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The second industrial revolution



v the HELP STUDYING ECONOMIC SCIENCE

V.A. Pogrebinskaya the SECOND INDUSTRIAL REVOLUTION

§1. General characteristic of the period.

1. Population and food resources.
2. Technological shifts.
3. New trends in development of economy.
4. Monopolization process.
5. Colonial expansion.
6. Conclusions

At the end of XIX - the beginning of the 20th century there were large shifts in development of the defining conditions and factors of economic growth: population, food resources, technologies, institutes.

1. Population and food resources.

All the 19th century was the period of rather high growth rates of the population. If throughout the period from emergence of agriculture until the end of the 18th century the world's population doubled everyone 1000, then in the 19th century it doubled less than in 100 years. If in 1800 the world's population made 906 million people, then in 1850 - 1171 million, and 1900 - 1608 million

In the 19th century the average annual growth rates of the population of two largest industrial countries of Europe - Great Britain and Germany were over 1%. At such speed the doubling is reached in 70 years. In Russia for the same period the average annual speed was 2%. In France - 0.4%. The unevenness of growth rates of the population leads to changes in

structure of its placement over the countries and continents. Within the 19th century the share of the population of Russia in the universal population, and the USA considerably increases. (See table I).

Table I

Dynamics of accommodation of the population (in %)

Dates Russia Zarubezhn aya Europe Zarubezhn aya Asia Africa USA Latinsk aya America Avstral iya and Oceania

1800 5.3 16.8 65.1 9.5 0.6 2.5 0.2
1900 7.9 17.8 57.3 7.8 4.9 3.9 0.4

Until the end of the 19th century food resources were the main limiter of growth of the population. Since the end of the 19th century thanks to development of transport broad import of food became possible.

Growth of agricultural production for the 19th century was carried out generally due to increase in the area of the cultivated land. This factor played a special role in Russia which by the end of the 19th century becomes the world supplier of bread. Besides, in the second half of the 19th century in the world there is noticeable growth of an intensification of agriculture due to use of natural, and then and artificial fertilizers, progress of knowledge in agricultural sciences and also the steam thresher and mechanical harvester. Process of an intensification of agriculture gains the greatest development in the USA. The relative low cost of the American production of wheat leads to sharp increase of its export to Europe that causes the first world agricultural crisis lasting over 20 years (first half of the 70th and the second half of the 90th of the 19th century).

Unevenness of distribution of the advanced agricultural technologies in the world, along with a variety

natural and institutional conditions defined influence of world agricultural crisis on dynamics of the population in each region. The increasing value for dynamics of the population is gained by its migration that is promoted also by development and cheapening of transport.

During 1815 - 1914 Europe there leave about 60 million people: 35 million - in the USA, 5 million - to Canada, 12-15 million - to Latin America. Most of emigrants left for the economic reasons, hoping for improvement of life in other places. But there were also political refugees running because of prosecutions in the homeland.

Along with external migration at the end of XIX - the beginning of the 20th century influence on economic development and internal migration which is defined both by settling of earlier not developed territories, and process of an urbanization grows. England became the leader of an urbanization. By 1900 the population share living in settlements of city type with the population of 2 thousand people also more reached in England 75%, in comparison with 50% in 1850

In the majority of the industrial countries the similar share made by 1900 about 50%, in comparison with 25 - 30 in the middle of the 19th century. Rapid growth of population of the cities at the end of XIX - the beginning of the 20th century is explained by a variety of reasons. The main of them is that development of a factory system of production predetermined need of concentration of labor for industrial centers. Achievements in development of agriculture, the industry, construction and transport made possible ensuring supply of increasing population of the cities with necessary living conditions though this process was disease in all countries.

2. Technological shifts.

At the end of XIX - the beginning of the 20th age of change in scientific and technical base of production were so considerable and led to such consequences in the organization of economy that they received definition of "the second industrial revolution".

During this period three interconnected processes gain development: inventions, innovations and dissemination of new technologies. The invention means any innovation of mechanical, chemical or electric character. That inventions gained value for economic development, they have to be introduced in economic process, then they become innovations. Distribution of innovations in this country, between the industries and between the countries is process of diffusion of technology. Distribution or diffusion of technologies depends on conditions in various industries and regions of the country, existence and a combination of factors of production in them and also the cultural environment. Technological shifts during the considered period were caused by change of power supply sources of production. Steam was forced out by electricity, process of the general electrification of production, transport, life began. A basis of this process became: the invention of a dinamomashina (V. Simens - Germany, 1867), the generator (T. Edison - the USA, 1888), the transformer for transmission of energy on distance (T. Edison, 1891), the electric railroad (V. Simens, 1879), glow lamps (P. Yablochkov - Russia, 1876), the electric melting furnace (T. Edison, 1877), the steam turbine (G. Parsons, 1884). In 1898 the first hydroelectric power station on the Niagara River (USA) is constructed.

The defining role was played also by the invention of internal combustion engines (R. Diesel - Germany, 1893; N. Otto - Germany, 1877). In 1883 - 1885 the car (G. Daymler, K. Benz) is invented.

There was a technical revolution in the metallurgy, metal working easy (automatic weaving loom), printing (a mechanical type-setting camp) the industries. There were new industries - power industry, the chemical, oil and petrochemical industry, automotive industry (in 1900 in the USA Ford's plant produced more than 4 thousand cars a year), production of steel (total smelting of steel increased since 1870 to 1900 by 20 times). In the USA Taylor's (conveyor) system which resulted in huge increase in productivity of work is invented.

the New technical base changed

the system of transport. By the beginning of XX

century the world tonnage of the steam fleet already exceeded the world tonnage of sailing. Sharply the world railway system grew, also pipeline transport appeared electric (the elevator, the tram, the subway), trackless (on the basis of the internal combustion engine). The largest achievement was the birth of air transport.

At the beginning of the 20th century oil becomes more and more important economic resource. By this time there are three regions of its production: The Russian Empire (Azerbaijan, the Volga region), the USA (Pennsylvania, Texas, California) and the Persian Gulf (fell within the scope of the British influence). Saltpeter which main region of production was South America became other strategic resource during this period. The similar arrangement of strategic resources led to the fact that Germany to which share 16% of world industrial production fell depended on deliveries of Russia and the USA. Such dependence influenced its political plans.

At a boundary of the XIX-XX centuries in technical progress the science began to play the increasing role. There was the higher technical education. The first technical colleges appeared in the 1870th in Germany (Berlin, Dresden, Munich, etc.), the USA (the university J. Gopkinsa in Baltimore), Japan and others

countries. Progress of the equipment gained value of scientific and technical progress. Its results, first of all, were used in military industrial complex. Military production included achievements of metallurgy, engine building, electrical equipment, exact instrument making, chemical technology and so forth. The factory industry, first of all, replaced a smooth-bore gun with a rifle, wooden sailing vessels on metal steamships, and soon and on armored turbokhoda, constructed the skorostrelny guns shooting more than on 10 km. created and applied smokeless gunpowder. At the end of the 19th century the gradual automation of small arms began - there was a machine gun (1883, the USA).

3. New trends in development of economy.

Institutional structure.

Speed of dissemination of new technologies in various countries depended except already listed factors and conditions on development of the institutes providing the new level of social production. By definition of the Nobel Prize laureate Douglas Nort the institutes are "rules of the game" in society, or... the restrictive framework created by the person which will organize relationship between people. Along with formal there are also informal institutes, i.e. the standard conventions and codes of behavior. Institutes influence economic process by the fact that make impact on costs of exchange and production. Along with the applied technology they define transformational (proizvodstvenna) and transaction (arising at promotion of goods the market) costs.

The role of institutes in society consists in reduction of uncertainty by establishment of steady structure

interactions between people. Stability of institutes is combined with the fact that they undergo changes in time. The organizations which are created for achievement of definite purposes act as the chief agents of similar changes. Realization of goals can be enabled on the way of connection of formal rules and informal restrictions. Formal rules can be changed for one night by adoption of legal decisions, the informal restrictions embodied in customs, traditions, unwritten rules of conduct give in to conscious efforts much less. Informal restrictions - an essence cultural restrictions which connect the past with the present and future.

The globality of the changes caused by the second industrial revolution put absolutely new problem before mankind: how to master changes, overcoming their negative consequences and keeping all valuable of heritage of the past. Solutions of this triune task in many respects was defined by change of institutional structure of world economy which is understood as changes in the mechanisms providing observance of rules.

Institutional changes in economy of the end of XIX - the beginnings of the 20th century were shown, first of all, in new forms of ownership and the organization of economy. Similar forms were predetermined by integration of production and change of its structure. The defining role in economic dynamics passed from easy to the heavy industry and transport. These industries demand considerably big investments, possess more long business cycles. The volume of their production and concentration of employment at the enterprises of the branches of the heavy industry and transport is higher, than in branches of light industry. For implementation of production the considerable investments reached are required

concentration of the capitals. Attraction of the capitals is carried out by means of a share issue, joint-stock companies of the opened and closed type are created. Since the end of the 19th century the joint-stock form becomes prevailing.

4. Monopolization process.

The second industrial revolution caused requirement of concentration of production and the capital. Association of means of certain businessmen and attraction of spare capitals in joint-stock companies created an opportunity to raise the level of concentration of the capital to monopoly level. The capitalist monopoly as a form of the organization of production represents association of capitalists, evolving from high level of production concentration and the capital for the purpose of concentration of establishment of monopoly prices and providing stable excess profits. Monopolies arose in the 19th century: after crisis of 1863 the set of cartels appeared; after crisis of 1900

>- 1903 cartels became the leading form of the organization of monopoly.

The capitalist monopoly thanks to the high level of concentration of economic resources created opportunities for acceleration of technical progress on condition of extraction of exclusively high profits.

The simplest forms of monopoly are conventions, pools, rings, corners. Mature forms of monopoly are cartels, syndicates, trusts, concerns.

The convention (Latin sopuyepyo — the contract, a condition, the agreement) — the contract between various enterprises and the organizations for settlement of sale, production, distribution of orders, etc. For example, multilateral Hague Conventions of 1899 - 1907

The pool (English roo1 — the general fund) had temporality. Creation of the general fund of profits, establishment of rules of distribution of income and profits is characteristic of P. The trade Pool provides the agreement on accumulation. and a delay of sale of goods for the purpose of creation of deficiency and price increase. (Exchange Pools are created for speculation in actions; patent — for joint accumulation and operation of patents.

Ring (English ring of letters. - a ring) - the agreement between the capitalist and on withdrawal from the market or a delay in warehouses of goods for the purpose of the subsequent sale at monopoly prices. Are characteristic mainly of the sphere of the trade capital, rather easily broke up at change of market conditions. The first agreements of type of a ring appeared in the Italian province of Lombardy (lombardirovaniye of goods). At the beginning of the 17th century, coverages of operation with the prices of coffee, alcohol, bread were observed in the Netherlands. Rings received mass distribution during an era of capitalism of free competition, especially during the periods of mass shortage of goods, for example, during the Great French revolution. Lombardirovaniye of goods it was characteristic of the USA in the 80th of the 19th century in the coal-mining industry and ferrous metallurgy.

A corner (from English To corner, letters. - to drive into a corner) - association of capitalists for the purpose of buying up of goods and the subsequent resale at monopoly price. Corners were created on the stock exchanges for the purpose of purchase of shares of the separate companies for the subsequent sale and for taking by a controlling stake. Corners are known from XVI-XVII centuries. In the 90th of the 19th century the corners were formed by American railway "kings" in fight against large exchange businessmen - the "bears" (playing short selling of actions). In one of such corners, called by name the largest railway company of the USA

"Norzern pasifik" the visible Western European houses financing purchases of a corner participated.

Cartel (fran. cartel, from ital. cartello - the paper, the document) based on the interim agreement of the independent enterprises for the purpose of establishment of control over the market of certain goods, increase in prices for it and providing exclusively high profit. The cartel provides establishment of obligatory all participants of minimum prices of goods, differentiation of areas of sale, determination of total production or is sold also shares (quota) in it of each participant, the general terms of employment of labor, exchange of patents, joint participation in any enterprise, etc. cartel agreements are concluded for the term of not less than 5 years. In Germany by the beginning of World War II there were 2 thousand cartels.

Syndicate (fr. syndicat - I consider, I check) - the agreement of the independent enterprises (trusts) on joint business activity. The greatest development was gained in the first quarter of the 20th century in mining industry of Germany, France, Russia. In Germany between two world wars there were several hundreds of syndicates, the largest — Rhine and Westphalian coal, German potash. In pre-revolutionary Russia of Prodamet, Produgol, "Copper" gave concerts sale up to 90% of products of the relevant industries.

Trust (English trust, osn. the value — trust) is characterized by loss by the uniting enterprises of commercial and production independence, submission to uniform management. Owners of the enterprises which entered into trust turn into participants (shareholders) of all trust in general.

Trusts received the greatest distribution to the USA in the last third of the 19th century. The first was created by J.D. Rockefeller in 1879 under the name "Standard Oil Trust" and covered a considerable part

oil industry of the USA. After World War I the trestirovaniye of the industry gained big development in Europe.

In the developed countries for restriction of some types of activity of trusts and other types of monopolies the so-called anti-trust legislation which was quite effective at the beginning of the century was entered. So, in the USA in 1890 the "anti-monopoly" law of Sherman declaring invalid any association or the agreement directed to restriction of trade or freedom of the competition was adopted. But from the middle of the 20th century the trusts gain diversified character and thus do not fall under jurisdiction of this legislation.

The concern (English concern is participation) covers the enterprises of different industries, transport, trade, bank and insurance companies. Certain businessmen, joint stock companies and trusts can be a part of concern. Participants of concern keep formal independence. A kernel of concern usually is the large trust (the American concern "Dyup de Nemour", the German concern Kruppa), bank (the American concern of Morgan, the Belgian concern Société Générale Belzhik), family firm (Japanese concerns Mitsui, Mitsubishi, Sumitomo, the German concern Flika), specially created head society (Belgian To. Sofina).

Concerns received the greatest distribution in Western Europe after World War I. Transition from the market of the perfect competition to the monopolistic competition results of development of monopolies. Become signs of the similar competition:

>- a small number of producers in each industry at a considerable share of their goods in the market;

>- merge of the banking and industrial capital and formation of the financial capital and financial oligarchy;

>- monopolism in distribution of information;

>- differentiation of goods on market segments, protection of goods patents, licenses, brands and trademarks;

>- emergence of considerable barriers for penetration into the industry;

>- an exit of monopolies for a framework of national borders.

Transition to a monopolistic stage of development began in the 70th

It was caused 19th century by the Second industrial revolution which stimulated rapid growth of productive forces. Development of new forms of ownership became a consequence of the Second industrial revolution. In the industry the joint-stock form of ownership becomes a basis. In agriculture the farmer property strengthens positions. A noticeable role is played by cooperative property in the credit, consumer, trade and housing sphere and also in agriculture.

The state ownership develops under the influence of a tendency to nationalization of economy as result of the new level of development of productive forces and new mechanisms of their organization.

A part during the monopolistic competition is played by municipal property on the basis of which the local economy develops and the system of municipal finance (construction and the maintenance of schools, hospitals, local means of communication) is formed.

Development of various forms of ownership during the monopolistic competition demonstrates that the economy of this era remains multistructure, at the defining value of joint-stock form of ownership. In the 50th - the 90th of the 19th century mass formation of joint-stock companies, banks and insurance begins

the companies, the gryunderstvo which received the name. This process was followed by considerable issue of securities, creation of the fictitious enterprises, exchange speculation. Especially intensively the gryunderstvo was observed in the USA, Germany and Russia. In the USA, for example, by 1914 the joint stock companies controlled over 80% of industrial output of the country.

Development of monopolies relied on process of concentration of production and the capital which brought in the end of XIX - the beginning of the 20th century to merging of industrial and bank monopolies and education of financial oligarchy. In the USA, by the beginning of the 20th century such large financial dynasties as were issued: Rokfellera, Morgana, Dyupona, Gugenheima, Carnegie, etc.

Monopolization of production threatened the competition as the main economic mechanism of development. During this period, it was necessary to keep this mechanism intervention of the state for legislative restriction of process of monopolization. There are anti-trust laws. The state carries out economic regulation both through activity of public sector, and on the basis of state orders and also by means of tax policy. Before and in the years of World War I the role of the state reaches the level allowing to speak about new type of regulation - state-monopoly. At the end of XIX - the beginning of the 20th century monopolistic processes arise also on the scale of the world market. It is promoted by transition from primary export of goods to primary export of the capitals. (See table II).

Table II

Export of the capital to the colonial countries

1870 1913

USA 377 mln. dollars 2448 mln. dollars

Germany (1880) 2923 million marks 10097 million marks

England 199.6 million pounds 525.3 million pounds

France 2802 million fr. 6880 million fr.

Japan 14.5 million yens 632.5 million yens

5. Colonial expansion.

The aspiration to expansion of the sphere of state-monopoly capitalism is expressed in occupation of colonies and colonial expansion. By the beginning of the 20th century from 1657 million people of the population of Earth of 570 million (over 1/3) also more than 360 million lived in colonies - in semi-colonies. The most major colonial powers of an era of industrial capitalism - England and France. Inclusion of the colonial countries in world trade led to transformation them in raw-material producing appendages of mother countries, at the same time mother countries contributed to the social and economic development of colonies (development of the local industry in raw materials processing, transport, communication, telegraph, the press, etc.).

During an era of monopoly capitalism amplified unevenness of rates of economic development in the countries. The highest rates of economic growth at the end of XIX - the beginning of the 20th century were observed in the young capitalist countries: To Russia, USA, Canada, Australia, Germany, Japan. England and France considerably lag behind them during this period. It leads to a new ratio of economic forces and relocation of the center of economic development from Europe to the USA. (See table III).

Table III

Specific weight of the most developed countries in world industrial production.

1860 1870 1880 1890 1900 1913

England 36 32 28 22 18 14

France 12 10 9 8 7 6

Germany 16 13 13 14 16 16

USA 17 23 28 31 31 36

Conclusions

Due to strengthening of world economic relations during the monopolistic competition there is a new ratio between the leading countries and the countries of the catching-up development. The novelty consists in the next moments:

>- in increase in a distance of the catching-up countries from the leading countries;

>- in strengthening of influence of the leading countries on a condition of world development;

>- in definition of the direction of development of the catching-up countries not only a global trend, but also national traditions.

In the countries of the catching-up development there are acute contradictions between traditional and modern economy. For their understanding we will address country history of economy of the period of monopoly capitalism.

§ 2. United States of America. 1

1. Dynamics of the population.
2. Monopolization process.
3. Financial capital.
4. The reasons of the accelerated rates of economic development
5. Foreign trade.
6. Capital outflow.
7. Economic policy of the state.
8. Conclusions.
1. Dynamics of the population.

By the end of XIX - the beginning of the 20th age of the USA was become the defining force in the world capitalist economy. Specific weight of the USA in world industrial production increased from 17% in 1860 up to 31% in 1890 and 36% in 1913; with a growth of specific weight of the population by the beginning of the 20th century up to 5%, in comparison of 0.6% to the beginning of the 19th century. By 1915 the population exceeded 100 million persons. Increase in the population of the USA was provided at the expense of two sources: emigrations from Europe and high rates of natural increase of the population. The number of the immigrants arriving in the USA grew quickly, but unevenly. In 1820 - 1825 - in the country there arrived 10 thousand people, at the beginning of the 20th century - about 1 million. By 1910 the number given rise abroad totaled 13.5 million people, or about 15% of the cumulative population. From them about 17% arrived from Germany, 10% from Ireland, 10% from Italy and Austria-Hungary, approximately on 9% from Great Britain, the Scandinavian countries, Canada and Russia, 7% from Poland and a small amount from other countries. The number of the inhabitants born abroad never exceeded 1/6 part of the cumulative population in the USA. The policy of free immigration pursued up to World War I promoted that America

turned into "a melting copper" of Europe. To America ran from Europe suffering from agrarian overpopulation, religious persecutions, war, millions of people as the poorest, become the main source of labor, and the most vigorous, strong-willed, talented at the turn of the century capable to initiate development of the capital. The immigration policy became one of sources of fast rates of economic growth of the USA at the end of XIX - the beginning of the 20th centuries

In comparison with the European neighbors of the USA as the state was a child, but on the economic power acquired the status of the giant by the beginning of the 20th century.

2. Monopolization process.

In one capitalist state of monopoly by the beginning of XX

century did not hold such dominant position in the national economy, as in the USA. Such giants of the monopolistic capital as Steel trust, the Standard Oil, General Motors and others concentrated in the hands a considerable part of production in the industries united by them.

Years of World War I and the post-war stage following behind them were the period of a bigger strengthening of a command role of monopolies in the national economy of the USA.

The first germs of monopolistic associations appeared in the USA in the 60th of the 19th century, however, quite developed monopolies were a child of the seventieth years. In the seventies, especially after crisis of 1873 there were several primary monopolistic agreements (so-called pools) which distributed areas of sale between the members. The firstborn of the American trusts, well-known Standart Oil Company was born in the same period. In the 1880th there were some more trusts: sugar, lead, producing cottonseed oil, meat, rubber and others. By 1890 in all major industries

the American industry there were already trust, organizations which took a considerable part of production of the connected industries.

Already then the American monopolies in the industry far surpassed everything that was available in the European states in the sizes and specific weight. They reached a bigger development in the nineties 19th century. There were new trusts in the most various industries of production. The American economist John Muudi in the book "The Truth about Trusts" published in 1904 defined existence in the USA of 300 trusts with the capital in 7 billion dollars.

The huge sizes of the American trusts provide them empery in the market. The USA — the country in which capitalist monopolies reached the highest development at the same time is the country most widely and in detail drafted anti-trust legislation. But the monopolistic capital easily bypassed these laws. In 1890 Sherman's act which is valid for the whole country was issued. But also this law which was eulogized by the bourgeois press was very little effective tool of fight against trusts. The wording of the law was not rather clear and gave a reason for various interpretation.

of Attempt to excite prosecution against the largest American trusts, with all clarity revealed that this law cannot be used as the effective tool of fight against monopolies. So in 1893 the prosecution against the sugar trust which bought up most the plants in the country and sharply raised sugar prices was excited. The Supreme Court of America did not take any measures against organizers of this monopoly, and did not even dismiss "Sugar and refining society" as officially called trust, having specified that the law does not ban to buy up and focus in some hands

enterprises. In other case the American court got rid to recognize Steel trust as monopoly, having specially noted in the resolution that Sherman's law belongs only to trade, but not to production associations.

But the American capitalists hurried to use Sherman's act for fight against the working organizations. According to this act, all organizations limiting freedom of economic activity were declared illegal. The senate in addition "explained" that it concerns also working and farmer organizations. Having provided substantial assistance to employers in fight against the working organizations, Sherman's act not only did not destroy existence of trusts, but also could not prevent emergence of new.

The subsequent anti-trust legislation also did not change a state of affairs. Being a concession of the petty and average bourgeoisie, similar laws served as means to increase before elections the popularity in masses for their initiators.

In 1914 the American congress adopted Clayton's law which is also directed contra trusts. But also this law interfered with existence and growth of monopolies very little. Even when judicial authorities found a reason for dissolution of any given trust — the last quickly revived under other name. Transformation of many trusts into "private agreements", "associations of interests", "the derzhatelsky companies" was the immediate result of the anti-trust legislation, and under these new names the same trusts disappeared.

Thus fight of the American petty and average bourgeoisie against trusts did not break absolute power of the monopolistic capital.

The command role of monopolistic associations in America is visible from table IV.

Table IV.

Specific weight of monopolies in capitalist farms of the USA

904 909 919

Gross output of monopolies in millions of dollars 0.9 6.3 4.7

Share of associations in all American industry in %: a) on number of the enterprises 3.6 5.9 1.5

b) on the number of workers 0.6 5.6 6.6

c) at the cost of gross output 3.7 9 7.7

This table is extremely indicative. It demonstrates that - first, monopolies unite the largest enterprises of the country on most of which of workers and the most advanced equipment is concentrated; secondly, at the beginning of the 20th century of monopoly played a command role, having concentrated an overwhelming part of gross output of the industry in the hands; thirdly that the specific weight of monopolies, their dominating role especially increased after World War I soldiers.

The American trusts most often acted in the form of joint-stock companies that gives the chance to mobilize the huge mass of the capital which is at the disposal of trust. For this purpose the set of small actions is issued. In the United States of America there were at the beginning of the 20th century about 6 million shareholders; in the majority - it were small holders and they could not

to have any impact on trust affairs.

Use of huge mass of the capitals were reached in specially created "derzhatelsky companies" - holdings. The capital of holdings were controlling stakes of various companies, on security which new actions were issued.

As a result amplified absolute power of financial oligarchy; owning rather small part of the united capitals, it mobilized huge amounts of money of small shareholders.

Such monopolistic associations as Standart Oil, the Aluminum company, Steel corporation, General Motors, Coal Corporations allowed the monopolistic capital to control completely industry supply with fuel, the electric power, gas, the most important types of raw materials. Thereof monopolies had a decisive influence on the capitalist industry in general.

3. Financial capital.

Development of the industrial capital and its connection with bank promoted education in the USA the most powerful in the world of a financial headband. Its formation is connected with features of a banking system of the USA.

Feature of a banking system of the USA was a huge number small, formally independent, banks. In 1914 there were 26 thousand such banks. The legislation limited, and in some states forbade banks to open offices in the whole country at all. It promoted preservation of a set of small banks.

Independence of small banks was illusive. The largest New York banks in which hands the overwhelming quantity of bank assets was concentrated acted as owners of situation.

Separate formally independent banks were controlled by the same group of financiers. By 1911 6 largest New York banks concentrated the majority of bank resources of the country in the hands. Deposits of each of these banks were over 100 million dollars.

Process of concentration and centralization of banking capital even more amplified after creation in 1913 of the Federal Reserve System. The government divided the country into 12 districts, in everyone. from which the Federal Reserve Bank was created. These banks were united in the uniform Federal Reserve System at the head of which there were a special management and Federal reserve council.

Federal banks are "banks of banks". They united all national and also some banks in states. By 1922 the Federal Reserve System united about 10 thousand banks possessing 63% of all bank resources of the country.

True owners of the Federal Reserve System - the largest New York banks. Representatives of the large monopolistic capital were a part of the Federal Union.

Thus, the fact of creation of the Federal Reserve System meant a big stride in business of concentration of banking capital. To 1916

28% of all American banks in which hands there was about a half of bank resources of the country were a part of the Federal Reserve System.

Thus, the Federal Reserve System represented the dominating force of the bank credit of America.

Along with concentration and centralization there was a merging and an interlacing of banking capital to industrial. Domination of the financial capital in one capitalist country did not pour out in such finished forms, as in the USA. The largest banks

the countries participated in capitalist monopolies, financed industrial associations, were engaged in promotional activity. At the same time, both banks, and industrial monopolies were in some hands. Here undividedly financial kings — Morgana, Rokfellera, Melona, Vanderbilda, etc. dominated

In 1913 the Senate created the special commission which stated domination of financial oligarchy over economic life of the USA. The largest banks (National City Bank and the 1st National Bank) in the USA were in Rockefeller and Morgan's hands. Two of these banks had assets generally for the sum of 7 billion dollars which they placed through 7 auxiliary banking institutions. These two largest banks had 347 management posts in banks, transportna?

James Bennett
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