credit which had hitherto
been allowed you.... But if the said next general meeting does
not decide upon measures which are unacceptable to us, and if we
receive suitable guarantees on this matter for the future, we
shall be quite willing to open negotiations with you on the
grant of a new credit.” [21]

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 small and big capital is being resumed at a
new and immeasurably higher stage of development. It stands to
reason that the big banks’ enterprises, worth many millions, can
accelerate technical progress with means that cannot possibly be
compared with those of the past. The banks, for example, set up
special technical research societies, and, of course, only
“friendly” industrial enterprises benefit from their work. To
this category belong the Electric Railway Research Association,
the Central Bureau of Scientific and Technical Research, etc.

The directors of the big banks themselves cannot fail to see
that new conditions of national economy are being created; but
they are 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
Supervisory Boards of the big banks, cannot fail to have noticed
that power is gradually passing into the hands of men who
consider the active intervention of the big banks in the general
development of industry to be necessary and of increasing
importance. Between these new men and the old bank directors,
disagreements on this subject of a business and often of a
personal nature are growing. The issue 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
middlemen 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
industry, to the big banks and modern industrial banking. The
two parties are agreed only on one point: that there are neither
firm principles nor a concrete aim in the new activities of the
big banks.” [22]

The old capitalism has had its day. The new capitalism represents 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 the practical men has quite a different ring from
the official praises of the charms of “organised” capitalism
sung by its apologists, Schulze-Gaevernitz, Liefmann and similar
“theoreticians.”

At precisely what period were the “new activities” of the big
banks finally established? Jeidels gives us a fairly exact
answer to this important question:

“The connections between the banks and industrial enterprises,
with their new content, their new forms and their new organs,
namely, the big banks which are organised on both a centralised
and a decentralised basis, 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 decentralised organisation 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 of banking, consolidated that
process, for the first time transformed the connection with
industry into the actual monopoly of the big banks, and made
this connection much closer and more active.” [23]

Thus, 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.

## Notes

[1] Alfred
Lansburgh, “Fünf Jahre deutsches Bankwesen” in Die
Bank , 1913, No. 8.
— Lenin

[2] Schulze-Gaevernitz, “Die deutsche Kreditbank” in “ Grundriss
der Sozialökonomik ”, Tübingen, 1915, 137.
— Lenin

[3] R. Liefmann, Beteilgungs- und Finanzierungsgesellschaften.
Eine Studie über den modernen Kapitalismus und das
Effektenwesen , I., Jena, 1909, 212.
— Lenin

[4] Alfred
Lansburgh, “Das Beteilgungssystem im deutschen Bankwesen”, in Die Bank , 1910, 500.
— Lenin

[5] Eugen
Kaufmann, Das französische Bankwesen , Tübingen, 1911, 356 and 362
— Lenin

[6] Jean
Lescure, L’épargne en France , Paris, 1914,
p. 52.
— Lenin

[7] A. Lansburgh, “Die Bank mit den 300 Millionen” in Die
Bank , 1914, p. 426
— Lenin

[8] S. Tschierschky, op. cit., 128.
— Lenin

[9] Statistics of the National Monetary Commission, quoted
in Die Bank , 1910, S. 1200.
— Lenin

[10] Die Bank , 1913, S 811.
— Lenin

[11] Die Bank , 1914, S 316.
— Lenin

[12] Dr. Oscar Stillich, Geld- und Bankwesen, Berlin, 1907,
S. 169.
— Lenin

[13] Schulze-Gaevernitz, “Die deutsche Kreditbank” in Grundriss
der Sozialökonomik , Tübingen, 1915, S. 101
— Lenin

[14] Riesser, op. cit., 4th ed., S 629.
— Lenin

[15] Schulze-Gaevernitz, “Die deutsche Kreditbank” in Grundriss
der Sozialökonomik, Tübingen, 1915, S. 151
— Lenin

[16] Die Bank , 1912, S. 435.
— Lenin

[17] Quoted by Schulze-Gaevernitz, op. cit., S 155
— Lenin

[18] Jeidels, op. cit.; Riesser, op. cit.
— Lenin

[19] Jeidels, op. cit., S 156-57
— Lenin

[20] An
article by Eug. Kaufmann on French banks in Die Bank , 1909, 2, S 851 et. seq.
— Lenin

[21] Dr. Oscar Stillich, Geld- und Bankwesen , Berlin,
1907, S. 147.
— Lenin

[22] Jeidels, op. cit., S 183-84
— Lenin

[23] ibid , S. 181.
— Lenin

[24] 

[25] 

[26] 

## III. FINANCE CAPITAL AND THE FINANCIAL OLIGARCHY

“A steadily increasing proportion of capital in industry,”
writes Hilferding, “ceases to 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 sink an
increasing share of its funds in industry. Thus, to an ever
greater degree the banker is being transformed into an industrial capitalist. This bank capital, i.e., capital in money
form, which is thus actually transformed into industrial
capital, I call ‘finance capital’.” “Finance capital is
capital controlled by banks and employed by industrialists.” [1]

This definition is incomplete insofar as it is silent on one
extremely important fact—on the increase of concentration
of production and of capital to such an extent that concentration is leading, and has led, to monopoly. But
throughout the whole of his work, and particularly in the two
chapters preceding the one from which this definition is taken,
Hilferding stresses the part played by capitalist monopolies.

The concentration of production; the monopolies arising
therefrom; the merging or coalescence of the banks with industry—such is the history of the rise of finance capital and
such is the content of that concept.

We now have to describe how, under the general conditions of
commodity production and private property, the “business
operations” of capitalist monopolies inevitably lead to the
domination of a financial oligarchy. It should be noted that
German—and not only German—bourgeois scholars, like Riesser, Schulze-Gaevernitz, Liefmann and others, are all
apologists of imperialism and of finance capital. Instead of
revealing the “mechanics” of the formation of an oligarchy, its
methods, the size of its revenues “impeccable and peccable,” its
connections with parliaments etc., etc., they obscure or gloss
over them. They evade these “vexed questions” by pompous and
vague phrases, appeals to the “sense of responsibility” of bank
directors, by praising “the sense of duty” of Prussian officials, giving serious study to the petty details of
absolutely ridiculous parliamentary bills for the “supervision”
and “regulation” of monopolies, playing spillikins with
theories, like, for example, the following “scholarly” definition, arrived at by Professor Liefmann: “ Commerce is an occupation having for its object the
collection, storage and supply of goods .” [2] (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 rule of the
financial oligarchy are so glaring 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 truthful picture
and criticism—petty-bourgeois, naturally—of this oligarchy.

Paramount importance attaches to the “holding system,” already
briefly referred to above. The German economist, Heymann,
probably the first to call attention to this matter, describes
the essence of it in this way:

“The head of the concern controls the principal company
(literally: the “mother company”); the latter reigns over the
subsidiary companies (“daughter companies”) which in their turn
control still other subsidiaries (“grandchild companies”),
etc. In this way, it is possible with a comparatively small
capital to dominate immense spheres of production. Indeed, 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 million in the second subsidiaries. And
if this ‘interlocking’ is extended, it is possible with one
million to control sixteen million, thirty-two million,
etc.” [3]

As a matter of fact, experience shows that it is sufficient to
own 40 per cent of the shares of a company in order to direct
its affairs, [4] since in practice a certain number of small, scattered shareholders find it impossible to attend
general meetings, etc. The “democratisation” of the ownership of
shares, from which the bourgeois sophists and opportunist
so-called “Social-Democrats” expect (or say that they expect)
the “democratisation 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” capitalist countries, the
law allows the issue of shares of smaller denomination. In
Germany, the law does not permit the issue of shares of less
than one thousand marks denomination, and the magnates of German
finance look with an envious eye at Britain, where the issue of
one-pound shares (= 20 marks, about 10 rubles) is permitted.
Siemens, one of the biggest industrialists and “financial kings”
in Germany, told the Reichstag on June 7, 1900, that “the
one-pound share is the basis of British imperialism.” [5] This
merchant has a much deeper and more “Marxist” understanding of
imperialism than a certain disreputable writer who is held to be
one of the founders of Russian
Marxism [21] and believes that imperialism is a bad habit of a certain
nation....

But the “holding system” not only serves enormously to increase
the power of the monopolists; it also enables them to resort
with impunity to all sorts of shady and dirty tricks to cheat
the public, because formally the directors of the “mother
company” are not legally responsible for the “daughter company”,
which is 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 from 15 per
cent to nil. It appears that the Board, without consulting the
shareholders, had loaned six million marks to one of its ‘daughter companies’, the Hassia Company, which had a
nominal capital of only some hundreds of thousands of marks. This commitment, amounting to nearly treble the capital
of the ‘mother company’, was never mentioned in its balance-sheets. This omission was quite legal and could be
hushed up for two whole years because it did not violate any
point of company law. The chairman of the Supervisory Board, who
as the responsible head had signed the false balance-sheets,
was, and still is, the president of the Kassel Chamber of
Commerce. The shareholders only heard of the loan to the  Hassia
Company long afterwards, when it had been proved to be a
mistake”... (the writer should put this word in inverted
commas) ... “and when Spring Steel shares dropped nearly 100
per cent, because those in the know were getting rid of them....

“ This typical example of balance-sheet jugglery, quite
common in joint-stock companies, explains why their Boards
of Directors are willing to undertake risky transactions with a
far lighter heart than individual businessmen. Modern methods of
drawing up balance-sheets not only make it possible to conceal
doubtful undertakings from the ordinary shareholder, but also
allow the people most concerned to escape the consequence of
unsuccessful speculation by selling their shares in time when
the individual businessman 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 beneath
it another inscription giving the real meaning of the document. [Palimpsests are parchment documents from which the
original inscription has been erased and another inscription
imposed.] “The simplest and, therefore, most common procedure for making
balance-sheets indecipherable is to divide a single business
into several parts by setting up ‘daughter companies’—or
by annexing them. The advantages of this system for various
purposes—legal and illegal—are so evident that big companies which do not employ it are quite the
exception.” [6]

As an example of a huge monopolist company that extensively
employs this system, the author quotes the famous General
Electric Company (the A.E.G., to which I shall refer again later
on). In 1912, it was calculated that this company held shares in
175 to 200 other companies, dominating them, of course, and thus
controlling a total capital of about 1,500 million marks . [7]

None of the rules of control, the publication of balance-sheets,
the drawing 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 intention of defending and prettyfying
capitalism—discourse to the public, are of any avail; for
private property is sacred, and no one can be prohibited from
buying, selling, exchanging or hypothecating 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. Agalid, who for fifteen years was an official of the
Russo-Chinese Bank and who, in May 1914, published a book, not
altogether correctly entitled Big Banks and the World
Market. [8] The author divides the big Russian banks into two main groups: (a) banks that come under the
“holding system,” and (b) “independent” banks—“independence”  however, being arbitrarily taken to mean
independence of foreign banks. The author divides the first group into three subgroups: (1) German holdings, (2)
British holdings, and (3) French holdings, having in view the “holdings” and domination of the big foreign banks of the
particular country mentioned. The author divides the capital of
the banks into “productively” invested capital (industrial and
commercial undertakings), and “speculatively” invested capital
(in Stock Exchange and financial operations), assuming, from his
petty-bourgeois reformist 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.

Here are the figures he supplies:

BANK ASSETS(According to
Reports for October-November 1912000,000 rubles
| Capital Invested
Groups of Russian banks | Productively | Speculatively | Total
a 1) | Four banks: Siberian
Commercial,Russian , International, andDiscount
Bank.... | 413.7 | 859.1 | 1,272.8 a 2) | Two banks: Commercial andIndustrial,
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
b) | Eight banks: Moscow
Merchants,Volga-Kama, Junker and Co.,St. Petersburg Commercial (formerlyWawelberg),
Bank of Moscow (formerlyRyabushinsky), Moscow
Discount,Moscow Commercial, Moscow Private....... | 504.2 | 391.1 | 895.3

According to these figures, of the approximately 4,000 million
rubles making up the “working” capital of the big banks, more than three-fourths , more than 3,000 million,
belonged to banks which in reality were only “daughter companies” of foreign banks, and chiefly of Paris banks (the
famous trio: Union Parisienne, Paris et Pays-Bas and
Société Générale), and of Berlin banks (particularly the Deutsche Bank and Disconto-Gesellschaft). Two
of the biggest Russian banks, the Russian (Russian Bank for
Foreign Trade) and the International (St. Petersburg
International Commercial Bank), between 1906 and 1912 increased
their capital from 44 to 98 million rubles, and their reserves
from 15 million to 39 million “employing three-fourths German
capital.” The first bank belongs to the Berlin Deutsche Bank
“concern” and the second to the Berlin
Disconto-Gesellschaft. The worthy Agahd is deeply indignant at
the majority of the shares being held by the Berlin banks, so
that the Russian shareholders are, therefore, powerless. Naturally, the country which exports capital skims
the cream; for example, the Berlin Deutsche Bank, before placing
the shares of the Siberian Commercial Bank on the Berlin 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 six million rubles, which
Hilferding calls “promoter’s profits.”

Our author puts the total “capacity” of the principal
St. Petersburg banks at 8,235 million rubles, well over 8,000
million, and the “holdings,” or rather, the extent to which
foreign banks dominated them, he estimates as follows: French
banks, 55 per cent; British, 10 per cent; German, 35 per
cent. The author calculates that of the total of 8,235 million
rubles of functioning capital, 3,687 million rubles, or over 40
per cent, fall to the share of the Produgol and Prodamet
syndicates [22] and the syndicates in the oil, metallurgical and
cement industries. Thus, owing to the formation of capitalist
monopolies, the merging of bank and industrial capital has also
made enormous strides in Russia.

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., strengthens the domination of the financial oligarchy 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 “business” methods of the American trusts, quoted
by Hilferding. In 1887, Havemeyer founded the Sugar Trust by
amalgamating fifteen small firms, whose total capital amounted
to 6,500,000 dollars. Suitably “watered,” as the Americans say,
the capital of the trust was declared to be 50 million dollars. This “overcapitalisation” anticipated the monopoly
profits, in the same way as the United States Steel Corporation
anticipates its monopoly profits in buying up as many iron ore
fields as possible. In fact, the Sugar Trust set up monopoly
prices, which secured it such profits that it could pay 10 per
cent dividend on capital “watered” sevenfold, or about 70
per cent on the capital actually invested at the time the trust
was formed! In 1909, the capital of the Sugar Trust amounted to 90 million dollars. In twenty-two years, it had
increased its capital more than tenfold.

In France the domination of the “financial oligarchy” ( Against the Financial 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 powerful banks enjoy, not a
relative, but an “absolute monopoly” in the issue of bonds. In
reality, this is a “trust of big banks.” And monopoly ensures
monopoly profits from bond issues. Usually a borrowing country
does not get more than 90 per cent of the sum of the loan, the
remaining 10 per cent goes to the banks and other middlemen. The
profit made by the banks out of the Russo-Chinese loan of 400
million francs amounted to 8 per cent; out of the Russian (1904)
loan of 800 million francs the profit amounted to 10 per cent;
and out of the Moroccan (1904) loan of 62,500,000 francs it
amounted to 18.75 per cent. Capitalism, which began its
development with petty usury capital, is ending 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 capitalism. With a stationary population, and stagnant industry,
commerce and shipping, the “country” can grow rich by usury.  “Fifty persons, representing a capital of eight million
francs, can control 2,000 million francs deposited in four banks.” The “holding system,” with which we are already
familiar, leads to the same result. One of the biggest banks,
the Société Générale for instance, issues
64,000 bonds for its “daughter company,” the Egyptian Sugar
Refineries. The bonds are issued at 150 per cent, i.e., the bank
gains 50 centimes on the franc. The dividends of the new company
were found to be fictitious, the “public” lost from 90 to 100
million francs. “One of the directors of the Société
Générale was a member of the board of directors of the
Sugar Refineries.” 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 oligarchy; the latter dominates over the press and the
government.” [9]

The extraordinarily high rate of profit obtained from the issue
of bonds, which is one of the principal functions of finance
capital, plays a very important part in the development and
consolidation of the financial oligarchy. “There is not a single
business of this type within the country that brings in profits
even approximately equal to those obtained from the floatation
of foreign loans,” says Die
Bank . [10] “No banking operation brings in profits comparable with those
obtained from the issue of securities!” According to the German Economist , the average annual profits made on
the issue of industrial stock were as follows:

| Per Cent
1895.............. | 38.6
1896.............. | 36.1
1897.............. | 66.7
1898.............. | 67.7
1899.............. | 66.9
1900.............. | 55.2 “In the ten years from 1891 to 1900, more than a thousand
million marks were ‘earned’ by issuing German industrial
stock.” [11]

During periods of industrial boom, the profits of finance
capital are immense, but during periods of depression, small and
unsound businesses go out of existence, and the big banks
acquire “holdings” in them by buying them up for a mere song, or
participate in profitable schemes for their “reconstruction” and
“reorganisation.” 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
continue to be calculated on this smaller basis. Or, if the
income has fallen to zero, new capital is called in, which,
combined with the old and less remunerative capital, will bring
in an adequate return.” “Incidentally,” adds Hilferding, “all
these reorganisations and reconstructions have a twofold
significance for the banks: first, as profitable transactions;
and secondly, as opportunities for securing control of the
companies in difficulties.” [12]

Here is an instance. The Union Mining Company of Dortmund was
founded in 1872. Share capital was issued to the amount of
nearly 40 million marks and the market price of the shares rose
to 170 after it had paid a 12 per cent dividend for its first
year. Finance capital skimmed the cream and earned a trifle of
something like 28 million marks. The principal sponsor of this
company was that very big German Disconto-Gesellschaft which so
successfully attained a capital of 300 million 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 million marks were written off
the books of the Union in the course of thirty years. “At the
present time, the original shareholders of the company possess
only 5 per cent of the nominal value of their shares” [13] but the
banks “earned something” out of every “reconstruction.”

Speculation in land situated in the suburbs of rapidly growing
big 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 of the means of communication,
since the rise in the price of land and the possibility of
selling it profitably in lots, 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 connected with these same banks through the holding system
and the distribution of seats on the boards. As a result 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 a “bog.” Frantic speculation in
suburban building lots; collapse of building enterprises like
the Berlin firm of Boswau and Knauer, which acquired as much as
100 million marks with the help of the “sound and solid”
Deutsche Bank—the latter, of course, acting through the
holding system, i.e., secretly, behind the scenes—and got
out of it with a loss of “only” 12 million marks, then the ruin
of small proprietors and of workers who get nothing from the
fictitious building firms, fraudulent deals with the “honest”
Berlin police and administration for the purpose of gaining
control of the issue of cadastral certificates, building
licences, etc., etc. [14] “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 in any country.

At the beginning of 1914, there was talk in Berlin of the
formation of a “transport trust,” i.e., of establishing
“community of interests” between the three Berlin transport
undertakings: the city electric railway, the tramway company and
the omnibus company. “We have been aware,” wrote Die
Bank , “that this plan was contemplated ever since it became
known that the majority of the shares in the bus company had
been acquired by the other two transport companies.... We may
fully 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 the question
is complicated by the fact that behind the transport trust that
is being formed are the banks, which, if they desire, can
subordinate the means of transportation, which they have
monopolised, to the interests of their real estate business. To
be convinced of the reasonableness of such a conjecture, we need
only recall that the interests of the big banks that encouraged
the formation of the Electric Railway Company were already
involved in it at the time the company was formed. That is to
say: the interests of this transport undertaking were interlocked with the real estate interests. The point is that
the eastern line of this railway was to run across land which
this bank sold at an enormous profit for itself and for several
partners in the transactions when it became certain the line was
to be laid down.” [15]

A monopoly, once it is formed and controls thousands of
millions, inevitably penetrates into every sphere of public life, regardless of the form of government and all other
“details.” In German economic literature one usually comes
across obsequious praise of the integrity of the Prussian
bureaucracy, and allusions to the French Panama scandal [23] and to
political corruption in America. But the fact is that even
bourgeois literature devoted to German banking matters constantly has to go far beyond the field of purely banking
operations; it speaks, for instance, about “the attraction of
the banks” in reference to the increasing frequency with which
public officials take employment with the banks, as follows:
“How about the integrity of a state official who in his
innermost heart is aspiring to a soft job in the
Behrenstrasse?” [16] (The Berlin street where 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,” in which he
incidentally referred to Wilhelm II’s tour of Palestine, and to “the
immediate result of this journey, the construction of the Baghdad railway,
that fatal ‘great product of German enterprise’, which is more responsible
for the ‘encirclement’ than all our political blunders put
together”. [17] (By encirclement is meant the policy of Edward VII to isolate Germany and surround her with an
imperialist anti-German alliance.) In 1911, Eschwege, the
contributor to this same magazine to whom I have already
referred, wrote an article entitled “Plutocracy and
Bureaucracy,” in which he exposed, for example, the case of a
German official named Völker, who was a zealous member of
the Cartel Committee and who, it turned out some time later,
obtained a lucrative post in the biggest cartel, the Steel
Syndicate. Similar cases, by no means casual, forced this
bourgeois author to admit that “the economic liberty guaranteed
by the German Constitution has become in many departments 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.” [18]

As for Russia, I shall confine myself to one example. Some years
ago, all the newspapers announced that Davydov, the director of
the Credit Department of the Treasury, had resigned his post to
take employment with a certain big bank at a salary which,
according to the contract, would total over one million rubles
in the course of several years. The Credit Department is an
institution, the function of which is to “co-ordinate the
activities of all the credit institutions of the country” and
which grants subsidies to banks in St. Petersburg and Moscow
amounting to between 800 and 1,000 million rubles.” [19]

It is characteristic of capitalism in general that the ownership
of capital is separated from the application 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 directly concerned in the
management of capital. Imperialism, or the domination of finance
capital, is that highest stage of capitalism in which this
separation reaches vast proportions. The supremacy of finance
capital over all other forms of capital means the predominance
of the rentier and of the financial oligarchy; it means that a
small number of financially “powerful” states stand out among
all the rest. The extent to which this process is going on may
be judged from the statistics on emissions, i.e., the issue of
all kinds of securities.

In the Bulletin of the International Statistical
Institute ,
A. Neymarck [20] has published very comprehensive,
complete and comparative figures covering the issue of securities all over the world, which have been repeatedly quoted
in part in economic literature. The following are the totals he
gives for four decades:

TOTAL ISSUES IN FRANCS PER
DECADE(000,000,000)
1871-80.............. | 76.1
1881-90............. | 64.5
1891-1900......... | 100.4
1901-10............ | 197.8

In the 1870s 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-promotion boom
which set in in Germany after the war. On the whole, the
increase was relatively 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 of almost
100 per cent to be observed. Thus the beginning of the twentieth
century marks the turning-point, not only in the growth of
monopolies (cartels, syndicates, trusts), of which we have
already spoken, but also in the growth of finance capital.

Neymarck estimates the total amount of issued securities current
in the world in 1910 at about 815,000 million francs. Deducting
from this sum amounts which might have been duplicated, he
reduces the total to 575,000-600,000 million, which is distributed among the various countries as follows (I take
600,000 million):

FINANCIAL SECURITIES CURRENT
IN 1910(000,000,000 francs)
Great Britain | 142 | Holland | 12.5
United States | 132 | Belgium | 7.5
France | 110 | Spain | 7.5
Germany | 95 | Switzerland | 6.25
Russia | 31 | Denmark | 3.75
Austria-Hungary | 24 | Sweden,Norway,Rumania,etc. | 2.5
Italy | 14
Japan | 12

From these figures we at once see standing out in sharp relief
four of the richest capitalist countries, each of which holds
securities to amounts ranging approximately from 100,000 to
150,000 million francs. Of these four countries, two, Britain
and France, are the oldest capitalist countries, and, as we
shall see, possess the most colonies; the other two, the United
States and Germany, are capitalist countries leading in the
rapidity of development and the degree of extension of capitalist monopolies in industry. Together, these four
countries own 479,000 million francs, that is, nearly 80 per
cent of the world’s finance capital. In one way or another,
nearly the whole of the rest of the world is more or less the
debtor to and tributary of these international banker countries,
these four “pillars” of world finance capital.

It is particularly important to examine the part which the
export of capital plays in creating the international network of
dependence on and connections of finance capital.

## Notes

[1] R. Hilferding, Finance Capital , Moscow, 1912 (in
Russian), pp. 338-39.
— Lenin

[2] R. Liefmann, op. cit., S. 476.
— Lenin

[3] Hans
Gideon Heymann, Die gemischten Werke im deutschen
Grosseisengewerbe Stuttgart, 1904, S. 268-69.
— Lenin

[4] Liefmann, Beteiligungsgesellschaften , etc., S. 258 of
the first edition.
— Lenin

[5] Schulze-Gaevernitz in Grundriss der
Sozialökonomik , V, 2, S. 110.
— Lenin

[6] L. Eschwege, “Tochtergesellschaften” in Die Bank , 1914,
S.545
— Lenin

[7] Kurt
Heinig, “Der Weg des Elecktrotrusts” in Die Neue Zeit ,
1912, 30. S. 484
— Lenin

[8] E. Agahd, Grossbanken und Weltmarkt. Die wirstschaftliche
und politische Bedeutung der Grossbanken im Weltmarkt unter
Berüchsichtigung ihres Einflusses auf Russlands
Volkswirtscahft und die deutsche-russichen Beziehungen, Berlin, 1914
— Lenin

[9] Lysis, Contre l’oligarchie financière en France , 5
ed. Paris, 1908, pp. 11, 12, 26, 39, 40, 48.
— Lenin

[10] Die Bank , 1913, No. 7, S. 630.
— Lenin

[11] Stillich, op. cit., S. 143, also W. Sombart, Die deutsche
Volkswirtschaft im 19. jahrhundert, 2. Aufl., 1909, S. 526,
Anlage 8.
— Lenin

[12] Finance Capital , p. 172.
— Lenin

[13] Stillich, op. cit., S. 138 and Liefmann, op. cit., S. 51.
— Lenin

[14] In Die Bank , 1913, S. 952, L. Eschwege, Der
Sumpf ; ibid ., 1912, 1, S. 223 et seq.
— Lenin

[15] “Verkehrstrust” in Die Bank , 1914, 1, S. 89.
— Lenin

[16] “Der Zug zur Bank” in Die Bank , 1909, 1, S. 79.
— Lenin

[17] ibid ., S. 301.
— Lenin

[18] ibid ., 1911, 2, S. 825; 1913, 2, S. 962.
— Lenin

[19] E. Agahd, op. cit., S. 202.
— Lenin

[20] Bulletin de l’institut international de statistique ,
t. XIX, livr. II, La  Haye, 1912. Data concerning small states,
second column, are estimated by adding 20 per cent to the 1902
figures.
— Lenin

[21] 

[22] 

[23] 

## IV. EXPORT OF CAPITAL

Typical of the old capitalism, when free competition held
undivided sway, was the export of goods. Typical of the latest
stage of capitalism, when monopolies rule, is the export of
capital.

Capitalism is commodity production at its highest stage of
development, when labour-power itself becomes a commodity. The
growth of internal exchange, and, particularly, of international
exchange, is a characteristic feature of capitalism. The uneven
and spasmodic development of individual enterprises, 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 of the
world,” the supplier of manufactured goods to all countries,
which in exchange were to keep her provided with raw materials. But in the last quarter of the nineteenth century,
this monopoly was already undermined; for other countries,
sheltering themselves with “protective” tariffs, developed into independent capitalist
states. On the threshold of the twentieth century we see the
formation of a new type of monopoly: firstly, monopolist
associations of capitalists in all capitalistically developed
countries; secondly, the monopolist position of a few very rich
countries, in which the accumulation of capital has reached
gigantic proportions. An enormous “surplus of capital”  has
arisen in the advanced countries.

It goes without saying that if capitalism could develop
agriculture, which today is everywhere lagging terribly behind
industry, if it could raise the living standards of the masses,
who in spite of the amazing technical progress are everywhere
still half-starved and poverty-stricken, there could be no
question of a surplus of capital. This “argument” is very often
advanced by the petty-bourgeois critics of capitalism. But if
capitalism did these things it would not be capitalism; for both
uneven development and a semi-starvation level of existence of
the masses are fundamental and inevitable conditions and
constitute premises of this mode of production. As long as
capitalism remains what it is, surplus capital will be utilised
not for the purpose of raising the standard of living of the
masses in a given country, for this would mean a decline in
profits for the capitalists, but for the purpose of increasing
profits by exporting capital abroad to the backward countries. In these backward countries profits are usually high,
for capital is scarce, the price of land is relatively low,
wages are low, raw materials are cheap. The export of capital is
made possible by a number of backward countries having already
been drawn into world capitalist intercourse; main railways have
either been or are being built in those countries, elementary
conditions for industrial development have been created,
etc. The need to export capital arises from the fact that in a
few countries capitalism has become “overripe” and (owing to the
backward state of agriculture and the poverty of the masses)
capital cannot find a field for “profitable” investment.

Here are approximate figures showing the amount of capital
invested abroad by the three principal countries [1] :

CAPITAL INVESTED
ABROAD(000,000,000 francs)
Year | Great Britain | France | Germany
1862..... | 3.6 | — | — 1872..... | 15.0 | 10 (1869) | —
1882..... | 22.0 | 15(1880) | ?
1893..... | 42.0 | 20(1890) | ?
1902..... | 62.0 | 27-37 | 12.5
1914..... | 75-100.0 | 00 | 44.0

This table shows that the export of capital reached enormous
dimensions only at the beginning of the twentieth century. Before the war the capital invested abroad by the three
principal countries amounted to between 175,000 million and
200,000 million francs. At the modest rate of 5 per cent, the
income from this sum should reach from 8,000 to 10,000 million
francs a year—a sound basis for the imperialist oppression and exploitation of most of the countries and nations
of the world, for the capitalist parasitism of a handful of
wealthy states!

How is this capital invested abroad distributed among the
various countries? Where is it invested? Only an approximate answer can be given to these questions, but it is
one sufficient to throw light on certain general relations and
connections of modern imperialism.

DISTRIBUTION (APPROXIMATE) OF
FOREIGNCAPITAL IN DIFFERENT PARTS OF THE
GLOBE(circa 1910)
Europe.......... | 4 | 23 | 18 | 45
America.......... | 37 | 4 | 10 | 51
Asia, Africa, and Australia...... | 29 | 8 | 7 | 44
Total........ | 70 | 35 | 35 | 140

The principal spheres of investment of British capital are the
British colonies, which are very large also in America (for
example, Canada), not to mention Asia, etc. In this case,
enormous exports of capital are bound up most closely with vast
colonies, of the importance of which for imperialism I shall
speak later. In the case of France the situation is different. French capital exports are invested mainly in Europe,
primarily in Russia (at least ten thousand million francs). This
is mainly loan capital, government loans, and not capital
invested in industrial undertakings. Unlike British colonial
imperialism, French imperialism might be termed usury imperialism. In the case of Germany, we have a third type;
colonies are inconsiderable, and German capital invested abroad
is divided most evenly between Europe and America.

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

The capital-exporting countries are nearly always able to obtain
certain “advantages,” the character of which throws light on the
peculiarity of the epoch of finance capital and monopoly. The
following passage, for instance, appeared in the Berlin review, Die Bank , for October 1913:

“A comedy worthy of the pen of Aristophanes is lately being
played on the international capital market. Numerous foreign
countries, from Spain to the Balkan states, from Russia to
Argentina, Brazil and China, are openly or secretly coming into
the big money market with demands, sometimes very persistent,
for loans. The money markets are not very bright at the moment
and the political outlook is not promising. But not a single
money market dares to refuse a loan for fear that its neighbour
may forestall it, consent to grant a loan and so secure some
reciprocal service. In these international transactions the
creditor nearly always manages to secure some extra benefit: a
favourable clause in a commercial treaty, a coating station, a
contract to construct a harbour, a fat concession, or an order
for guns.” [2]

Finance capital has created the epoch of monopolies, and
monopolies introduce everywhere monopolist principles: the
utilisation of “connections” for profitable transactions takes
the place of competition on the open market. The most usual
thing is to stipulate that part of the loan granted shall be
spent on purchases in the creditor country, particularly on
orders for war materials, or for ships, etc. In the course of
the last two decades (1890-1910), France has very often resorted
to this method. The export of capital thus becomes a means of
encouraging the export of commodities. In this connection,
transactions between particularly big firms assume a form which,
as
Schilder [3] “mildly” puts it, “borders on corruption.” Krupp in Germany, Schneider in France, Armstrong in
Britain are instances of firms which have close connections with
powerful banks and governments and which cannot easily be
“ignored” when a loan is being arranged.

France, when granting loans to Russia, “squeezed” her in the
commercial treaty of September 16, 1905, stipulating for certain
concessions to run till 1917. She did the same in the commercial
treaty with Japan of August 19, 1911. The tariff war between
Austria and Serbia, which lasted, with a seven months’ interval,
from 1906 to 1911, was partly caused by Austria and France
competing to supply Serbia with war materials. In January 1912,
Paul Deschanel stated in the Chamber of Deputies that from 1908
to 1911 French firms had supplied war materials to Serbia to the
value of 45 million francs.

A report from the Austro-Hungarian Consul at San-Paulo (Brazil)
states: “The Brazilian railways are being built chiefly by
French, Belgian, British and German capital. In the financial
operations connected with the construction of these railways the
countries involved stipulate for orders for the necessary
railway materials.”

Thus finance capital, literally, one might say, spreads its net
over all countries of the world. An important role in this is
played by banks founded in the colonies and by their branches. German imperialists look with envy at the “old”
colonial countries which have been particularly “successful” in
providing for themselves in this respect. In 1904, Great Britain
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 “only” 13 with 70
branches. [4] The American capitalists, in their turn, are jealous of the English and German: “In South America,”
they complained in 1915, “five German banks have forty branches
and five British banks have seventy branches.... Britain and
Germany have invested in Argentina, Brazil, and Uruguay in the
last twenty-five years approximately four thousand million
dollars, and as a result together enjoy 46 per cent of the total
trade of these three countries.” [5]

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

## Notes

[1] Hobson, Imperialism , London, 1902, p. 58; Riesser,
op. cit., S. 395 und

404; P. Arndt in Weltwirtschaftliches Archiv , Bd. 7, 1916, S. 35; Neymarck in Bulletin ; Hilferding, Finance Capital , p. 492;
Lloyd George, Speech in the House of Commons, May 4,
1915. reported in the Daily Telegraph , May 5, 1915;
B. Harms, Probleme der Weltwirtschaft , Jena, 1912,
S. 235 et seq.;

Dr. Siegmund Schilder, Entwicklungstendenzen der
Weltwirtschaft , Berlin, 1912, Band 1, S. 150; George Paish,
“Great Britain’s Capital Investments, etc.”, in Journal of
the Royal Statistical Society, Vol. LXXIV, 1910-11, P. 167
et seq.; Georges Diouritch, L’Expansion des banques allemandes a l’ètranger, ses rapports avec le
développement économique de l’Allemagne , Paris, 1909, p. 84.
— Lenin

[2] Die
Bank , 1913, 2, S. 1024-25.
— Lenin

[3] Schilder, op. cit., S. 346, 350, 371.
— Lenin

[4] Riesser, op. cit., 4th ed., S. 375; Diouritch, p. 283.
— Lenin

[5] The
Annals of the American Academy of Political and Social
Science , Vol. LIX, May 1915, p. 301. In the same volume on
p. 3.31, we read that the well-known statistician Paish, in the
last issue of the financial magazine The Statist , estimated the amount of capital exported by Britain, Germany,
France, Belgium and Holland at $40,000 million, i.e., 200,000
million francs.
— Lenin

## V. DIVISION OF THE WORLD AMONG CAPITALIST ASSOCIATIONS

Monopolist capitalist associations, cartels, syndicates and
trusts first divided the home market among themselves and
obtained more or less complete possession of the industry of
their own country. But under capitalism the home market is
inevitably bound up with the foreign market. Capitalism long ago
created a world market. As the export of capital increased, and
as the foreign and colonial connections and “spheres of
influence” of the big monopolist associations expanded in all
ways, things “naturally” gravitated towards an international
agreement among these associations, and towards the formation of
international cartels.

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

The electrical industry is highly typical of the latest
technical achievements and is most typical of capitalism at the
end of the nineteenth and the beginning of the twentieth
centuries. This industry has developed most in the two leaders
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 that time had become fairly well merged with
industry, enormously accelerated and intensified the ruin of
relatively small firms and their absorption by the large
ones. “The banks,” writes Jeidels, “refused a helping hand to
the very firms in greatest need of capital, and brought on first
a frenzied boom and then the hopeless failure of the companies
which had not been connected with them closely enough.” [1]

As a result, after 1900, concentration in Germany progressed
with giant strides. Up to 1900 there had been seven or eight
“groups” in the electrical industry. Each consisted of several
companies (altogether there were 28) and each was backed by from
2 to 11 banks. Between 1908 and 1912 all these groups were
merged into two, or one. The following diagram shows the
process:

GROUPS IN THE ELECTRICAL INDUSTRY
Prior to 1900: Felten &
Lahmeyer; Guillaume|| | Union A.E.G.|| | Siemens Schuckert&
Halske & Co.| | Berg-mann| | Kum-mer|
||Felten &
Lahmeyer|_-_-_-_-_-_-_-_-_-_-_-_ | |A.E.G.(G.E.C.)_-_-_-_-_-_-_-| | ||Siemens &
Halske-Schuckert|_-_-_-_-_-_-_-_ | ||Berg-man_-_-_-_-_-| | ||Failed in1900
By 1912: | A.E.G. (G.E.C.) Siemens &
Halske Schuckert
| (in close
"co-operation" since 1908)

The famous A.E.G. (General Electric Company), which grew up in
this way, controls 175 to 200 companies (through the “holding”
system), and a total capital of approximately 1,500 million marks. Of direct agencies abroad alone, it has
thirty-four, 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 million marks. Of this sum, 62 million were invested in
Russia. Needless to say, the A.E.G. is a huge “combine”—its
manufacturing companies alone number no less than sixteen—producing
the most diverse articles, from cables and insulators to motor-cars and flying machines.

But concentration in Europe was also a component part of the
process of concentration in America, which developed in the
following way:

| General Electric Company
United States: | Thomas-Houston Co.establishes a firm inEurope | Edison Co. establishes in Eu-rope the
French Edison Co.which transfers its patents tothe
German firm
Germany: | Union Electric Co. | General Electric Co. (A.E.G.)

Thus, two electrical “great powers” were formed: “there
are no other electrical companies in the world completely independent of them,” wrote Heinig in his
article “The Path of the Electric Trust.” An idea, although far
from complete, of the turnover and the size of the enterprises
of the two “trusts” can be obtained from the following figures:

America: General Electric
Co:(G.E.C) |  |  |
19071910 | 252298 | 28,00032,000 | 35.445.6
Germany: General Electric
Co:(A.E.G.) |  |  |
19071911 | 216362 | 30,70060,800 | 14.521.7

And then, in 1907, the German and American trusts concluded an
agreement by which they divided the world between them. Competition 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 regarding the penetration of “daughter companies” into
new branches of industry, into “new” countries formally not yet
allotted. The two trusts were to exchange inventions and
experiments. [2]

The difficulty of competing against this trust, actually a
single world-wide trust controlling a capital of several
thousand million, with “branches”, agencies, representatives,
connections, etc., in every corner of the world, is self-evident. But the division of the world between two powerful
trusts does not preclude redivision if the relation of forces
changes as a result of uneven development, war, bankruptcy, etc.

An instructive example of an attempt at such a redivision, of
the struggle for redivision, is provided by the oil industry.

“The world oil market,” wrote Jeidels in 1905, “is even today
still divided between two great financial groups—Rockefeller’s American Standard Oil Co., and Rothschild and
Nobel, the controlling interests of the Russian oilfields in
Baku. The two groups are closely connected. But for several
years five enemies have been threatening their monopoly”: [3] (1) the
exhaustion of the American oilfields; (2) the competition of the
firm of Mantashev of Baku; (3) the Austrian oilfields; (4) the
Rumanian oilfields; (5) the overseas oilfields, particularly in
the Dutch colonies (the extremely rich firms, Samuel and Shell,
also connected with British capital). The three last groups are
connected with the big German banks, headed by the huge Deutsche
Bank. These banks independently and systematically developed the
oil industry in Rumania, for example, in order to have a
foothold of their “own.” In 1907, the foreign capital invested
in the Rumanian oil industry was estimated at 185 million
francs, of which 74 million was German capital. [4]

A struggle began for the “division of the world”, as, in fact,
it is called in economic literature. On the one hand, the
Rockefeller “oil trust” wanted to lay its hands on everything ; it formed a “daughter company” right
in Holland, and bought up oilfields in the Dutch Indies, in
order to strike at its principal enemy, the Anglo-Dutch Shell
trust. On the other hand, the Deutsche Bank and the other German
banks aimed at “retaining” Rumania “for themselves” and at
uniting her with Russia against Rockefeller. The latter
possessed far more capital and an excellent system of oil
transportation and distribution. The struggle had to end, and
did end in 1907, with the utter defeat of the Deutsche Bank,
which was confronted with the alternative: either to liquidate
its “oil interests” and lose millions, or submit. It chose to
submit, and concluded a very disadvantageous agreement with the
“oil trust.”  The Deutsche Bank agreed “not to attempt anything
which might injure American interests.” Provision was made,
however, for the annulment 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, through his
private secretary, Stauss, launched a campaign for a state oil monopoly. The gigantic machine of the huge German bank
and all its wide “connections” were set in motion. The press
bubbled over with “patriotic” indignation against the “yoke” of
the American trust, and, on March 15, 1911, the Reichstag, by an
almost unanimous 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 Bank, which hoped to cheat its American counterpart and
improve its business by a state monopoly, appeared to have been
won. The German oil magnates already saw visions of enormous
profits, which would not be less than those of the Russian sugar
refiners.... But, firstly, the big German 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 fright at the prospect of a
struggle with Rockefeller, for it was very 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 thousand million marks were voted for Germany’s war
preparations. The oil monopoly project was postponed. The
Rockefeller “oil trust” came out of the struggle, for the time
being, victorious.

The Berlin review, Die Bank , wrote in this connection that
Germany could fight the oil trust only 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, when the
next great crash in the electrical industry is imminent, and
when the gigantic, expensive power stations now being put up at
great cost everywhere by private electrical concerns, which are
already obtaining certain franchises from towns, from states,
etc., can no longer work at a profit. Water-power will then have to be
used. But it will be impossible to convert it into cheap
electricity at state expense; it will also have to be handed
over to a ‘private monopoly controlled by the state’, because
private industry has already concluded a number of contracts and
has stipulated for heavy compensation.... So it was with the
nitrate monopoly, so it is with the oil monopoly, so it will be
with the electric power monopoly. It is time our state socialists, who allow themselves to be blinded by a beautiful
principle, understood, at last, that in Germany the monopolies
have never pursued the aim, nor have they had the result, of
benefiting the consumer, or even of handing over to the state
part of the promoter’s profits; they have served only to
facilitate, at the expense of the state, the recovery of private
industries which were on the verge of bankruptcy. [5]

Such are the valuable admissions which the German bourgeois
economists are forced to make. We see plainly here how private
and state monopolies are interwoven in the epoch of finance
capital; how both are but separate links in the imperialist
struggle between the big monopolists for the division of the
world.

In merchant shipping, the tremendous development of concentration has ended also in the division of the world. In
Germany two powerful companies have come to the fore: the
Hamburg-Amerika and the Norddeutscher Lloyd, each having a
capital of 200 million marks (in stocks and bonds) and possessing shipping tonnage to the value of 185 to 189 million
marks. On the other hand, in America, on January 1, 1903, the
International Mercantile Marine Co., known as the Morgan trust,
was formed; it united nine American and British steamship
companies, and possessed a capital of 120 million dollars (480
million marks). As early as 1903, the German giants and this
American-British trust concluded an agreement to divide the
world with a consequent division of profits. The German
companies undertook not to compete in the Anglo-American
traffic. Which ports were to be “allotted” to each was precisely
stipulated; a joint committee of control was set up, etc. This
agreement was concluded for twenty years, with the prudent
provision for its annulment in the event of war. [6]

Extremely instructive also is the story of the formation of the
International Rail Cartel. The first attempt of the British,
Belgian and German rail manufacturers to form such a cartel was
made as early as 1884, during a severe industrial depression. The manufacturers agreed not to compete with one
another in the home markets of the countries involved, and they
divided the foreign 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 which was met by a percentage levy on all
sales. But in 1886 the cartel collapsed when two British firms
retired from it. It is characteristic that agreement could not
be achieved during subsequent boom periods.

At the beginning of 1904, the German steel syndicate was
formed. In November 1904, the International Rail Cartel was
revived, with the following quotas: Britain, 53.5 per cent;
Germany, 28.83 per cent; Belgium, 17.67 per cent. France came in
later and received 4.8 per cent, 5.8 per cent and 6.4 per cent
in the first, second and third year respectively, over and above
the 100 per cent limit, i.e., out of a total of 104.8 per cent,
etc. In 1905, the United States Steel Corporation entered the
cartel; then Austria and Spain. “At the present time,” wrote
Vogelstein in 1910, “the division of the world is complete, and the big
consumers, primarily the state railways—since the world
has been parcelled out without consideration for their interests—can now dwell like the poet in the heavens of
Jupiter.” [7]

Let me also mention the International Zinc Syndicate which was
established in 1909 and which precisely apportioned output among
five groups of factories: German, Belgian, French, Spanish and
British; and also the International Dynamite Trust, which,
Liefmann says, is “quite a modern, close alliance of all the
German explosives manufacturers who, with the French and
American dynamite manufacturers, organised in a similar manner,
have divided the whole world among themselves, so to speak.” [8]

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 (now joined by Karl Kautsky, who has
completely abandoned the Marxist position he had held, for
example, in 1909) have expressed the opinion that international
cartels, being one of the most striking expressions of the
internationalisation of capital, give the hope of peace among
nations under capitalism. Theoretically, this opinion is
absolutely absurd, while in practice it is sophistry and a
dishonest defence of the worst opportunism. International
cartels show to what point capitalist monopolies have developed,
and the object of the struggle between the various capitalist associations. This last
circumstance is the most important; it alone shows us the
historico-economic meaning of what is taking place; for the forms of the struggle may and do constantly change in
accordance with varying, relatively specific and temporary
causes, but the substance of the struggle, its class content , positively cannot change while
classes exist. Naturally, it is in the interests of, for
example, the German bourgeoisie, to whose side Kautsky has in
effect gone over in his theoretical arguments (I shall deal with
this later), to obscure the substance of the present economic struggle (the division of the world) and to emphasise
now this and now another form 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
capitalists divide the world, not out of any particular malice,
but because the degree of concentration which has been reached
forces them to adopt this method in order to obtain profits. And
they divide it “in proportion to capital”, “in proportion to
strength,” because there cannot be any other method of division
under commodity production and capitalism. But strength varies
with the degree of economic and political development. In order
to understand what is taking place, it is necessary to know what
questions are settled by the changes in strength. The question
as to whether these changes are “purely” economic or non-economic (e.g., military) is a secondary one, which cannot
in the least affect fundamental views on the latest epoch of
capitalism. To substitute the question of the form of the
struggle and agreements (today peaceful, tomorrow warlike, the
next day warlike again) for the question of the substance of the
struggle and agreements between capitalist associations is to
sink to the role of a sophist.

The epoch of the latest stage of capitalism shows us that
certain relations between capitalist associations grow up, based on the economic division of the world; while
parallel to and in connection with it, certain relations grow up
between political alliances, between states, on the basis of the
territorial division of the world, of the struggle for colonies,
of the “struggle for spheres of influence.”

## Notes

[1] Jeidels, op. cit., S. 232.
— Lenin

[2] Riesser, op. cit.; Diouritch, op. cit., p. 239; Kurt Heinig,
op. cit.
— Lenin

[3] Jeidels, op. cit., S. 192-93.
— Lenin

[4] Diouritch, op. cit., pp. 245-46.
— Lenin

[5] Die
Bank , 1912, 1, S. 1036; 1912, 2, S. 629; 1913, 1, S. 388.
— Lenin

[6] Riesser, op. cit., S. 125.
— Lenin

[7] Vogelstein, Organisationsformen , S. 100.
— Lenin

[8] Liefmann, Kartelle und Trusts , 2. A., S. 161.
— Lenin

## VI. DIVISION OF THE WORLD AMONG THE GREAT POWERS

In his book, on “the territorial development of the European
colonies,”
A. Supan, [1] the geographer, gives the following
brief summary of this development at the end of the nineteenth
century:

PERCENTAGE OF TERRITORY
BELONGING TO THE EUROPEANCOLONIAL POWERS(Including the United States)
Africa.......... | 10.8 | 90.4 | +79.6
Polynesia.... | 56.8 | 98.9 | +42.1
Asia............ | 51.5 | 56.6 | +5.1
Australia..... | 100.0 | 100.0 | — America...... | 27.5 | 27.2 | -0.3 “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, it is necessary to
amplify Supan’s conclusion and say that the characteristic
feature of the period under review is the final partitioning of
the globe—final, not in the sense that repartition is impossible; on the contrary, repartitions 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 the future only redivision is possible, i.e., territories can only
pass from one “owner” to another, instead of passing as
ownerless territory to an owner

Hence, we are living in a peculiar epoch of world colonial
policy, which is most closely connected with the “latest stage
in the development of capitalism,” with finance capital. For
this reason, it is essential first of all to deal in greater
detail with the facts, in order to ascertain as exactly as
possible what distinguishes this epoch 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, a sharpening of the struggle for colonies, observed
precisely in the epoch 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
colonisation, [2] made an attempt to sum up the data on the colonial possessions of Great Britain, France and Germany
during different periods of the nineteenth century. The
following is a brief summary of the results he has obtained:

COLONIAL POSSESSIONS
Year | Great Britain | France | Germany
Area(000,000sq. m.) | Pop. (000,000) | Area(000,000sq. m.) | Pop. (000,000) | Area(000,000sq. m.) | Pop. (000,000)
1815-30 | ? | 126.4 | 0.02 | 0.5 | — | — 1860 | 2.5 | 145.1 | 0.2 | 3.4 | — | —
1880 | 7.7 | 267.9 | 0.7 | 7.5 | — | — 1899 | 9.3 | 309.0 | 3.7 | 56.4 | 1.0 | 14.7

For Great Britain, the period of the enormous expansion of
colonial conquests was that between 1860 and 1880, and it was
also very considerable in the last twenty years of the nineteenth century. For France and Germany this period falls
precisely in these twenty years. We saw above that the development of premonopoly capitalism, of capitalism in which
free competition was predominant, reached its limit in the 1860s
and 1870s. We now see that it is precisely after that period that the tremendous “boom” in colonial conquests
begins, and that the struggle for the territorial division of
the world becomes extraordinarily sharp. It is beyond doubt,
therefore, that capitalism’s transition to the stage of monopoly
capitalism, to finance capital, is connected with the intensification of the struggle for the partitioning of the
world.

Hobson, in his work on imperialism, marks the years 1884-1900 as
the epoch of intensified “expansion” of the chief European
states. According to his estimate, Great Britain during these
years acquired 3,700,000 square miles of territory with
57,000,000 inhabitants; France, 3,600,000 square miles with
36,500,000; Germany, 1,000,000 square miles with 14,700,000;
Belgium, 900,000 square miles with 30,000,000; Portugal, 800,000
square miles with 9,000,000 inhabitants. The scramble for
colonies by all the capitalist states at the end of the
nineteenth century and particularly since the 1880s is a
commonly known fact in the history of diplomacy and of foreign
policy.

In the most flourishing period of free competition in Great
Britain, 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,
their complete separation from Britain, was inevitable and
desirable. M. Beer, in an article, “Modern British
Imperialism,” [3] published in 1898, shows that in
1852, Disraeli, a statesman who was generally inclined towards
imperialism, declared: “The colonies are millstones round our
necks.” But at the end of the nineteenth century the British
heroes of the hour were Cecil Rhodes and Joseph Chamberlain, who
openly advocated imperialism and applied the imperialist policy
in the most cynical manner!

It is not without interest to observe that even then these
leading British bourgeois politicians saw the connection between
what might be called the purely economic and the socio-political
roots of modern imperialism. Chamberlain advocated imperialism
as a “true, wise and economical policy,” and pointed particularly to the German, American and Belgian competition
which Great Britain was encountering in the world market. Salvation lies in monopoly,  said the capitalists as
they formed cartels, syndicates and trusts. Salvation lies in
monopoly, echoed the political leaders of the bourgeoisie,
hastening to appropriate the parts of the world not yet shared
out. And Cecil Rhodes, we are informed by his intimate friend,
the journalist Stead, expressed his imperialist views to him in
1895 in the following terms: “I was in the East End of London (a
working-class quarter) yesterday and attended a meeting of the
unemployed. I listened to the wild speeches, which were just a
cry for ‘bread! bread!’ and on my way home I pondered over the
scene and I became more than ever convinced of the importance of
imperialism.... My cherished idea is a solution for the social
problem, i.e., in order to save the 40,000,000 inhabitants of
the United Kingdom from a bloody civil war, we colonial
statesmen must acquire new lands to settle the surplus population, to provide new markets for the goods produced in the
factories and mines. The Empire, as I have always said, is a
bread and butter question. If you want to avoid civil war, you
must become imperialists. [4]

That was said in 1895 by Cecil Rhodes, millionaire, a king of
finance, the man who was mainly responsible for the Anglo-Boer
War. True, his defence of imperialism is crude and cynical, but
in substance it does not differ from the “theory” advocated by
Messrs. Maslov, Südekum, Potresov, David, the founder of
Russian Marxism and others. Cecil Rhodes was a somewhat more
honest social-chauvinist....

To present as precise a picture as possible of the territorial
division of the world and of the changes which have occurred
during the last decades in this respect, I shall utilise the
data furnished by Supan in the work already quoted on the
colonial possessions of all the powers of the world. Supan takes
the years 1876 and 1900; I shall take the year 1876—a year very aptly selected, for it is precisely by that time that
the pre-monopolist stage of development of West-European
capitalism can be said to have been, in the main, completed—and the year 1914, and instead of Supan’s figures I shall
quote the more recent statistics of Hübner’s Geographical and Statistical Tables . Supan gives
figures only for colonies; I think it useful, in order to
present a complete picture of the division of the world, to add
brief data on non-colonial and semi-colonial countries, in which
category I place Persia, China and Turkey: the first of these
countries is already almost completely a colony, the second and
third are becoming such.

We thus get the following result:

COLONIAL POSSESSIONS OF THE
GREAT POWERS(000,000 square kilometers and 000,000 inhabitants)
1876 | 1914 | 1914 | 1914
Area | Pop. | Area | Pop. | Area | Pop. | Area | Pop.
Great Britain | 22.5 | 251.9 | 33.5 | 393.5 | 0.3 | 46.5 | 33.8 | 444.0
Russia | 17.0 | 15.9 | 17.4 | 33.2 | 5.4 | 136.2 | 22.8 | 169.4
France | 0.9 | 6.0 | 10.6 | 55.5 | 0.5 | 39.6 | 11.1 | 95.1
Germany | — | — | 2.9 | 12.3 | 0.5 | 64.9 | 3.4 | 77.2
United States | — | — | 0.3 | 9.7 | 9.4 | 97.0 | 9.7 | 106.7
Japan | — | — | 0.3 | 19.2 | 0.4 | 53.0 | 0.7 | 72.2
Total for 6 Great Powers | 40.4 | 273.8 | 65.0 | 523.4 | 16.5 | 437.2 | 81.5 | 960.6

Colonies of other powers(Belgium, Holland,  etc.) | 9.9 | 45.3
Semi-colonial countries(Persia, China, Turkey) | 14.5 | 361.2
Other countries | 28.0 | 289.9
Total for the world | 133.9 | 1,657.0

We clearly see from these figures how “complete” was the
partition of the world at the turn of the twentieth century. After 1876 colonial possessions increased to enormous
dimensions, by more than fifty per cent, from 40,000,000 to
65,000,000 square kilometres for the six biggest powers; the
increase amounts to 25,000,000 square kilometres, fifty per cent
more than the area of the metropolitan countries (16,500,000
square kilometres). In 1876 three powers had no colonies, and a
fourth, France, had scarcely any. By 1914 these four powers had
acquired colonies with an area of 14,100,000 square kilometres,
i.e., about half as much again as the area of Europe, with a
population of nearly 100,000,000. The unevenness in the rate of
expansion of colonial possessions is very great. If, for
instance, we compare France, Germany and Japan, which do not
differ very much in area and population, we see that the first
has acquired almost three times as much colonial territory as
the other two combined. In regard to finance capital, France, at
the beginning of the period we are considering, was also,
perhaps, several times richer than Germany and Japan put
together. In addition to, and on the basis of, purely economic
conditions, geographical and other conditions also affect the
dimensions of colonial possessions. However strong the process of levelling
the world, of levelling the economic and living conditions in
different countries, may have been in the past decades as a
result of the pressure of large-scale industry, exchange and
finance capital, considerable differences still remain; and
among the six countries mentioned we see, firstly, young
capitalist countries (America, Germany, Japan) whose progress
has been extraordinarily rapid; secondly, countries with an old
capitalist development (France and Great Britain), whose
progress lately has been much slower than that of the previously
mentioned countries, and thirdly, a country most backward
economically (Russia), where modern capitalist imperialism is
enmeshed, so to speak, in a particularly close network of
pre-capitalist relations.

Alongside the colonial possessions of the Great Powers, we have
placed the small colonies of the small states, which are, so to
speak, the next objects of a possible and probable “redivision”
of colonies. These small states mostly retain their colonies
only because the big powers are torn by conflicting interests,
friction, etc., which prevent them from coming to an agreement
on the division of the spoils. As to the “semi-colonial” states,
they provide an example of the transitional forms which are to
be found in all spheres of nature and society. Finance capital
is such a great, such a decisive, you might say, force in all
economic and in all international relations, that it is capable
of subjecting, and actually does subject, to itself even states
enjoying the fullest political independence; we shall shortly
see examples of this. Of course, finance capital finds most
“convenient,” and derives the greatest profit from, a form of subjection which involves the loss of the political
independence of the subjected countries and peoples. In this
respect, the semi-colonial countries provide a typical example
of the “middle stage.” It is natural that the struggle for these
semidependent countries should have become particularly bitter
in the epoch of finance capital, when the rest of the world has
already been divided up.

Colonial policy and imperialism existed before the latest stage
of capitalism, and even before capitalism. Rome, founded on
slavery, pursued a colonial policy and practised imperialism. But “general” disquisitions on imperialism, which
ignore, or put into the background, the fundamental difference
between socio-economic formations, inevitably turn into the most
vapid banality or bragging, like the comparison: “Greater Rome
and Greater
Britain.” [5] Even the capitalist colonial policy of previous stages of
capitalism is essentially different from the colonial policy of
finance capital.

The principal feature of the latest stage of capitalism is the
domination of monopolist associations of big employers. These
monopolies are most firmly established when all the sources of raw materials are captured by one group, and we have
seen with what zeal the international capitalist associations
exert every effort to deprive their rivals of all opportunity of
competing, to buy up, for example, ironfields, oilfields,
etc. Colonial possession alone gives the monopolies complete
guarantee against all contingencies in the struggle against
competitors, including the case of the adversary wanting to be
protected by a law establishing a state monopoly. The more
capitalism is developed, the more strongly the shortage of raw
materials is felt, the more intense the competition and the hunt
for sources of raw materials throughout the whole world, the
more desperate the struggle for the acquisition of colonies.

“It may be asserted,” writes Schilder, “although it may sound
paradoxical to some, that in the more or less foreseeable future
the growth 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.” For example, there is a growing shortage
of timber—the price of which is steadily rising—of leather, and of raw materials for the textile
industry. “Associations of manufacturers are making efforts to
create an equilibrium between agriculture and industry in the
whole of world economy; as an example of this we might mention
the International Federation of Cotton Spinners’ Associations in
several of the most important industrial countries, founded in
1904, and the European Federation of Flax Spinners’
Associations, founded on the same model in
1910.” [6]

Of course, the bourgeois reformists, and among them particularly
the present-day adherents of Kautsky, try to belittle the
importance of facts of this kind by arguing that raw materials
“could be” obtained in the open market without a “costly and
dangerous” colonial policy; and that the supply of raw materials
“could be” increased enormously by “simply” improving conditions
in agriculture in general. But such arguments become an apology
for imperialism, an attempt to paint it in bright colours,
because they ignore the principal feature of the latest stage of
capitalism: monopolies. The free market is becoming more and
more a thing of the past; monopolist syndicates and trusts are
restricting it with every passing day, and “simply” improving
conditions in agriculture means improving the conditions of the
masses, raising wages and reducing profits. Where, except in the
imagination of sentimental reformists, are there any trusts
capable of concerning themselves with the condition of the
masses instead of the conquest of colonies?

Finance capital is interested not only in the already discovered
sources of raw materials but also in potential sources, because
present-day technical development is extremely rapid, and land
which is useless today may be improved tomorrow if new methods
are devised (to this end a big bank can equip a special
expedition of engineers, agricultural experts, etc.), and if
large amounts of capital are invested. This also applies to
prospecting for minerals, to new methods of processing up and
utilising raw materials, etc., etc. Hence, the inevitable
striving of finance capital to enlarge its spheres of influence
and even its actual territory. In the same way that the trusts
capitalise their property at two or three times its value,
taking into account its “potential” (and not actual) profits and
the further results of monopoly, so finance capital in general
strives to seize the largest possible amount of land of all
kinds in all places, and by every means, taking into account
potential sources of raw materials and fearing to be left behind
in the fierce struggle for the last remnants of independent
territory, or for the repartition of those territories that have
been already divided.

The British capitalists are exerting every effort to develop
cotton 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 under cotton); the Russians are doing the
same in their colony, Turkestan, because in this way they will be in a better position to defeat their foreign
competitors, to monopolise 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 concentrated in the hands of one set of
owners.

The interests pursued in exporting capital also give an impetus
to the conquest of colonies, for in the colonial market it is
easier to employ monopoly methods (and sometimes they are the
only methods that can be employed) to eliminate competition, to
ensure supplies, to secure the necessary “connections,” etc.

The non-economic superstructure which grows up on the basis of
finance capital, its politics and its ideology, stimulates the
striving 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 quoted
above, [7] writes that social causes should be added to the
economic causes of modern colonial policy: “Owing to the growing
complexities of life and the difficulties which weigh not only
on the masses of the workers, but also on the middle classes,
‘impatience, irritation and hatred are accumulating in all the
countries of the old civilisation and are becoming a menace to
public order; the energy which is being hurled out of the
definite class channel must be given employment abroad in order
to avert an explosion at home’.” [8]

Since we are speaking of colonial policy in the epoch of
capitalist imperialism, it must be observed that finance capital
and its foreign policy, which is the struggle of the great
powers for the economic and political division of the world,
give rise to a number of transitional forms of state dependence. Not only are the two main groups of countries, those
owning colonies, and the colonies themselves, but also the
diverse forms of dependent countries which, politically, are
formally independent, but in fact, are enmeshed in the net of
financial and diplomatic dependence, typical of this epoch. We
have already referred to one form of dependence—the semi-colony. An example of another is provided by Argentina.

“South America, and especially Argentina,” writes
Schulze-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.” [9] Basing himself on
the reports of the Austro-Hungarian Consul at Buenos Aires for
1909, Schilder estimated the amount of British capital invested
in Argentina at 8,750 million francs. It is not difficult to
imagine what strong connections British finance capital (and its
faithful “friend”, diplomacy) thereby acquires with the
Argentine bourgeoisie, with the circles that control the whole
of that country’s economic and political life.

A somewhat different form of financial and diplomatic dependence, accompanied by political independence, is presented
by Portugal. Portugal is an independent sovereign state, but
actually, for more than two hundred years, since the war of the
Spanish Succession (1701-14), 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 Great Britain
has received commercial privileges, preferential conditions for
importing goods and especially capital into Portugal and the
Portuguese colonies, the right to use the ports and islands of
Portugal, her telegraph cables, etc., etc. [10] Relations of this
kind have always existed between big and little states, but in
the epoch of capitalist imperialism they become a general
system, they form part of the sum total of “divide the world”
relations and become links in the chain of operations of world
finance capital.

In order to finish with the question of the division of the
world, I must make the following additional observation. This
question was raised quite openly and definitely not only in
American literature after the Spanish-American War, and in
English literature after the Anglo-Boer War, at the very end of
the nineteenth century and the beginning of the twentieth; not
only has German literature, which has “most jealously” watched
“British imperialism,” systematically given its appraisal of
this fact. This question has also been raised in French
bourgeois literature as definitely and broadly as is thinkable
from the bourgeois point of view. Let me quote Driault, the
historian, who, in his book, Political and Social Problems
at the End of the Nineteenth Century , in the chapter “The
Great Powers and the Division of the World,” wrote the following: “During the past few years, all the free territory of
the globe, with the exception of China, has been occupied by the
powers of Europe and North America. This has already brought
about several conflicts and shifts of spheres of influence, and
these foreshadow more terrible upheavals 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 receiving
their share and never participating in the tremendous exploitation of the globe which will be one of the most
essential features of the next century (i.e., the twentieth). That is why all Europe and America have lately been
afflicted with the fever of colonial expansion, of
‘imperialism’, that most noteworthy feature of the end of the
nineteenth century.” And the author added: “In  this partition
of the world, in this furious hunt for the treasures and the big
markets of the globe, the relative strength 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, the arbiters of her
destiny, are not equally preponderant in the whole world. And, as colonial might, the hope of controlling as yet
unassessed wealth, will evidently react upon the relative
strength of the European powers, the colonial question—“imperialism,”
if you will—which has already modified the political conditions of Europe itself, will modify them more and
more.” [11]

## Notes

[1] A. Supan, Die territoriale Entwicklung der europäischen
Kolonien , 1906, S. 254.
— Lenin

[2] Henry C. Morris, The History of Colonisation , New York, 1900,
Vol. II, p. 88; Vol. 1, p. 419; Vol. 11, p. 304.
— Lenin

[3] Die Neue Zeit , XVI, 1, 1898, S. 302.
— Lenin

[4] Ibid ., S. 304.
— Lenin

[5] C. P. Lucas, Greater Rome and Greater Britain , Oxford,
1912, or the Earl of Cromer’s Ancient and Modern
Imperialism , London, 1910.
— Lenin

[6] Schilder, op. cit., S. 38-42.
— Lenin

[7] See pp. 256–57 of this volume.— Ed .

[8] Wahl, La France aux colonies quoted by Henri Russier, Le Partage de l’Océanie , Paris, 1905, p. 165.
— Lenin

[9] Schulze-Gaevernitz, Britischer Imperialismus und englischer
Freihandel zu Beginn des 20-ten Jahrhunderts, Leipzig, 1906, S. 318. Sartorius v. Waltershausen says the same in Das volkswirtschaftliche System der Kapitalanlage im
Auslande, Berlin, 1907, S. 46.
— Lenin

[10] Schilder, op. cit., Vol. I, S. 160-61.
— Lenin

[11] J. E. Driault, Problèmes politiques et sociaux, Paris, 1900, p. 299.
— Lenin

## VII. IMPERIALISM AS A SPECIAL STAGE OF CAPITALISM

We must now try to sum up, to draw together the threads of what
has been said above on the subject of imperialism. Imperialism
emerged as the development and direct continuation of the
fundamental characteristics of capitalism in general. But
capitalism only became capitalist imperialism at a definite and
very high stage of its development, when certain of its
fundamental characteristics began to change into their opposites, when the features of the epoch of transition from
capitalism to a higher social and economic system had taken
shape and revealed themselves in all spheres. Economically, the
main thing in this process is the displacement of capitalist
free competition by capitalist monopoly. Free competition is the
basic feature of capitalism, and of commodity production
generally; monopoly is the exact opposite of free competition,
but we have seen the latter being transformed into monopoly
before our eyes, creating large-scale industry and forcing out
small industry, replacing large-scale by still larger-scale
industry, and carrying concentration of production and capital
to the point where out of it has grown and is growing monopoly:
cartels, syndicates and trusts, and merging with them, the
capital of a dozen or so banks, which manipulate thousands of
millions. At the same time the monopolies, which have grown out
of free competition, do not eliminate the latter, but exist
above it and alongside it, and thereby give rise to a number of
very acute, intense antagonisms, frictions and conflicts. Monopoly 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
monopoly 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 very big monopolist banks, merged with
the capital of the monopolist associations of industrialists;
and, on the other hand, the division of the world is the
transition from a colonial policy which has extended without
hindrance to territories unseized by any capitalist power, to a
colonial policy of monopolist possession 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, since we have to
deduce from them some especially important features of the
phenomenon that has to be defined. And so, without forgetting
the conditional and relative value of all definitions in
general, which can never embrace all the concatenations of a
phenomenon in its full development, we must give a definition of
imperialism that will include the following five of its basic
features:

(1) the concentration of production and capital has developed to
such a high stage that it has created monopolies which play
a decisive role in economic 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 as distinguished from the export
of commodities acquires exceptional importance; (4) the
formation of international monopolist capitalist associations which share the world among themselves and
(5)
the territorial division of the whole world among the biggest capitalist powers is completed. Imperialism is
capitalism at that stage of development at which the dominance of monopolies and finance capital is established;
in which the export of capital has acquired pronounced importance; in which the division of the world among the
international trusts has begun, in which the division of all
territories of the globe among the biggest capitalist powers
has been completed.

We shall see later that imperialism can and must be defined
differently if we bear in mind not only the basic, purely
economic concepts—to which the above definition is limited—but also the historical place of this stage of
capitalism in relation to capitalism in general, or the relation
between imperialism and the two main trends in the working-class
movement. The thing to be noted at this point is that imperialism, as interpreted above, undoubtedly represents a
special stage in the development of capitalism. To enable the
reader to obtain the most well-grounded idea of imperialism, I
deliberately tried to quote as extensively as possible bourgeois economists who have to admit the particularly
incontrovertible facts concerning the latest stage of capitalist
economy. With the same object in view, I have quoted detailed
statistics which enable one to see to what degree bank capital,
etc., has grown, in what precisely the transformation of
quantity into quality, of developed capitalism into imperialism,
was expressed. Needless to say, of course, all boundaries in
nature and in society are conventional and changeable, and it
would be absurd to argue, for example, about the particular year
or decade in which imperialism “definitely” became established.

In the matter of defining imperialism, however, we have to enter
into controversy, primarily, with Karl Kautsky, the principal
Marxist theoretician of the epoch of the so-called Second
International—that is, of the twenty-five years between
1889 and 1914. The fundamental ideas expressed in our definition
of imperialism were very resolutely attacked by Kautsky in 1915,
and even in November 1914, when he said that imperialism must
not be regarded as a “phase” or stage of economy, but as a
policy, a definite policy “preferred” by finance capital; that
imperialism must not be “identified” with “present-day capitalism”; that if imperialism is to be understood to mean
“all the phenomena of present-day capitalism”—cartels, protection, the domination of the 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 idea is to quote his own definition of
imperialism, which is diametrically opposed to the substance of
the ideas which I have set forth (for the objections coming from
the camp of the German Marxists, who have been advocating
similar 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 follows:

“Imperialism is a product of highly developed industrial
capitalism. It consists in the striving of every industrial
capitalist nation to bring under its control or to annex all
large areas of agrarian [Kautsky’s italics] territory, irrespective of what nations inhabit
it.” [1]

This definition is of no use at all because it one-sidedly,
i.e., arbitrarily, singles out only the national question
(although the latter is extremely important in itself as well as
in its relation to imperialism), it arbitrarily and inaccurately connects this question only with
industrial capital in the countries which annex other nations,
and in an equally arbitrary and inaccurate manner pushes into
the forefront the annexation of agrarian regions.

Imperialism is a striving for annexations—this is what the political part of Kautsky’s definition amounts
to. It is correct, but very incomplete, for politically,
imperialism is, in general, a striving towards violence and
reaction. For the moment, however, we are interested in the economic aspect of the question, which Kautsky himself introduced into his definition. The
inaccuracies in Kautsky’s definition are glaring. The characteristic feature of imperialism is not industrial 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 the eighties onwards gave rise to the extreme
intensification of annexationist (colonial) policy. The
characteristic feature of imperialism is precisely that it
strives to annex not only agrarian territories, but even most highly industrialised regions (German appetite for
Belgium; French appetite for Lorraine), because (1) the fact
that the world is already partitioned obliges those contemplating a redivision to reach out for every
kind of territory, and (2) an essential feature of imperialism is the rivalry between several great powers in the
striving for hegemony, i.e., for the conquest of territory, not
so much directly for themselves as to weaken the adversary and
undermine his hegemony. (Belgium is particularly important for Germany as a base for operations against Britain;
Britain needs Baghdad as a base for operations 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 he, Kautsky,
understands it. We take up the work by the English writer
Hobson, Imperialism , which appeared in 1902, and there
we read:

“The new imperialism differs from the older, first, in substituting for the ambition of a single growing empire the
theory and the practice of competing empires, each motivated by
similar lusts of political aggrandisement and commercial gain;
secondly, in the dominance of financial or investing over
mercantile interests.” [2]

We see that Kautsky is absolutely wrong in referring to English
writers generally (unless he meant the vulgar English imperialists, or the avowed apologists for imperialism). We see
that Kautsky, while claiming that he continues to advocate
Marxism, 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 historical concreteness!) features of
modern imperialism: (1) the competition between several imperialisms, and (2) the predominance of the financier
over the merchant. If it is chiefly a question of the annexation
of agrarian countries by industrial countries, then the role of
the merchant is put in the forefront.

Kautsky’s definition is not only wrong and un-Marxist. It serves
as a basis for a whole system of views which signify a rupture
with Marxist theory and Marxist practice all along the line. I
shall refer to this later. The argument about words which
Kautsky raises as to whether the latest stage of capitalism
should be called imperialism or the stage of finance capital is
not worth serious attention. Call it what you will, it makes no
difference. The essence 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 policy which, he alleges, is
possible on this very same basis of finance capital. It follows,
then, that monopolies in the economy are compatible with
non-monopolistic, non-violent, non-annexationist methods in
politics. It follows, then, that the territorial division of the
world, which was completed during this very epoch 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-imperialist 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 depth; the result is bourgeois reformism instead of
Marxism.

Kautsky enters into controversy with the German apologist of
imperialism and annexations, Cunow, who clumsily and cynically
argues that imperialism is present-day capitalism; the development of capitalism is inevitable and progressive;
therefore imperialism is progressive; therefore, we should
grovel before it and glorify it! This is something like the
caricature of the Russian Marxists which the Narodniks drew in
1894-95. They argued: if the Marxists believe that capitalism is
inevitable in Russia, that it is progressive, then they ought to
open a tavern and begin to implant capitalism! Kautsky’s reply
to Cunow is as follows: imperialism is not present-day capitalism; it is only one of the forms of the policy of
present-day capitalism. This policy we can and should fight,
fight imperialism, annexations, etc.

The reply seems quite plausible, but in effect it is a more
subtle and more disguised (and therefore more dangerous)
advocacy of conciliation with imperialism, because a “fight”
against the policy of the trusts and banks that does not affect
the economic basis of the trusts and banks is mere bourgeois
reformism and pacifism, the benevolent and innocent expression
of pious wishes. Evasion of existing contradictions, forgetting
the most important of them, instead of revealing their full
depth—such is Kautsky’s theory, which has nothing in common with Marxism. Naturally, such a “theory” can only serve
the purpose of advocating unity with the Cunows!

“From the purely economic point of view,” writes Kautsky, “it is
not impossible 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,” [3] i.e., of a
superimperialism, of a union of the imperialisms of the whole
world and not struggles among them, a phase when wars shall
cease under capitalism, a phase of “the joint exploitation of
the world by internationally united finance capital.” [4]

We shall have to deal with this “theory of ultra-imperialism”
later on in order to show in detail how decisively and completely it breaks with Marxism. At present, in keeping with
the general plan of the present work, we must examine the exact
economic data on this question. “From the purely economic point
of view,” is “ultra-imperialism” possible, or is it ultra-nonsense?

If the purely economic point of view is meant to be a “pure”
abstraction, then all that can be said reduces itself to the
following proposition: development is proceeding towards
monopolies, hence, towards a single world monopoly, towards a
single world trust. This is indisputable, but it is also as
completely meaningless as is the statement that “development is
proceeding” towards the manufacture of foodstuffs in laboratories. In this sense the “theory” of ultra-imperialism is
no less absurd than a “theory of ultra-agriculture” would be.

If, however, we are discussing the “purely economic” conditions
of the epoch of finance capital as a historically concrete epoch
which began at the turn of the twentieth century, then the best
reply that one can make to the lifeless abstractions of
“ultra-imperialism” (which serve exclusively a most reactionary
aim: that of diverting attention from the depth of existing antagonisms) is to contrast them with the concrete economic
realities of the 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, i.e., that the rule
of finance capital lessens the unevenness and contradictions inherent in the world economy, whereas in reality
it increases them.

R. Calwer, in his little book, An Introduction to the World
Economy , [5] made an attempt to summarise the main, purely economic, data that enable one to obtain a concrete
picture of the internal relations of the world economy at the
turn of the twentieth century. 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 states to which they
belong and “leaves aside” 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 summary of the economic data he quotes on these regions.

Principaleconomicareas | Area | Pop. | Transport | Trade | Industry
Million sq.miles | Millions | Railways(thou. km) | Mercantilefleet (mill-ions tons) | Imports,exports(thous-millionmarks) | Output |
Of coal (mill.tons) | Of pig iron(mill. tons) | Numberof cottonspindles(millions)
1) Central Europe | 27.6(23.6) | 388(146) | 204 | 8 | 41 | 251 | 15 | 26
2) Britain | 28.9(28.6) | 398(355) | 140 | 11 | 25 | 249 | 9 | 51
3) Russia | 22 | 131 | 63 | 1 | 3 | 16 | 3 | 7
4) Eastern Asia | 12 | 389 | 8 | 1 | 2 | 8 | 0.02 | 2
5) America | 30 | 148 | 379 | 6 | 14 | 245 | 14 | 19

NOTE: The figures in parentheses show the area and population of the colonies .

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

There are two areas where capitalism is little developed: Russia
and Eastern Asia. In the former, the population is extremely
sparse, in the latter it is extremely dense; in the former
political concentration is high, in the latter it does not
exist. The partitioning of China is only just beginning, and the
struggle for it between Japan, the U.S., etc., is continually
gaining in intensity.

Compare this reality—the vast diversity of economic and
political conditions, the extreme disparity in the rate of
development of the various countries, etc., and the violent
struggles among the imperialist states—with Kautsky’s silly little fable about “peaceful” ultra-imperialism. Is this
not the reactionary attempt of a frightened philistine to hide
from stern reality? Are not the international cartels which
Kautsky imagines are the embryos of “ultra-imperialism” (in the
same way as one “can” describe the manufacture of tablets in a
laboratory as ultra-agriculture in embryo) an example of the
division and the redivision of the world, the transition from peaceful division to non-peaceful division and
vice versa? Is not American and other finance capital, which
divided the whole world peacefully with Germany’s participation
in, for example, the international rail syndicate, or in the
international mercantile shipping trust, now engaged in redividing the world on the basis of a new relation of
forces that is being changed by methods anything but peaceful?

Finance capital and the trusts do not diminish but increase the
differences in the rate of growth of the various parts of the
world economy. Once the relation of forces is changed, what
other solution of the contradictions can be found under
capitalism than that of force ? Railway statistics [6] provide
remarkably exact data on the different rates of growth of
capitalism and finance capital in world economy. In the last
decades of imperialist development, the total length of railways
has changed as follows:

| Railways (000 kilometers)
1890 | 1913 | +
Europe | 224 |  | 346 |  | +122 |
U.S. | 268 | 411 | +143
All colonies | 82 | 125 | 210 | 347 | +128 | +222
Independent and semi-independentstates of Asia and America | 43 | 137 | +94
Total | 617 |  | 1,104 |  |  |

Thus, the development of railways has been most rapid in the
colonies and in the independent (and semi-independent) states of
Asia and America. Here, as we know, the finance capital of the
four or five biggest capitalist states holds undisputed
sway. Two hundred thousand kilometres of new railways in the
colonies and in the other countries of Asia and America
represent a capital of more than 40,000 million marks 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 overseas countries. Among the latter, new imperialist
powers are emerging (e.g., Japan). The struggle among the world
imperialisms is becoming more acute. The tribute levied by
finance capital on the most profitable colonial and overseas
enterprises is increasing. In the division of this “booty,” an
exceptionally large part goes to countries which do not always
stand at the top of the list in the rapidity of the development
of their productive forces. In the case of the biggest countries, together with their colonies, the total length of
railways was as follows:

| (000 kilometres)
1890 | 1913 |
U.S. | 268 | 413 | +145
British Empire | 107 | 208 | +101
Russia | 32 | 78 | +46
Germany | 43 | 68 | +25
France | 41 | 63 | +22
Total | 491 | 830 | +339

Thus, about 80 per cent of the total existing railways are
concentrated in the hands of the five biggest powers. But the
concentration of the ownership of these railways, the concentration of finance capital, is immeasurably greater since
the French and British millionaires, for example, own an
enormous amount of shares and bonds in American, Russian and
other railways.

Thanks to her 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 incomparably more rapid
during this period than in Britain—not to speak of France
and Russia. In 1892, Germany produced 4,900,000 tons of pig-iron
and Great Britain produced 6,800,000 tons; in 1912, Germany
produced 17,600,000 tons and Great Britain, 9,000,000 tons. Germany, therefore, had an overwhelming superiority over
Britain in this respect. [7] The question is: what means other than war could there be under capitalism to overcome
the disparity between the development of productive forces and
the accumulation of capital on the one side, and the division of
colonies and spheres of influence for finance capital on the
other?

## Notes

[1] Die Neue Zeit , 1914, 2 (B. 32), S. 909, Sept. 11, 1914;
cf. 1915, 2, S. 107 et seq.
— Lenin

[2] Hobson, Imperialism , London, 1902, p. 324.
— Lenin

[3] Die
Neue Zeit , 1914, 2 (B. 32), S. 921, Sept. 11,
1914. Cf. 1915, 2, S. 107 et seq.
— Lenin

[4] Ibid ., 1915, 1, S. 144, April 30, 1915.
— Lenin

[5] R. Calwer, Einfü hrung in die Weltwirtschaft ,
Berlin, 1906.
— Lenin

[6] Statistisches Jahrbuch für das deutsche Reich, 1915;
Archiv für Eisenbahnwesen, 1892. Minor details for the distribution of railways among the colonies of the various
countries in 1890 had to be estimated approximately.
— Lenin

[7] Cf. also Edgar Crammond, “The Economic Relations of the British
and German Empires” in The Journal of the Royal Statistical
Society , July 1914, p. 777 et seq.
— Lenin

## VIII. PARASITISM AND DECAY OF CAPITALISM

We now have to examine yet another significant aspect of
imperialism to which most of the discussions on the subject
usually attach insufficient importance. One of the shortcomings
of the Marxist Hilferding is that on this point he has taken a
step backward compared with the non-Marxist Hobson. I refer to
parasitism, which is characteristic of imperialism.

As we have seen, the deepest economic foundation of imperialism
is monopoly. This is capitalist monopoly, i.e., monopoly which
has grown out of capitalism and which exists in the general
environment of capitalism, commodity production and competition,
in permanent and insoluble contradiction to this general
environment. Nevertheless, like all monopoly, it inevitably
engenders a tendency of stagnation and decay. Since monopoly
prices are established, even temporarily, the motive cause of
technical and, consequently, of all other progress disappears to
a certain extent and, further, the economic possibility arises
of deliberately retarding technical progress. For instance, in
America, a certain Owens invented a machine which revolutionised
the manufacture of bottles. The German bottle-manufacturing
cartel purchased Owens’s patent, but pigeon-holed it, refrained
from utilising it. Certainly, monopoly under capitalism can
never completely, and for a very long period of time, eliminate
competition in the world market (and this, by the by, is one of
the reasons why the theory of ultra-imperialism is so absurd). Certainly, the possibility of reducing the cost of
production and increasing profits by introducing technical
improvements operates in the direction of change. But the
tendency to stagnation and decay, which is characteristic of
monopoly, continues to operate, and in some branches of
industry, in some countries, for certain periods of time, it
gains the upper hand.

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

Further, imperialism is an immense accumulation of money capital
in a few countries, amounting, as we have seen, to
100,000-150,000 million francs in securities. Hence the
extraordinary growth of a class, or rather, of a stratum of
rentiers, i.e., people who live by “clipping coupons,” who take
no part in any enterprise whatever, whose profession is
idleness. The export of capital, one of the most essential
economic bases of imperialism, still more completely isolates
the rentiers from production and sets the seal of parasitism on
the whole country that lives by exploiting the labour of several
overseas countries and colonies.

“In 1893,” writes Hobson, “the British capital invested abroad
represented about 15 per cent of the total wealth of the United
Kingdom.” [1] Let me remind the reader that by 1915 this capital had increased
about two and a half times. “Aggressive imperialism,” says
Hobson further on, “which costs the tax-payer so dear, which is
of so little value to the manufacturer and trader ... is a
source of great gain to the investor.... The annual income Great
Britain derives from commissions in her whole foreign and
colonial trade, import and export, is estimated by Sir R. Giffen
at £18,000,000 (nearly 170 million rubles) for 1899, taken
at 2 1/2 per cent, upon a turnover of £800,000,000.” Great
as this sum is, it cannot explain the aggressive imperialism of
Great Britain, which is explained by the income of £90 million to £100 million from “invested” capital, the
income of the rentiers.

The income of the rentiers is five times greater than the income obtained from the foreign trade of the biggest
“trading” country in the world! This is the essence of imperialism and imperialist parasitism.

For that reason the term “rentier state” (Rentnerstaat), or
usurer state, is coming into common use in the economic
literature that deals with imperialism. The world has become
divided into a handful of usurer states and a vast majority of
debtor states. “At the top of the list of foreign investments,”
says Schulze-Gaevernitz, “are those placed in politically
dependent or 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 debtors.” [2] Sartorius
von Waltershausen in his book, The National Economic System
of Capital Investments Abroad, cites Holland as the model
“rentier state” and points out that Great Britain and France are
now becoming such. [3] Schilder is of the opinion that five
industrial states have become “definitely pronounced creditor
countries”: Great Britain, France, Germany, Belgium and
Switzerland. He does not include Holland in this list simply
because she is “industrially little developed.” [4] The United States is
a creditor only of the American countries.

“Great Britain,” says Schulze-Gaevernitz, “is gradually becoming
transformed from an industrial into a creditor state. Notwithstanding the absolute increase in industrial
output and the export of manufactured goods, there is an
increase in the relative importance of income from interest and
dividends, issues of securities, commissions and speculation in
the whole of the national economy. In my opinion it is precisely
this that forms the economic basis of imperialist ascendancy. The creditor is more firmly attached to the debtor
than the seller is to the buyer. [5] In regard to Germany, A. Lansburgh,
the publisher of the Berlin Die Bank, in 1911, in an article entitled “Germany—a Rentier State”, wrote the
following: “People in Germany are ready to sneer at the yearning
to become rentiers that is observed in France. But they forget
that as far as the bourgeoisie is concerned the situation in
Germany is becoming more and more like that in
France.” [6]

The rentier state is a state of parasitic, decaying capitalism,
and this circumstance cannot fail to influence all the socio-political conditions of the countries concerned, in
general, and the two fundamental trends in the working-class movement, in particular. To demonstrate this in the clearest
possible manner let me quote Hobson, who is a most reliable
witness, since he cannot be suspected of leaning towards Marxist
orthodoxy; on the other hand, 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 imperialist
experience.

With the Anglo-Boer War fresh in his mind, Hobson describes the
connection between imperialism and the interests of the
“financiers,” their growing profits from contracts, supplies,
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.” Two sets of
circumstances, in this writer’s opinion, have weakened the old
empires: (1) “economic parasitism,” and (2) the formation of
armies recruited from subject peoples. “There is first the habit
of economic parasitism, by which the ruling state has used its
provinces, colonies, and dependencies in order to enrich its
ruling class and to bribe its lower classes into acquiescence.” And I shall add that the economic possibility of
such bribery, whatever its form may be, requires high monopolist
profits.

As for the second circumstance, Hobson writes: “One of the
strangest symptoms of the blindness of imperialism is the
reckless indifference 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 by
natives; in India, as more recently in Egypt, great standing
armies are placed under British commanders; almost all the
fighting associated with our African dominions, except in the
southern part, has been done for us by natives.”

Hobson gives the following economic appraisal of the prospect of
the partitioning of China: “The greater part of Western Europe
might then assume the appearance and character already exhibited
by tracts of country in 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 larger body
of personal 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 as tribute from Asia and
Africa. . . . We have foreshadowed 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
civilisation, 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 and 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 undeserving of consideration examine the economic and social
condition of districts in Southern England today which are
already reduced to this condition, and reflect 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.” [7]

The author is quite right: if the forces of imperialism had not
been counteracted they would have led precisely to what he has
described. The significance of a “United States of Europe” in
the present imperialist situation is correctly appraised. He
should have added, however, that, also within the working-class movement, the opportunists, who are for the moment
victorious in most countries, are “working” systematically and
undeviatingly in this very direction. Imperialism, which means
the partitioning of the world, and the exploitation of other
countries besides China, which means high monopoly profits for a
handful of very rich countries, makes it economically possible
to bribe the upper strata of the proletariat, and thereby
fosters, gives shape to, and strengthens opportunism. We must
not, however, lose sight of the forces which counteract
imperialism in general, and opportunism in particular, and
which, naturally, the social-liberal Hobson is unable to
perceive.

The German opportunist, Gerhard Hildebrand, who was once
expelled from the Party for defending imperialism, and who could
today be a leader of the so-called “Social-Democratic” Party of
Germany, supplements Hobson well by his advocacy of a “United
States of Western Europe” (without Russia) for the purpose of
“joint” action ... against the African Negroes, against the
“great Islamic movement,” for the maintenance of a “powerful
army and navy”, against a “Sino-Japanese coalition,” [8] etc.

The description of “British imperialism” in Schulze-Gaevernitz’s
book reveals the same parasitical traits. The national income of
Great Britain approximately doubled from 1865 to 1898, while the
income “from abroad” increased nine-fold in the same period. While the “merit” of imperialism is that it “trains the
Negro to habits of industry” (you cannot manage without coercion
... ), the “danger” of imperialism lies in that “Europe will
shift the burden of physical toil—first agricultural and
mining, then the rougher work 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 economic, and
later, the political emancipation of the coloured races.”

An increasing proportion of land in England is being taken out
of cultivation and used for sport, for the diversion of the
rich. As far as Scotland—the most aristocratic place for
hunting and other sports—is concerned, it is said that “it lives on its past and on Mr. Carnegie” (the American
multimillionaire). On horse racing and fox hunting alone England
annually spends £14,000,000 (nearly 130 million rubles). The number of rentiers in England is about one
million. The percentage of the productively employed population
to the total population is declining:

| Population England andWales (000,000) | Workers inbasic
industries(000,000) | Per cent oftotal popula-tion
1851..... | 17.9 | 4.1 | 23
1901..... | 32.5 | 4.9 | 15

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 workers and the “ lower stratum of the proletariat proper .” The
upper stratum furnishes the bulk of the membership of co-operatives, of trade unions, of sporting clubs and of
numerous religious sects. To this level is adapted the electoral
system, which in Great Britain is still “ sufficiently restricted to exclude the lower stratum of the proletariat
proper "! In order to present the condition of the British
working class in a rosy light, only this upper stratum—which
constitutes a minority of the proletariat—is usually spoken of. For instance, “the problem of unemployment
is mainly a London problem and that of the lower proletarian stratum, to which the politicians attach little
importance ...” [9] He should have said: to which the bourgeois politicians and the “socialist” opportunists
attach little importance.

One of the special features of imperialism connected with the
facts I am describing, is the decline in emigration from
imperialist countries and the increase in immigration into these
countries from the more 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 169,000. Emigration from
Germany 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 to 341,000. On the other hand,
there was an increase in the number of workers entering Germany
from Austria, Italy, Russia and other countries. According to
the 1907 census, there were 1,342,294 foreigners in Germany, of
whom 440,800 were industrial workers and 257,329 agricultural
workers. [10] In France, the workers employed in the mining industry are, “in great part,” foreigners: Poles,
Italians and
Spaniards. [11] In the United States, immigrants from Eastern and Southern Europe are engaged in the most poorly
paid jobs, while American workers provide the highest percentage
of overseers or of the better-paid workers. [12] Imperialism has
the tendency to  create privileged sections also among the
workers, and to detach them from the broad masses of the
proletariat.

It must be observed that in Great Britain the tendency of
imperialism to split the workers, to strengthen 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 distinguishing features of imperialism were already
observed in Great Britain in the middle of the nineteenth
century—vast colonial possessions and a monopolist position in the world market. Marx and Engels traced this
connection between opportunism in the working-class movement and
the imperialist features of British capitalism systematically,
during the course of several decades. For example, on October 7,
1858, Engels wrote to Marx: “The English proletariat is actually
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 alongside the bourgeoisie. For a nation which exploits
the whole world this is of course to a certain extent justifiable.” [13] Almost a quarter of a century later, in a letter
dated August 11, 1881, Engels speaks of the “worst English 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 English
workers think about colonial 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 gaily share the feast of England’s monopoly of the world
market and the colonies.” [13] (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.)

This clearly shows the causes and effects. The causes are: (1)
exploitation of the whole world by this country; (2) its
monopolist position in the world market; (3) its colonial
monopoly. The effects are: (1) a section of the British
proletariat becomes bourgeois; (2) a section of the proletariat
allows itself to be led by men bought by, 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 (in the sense of
drawing superprofits from) a part of the “whole world” only a
little smaller than that which England exploited in 1858; each
of them occupies a monopolist position in the world market
thanks to trusts, cartels, finance capital and creditor and
debtor relations; 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, 65,000,000 sq. km., or 86 per cent, belong to six
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 such economic and political conditions that are
bound to increase the irreconcilability between opportunism and
the general and vital interests of the working-class movement:
imperialism has grown from an embryo into the predominant
system; capitalist monopolies occupy first place in economics
and politics; the division of the world has been completed; on
the other hand, instead of the undivided monopoly of Great
Britain, we see a few imperialist powers contending for the
right to share in this monopoly, and this struggle is characteristic of the whole period of the early twentieth
century. Opportunism cannot now be completely triumphant in the
working-class movement of one country for decades as it was in
Britain in the second half of the nineteenth century; but in a
number of countries it has grown ripe, overripe, and rotten, and
has become completely merged with bourgeois policy in the form
of
“social-chauvinism”. [14]

## Notes

[1] Hobson,
op. cit., pp. 59, 62.
— Lenin

[2] Schulze-Gaevernitz, Britischer Imperialismus , S. 320 et
seq.
— Lenin

[3] Sartorius von Waltershausen, Das
volkswirtschaftliche System , etc., Berlin, 1907, Buch IV.
— Lenin

[4] Schilder, op. cit., S. 393.
— Lenin

[5] Schulze-Gaevernitz, op. cit., S. 122.
— Lenin

[6] Die
Bank , 1911, 1, S. 10-11.
— Lenin

[7] Hobson,
op. cit., pp. 103, 205, 144, 335, 386.
— Lenin

[8] Gerhard
Hildebrand, Die Erschütterung der Industrieherrschaft und des Industriesozialismus , 1910, S. 229 et seq.
— Lenin

[9] Schulze-Gaevernitz, Britischer Imperialismus S. 301.
— Lenin

[10] Statistik des Deutschen Reichs , Bd. 211.
— Lenin

[11] Henger, Die Kapitalsanlage der Franzosen , Stuttgart,
1913.
— Lenin

[12] Hourwich, Immigralion and Labour, New York, 1913.
— Lenin

[13] Briefwechsel von Marx und Engels , Bd. II, S. 290; 1V,
433—Karl Kautsky, Sozialismus und
Kolonialpolitik , Berlin, 1907, S. 79; this pamphlet was
written by Kautsky in those infinitely distant days when he was
still a Marxist.
— Lenin

[14] Russian social-chauvinism in its overt form, represented by the
Potresovs, Chkenkelis, Maslovs, etc., and its covert form
(Chkeidze, Skobelev, Axelrod, Martov, etc.) also emerged from
the Russian variety of opportunism, namely, liquidationism.
— Lenin

[15] 

## IX. CRITIQUE OF IMPERIALISM

By the critique of imperialism, in the broad sense of the term,
we mean the attitude of the different classes of society towards
imperialist policy in connection with their general ideology.

The enormous dimensions of finance capital concentrated in a
few hands and creating an extraordinarily dense and widespread
network of relationships and connections which subordinates not
only the small and medium, but also the very small capitalists and
small masters, on the one hand, and the increasingly intense
struggle waged against other national state groups of financiers
for the division of the world and domination over other countries,
on the other hand, cause the propertied classes to go over
entirely to the side of imperialism. “General” enthusiasm over the
prospects of imperialism, furious defence of it and painting it in
the brightest colours—such are the signs of the times. Imperialist ideology also penetrates the working class. No
Chinese Wall separates it from the other classes. The leaders of
the present-day, so-called, “Social-Democratic” Party of Germany
are justly called “social-imperialists,” that is, socialists in
words and imperialists in deeds; but as early as 1902, Hobson
noted the existence in Britain of “Fabian imperialists” who
belonged to the opportunist Fabian Society.

Bourgeois scholars and publicists usually come out in defence
of imperialism in a somewhat veiled form; they obscure its
complete domination and its deep-going roots, strive to push
specific and secondary details into the forefront and do their
very best to distract attention from essentials by means of
absolutely ridiculous schemes for “reform,” such as police
supervision of the trusts or banks, etc. Cynical and frank
imperialists who are bold enough to admit the absurdity of the
idea of reforming the fundamental characteristics of imperialism
are a rarer phenomenon.

Here is an example. The German imperialists attempt, in the
magazine Archives of World Economy , to follow the national emancipation movements in the colonies, particularly, of
course, in colonies other than those belonging to Germany. They
note the unrest and the protest movements in India, the movement
in Natal (South Africa), in the Dutch East Indies, etc. One of
them, commenting on an English report of a conference held on June
28-30, 1910, of representatives of various subject nations and
races, of peoples of Asia, Africa and Europe who are under foreign
rule, writes as follows in appraising the speeches delivered at
this conference: “We are told that we must fight imperialism; that
the ruling states should recognise the right of subject peoples to
independence; that an international tribunal should supervise the
fulfilment of treaties concluded between the great powers and weak
peoples. Further than the expression of these pious wishes they do
not go. We see no trace of understanding of the fact that
imperialism is inseparably bound up with capitalism in its present
form and that, therefore [!!], an open struggle against
imperialism would be hopeless, unless, perhaps, the fight were to
be confined to protests against certain of its especially
abhorrent excesses.” [1] Since the reform of the basis of
imperialism is a deception, a “pious wish”, since the bourgeois
representatives of the oppressed nations go no “further” forward,
the bourgeois representative of an oppressing nation goes
“further” backward , to servility towards imperialism under cover of the claim to be “scientific.” That is also
“logic”!

The questions as to whether it is possible to reform the basis
of imperialism, whether to go forward to the further intensification and deepening of the antagonisms which it
engenders, or backward, towards allaying these antagonisms, are
fundamental questions in the critique of imperialism. Since the
specific political features of imperialism are reaction everywhere
and increased national oppression due to the oppression of the
financial oligarchy and the elimination of free competition, a
petty-bourgeois-democratic opposition to imperialism arose at
the beginning of the twentieth century in nearly all imperialist
countries. Kautsky not only did not trouble to oppose, was not
only unable to oppose this petty-bourgeois reformist opposition,
which is really reactionary in its economic basis, but became
merged with it in practice, and this is precisely where Kautsky
and the broad international Kautskian trend deserted Marxism.

In the United States, the imperialist war waged against Spain
in 1898 stirred up the opposition of the “anti-imperialists,” the
last of the Mohicans of bourgeois democracy who declared this war
to be “criminal,” regarded the annexation of foreign territories
as a violation of the Constitution, declared that the treatment of
Aguinaldo, leader of the Filipinos (the Americans promised him the
independence of his country, but later landed troops and annexed
it), was “jingo treachery”, and quoted the words of Lincoln: “When
the white man governs himself, that is self-government; but when
he governs himself and also governs others, it is no longer
self-government; it is despotism.” [2] But as long as all this criticism
shrank from recognising the inseverable bond between imperialism
and the trusts, and, therefore, between imperialism and the
foundations of capitalism, while it shrank from joining the forces
engendered by large-scale capitalism and its development, it
remained a “pious wish”.

This is also the main attitude taken by Hobson in his critique
of imperialism. Hobson anticipated Kautsky in protesting against
the “inevitability of imperialism” argument, and in urging the
necessity of “increasing the consuming capacity” of the people
(under capitalism!). The petty-bourgeois point of view in the
critique of imperialism, the omnipotence of the banks, the
financial oligarchy, etc., is adopted by the authors I have often
quoted, such as Agahd, A. Lansburgh, L. Eschwege, and among the
French writers Victor Berard, author of a superficial book
entitled England and Imperialism which appeared in
1900. All these authors, who make no claim to be Marxists,
contrast imperialism with free competition and democracy, condemn
the Baghdad railway scheme, which is leading to conflicts 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 thousands of millions of
francs representing “international” securities, exclaimed in 1912:
“Is it possible to believe that peace may be disturbed ... that,
in the face of these enormous figures, anyone would risk starting
a
war?” [3]

Such simple-mindedness on the part of the bourgeois economists
is not surprising; moreover, it is in their interest to
pretend to be so naive and to talk “seriously” about peace under
imperialism. But what remains of Kautsky’s Marxism, when, in 1914,
1915 and 1916, he takes up the same bourgeois-reformist point of
view and affirms that “everybody is agreed” (imperialists,
pseudo-socialists and social-pacifists) on the matter of peace? Instead
of an analysis of imperialism and an exposure of the depths of its
contradictions, we have nothing but a reformist “pious wish” to
wave them aside, to evade them.

Here is a sample of Kautsky’s economic criticism of imperialism. He takes the statistics of the British export and
import trade with Egypt for 1872 and 1912; it seems that this
export and import trade has grown more slowly than British foreign
trade as a whole. From this Kautsky concludes that “we have no
reason to suppose that without military occupation the growth of
British trade with Egypt would have been less, simply as a result
of the mere operation of economic factors.” “The urge of capital
to expand ... can be best promoted, not by the violent methods of
imperialism, but by peaceful democracy.” [4]

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

“It is not the business of the proletariat,” writes Hilferding
“to contrast the more progressive capitalist policy with that of
the now bygone era of free trade and of hostility towards the
state. The reply of the proletariat to the economic policy of
finance capital, to imperialism, cannot be free trade, but
socialism. The aim of proletarian policy cannot today be the ideal
of restoring free competition—which has now become a reactionary ideal—but the complete elimination of
competition by the abolition of capitalism.” [5]

Kautsky broke with Marxism by advocating in the epoch of
finance capital a “reactionary ideal,” “peaceful democracy,” “the
mere operation of economic factors,” for objectively this
ideal drags us back from monopoly to non-monopoly capitalism, and
is a reformist swindle.

Trade with Egypt (or with any other colony or semi-colony)
“would have grown more” without military occupation, without imperialism, and without finance capital. What does this
mean? That capitalism would have developed more rapidly if free
competition had not been restricted by monopolies in general, or
by the “connections,” yoke (i.e., 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. Let us assume that free
competition, without any sort of monopoly, would have developed
capitalism and trade more rapidly. But the more rapidly trade and
capitalism develop, the greater is the concentration of production
and capital which gives rise to monopoly. And monopolies
have already arisen—precisely out of free competition! Even if monopolies have now begun to retard progress,
it is not an argument in favour of free competition, which has
become impossible after it has given rise to monopoly.

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

Even if we correct this argument and say, as Spectator says,
that the trade of the colonies with Britain is now developing more
slowly than their trade with other countries, it does not save
Kautsky; for it is also monopoly, also imperialism that is beating Great Britain, only it is the
monopoly and imperialism of another country (America, Germany). 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. III of Capital [12] ). It
is known, too, that the cartels add finance capital have a system
peculiar to themselves, that of “exporting goods at cut-rate
prices”, or “dumping,” as the English call it: within a given
country the cartel sells its goods at high monopoly prices, but
sells them abroad 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
rapidly than Great Britain’s, it only proves that German
imperialism is younger, stronger and better organised than British
imperialism, is superior to it; but it by no means proves the
“superiority” of free trade, for it is not a fight between free
trade and protection and colonial dependence, but between two
rival imperialisms, two monopolies, two groups of finance
capital. The superiority of German imperialism over British
imperialism is more potent than the wall of colonial frontiers or
of protective tariffs: to use this as an “argument” in favour of free trade and “peaceful democracy” is banal, it means
forgetting the essential features and characteristics of
imperialism, substituting 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 one single country, chosen
at random, and one single colony with the other countries; he
examined the export trade of an imperialist country: (1) with
countries which are financially dependent upon it, and borrow
money from it; and (2) with countries which are financially
independent. He obtained the following results:

EXPORT TRADE OF GERMANY (000,000 marks)
To countries financiallydependent onGermany | 1889 | 1908 | Per centincrease
Rumania | 48.2 | 70.8 | 47
Portugal | 19.0 | 32.8 | 73
Argentina | 60.7 | 147.0 | 143
Brazil | 48.7 | 84.5 | 73
Chile | 28.3 | 64.0 | 114
Total | 234.8 | 451.5 | 92
To
countriesfinanciallyindependentof Germany |  |  |
Great Britain | 651.8 | 997.4 | 53
France | 210.2 | 437.9 | 108
Belgium | 137.2 | 322.8 | 135
Switzerland | 177.4 | 401.1 | 127
Australia | 21.2 | 64.5 | 205
Dutch East Indies | 8.8 | 40.7 | 363
Total | 1,206.6 | 2,264.4 | 87

Lansburgh did not draw conclusions and therefore, strangely enough, failed to observe that if the figures prove
anything at all, they prove that he is wrong, for the exports to countries financially dependent on Germany have grown more rapidly, if only slightly, than exports to the
countries which are financially independent. (I emphasise the
“if”, for Lansburgh’s figures are far from complete.)

Tracing the connection between exports and loans, Lansburgh
writes:

“In 1890-91, a Rumanian loan was floated through the German
banks, which had already in previous years made advances on this
loan. It was used chiefly to purchase railway materials in
Germany. In 1891, German exports to Rumania amounted to 55 million
marks. The following year they dropped to 39.4 million marks and,
with fluctuations, to 25.4 million 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-
to 21,100,000 (1890); then, in the two following years, they
dropped to 16,200,000 and 7,400,000, and regained their former
level only in 1903.

“The figures of German trade with Argentina are still more
striking. Loans were floated in 1888 and 1890; German exports to
Argentina reached 60,700,000 marks (1889). Two years later they
amounted to only 18,600,000 marks, 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 by the state and by municipalities, with advances to
build power stations, and with other credit operations.

“Exports to Chile, as a consequence of the loan of 1889, rose
to 45,200,000 marks (in 1892), and a year later dropped to
22,500,000 marks. A new Chilean loan floated by the German banks
in 1906 was followed by a rise of exports to 84,700,000 marks in
1907, only to fall again to 52,400,000 marks in
1908.” [6]

From 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 bad it is to invest capital abroad
instead of “naturally” and “harmoniously” developing home
industry, how “costly” are the millions in bakshish that Krupp has
to pay in floating foreign loans, etc. But the facts tell us
clearly: the increase in exports is connected with just these swindling tricks of finance capital, which is not concerned
with bourgeois morality, but with skinning the ox twice—first, it pockets the profits from the loan; then it pockets other
profits from the same loan which the borrower uses to make purchases from Krupp, or to purchase railway material from
the Steel Syndicate, etc.

I repeat that I do not by any means consider Lansburgh’s
figures to be perfect; but I had to quote them because they are
more scientific than Kautsky’s and Spectator’s and because
Lansburgh showed the correct way to approach the question. In
discussing 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 obscure the very essence of the question.

Kautsky’s theoretical critique of imperialism has nothing in
common with Marxism and serves only 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 fundamental contradictions of
imperialism: the contradictions between monopoly and free
competition which exists side by side with it, between the
gigantic “operations” (and gigantic profits) of finance capital
and “honest” trade in the free market, the contradiction between
cartels and trusts, on the one hand, and non-cartelised industry,
on the other, etc.

The notorious theory of “ultra-imperialism,” invented by
Kautsky, is just as reactionary. Compare his arguments on this
subject in 1915, with Hobson’s arguments in 1902.

Kautsky: “... Cannot the present imperialist policy be supplanted by a new, ultra-imperialist policy, which will
introduce the joint exploitation of the world by internationally
united finance capital in place of the mutual rivalries of
national finance capitals? Such a new phase of capitalism is at
any rate conceivable. Can it be achieved? Sufficient premises are
still lacking to enable us to answer this question.” [7]

Hobson: “Christendom thus laid out in a few great federal
empires, each with a retinue of uncivilised 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.”

Kautsky called ultra-imperialism or super-imperialism what
Hobson, thirteen years earlier, described as interimperialism. Except for coining a new and clever catchword,
replacing one Latin prefix by another, the only progress Kautsky
has made in the sphere of “scientific” thought is that he gave out
as Marxism what Hobson, in effect, described as the cant of
English parsons.

After the Anglo-Boer War it was quite natural for this highly
honourable caste to exert their main efforts 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 guarantee still higher
profits for the British financiers. And what better consolation
could there be than the theory that imperialism is not so bad;
that it stands close to inter- (or ultra-) imperialism, which can
ensure permanent peace? No matter what the good intentions of the
English parsons, or of sentimental Kautsky, may have been, the
only objective, i.e., real, social significance of Kautsky’s
“theory” is this: it is a most reactionary method of consoling the
masses with hopes of permanent peace being possible under
capitalism, by distracting their attention from the sharp
antagonisms and acute problems of the present times, and directing
it towards illusory prospects of an imaginary “ultraimperialism”
of the future. Deception of the masses—that is all there is
in Kautsky’s “Marxist” 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 three colonial and semi-colonial
countries, with a population of six to seven hundred million, are
subjected to the exploitation of the finance capital of several
imperialist powers: Great Britain, France, Japan, the U.S.A.,
etc. Let us assume that these imperialist countries form alliances
against one another in order to protect or enlarge their
possessions, their interests and their spheres of influence in
these Asiatic states; these alliances will be “inter-imperialist”,
or “ultra-imperialist” alliances. Let us 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.” There are
actual examples of alliances of this kind in the history of the
twentieth century—the attitude of the powers to China, for
instance. 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 temporary, that they would eliminate friction,
conflicts and struggle in every possible form?

The question has only to be presented clearly for any other
than a negative answer to be impossible. This is because the only
conceivable basis under capitalism for the division of spheres of
influence, interests, colonies, etc., is a calculation of the strength of those participating, their general economic,
financial, military strength, etc. And the strength of these
participants in the division does not change to an equal degree,
for the even development of different undertakings, trusts, branches  of industry, or countries is impossible under
capitalism. 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 of the imperialist powers will have
remained unchanged? It is out of the question.

Therefore, in the realities of the capitalist system, and not
in the banal philistine fantasies of English parsons, or of the
German “Marxist,” Kautsky, “inter-imperialist” or “ultra-imperialist”
alliances, no matter what form they may assume, whether of one imperialist coalition against another, or of a
general alliance embracing all the imperialist powers, are inevitably nothing more than a “truce” in periods
between wars. Peaceful alliances prepare the ground for wars, and
in their turn grow out of wars; the one conditions the other,
producing alternating forms of peaceful and non-peaceful struggle
on one and the same basis of imperialist connections and
relations within world economics and world politics. But in order
to pacify the workers and reconcile them with the social-chauvinists
who have deserted to the side of the bourgeoisie, over-wise Kautsky separates one link of a single chain
from another, separates the present peaceful (and ultra-imperialist, nay, ultra-ultra-imperialist) alliance of all the powers for the “pacification” of China (remember
the suppression of the Boxer
Rebellion ) from the non-peaceful conflict of tomorrow, which will prepare the ground for another “peaceful”
general alliance for the partition, say, of Turkey, on the day
after tomorrow, etc., etc. Instead of showing the living connection between periods of imperialist peace and
periods of imperialist war, Kautsky presents the workers with
a lifeless abstraction in order to reconcile them to their
lifeless leaders.

An American writer, Hill, in his A History of the Diplomacy
in the International Development of Europe refers in his
preface to the following periods in the recent history of
diplomacy: (1) the era of revolution; (2) the constitutional
movement; (3) the present era of “commercial imperialism.” [8] Another
writer divides the history of Great Britain’s “world policy” since
1870 into four periods: (1) the first Asiatic period (that of the
struggle against Russia’s advance in Central Asia towards India);
(2) the African period (approximately 1885-1902): that of the
struggle against France for the partition of Africa (the “Fashoda
incident” of 1898 which brought her within a hair’s breadth of war
with France); (3) the second Asiatic period (alliance with Japan
against Russia); and (4) the “European” period, chiefly
anti-German. [9] “The political patrol clashes take place on the financial field,” wrote the banker, Riesser, in 1905,
in showing how French finance capital operating in Italy was
preparing the way for a political alliance of these countries, and
how a conflict was developing between Germany and Great Britain
over Persia, between all the European capitalists over Chinese
loans, etc. Behold, the living reality of peaceful “ultra-imperialist” alliances in their inseverable connection with
ordinary imperialist conflicts!

Kautsky’s obscuring of the deepest contradictions of imperialism, which inevitably boils down to painting imperialism
in bright colours, 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
striving for domination, not for freedom. Whatever the political
system, the result of these tendencies is everywhere reaction and
an extreme intensification of antagonisms in this field. Particularly intensified become the yoke of national
oppression and the striving for annexations, i.e., the violation
of national independence (for annexation is nothing but the
violation of the right of nations to self-determination). Hilferding rightly notes the connection
between imperialism and the intensification of national
oppression. “In the newly opened-up countries,” he writes, “the
capital imported into them intensifies antagonisms and excites
against the intruders the constantly growing resistance of the
peoples who are awakening to national consciousness; this
resistance can easily develop into dangerous measures against
foreign capital. The old social relations become completely
revolutionised, the age-long agrarian isolation of ‘nations
without history’ is destroyed and they are drawn into the
capitalist whirlpool. Capitalism itself gradually provides the
subjugated with the means and resources for their emancipation and
they set out to achieve the goal which once seemed highest to the
European nations: the creation of a united national state as a
means to economic and cultural freedom. This movement for national
independence threatens European capital in its most valuable and
most promising fields of exploitation, and European capital can
maintain its domination only by continually increasing its
military forces.” [10]

To this must be added that it is not only in newly opened-up
countries, but also in the old, that imperialism is leading to
annexation, to increased national oppression, and, consequently,
also to increasing resistance. While objecting to the intensification of political reaction by imperialism, Kautsky
leaves in the shade a question that has become particularly
urgent, viz., the impossibility of unity with the opportunists in
the epoch of imperialism. While objecting to annexations, he
presents his objections in a form that is most 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 of Alsace-Lorraine by
Germany. In order to appraise this “mental aberration” of
Kautsky’s I shall take the following example. Let us suppose that
a Japanese condemns the annexation of the Philippines by the
Americans. The question is: will many believe that he does so
because he has a horror of annexations as such, and not because he
himself 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 critique of imperialism, are permeated through and through with a spirit, absolutely
irreconcilable with Marxism, of obscuring and glossing over the
fundamental contradictions of imperialism and with a striving to
preserve at all costs the crumbling unity with opportunism in the
European working-class movement.

## Notes

[1] Weltwirtschaffliches Archiv , Bd. II, S. 193.
— Lenin

[2] J. Patouillet ,
L’impérialisme américain, Dijon, 1904,
p. 272.
— Lenin

[3] Bulletin de l’Institut
International de Statistique, T. XIX , Lvr. II,
p. 225.
— Lenin

[4] Kautsky, Nationalstaat,
imperialistischer Staat und Staatenbund, Nürnberg, 1915,
S. 72, 70.
— Lenin

[5] Finance Capital, p. 567.
— Lenin

[6] Die Bank, 1909, 2, S. 819
et seq.
— Lenin

[7] Die Neue Zeit , April 30,
1915, S. 144.
— Lenin

[8] David Jayne Hill, History of the
Diplomacy in the International Development of Europe , Vol. I,
p. X.
— Lenin

[9] Schilder, op. cit., S. 178.
— Lenin

[10] Finance Capital ,
p. 487.
— Lenin

[11] 

[12] 

[13] 

## X. THE PLACE OF IMPERIALISM IN HISTORY

We have seen that in its economic essence imperialism is
monopoly capitalism.  This in itself determines its place in
history, for monopoly that grows out of the soil of free
competition, and precisely out of free competition, is the
transition from the capitalist system to a higher socio-economic
order.  We must take special note of the four principal types of
monopoly, or principal manifestations of monopoly capitalism,
which are characteristic of the epoch we are examining.

Firstly, monopoly arose out of the concentration of production
at a very high stage.  This refers to the monopolist capitalist
associations, cartels, syndicatess, and trusts.  We have seen
the important part these play in present-day economic life.  At
the beginning of the twentieth century, monopolies had acquired
complete supremacy in the advanced countries, and although the
first steps towards the formation of the cartels were taken by
countries enjoying the protection of high tariffs (Germany,
America), Great Britain, with her system of free trade, revealed
the same basic phenomenon, only a little later, namely, the
birth of monopoly out of the concentration of production.

Secondly, monopolies have stimulated the seizure of the most
important sources of raw materials, especially for the basic and
most highly cartelised industries in capitalist society: the
coal and iron industries. The monopoly of the most important
sources of raw materials has enormously increased the power of
big capital, and has sharpened the antagonism between cartelised
and non-cartelised industry.

Thirdly, monopoly has sprung from the banks. The banks have
developed from modest middleman enterprises into the monopolists
of finance capital. Some three to five of the biggest banks in
each of the foremost capitalist countries have achieved the
“personal link-up” between industrial and bank capital, and have
concentrated in their hands the control 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 network of dependence relationships over all the
economic and political institutions of present-day 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, i.e., for spheres
for profitable deals, concessions, monopoly profits and so on,
economic territory in general. When the colonies of the European
powers,for instance, comprised only one-tenth of the territory
of Africa(as was the case in 1876), colonial policy was able to
develop—by methods other than those of monopoly—by the “free grabbing” of territories, so to speak. But when
nine-tenths of Africa had been seized (by 1900), when the whole
world had been divided up,there was inevitably ushered in the
era of monopoly possession of colonies and, consequently, of
particularly intense struggle for the division and the redivision
of the world.

The extent to which monopolist capital has intensified all the
contradictions of capitalism is generally known. It is sufficient to mention the high cost of living and the tyranny of
the cartels. This intensification of contradictions constitutes
the most powerful driving force of the transitional period of
history, which began from the time of the final victory of world
finance capital.

Monopolies, oligarchy, the striving for domination and not for
freedom, the exploitation of an increasing number of small or
weak nations by a handful of the richest or most powerful
nations—all these have given birth to those distinctive
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 of the “rentier state”, the usurer state, in which the
bourgeoisie to an ever-increasing degree 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
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 greater or lesser
degree, now one and now another of these tendencies. On the
whole, capitalism is growing far more rapidly than before; but
this growth is not only becoming more and more uneven in
general, its unevenness also manifests itself, in particular, in
the decay of the countries which are richest in capital
(Britain).

In regard to the rapidity of Germany’s economic development,
Riesser, 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, compares with the rapidity with which the
whole of Germany’s national economy, and with it German banking,
progressed during this period (1870-1905) in about the same way
as the speed of the mail coach in the good old days compares
with the speed of the present-day automobile ... which is
whizzing past so fast that it endangers not only innocent
pedestrians in its path, but also the occupants of the car.” In
its turn, this finance capital which has grown with such
extraordinary rapidity 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 for this very reason , the parasitic features of modern American capitalism have stood
out with particular prominence. On the other hand, a comparison
of, say, the republican American bourgeoisie with the monarchist
Japanese or German bourgeoisie shows that the most pronounced
political distinction diminishes to an extreme degree in the
epoch of imperialism—not because it is unimportant in general, but because in all these cases we are talking about 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 the numerous
countries, etc., makes it economically possible for them to
bribe certain sections of the workers, and for a time a fairly
considerable minority of them, and win them to the side of the
bourgeoisie of a given industry or given nation against all the
others. The intensification of antagonisms between imperialist
nations for the division of the world increases this urge. And
so there is created that bond between imperialism and opportunism, which revealed itself first and most clearly in
Great Britain, 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, are
prone to wave aside the connection between imperialism and
opportunism in the working-class movement—a particularly
glaring fact at the present time—by resorting to “official optimism” ( à la Kautsky and Huysmans)
like the following: the cause of the opponents of capitalism
would be hopeless if it were progressive capitalism that led to
the increase of opportunism, or, if it were the best-paid
workers who were inclined towards opportunism, etc. We must have
no illusions about “optimism” of this kind. It is optimism in
respect of opportunism; it is optimism which serves to conceal
opportunism. As a matter of fact the extraordinary rapidity and
the particularly revolting character of the development of opportunism is by no means a guarantee that its victory will be
durable: the rapid growth of a painful abscess on a healthy body
can only cause it to burst more quickly and thus relieve the
body of it. The most dangerous 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 essence
of imperialism, it follows that we must define it as capitalism
in transition, or, more precisely, as moribund capitalism. It is
very instructive in this respect to note that bourgeois
economists, in describing modern capitalism, frequently employ
catchwords and phrases like “interlocking”, “absence of
isolation”, etc.; “in conformity with their functions and course
of development”, banks are “not purely private business
enterprises: they are more and more outgrowing the sphere of
purely private business regulation”. And this very Riesser,
whose words I have just quoted, declares with all seriousness
that the “prophecy” of the Marxists concerning “socialisation”
has “not come true”!

What then does this catchword “interlocking” express? It merely
expresses the most striking feature of the process going on
before our eyes. It shows that the observer counts the separate
trees, but cannot see the wood. It slavishly copies the
superficial, the fortuitous, the chaotic. It reveals the
observer as one who is overwhelmed by the mass of raw material
and is utterly incapable of appreciating its meaning and
importance. Ownership of shares, the relations between owners of
private property “interlock in a haphazard way”. But underlying
this interlocking, its very base, are the changing social
relations of production. When a big enterprise assumes gigantic
proportions, and, on the basis of an exact computation of mass
data, organises according to plan the supply of primary raw
materials to the extent of two-thirds, or three-fourths, of all
that is necessary for tens of millions of people; when the raw
materials are transported in a systematic and organised manner
to the most suitable places of production, sometimes situated
hundreds or thousands of miles from each other; when a single
centre directs all the consecutive stages of processing the
material right up to the manufacture of numerous varieties of
finished articles; when these products are distributed according
to a single plan among tens and hundreds of millions of
consumers (the marketing of oil in America and Germany by the
American oil trust)—then it becomes evident that we have
socialisation of production, and not mere “interlocking”, that
private economic and private property relations constitute a
shell which no longer fits its contents, a shell which must
inevitably decay if its removal is artificially delayed, a shell
which may remain in a state of decay for a fairly long period
(if, at the worst, the cure of the opportunist abscess is
protracted), but which will inevitably be removed.

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

“Once the supreme management of the German banks has been
entrusted to the hands of a dozen persons, their activity is
even today more significant for the public good than that of the
majority of the Ministers of State. .. . (The “interlocking” of
bankers, ministers, magnates of industry and rentiers is here
conveniently forgotten.) If we imagine the development of those
tendencies we have noted carried to their logical conclusion we
will have: the money capital of the nation united in the banks;
the banks themselves combined into cartels; the investment
capital of the nation cast in the shape of securities. Then the
forecast of that genius Saint-Simon will be fulfilled:
‘The present anarchy of production, which corresponds to the fact
that economic relations are developing without uniform regulation, must make way for organisation in
production. Production will no longer be directed by isolated
manufacturers, independent of each other and ignorant of man’s
economic needs; that will be done by a certain public institution. A central committee of management, being able to
survey the large field of social economy from a more elevated
point of view, will regulate it for the benefit of the whole of
society, will 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 functions a certain organisation of economic labour, the banks.’  We are still a
long way from the fulfilment of Saint-Simon’s forecast, but we
are on the way towards it: Marxism, different from what Marx
imagined, but different only in form.” [1]

A crushing “refutation” of Marx indeed, which retreats a step
from Marx’s precise, scientific analysis to Saint-Simon’s
guess-work, the guess-work of a genius, but guess-work all the
same.

## Notes

[1] Grundriss der Sozialökonomik , S. 146.
— Lenin