Imperialism, the Highest Stage of Capitalism

A POPULAR OUTLINE

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 in 1900 |
| 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
in Europe | Edison Co. establishes in Eu- rope the
French Edison Co. which transfers its patents to the
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:

| | Turnover (000,000 marks) | Number of employees | Net profits (000,000 marks) |
| --- | --- | --- | --- |
| America: General Electric
Co: (G.E.C) | | | |
| 1907 1910 | 252 298 | 28,000 32,000 | 35.4 45.6 |
| Germany: General Electric
Co: (A.E.G.) | | | |
| 1907 1911 | 216 362 | 30,700 60,800 | 14.5 21.7 |

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