The Internationalisation of Capitalist Interests  

I. Changes in the Basis of Production 

The war has not only transformed the national structure of capital; it has also revolutionised the international structure. The latter change has been mainly determined by the extensive modifications which the peace treaties have effected in the old national economic units. 

Everyone knows, nowadays, that the world war was, first and foremost, an economic war. During the last decades of the nineteenth century and the opening years of the twentieth century, industrialisation had advanced with such rapid strides in the various countries of Europe that the national supplies of raw materials had become inadequate. A new and wider foundation was indispensable, and the first condition of the requisite expansion was that there should be a union between German coal and French ore. The main problem the war had to decide was whether this union should be effected under the French flag or the German. 

The immediate issue of the fight has left the question unsettled. Neither Germany nor France has been able to assert definitive supremacy. We may add that the failure of France to take full advantage of victory on the battlefield has been due, not so much to moderation, as to the fact that her economic interests conflict with those of her allies.

Nevertheless, the peace treaties have led to a considerable reduction in Germany's productive basis, while France has correspondingly gained. The Saar coal basin has been detached from Germany, for fifteen years at least. Germany, moreover, has forfeited to Poland a large part of the Upper Silesian coal area. But the most decisive change has been effected by the French re-annexation of Alsace-Lorraine, seeing that prior to the war sixty per cent. of the German ore was drawn from the lost provinces. Thereby the mineral wealth of France, already considerable, has been greatly increased, so that France is now able to produce a far larger quantity of ore than Germany (including Lorraine) could produce prior to the war. In pre-war days, Germany produced annually about thirty-six million tons of ore as against twenty-two million tons produced by France. To-day the total capacity of the respective countries for normal production is fifteen million tons in the former case and forty-three million tons in the latter.

This great increase in mineral wealth will not profit France unless an ample supply of coal can be obtained for smelting purposes. There is not enough coal in France to meet these requirements. Before the war, the French used to send across the German frontier about one-fifth of the ores they mined; and every year they imported from Germany about two million tons of coke. The peace treaties have not brought France any new coal areas, except for the Saar district, and the Saar coal is not suitable for smelting. Consequently, France is even more dependent on German coal than she was prior to the war.

It is of the utmost importance that the reader should not lose sight of the changes in the general foundations of production, for they are the explanation of most of the notable happenings of the post-war epoch, and account for the persistent conflicts between Germany and France. I do not mean that an intelligent person will regard these conflicts as inevitable and justifiable. But the facts show that private interests are the chief determinants of the struggle.

There are only two ways of solving this problem of the conflict of interests between German heavy industry and French heavy industry. One is by way of an understanding. The other is by way of force, which means a new world war. Which way will be chosen?

The armaments' fever from which France is suffering indicates that the way of force is not altogether improbable. But there are great obstacles along this path. If France should come to blows with Germany, she would at once be isolated from the most powerful of her former allies. and moreover, it seems doubtful whether so soon after the world war the bourgeoisie of any country would venture to entrust the masses with weapons. As regards Germany, the Entente has forbidden her to maintain an army worth considering, so that it would be sheer lunacy for that country to seek an issue by force of arms. Finally, the world war has proved that economic problems cannot be solved by cannon fire. Neither France nor Germany can be solely interested in economic supremacy; both countries require markets for enhanced production. But to-day Europe has been so terribly impoverished by the war as to have no more than a fraction of the pre-war purchasing power. Another Great War would reduce purchasing power to zero.

All these considerations point to the desirability of securing the best possible settlement by way of mutual understanding, and in actual fact attempts in this direction have been made several times.

The first step of the kind was made by Erzberger, the leader of the Catholic Centre Party in the Reichstag. Before the end of the war he penned a memorial addressed to Great Britain, urging that foreign capital should be invested in German enterprises. Especially he hoped to interest British capital in this scheme. Now at that time England was regarded by Germany as one of the most hateful of her enemies, and in certain economic circles was even looked upon as the real instigator of the war. Erzberger's proposal showed how quickly the interests of capitalist patriotism can be adapted to changing conditions. His underlying motive would seem to have been a conviction that the investment of British capital in German industry would supply the foundation of a lasting peace between the two countries, and also the belief that, if the plan were adopted, the "nation of shopkeepers" would do its best to safeguard the interests of German industry during the peace negotiations.

Since the end of the war this plan of bringing about a close linking of interests between British and German capital has never been wholly abandoned. From time to time it has been brought forward in various circles. The idea played a part at the Genoa Conference. Two years ago, considerable stress was laid by Rechberg on a similar scheme, but the suggestion this time was that the linking of interests should be effected, not with England, but with Germany's direct rival, French heavy industry.

The scheme has not as yet led to any notable results in either of its forms. Under Stinnes' leadership, German heavy industry has vigorously opposed Rechberg's plan of an accommodation with the French. This does not prove that on principle Stinnes is averse to an understanding. It merely shows that the proposed solutions do not fulfil Stinnes' personal interests, or that for one reason or another they seem to him premature. On several occasions Stinnes has undertaken prolonged negotiations with British and French industrials. In I922 he made an agreement with Lubersac and Bemelmans. A year earlier, he was in close touch with the French financier Jules Bernard, one of the directors of the Comité des Forges. We learn from the "Manchester Guardian Commercial" of February 18, I923, that during the year I922 there had been almost unceasing negotiation between the French, German, and Belgian industrials, with a view to establishing an international price cartel (for sales). At the same time an agreement was likely to be reached between the French Comité des Forges and the Verband der deutschen Eisen und Stahlindustriellen,* relating to the supply of coke.

Again, the sole cause of the Ruhr conflict was the question to what extent the French should participate in German industry. But the representatives of heavy industry throughout the world have ways and means of influencing the press. The French and the German parties to this quarrel knew very well how to deceive the public as to the real meaning of the struggle, and were able to pose as patriots - the German industrials being described in the German papers as persecuted for their royalty to the fatherland! No one was allowed to know that shortly before the occupation of the Ruhr the industrial magnates of the two countries had been hobnobbing, and that private negotiations were being continued even while the struggle was officially in progress. To-day this is an open secret. When the Ruhr fight came to an end, Rechberg made a statement which has never been contradicted. He said: 'I cannot understand why Herr Stinnes opposes my plan'. I learn from Paul Reynaud, the French Deputy, that in June of the present year (1923) Stinnes wanted to negotiate with him. Since M. Reynaud supports my own plan, this implies that Stinnes wanted, to discuss with Reynaud the idea of French participation. I am forced to conclude that the conditions Herr Stinnes wished to secure must have differed only in points of detail from my own proposals. I hold, moreover, that the resistance to my scheme is futile. An alliance between French and German industrial interests is inevitable, and such an alliance would be extremely advantageous to both nations.'

The following extract from the 'Frankfurter Zeitung' shows that Stinnes was trying to negotiate with the French at an earlier date than that mentioned by Rechberg: "Herr Rechberg's remarks anent Herr Stinnes' endeavours to treat with the French are very much to the point. We have direct knowledge of the fact that Herr Stinnes was making overtures, not only to M. Reynaud, but to other political and economic groups; not only in June, but at an earlier date - at a time when the journals within his sphere of influence were preaching passive resistance to the last extremity.'

The Ruhr fight is over now. What sort of final settlement do the industrials look forward to? Considerable light on this problem is thrown by an interview given by Hugo Stinnes to a representative of the 'Journal des Débats' It is of such importance that I shall reproduce the most significant passages in full. The interview runs follows:

lheim-on-the-Ruhr, January 6, 1924.

'I have just seen M. Hugo Stinnes.

'I said to him: 'M. Stinnes, I wish you would tell me what you think of the agreements which have been reached with the Micum, and what you think about their being carried out. I should like to know your views upon the reparations question, upon the future relationships between Germany and France. If possible, I should like to have your opinion upon the plan advocated in Paris by M. Arnold Rechberg.'

'I think,' he said, 'that it would be extremely risky, at this stage, to make any public statement regarding certain details of these agreements. Undue publicity is one of the troubles of our day. It has often compromised negotiations which might have been most advantageous to the public.

'The Micum understandings are already a beginning of reparations, a first step towards the settlement of this matter. But their effect, as you know, is to impose upon the Ruhr industrials and companies the burden of a debt which is really the Reich's debt, one for the discharge of which Germany as a whole is responsible. Naturally it is impossible that we should take Germany's place here, in the payment of reparations due to France...

'My view is that the first step should be for the governments to come to an agreement on the sums to be paid annually. They must settle the yearly figure of the amounts to be delivered. Calculated on a gold basis, the annual payments can be covered by long-term contracts (extending over twenty or thirty years) between the industrialists of the respective countries.

'Thus the actual payments would be made in fuel, chemical products, and the like; and the German mines and factories would be indemnified by the government of the Reich. The materials handed over would be delivered to industriel or agricultural consumers in France, Belgium, and Italy, payment for these commodities being made to the respective governments by those who receive them, and the amount of such payments being entered in a special reparations account. In any case, my opinion is that these long-term contracts should be made between the industrials themselves, and not by the governments.

To avoid misunderstanding, let me explain once more that the actual fixing of the amount of the annual payments should be a governmental matter. But the making of the payments in kind is an industriel and financial problem.

'It is essential, moreover, that the industrials of the Ruhr and the Rhine, upon whom, in the nature of things, it will be incumbent to make the greater part of such deliveries in kind, shall feel assured that they will be indemnified by the Reich. Perhaps the Reich will earmark certain taxes for this purpose, the necessary guarantees and securities being furnished by a government department instituted for this special purpose. We must be able to have perfect confidence that the agreed mechanism will work satisfactorily. If this condition be fulfilled, we can pledge ourselves to carry out the understanding.

'That seems to me the best way of settling the reparations question. The plan has enormous advantages, over and above those that are the immediate aim of the scheme. It would restore the confidence necessary to the smooth conduct of business, to the general safety of life, to wellbeing. I have no doubt whatever that great perspectives will be opened by the mere fact that we, Germans and Frenchmen, could thus show the Americans that we have come to terms. As things are, there is no trust in us, so that we can get no credits. My son is now in the United States, and such is his report on the situation. We ourselves, whose credit used to stand high in the States, now find that that credit is shaken because, at the present juncture, we have to take the place of the Reich in the matter of settling the war indemnities.

'In what light do they regard us, these capitaliste of a distant land which has nothing to do with our quarrels? They look upon us as we used to look upon Mexico or Cuba! They will not lend us money that we may squander it, or that we may use it to make war on one another. But the money is there, waiting to be used. As soon as we have come to an understanding with one another it will be made available to us on remarkably easy terms.

I am quite sure that what I have named is the only trouble between France and America, and between Germany and America.

'That is why (I speak as a German, but I believe that I am representing French interests as well as German) we must honestly try to find a sound basis for the settlement of the reparations question. We must seize the opportunities offered by the negotiations and the agreements with the Micum. Time presses. We must choose between two possibilities. We can either liquidate the present state of affairs by means of a new war and further ruin; or we can work for peace through a stable understanding between two countries which cannot remain permanently hostile. I am working on behalf of the latter alternative.'

'What about M. Arnold Rechberg's plan? I enquired.

'M. Stinnes replied as follows:

'If the far-reaching agreements of which I have already spoken, the agreements between the German and the French industrials, were to be made, we should be able to look forward to the day when there might be an exchange of shares between the industrial companies on one side of the frontier and the other. That might well come to pass. But an attempt to force the industrialists to allow the governments to meddle in their affairs would be so preposterous that nothing can be said in its favour.

'Industrials who have common interests, and who mutually esteem one another - they are the people who can work together.'

We are indebted to Herr Stinnes for his frankness to the French interviewer. The following deductions may be drawn from his remarks.

German heavy industry, in whose name Stinnes speaks, wants:

I. To make deliveries, in kind. on account of reparations, to amounts decided by agreements between the governments;

2. To bring about an exchange of shares between German and French enterprises.

But German heavy industry does not want:

I. To have the details of the deliveries in kind controlled by the governments;

2. To allow the German government to meddle in business affairs.

Thus payments in kind by way of reparations are to be effected. exclusively by private treaty between the industrial groups of the respective countries. The governments are to have no say as to the nature of the payments in kind. The prices are to be settled exclusively by private bargaining. All that the German government will have to do in the matter is to pay the bill when the German industrials send it in.

While Stinnes demands that the government should have absolute confidence, in German heavy industry, he will not reciprocate in this matter. He will not be content with a mere pledge that the government will settle accounts in due time. He insists that the necessary guarantees and securities shall be furnished by the earmarking of certain taxes and by establishing a special government department. The payments in kind are not to begin until these conditions have been fulfilled. However important the question whether German heavy industry, with the aid of France, is to become a sort of tax collector in Germany, we cannot discuss it further here. Enough that Stinnes should be willing to surrender parts of his own enterprises to the "hereditary enemy," while fighting tooth and nail against allowing the German government to have a finger in the same pie. The nature of capitalist patriotism was vividly displayed throughout the Ruhr struggle. The above-quoted interview places it in a yet more remarkable light.

One additional question arises in this connection. Why did German heavy industry not do its utmost to oppose the occupation, if it opined that the conflict of interests could only be settled by way of mutual understanding? Why, for instance, did German heavy industry deliberately sabotage the policy of the Wirth ministry, which aimed at the full payment of reparations? Why did the industrials corner the market, so that the securities needed for the payment of reparations were unobtainable? Wirth, the premier, found it necessary (it will be remembered) to censure publicly the selfishness and greed of the German capitaliste.

The explanation is not far to seek. In this matter of reparations, the government was to pay the piper, but the industrials were to call the tune. The actual making of the reparations was to be in their hands. But the government could not be prevented from playing a part in the game unless it had first of all been weakened. I do not wish to imply that this was the only aim of the Ruhr occupation and of the policy of passive resistance. Still, there can be no doubt that the occupation and the policy in question proved the best way of ruining both the State and the German workers, while furnishing the German industrials with renewed possibilities for immense enrichment at the cost of the community.

More than ever, therefore, do I feel justified to-day in reiterating the contention I put forward at various public meetings in Germany directly after the occupation of the Ruhr had begun. I considered and consider it possible that the occupation was the outcome of a secret understanding between German and French heavy industry. Before the occupation, in certain industrial circles there had been a wish for a military occupation of the Ruhr, which, so the employers considered, might help to break the strength of the strongly organised and combative workers in this industrial area, one of the most important in the world. Moreover, in May 1921, nearly two years before the occupation, Stresemann, who subsequently became premier, had demanded in the Reichstag "the endorsement of everything which could induce the chiefs of the great world-wide economic concerns to join hands instead of competing with one another." Why was it that twenty months later so little attempt was made to follow this advice by the very persons who had given it? Why did those grouped round Stresemann clamour for passive resistance? Why did the Cuno government, whose main prop was the Stinnes-Stresemann party, organise passive resistance in January 1923? Was it not because the struggle on the Ruhr and the Rhine was advantageous at one and the same time to the German and to the French industrialists?

My conviction that before and during the Ruhr occupation there was a private understanding continually in view between the German and French industrialists is not based solely upon such statements as those previously quoted. The manifest behaviour of the industrials speaks more plainly than any declarations or interviews. I am thinking, above all, of the extensive investments made during recent years by German heavy industry all over the world. There was a time when almost every day there could be read in the papers the news that some fresh undertaking had been founded by German industrials in Austria, Czecho-Slovakia, Scandinavia, South America, or the Dutch colonies; or that some extant undertaking had been acquired by Germans. The Stinnes concern has been especially conspicuous for the international character of its ramifications. Everywhere it owns or controls enterprises and establishments wielding large amounts of capital. Can we suppose that this expansion of business interests across the frontiers and across the seas would have taken place if Stinnes and the German heavy industrialists had wavered for a moment in the belief that, after all the quarrels about reparations (the Ruhr quarrel not excepted), the German and French heavy industrialists would join forces, would unite to form an international concern?

Two transactions of the kind may be mentioned here. First of all, the Stinnes concern has joint interests in Czecho-Slovakian enterprises with the Schneider-Creusot concern the most powerful of the French industrial undertaking; and this community of interests has been considerably increased by a joint participation in the Austrian Alpine Montana Co. Secondly, at the very beginning of the Ruhr conflict an agreement was made between the Batiste Aniline and Soda Works and the French government, whereby the German patent for the manufacture of nitrogen was transferred to France, and at the same time a promise was given by the German factory that its own staff would help in the establishment of a nitrogen factory in France and in the training of the French staff.

These were not chance developments. Both transactions had been prepared long in advance, and it is noteworthy that the Ruhr conflict did not interfere for a moment with their being carried into effect. With regard to the Batiste Aniline and Soda Works, it is well to point out that this undertaking is not an isolated one, and cannot have been acting independently of associated enterprises. The firm is closely connected with the chief manufacturing chemists of Germany, and has always co-operated with them in the utilisation of the nitrogen manufacturing process that was sold to the French government. The agreement with the latter can only have been made with the knowledge and consent of the Badische firm's German associates.

This cession of a patent to the French government is an interesting matter from quite another aspect to the foregoing. It is common knowledge that the discovery how to manufacture ammonia from the air was one of the things which chiefly enabled Germany to continue the war so long. Owing to the blockade, the artificial fertilisers essential to agriculture could no longer be imported, but now a substitute could be manufactured at home. In addition, the discovery was of vital significance to the munitions industry. Several references were made, during the discussion of the agreement in the French Chamber, to the importance of this matter. It was announced that the agreement would enable France to carry out her armaments program. At the close of the debate, Lefèvre, the minister of war, officially congratulated Loucheur, who had engineered the agreement on the French side.

The community of interests between the German and the French heavy industrials has its bearing upon another factor of the drawing together of international capital- the partition of Austria-Hungary, and its break up into a number of petty States.

2. Colonisation of Europe

However destructive the war as regards Iife and property, it has been creative as regards the formation of States at the expense of Germany, Russia, and, above all, the sometime Habsburg empire. The new countries can have their existence justified, with much display of learning, through reference to historical conditions that obtained in earlier centuries, but they lack an adequate basis for independent existence as far as capital is concerned and in the domain of economic life.

It would be superfluous here to consider the motives of this partition of some of the old political units. Already it is manifest that the design of France to bring all the new formations under her exclusive control will not be fulfilled. There are several reasons for the French failure. Apart from the contemporary economic dependence of France upon Germany, the immense indebtedness of France to Great Britain and the United States is a considerable factor. (The French debt to the United States is nearly four milliard dollars, and to Great Britain about three-fourths of that amount; France has also lost one milliard dollars in Russia.) An additional cause is the utter impoverishment of the territories out of which the new States have been fashioned.

In the countries formed by the break-up of Austria-Hungary, French influence has already to reckon with the competition of British, German, and American capital. In this area there is now to be witnessed the most extensive and most diversified interweaving of international capitalist interests that the world has ever known. A new "Drang nach Osten" [Urge to the East] has suddenly seized all the great States of Europe like a fever. The main base of operations for the conquest of south-eastern Europe is Vienna, and the Viennese banks are the chief implements in the attack. The banks are entirely under foreign influence. In the "Manchester Guardian Commercial" of January3I, 1924, we find an extremely vivid account of the movement, from which the following passage, may be quoted:

"It is for the moment an indisputable fact that Vienna has become the chief trading centre of Middle and Eastern Europe, and even does a good deal towards financing Germany. The result has been an entirely new set of bank connections between Vienna and the west and south. Of the English banks, the National Provincial and Union Bank and Lazard Brothers are connected with the Credit-Anstalt, which possesses affiliated banks in all Succession States. This bank, in union with the Rothschild group and the firms of Warburg and the International Acceptance Bank, owns the Amstelbank of Amsterdam, where an enormous German business is carried on. The firms of Warburg and the International Acceptance Bank also have a direct connection with the National Provincial and Union Bank. Messrs. Schroeder, Messrs. J. P. Morgan in America, and a group of Dutch bankers, hold important interest in the Allgemeine Oesterreichische Bodenkreditanstalt, which controls about 100 industrial undertakings and a number of banks in Czecho-Slovakia and Hungary. Lloyds Bank, Hambro's Bank, and a trust company founded for that purpose, have of late concluded arrangements with the Niederösterreichische Eskompte Gesellschaft, which also belongs to the group of the 'Union Européenne'. This group is closely connected with Schneider-Creusot in France. The relations between the Bank of England and the Anglo-Austrian Bank need no elaboration, although it should be noted that the English group seems willing of late, to give the Vienna board a greater degree of freedom. The London and Eastern Trade Bank holds interests in the Mercurbank, the shares of which have found access to the New York Stock Exchange. Messrs. Kleinwort and Sons control, in alliance with Messrs. Mendelsohn, a large holding in the banking house of Kux, Bloch and Company, of Vienna, while other London financial interests are connected with the British-Austrian bank and its sister bank, the British-Hungarian Bank of Budapest. Of Belgian and Italian connections, mention must be made of the Banque Générale Belge and the Credito Italiano, of which the former has a considerable interest in the Wiener Bank-Verein and the latter in several Austrian institutions. In addition to that there are innumerable connections between foreign interests and private banking firms in Vienna. Austrian banks have been active in their turn, the most prominent instance being the firm S. Bosel, which, in addition to its industriel expansions, has acquired various German banks. The future certainly points to some further developments as soon as Germany is able to resume the role she formerly played in European trade and finance."

Above all, it is the heavy industry concerns which are stretching their iron tentacles eastward. The channels through which the stream of western capital is flowing are too intricate to be followed here in detail. I shall be content to describe the main ramifications of the two most powerful iron concerns, the Schneider-Creusot concern and the Stinnes concern.

The first appearance of Schneider-Creusot in eastern Europe dates from the spring of 1919. The Oesterreichische Berg und Hüttenwerke owned important coal mines, smelting furnaces, and steel works in the Teschen district. By participation with the Austrian mining company, Schneider-Creusot secured a footing for a further advance. Soon afterwards, the French concern acquired a considerable part of a new issue of shares by the famous Skoda armament works of Pilsen. Then the Schneider-Creusot undertaking rested on its oars for a time, white arranging for fresh supplies of capital. This was managed chiefly by the influence that could be exerted on the French banks, Union Parisienne and Crédit Lyonnais. In the spring of I920, Schneider-Creusot was able to resume a rapid and successful expansion of interests. One after another, it secured control of the Prager Eisenindustrie, the Pankrac-Minen, the Stahlwerke Hradecz-Kralov, and the Veitsche Magnesitwerke in Styria; and a year later it was able to extend its influence over the Berg- und Hüttenwerke of Moravian Ostrau.

At the same time the Schneider-Creusot concern was busily at work extending its interests in Poland. In 1919 it gained control over the Huta-Bankowa works, in which the Crédit Lyonnais already had an interest before the war. The same year, in collaboration with the British armaments firm of Vickers, it founded the Polish Society for the Supply of Munitions. In addition, Schneider-Creusot was extending its banking interests in Hungary, Yugoslavia, and Rumania.

The latest among the larger transactions of this kind was an arrangement for a community of interests with the Niederösterreichische Eskompte Gesellschaft, whereby the Schneider-Creusot group secured an influence in the Oesterreichische Alpine Montan Gesellschaft. The activities of the last-named company embrace coal mines, smelting furnaces, and rolling mills, so that it is one of the most important among continental enterprises.

The Austro-Hungarian Succession States, with their great mineral wealth and their highly developed manufacturing industry, could hardly fail to prove alluring to the Stinnes concern. Especially attractive were the mineral resources of Austria and Czecho-Slovakia, through whose exploitation the German heavy industrialists hoped to secure a partial compensation for the loss of the ironfields of Lorraine. The most obvious advance in this direction was to form a union with the Oesterreichische Alpine Montan Gesellschaft, which controls almost all the ore deposits left to Austria, and turns out more than twenty million tons yearly. This company had hitherto been controlled by the Italian Fiat group, which held a majority of the shares. Stinnes purchased the Fiat holdings, and was able to do so on advantageous terms, for the undertaking was in difficulties, owing to the inadequacy of the coal supplies at its command Stinnes was able to put two Upper Silesian coal mines at the disposal of the Austrian mining company, and he also arranged to supply the latter with six hundred thousand tons of coke every year.

This has been the biggest of the Stinnes expansions, outside the German frontiers; but among a number of other acquisitions, several of considerable importance remain to be mentioned, such as participation in the Czecho-Slovakian iron industry through the acquisition of the Rima-Muranjer-Salgo-Tarjaner ironworks. Stinnes has also got possession of the Waggon und Schiffbau Gesellschaft Hugo Ganz of Ratibor and Budapest; and the Aluminiumerzwerke und Industrie Company of Bucharest.

The chief ramifications of the two biggest continental concerns have now been enumerated. But there are a number of important lesser ones, especially those interested in electrical power.

French interests are very much in evidence in Poland. The Huta-Bankowa works have already been mentioned. French capital is also dominant in the Sosnovicer Berg und Hüttenanlagen Company, which owns important zinc mines, pipe works, and zinc roIling-mills; in the Dombrowa coal basin; in the Polish petroleum industry; and in the textile industry (according to official figures, 75% of the capital in Polish textiles is French). In February I924, a plan was afoot to form a British, French, and Italian syndicate for the exploitation of the mineral wealth of Poland. But French and German capital are likewise associated in the Polish petroleum industry. M. Georges Benard, of the Benard bank in Paris, is interested in the Société Galicienne des Carpathes, in which Baron von Liebig and Dr. Freund of the Deutsches Erdöl Limited in Berlin have a stake.

All the before-mentioned combines are supplemented by a network of trading and selling organisations which spreads throughout eastern Europe; for western industriel capital wants to use this area, not only for productive purposes, but also as a market for western products. It is not for philanthropic reasons that capital flows eastward, not from a mere charitable desire to revive the economic life of countries that are more or less bankrupt. As usual, what capital aims at is to secure as much surplus value as possible. In this respect the petty States of eastern Europe offer the most attractive possibilities. Except for Czecho-Slovakia and Austria, they are not as yet highly industrialised. Before the war, their industrialisation was, to some extent, deliberately hindered. The agrarian magnates did not favour the development of powerful lords of industry, who would challenge their own supremacy. Moreover, they were afraid that industrialisation would draw labour away from the land, and would be likely to lead to the formation of a class-conscious proletariat putting forward demands on its own account.

Dependence upon foreign, capital has broken down the resistance to industrialisation, and the western system of industry is spreading rapidly through eastern Europe. For instance, the Budapest Chamber of Commerce reports that in 1923 there were established in Hungary 27I new factories. Forty-eight of these were engaged in the production of iron or other metallic commodities; forty-five in the manufacture of foodstuffs; seventy in the textile industry; thirty-nine in pottery; ten in the wood industry; and so on.

Some light has already been thrown upon the nature of this capitalist Voyage of the Argonauts. I may add that a considerable lure has been exercised by the great depreciation of the currency in most of the Austro-Hungarian Succession States, for this has enabled the western capitaliste to buy the enterprises cheaply, and to run them with cheap labour.

It is hardly an exaggeration to say that in these countries of eastern Europe a "national" industry no longer exists. They have become colonial areas for the investment of foreign capital.

A careful study of this process of colonisation shows that the spread of the western concerns eastward is not occurring competitively. For the most part it takes place on terms of cordial understanding between the various combines, or at any rate competition is reduced to a minimum. In the previously quoted Konzerne der Metallindustrie we read: "It has been maintained for a long time past that the French influence in the Skoda works of Pilsen is exercised in virtue of a prior understanding with Stinnes."

There can be no doubt that the German and French concerns, at any rate, are working hand in hand. We have instanced the case of the Alpine Montan Gesellschaft, but there are others. Now and again, of course, friction arises. But such friction is not the expression of a dispute between the capital of two different countries because they are different countries. Similar disputes often occur between concerns of the same nationality when each is trying to form associations advantageous to itself.

3. Industrialisation of the Colonies.

Nowadays, the colonies are favourite sites for the concentration of international capital. The petroleum wells and the tin deposits of the East Indies and the mineral treasure of the West Indies are quite as interesting to European concerns as the mines and smelting furnaces of Austria, the iron industry of Czecho-Slovakia, and the oil wells of Galicia or Rumania. Towards all these riches they stretch forth eager arms. Wherever men dwell, labour and hunger can be turned to the account of capital. Of course this is not a new phenomenon, peculiarly characteristic of the post-war era. In the days before the war, powerful capitalise groups were thrusting tentacles across the world to seize the treasures of all lands and to draw profits from all men's toil. The new feature in the case is that the number of the tentacles has diminished, whilst their strength has increased. To-day these world-wide enterprises are no longer conducted by a very large number of capitalists; they are in the hands of the leaders of a few European concerns, and they for the most part are collaborators instead of competitors.

Moreover, the war has initiated a complete change in colonial policy. Hitherto the capitalists of the homelands had looked upon the colonies mainly as sources of raw materials and as markets, and had not endeavoured to make use of them as fields for commodity production. Now, the aim of colonial policy is to industrialise the colonial territories. One of the principal reasons for the change is the possibility of utilising cheap labour power. Machinery has been so highly perfected that it suffices to have a few highly skilled European workers as supervisors, and the enormous majority of the labourers can be indigenous. An additional advantage is that in the colonies where coloured labour predominates, little regard need be paid to the laws of nature in respect of working powers, for if a worker is used up within a few years, poverty and density of population provide for his replacement. The skilled supervisors receive good wages, and for the most part they go to the colonies for a definite term of years, to return home when that term expires. Thus there are great difficulties in the way of forming powerful labour organisations which might resist the more intensified forms of capitalise exploitation.

These considerations, to which we shall have to return, proved decisive for industrial capital when the events of the post-war period made the European labour organisations a notable factor in the struggle, and when the opportunities for exploitation were restricted in Europe by the general introduction of the eight-hour day.

Such colonial enterprises need vast amounts of capital. Petty undertakings have no place here. In the technical respect, the new factories, etc., must have an equipment equal to that of the best European and American undertakings. Furthermore, there are numerous costly preliminaries, which are peculiar to the development of these colonial enterprises as compared with lands that have already been industrialised. Roads have to be made, railways built, docks provided or improved Such titanic tasks can only be accomplished by international aggregations of capital, and the need for an international community of interests has its inevitable effect.

The vast developmental possibilities of the colonies can be measured by the fact that in British India as early as the year 1920 the production of cotton goods was four times what it had been in 1914, while that of metal goods had increased threefold, and that of jute fivefold.

An especially strong impulse towards industrialisation is now manifest in the Dutch Colonies. A company with a capital of twenty million guilders has just been formed to establish glass works in Sumatra. Negotiations are in progress for the provision of a capital of seventy million guilders which is to found a smelting enterprise in Borneo. Another great industriel company is in process of formation, this time to conduct operations in the West Indies. The capital for all these undertakings is international.

4. Internationalisation of Capitalist Interests a World Wide Phenomenon

In view of the internationalisation of capital in the Austro-Hungarian Succession States and in the distant colonies, it is obvious that the capitalist forces of the great European industrial countries are being mingled to an ever-increasing extent. The mingling process has already gone a good deal farther than most people realise. A statistical demonstration of this is difficult to furnish, even more difficult than a statistical demonstration of the concentration of capital in any one country. Still, the investigation made by the German Metalworkers' Union gives some useful pointers. We Iearn from this book that the two largest German electrical concerns, that of the Allgemeine Elektrizitätsgesellschaft* and Stinnes' Siemens-Rhine-Elbe-Schuckert Union - collaborating to some extent - have interests in the leading electrical enterprises of Italy, France, Spain, Scandinavia, Holland, Switzerland, etc.

In Amsterdam alone, at the beginning of the present year there were fifteen German banks, nearly all of them established since the war, or having gained a footing there by purchase since the war. In very few instances is their capital purely German. For instance, the board of directors of the Von der Heydt Kerstens Bank consists of the following persons: the Hon. Cecil A. Campbell, London; Louis Hagen (a member of the banking firm of A. Levy), Cologne; Wilhelm Hammerschmidt (a member of the banking firm of B. Simons & Co.), Düsseldorf; Kurt Hirschland (a member of the banking firm of Simon Hirschland), Essen and Hamburg; Jacques Keller (manager of the Comptoir d'Escompte de Genève), Geneva; his excellency Dr. von Kühlmann, Berlin; Baron Theodor von Liebig (a member of the firm of Johann Liebig & Co.), Reichenberg (Czecho-Slovakia) and Vienna; Baron S. Alfred von Oppenheim (a member of the banking firm Sal. Oppenheim, jr.,& Co.), Cologne; Dr. Karl von Schubert, Berlin; Dr. Ernst Schön (manager of the Allgemeine Deutsche Kreditanstalt), Leipzig.

In February 1924, the foundation of another great international bank with headquarters in Amsterdam was decided on. The company has a capital of twenty million guilders, and the following are participants: Kleinwort Sons.& Co., a London banking firm; the Westminster Bank, Ltd., London; the Nederlandsche Handel-Maatschappij, Amsterdam; the Rotterdamsche Bankvereeniging, Rotterdam; Pierson & Co., Amsterdam; Mendelssohn & Co., an Amsterdam banking firm (a branch of the same banking firm in Berlin); the Deutsche Bank, the Amsterdam branch of the Berlinese bank of the same name; the H. Albert de Bary & Co. Trading Company, Amsterdam (a branch of the Diskonto Gesellschaft of Berlin); Proehl & Gutmann, Amsterdam (a branch of the Dresdener Bank in Berlin); the Schweizerischer Bankverein, Basle; the Skandinaviska Kreditaktiebolaget, Stockholm.

Another interesting new company was founded in Rotterdam last February. I refer to the Carbo-Union Kolen Mij., which is an outcome of the Carbo-Union Industrie Mij., and in which the firm of Hugo Stinnes, the mining company of Mathias Stinnes, and the Combustion Engineering Corporation of New York, are interested. A Dutch commercial newspaper was informed by the new company that it was a collaboration between the German Stinnes group and an American group for the joint utilisation of patents and practical experience, especially in the domains of the utilisation of compressed coal dust ("patent fuel") and the preparation of coal tar.

Dutch and French capital collaborate in the Import-und-Export-Maatschappij Oranje-Nassau, founded at The Hague in January 1924. This corporation owns the majority of the shares in the Dutch Oranje-Nassau mines, and is part owner of German and French mines with a total production of seven million tons per annum. It commands large quantities of capital. The French industrial magnate de Wendel, A. H . van Nierop (the manager of the Amsterdamsche Bank in Amsterdam), and Comte de Mitry of Paris, are on the board of directors.

In February 1924, there was founded at Nuremberg the Bayerische Eisen und Metall Co. Ltd. The capital of this undertaking is Dutch and German, and amounts to ten million gold marks. The business of the company is the wholesale export of hardware, especially to Holland and the Dutch colonies. Another Dutch and German undertaking is Müllenbach & Co., Ltd., an enterprise founded at the same date in Oberwinter-on-the-Rhine, with a capital of twenty million gold marks. Dutch capital has also made its way of late into Upper Silesia. In January 1924, the Austrian banker Bosel, chairman of the Union Bank of Vienna, entered into an agreement with the Rotterdamsche Bankvereeniging and another Dutch bank, in virtue of which a considerable part of the shares of the Laura-Hütte, one of the largest industrial undertakings of Poland, were transferred to the Dutch banks. We learn from a Dutch commercial newspaper that this transaction is merely the first stage in the formation of a far more extensive international combine.

Only a few of the recently formed international aggregations of capital have been mentioned in this section. But enough has been said to show how rapid is the tempo of the movement, and how it affects every country. No attempt can be made here to give a complete picture of the international interlacements of capital. My only aim has been to show that the emigration of capital and the mingling of capital are world-wide phenomena.

 Notes

I. Changes in the Basis of Production 

*    The Federation of German Iron and Steel Industrials. 

 4. Internationalisation of Capitalist Interests a World Wide Phenomenon

*    Generally known, for short, as the A.E.G.

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