The imperialist phase of capitalist accumulation which implies universal
competition comprises the industrialisation and capitalist emancipation
of the _hinterland_ where capital formerly realised its surplus value.
Characteristic of this phase are: lending abroad, railroad
constructions, revolutions, and wars. The last decade, from 1900 to
1910, shows in particular the world-wide movement of capital, especially
in Asia and neighbouring Europe: in Russia, Turkey, Persia, India,
Japan, China, and also in North Africa. Just as the substitution of
commodity economy for a natural economy and that of capitalist
production for a simple commodity production was achieved by wars,
social crises and the destruction of entire social systems, so at
present the achievement of capitalist autonomy in the _hinterland_ and
backward colonies is attained amidst wars and revolutions. Revolution is
an essential for the process of capitalist emancipation. The backward
communities must shed their obsolete political organisations, relics of
natural and simple commodity economy, and create a modern state
machinery adapted to the purposes of capitalist production. The
revolutions in Turkey, Russia, and China fall under this heading. The
last two, in particular, do not exclusively serve the immediate
political requirements of capitalism; to some extent they carry over
outmoded pre-capitalist claims while on the other hand they already
embody new conflicts which run counter to the domination of capital.
These factors account for their immense drive, but at the same time
impede and delay the ultimate victory of the revolutionary forces. A
young state will usually sever the leading strings of older capitalist
states by wars, which temper and test the modern state's capitalist
independence in a baptism by fire. That is why military together with
financial reforms invariably herald the bid for economic independence.
The forward-thrusts of capital are approximately reflected in the
development of the railway network. The permanent way grew most quickly
in Europe during the forties, in America in the fifties, in Asia in the
sixties, in Australia during the seventies and eighties, and during the
nineties in Africa.[401]
Public loans for railroad building and armaments accompany all stages of
the accumulation of capital: the introduction of commodity economy,
industrialisation of countries, capitalist revolutionisation of
agriculture as well as the emancipation of young capitalist states. For
the accumulation of capital, the loan has various functions: (_a_) it
serves to convert the money of non-capitalist groups into capital, i.e.
money both as a commodity equivalent (lower middle-class savings) and as
fund of consumption for the hangers-on of the capitalist class; (_b_) it
serves to transform money capital into productive capital by means of
state enterprise--railroad building and military supplies; (_c_) it
serves to divert accumulated capital from the old capitalist countries
to young ones. In the sixteenth and seventeenth centuries, the loan
transferred capital from the Italian cities to England, in the
eighteenth century from Holland to England, in the nineteenth century
from England to the American Republics and Australia, from France,
Germany and Belgium to Russia, and at the present time [1912] from
Germany to Turkey, from England, Germany and France to China, and, via
Russia, to Persia.
In the Imperialist Era, the foreign loan played an outstanding part as a
means for young capitalist states to acquire independence. The
contradictions inherent in the modern system of foreign loans are the
concrete expression of those which characterise the imperialist phase.
Though foreign loans are indispensable for the emancipation of the
rising capitalist states, they are yet the surest ties by which the old
capitalist states maintain their influence, exercise financial control
and exert pressure on the customs, foreign and commercial policy of the
young capitalist states. Pre-eminently channels for the investment in
new spheres of capital accumulated in the old countries, such loans
widen the scope for the accumulation of capital; but at the same time
they restrict it by creating new competition for the investing
countries.
These inherent conflicts of the international loan system are a classic
example of spatio-temporal divergencies between the conditions for the
realisation of surplus value and the capitalisation thereof. While
realisation of the surplus value requires only the general spreading of
commodity production, its capitalisation demands the progressive
supercession of simple commodity production by capitalist economy, with
the corollary that the limits to both the realisation and the
capitalisation of surplus value keep contracting ever more. Employment
of international capital in the construction of the international
railway network reflects this disparity. Between the thirties and the
sixties of the nineteenth century, railway building and the loans
necessary for it mainly served to oust natural economy, and to spread
commodity economy--as in the case of the Russian railway loans in the
sixties, or in that of the American railways which were built with
European capital. Railway construction in Africa and Asia during the
last twenty years, on the other hand, almost exclusively served the
purposes of an imperialist policy, of economic monopolisation and
economic subjugation of the backward communities. As regards Russia's
railroad construction in Eastern Asia, for instance, it is common
knowledge that Russia had paved the way for the military occupation of
Manchuria by sending troops to protect her engineers working on the
Manchurian railway. With the same object in view, Russia obtained
railway concessions in Persia, Germany in Asia Minor and Mesopotamia,
and Britain and Germany in Africa.
In this connection, we must deal with a misunderstanding concerning the
capital investments in foreign countries and the demand of these
countries for capital imports. Already in the early twenties of the last
century, the export of British capital to America played an important
part, being largely responsible for the first genuine industrial and
commercial crises in England in 1825. Since 1824, the London stock
exchange had been flooded with South American stocks and shares. During
the following year, the newly created states of South and Central
America raised loans in London alone for more than £20,000,000, and in
addition, enormous quantities of South American industrial shares and
similar bonds were sold. This sudden prosperity and the opening up of
the South American markets in their turn called forth greatly increased
exports of British commodities to the Latin Americas. British commodity
exports to these countries amounted to £2,900,000 in 1821 which had
risen to £6,400,000 by 1825.
Cotton textiles formed the most important item of these exports; this
powerful demand was the impetus for a rapid expansion of British cotton
production, and many new factories were opened. In 1821, raw cotton to
the value of £m. 129 was made up in England, and in 1826 the amount had
risen to £m. 167.
The situation was thus fraught with the elements of a crisis. Tugan
Baranovski raises the question: 'But from where did the South American
countries take the means to buy twice as many commodities in 1825 as in
1821? The British themselves supplied these means. The loans floated on
the London stock exchange served as payment for imported goods. Deceived
by the demand they had themselves created, the British factory-owners
were soon brought to realise by their own experience that their high
expectations had been unfounded.'[402]
He thus characterises as 'deceptive', as an unhealthy, abnormal economic
phenomenon the fact that the South American demand for English goods had
been brought about by British capital. Thus uncritically he took over
the doctrine of an expert with whose other theories he wished to have
nothing in common. The opinion had been advanced already during the
English crisis of 1825 that it could be explained by the 'singular'
development of the relations between British capital and South American
demand. None other than Sismondi had raised the same question as Tugan
Baranovski and given a most accurate description of events in the second
edition of his _Nouveaux Principes_:
'The opening up of the immense market afforded by Spanish America to
industrial producers seemed to offer a good opportunity to relieve
British manufacture. The British government were of that opinion, and in
the seven years following the crisis of 1818, displayed unheard-of
activity to carry English commerce to penetrate the remotest districts
of Mexico, Columbia, Brazil, Rio de la Plata, Chile and Peru. Before the
government decided to recognise these new states, it had to protect
English commerce by frequent calls of battleships whose captains had a
diplomatic rather than a military mission. In consequence, it had defied
the clamours of the Holy Alliance and recognised the new republics at a
moment when the whole of Europe, on the contrary, was plotting their
ruin. But however big the demand afforded by free America, yet it would
not have been enough to absorb all the goods England had produced over
and above the needs of consumption, had not their means for buying
English merchandise been suddenly increased beyond all bounds by the
loans to the new republics. Every American state borrowed from England
an amount sufficient to consolidate its government. Although they were
capital loans, they were immediately spent in the course of the year
like income, that is to say they were used up entirely to buy English
goods on behalf of the treasury, or to pay for those which had been
dispatched on private orders. At the same time, numerous companies with
immense capitals were formed to exploit all the American mines, but all
the money they spent found its way back to England, either to pay for
the machinery which they immediately used, or else for the goods sent to
the localities where they were to work. As long as this singular
commerce lasted, in which the English only asked the Americans to be
kind enough to buy English merchandise with English capital, and to
consume them for their sake, the prosperity of English manufacture
appeared dazzling. It was no more income but rather English capital
which was used to push on consumption: the English themselves bought and
paid for their own goods which they sent to America, and thereby merely
forwent the pleasure of using these goods.'[403]
From this Sismondi drew the characteristic conclusion that the real
limits to the capitalist market are set by income, i.e. by personal
consumption alone, and he used this example as one more warning against
accumulation.
Down to the present day, the events which preceded the crisis of 1825
have remained typical for a period of boom and expansion of capital, and
such 'singular commerce' is in fact one of the most important
foundations of the accumulation of capital. Particularly in the history
of British capital, it occurs regularly before every crisis, as Tugan
Baranovski himself showed by the following facts and figures: the
immediate cause of the 1836 crisis was the flooding of the American
market with British goods, again financed by British money. In 1834,
U.S. commodity imports exceeded exports by £m. 1·2 but at the same time
their imports of precious metal exceeded exports by nearly £m. 3·2. Even
in 1836, the year of the crisis itself, their surplus of imported
commodities amounted to £m. 10·4, and still the excess of bullion
imported was £m. 1. This influx of money, no less than the stream of
goods, came chiefly from England, where U.S. railway shares were bought
in bulk. 1835/6 saw the opening in the United States of sixty-one new
banks with a capital of £m. 10·4, predominantly British. Again, the
English paid for their exports themselves. The unprecedented industrial
boom in the Northern States of the Union, eventually leading to the
Civil War, was likewise financed by British capital, which again created
an expanding market for British industry in the United States.
And not only British capital--other European capitals also made every
possible effort to take part in this 'singular commerce'. To quote
Schaeffle, in the five years between 1849 and 1854, at least £m. 100
were invested in American shares on the various stock exchanges of
Europe. The simultaneous revival of world industry attained such
dimensions that it culminated in the world crash of 1857.--In the
sixties, British capital lost no time in creating similar conditions in
Asia as well as the United States. An unending stream was diverted to
Asia Minor and East India, where it financed the most magnificent
railroad projects. The permanent way of British India amounted in 1860
to 844 miles, in 1870 to 4,802 miles, in 1880 to 9,361 miles and in 1890
to 16,875 miles. This at once increased the demand for British
commodities. No sooner had the War of Secession come to a close, than
British capital again flowed into the United States. It again paid for
the greater part of the enormous railroad constructions in the Union
during the sixties and seventies, the permanent way amounting in 1850 to
8,844 miles, in 1860 to 30,807 miles, in 1870 to 53,212 miles, in 1880
to 94,198 miles, and in 1890 to 179,005 miles. Materials for these
railways were also being supplied by England--one of the main causes for
the rapid development of the British coal and iron industries and the
reasons why these industries were so seriously affected by the American
crises of 1866, 1873 and 1884. What Sismondi considered sheer lunacy was
in this instance literally true: the British with their own materials,
their own iron etc., had built railroads in the United States, they had
paid for the railways with their own capital and only forwent their
'use'. In spite of all periodical crises, however, European capital had
acquired such a taste for this madness, that the London stock exchange
was seized by a veritable epidemic of foreign loans in the middle of the
seventies. Between 1870 and 1875, loans of this kind, amounting to £m.
260, were raised in London. The immediate consequence was a rapid
increase in the overseas export of British merchandise. Although the
foreign countries concerned went periodically bankrupt, masses of
capital continued to flow in. Turkey, Egypt, Greece, Bolivia, Costa
Rica, Ecuador, Honduras, Mexico, Paraguay, Peru, St. Domingo, Uruguay,
and Venezuela completely or partially suspended their payments of
interest in the late seventies. Yet undeterred by this, the fever for
exotic state loans burst out again at the end of the eighties--the South
American states and South African colonies were lent immense quantities
of European capital. In 1874, for instance, the Argentine Republic
borrowed as much as £m. 10 and the loan had risen to £m. 59 by 1890.
England built railways with her own iron and coal in all these countries
as well, paying for them with her own capital. In 1885, the Argentine
permanent way had been 1,952 miles, in 1893 it was 8,557 miles.
Exports from England were rising accordingly:
----------------------------
| 1886 | 1890
----------+--------+--------
| £m. | £m.
Iron | 21·8 | 31·6
Machinery | 10 | 16·4
Coal | 9 | 19
----------------------------
British total exports (mainly to the Argentine) amounted to £m. 4·7 in
1885 and to £m. 10·7 a mere four years later.
At the same time, British capital flowed into Australia in the form of
state loans. At the end of the eighties the loans to the three colonies
Victoria, New South Wales and Tasmania amounted to £m. 112, £m. 81 of
which were invested in railway construction. The permanent way of
Australia extended over 4,900 miles in 1880, and over 15,600 miles in
1895.
Britain, supplying capital and materials for these railways, was also
embroiled in the crises of 1890 in the Argentine, Transvaal, Mexico,
Uruguay, and in that of 1893 in Australia.
The following two decades made a difference only in so far as German,
French and Belgian capital largely participated with British capital in
foreign investments, while railway construction in Asia Minor had been
financed entirely by British capital from the fifties to the late
eighties. From then on, German capital took over and put into execution
the tremendous project of the Anatolian railway. German capital
investments in Turkey gave rise to an increased export of German goods
to that country.
In 1896, German exports to Turkey amounted to £m. 1·4, in 1911 to £m.
5·65. To Asiatic Turkey, in particular, goods were exported in 1901 to
the value of £m. 0·6 and in 1911 to the value of £m. 1·85. In this case,
German capital was used to a considerable extent to pay for German
goods, the Germans forgoing, to use Sismondi's term, only the pleasure
of using their own products.
Let us examine the position more closely:
Realised surplus value, which cannot be capitalised and lies idle in
England or Germany, is invested in railway construction, water works,
etc. in the Argentine, Australia, the Cape Colony or Mesopotamia.
Machinery, materials and the like are supplied by the country where the
capital has originated, and the same capital pays for them. Actually,
this process characterises capitalist conditions everywhere, even at
home. Capital must purchase the elements of production and thus become
productive capital before it can operate. Admittedly, the products are
then used within the country, while in the former case they are used by
foreigners. But then capitalist production does not aim at its products
being enjoyed, but at the accumulation of surplus value. There had been
no demand for the surplus product within the country, so capital had
lain idle without the possibility of accumulating. But abroad, where
capitalist production has not yet developed, there has come about,
voluntarily or by force, a new demand of the non-capitalist strata. The
consumption of the capitalist and working classes at home is irrelevant
for the purposes of accumulation, and what matters to capital is the
very fact that its products are 'used' by _others_. The new consumers
must indeed realise the products, pay for their use, and for this they
need money. They can obtain some of it by the exchange of commodities
which begins at this point, a brisk traffic in goods following hard on
the heels of railway construction and mining (gold mines, etc.). Thus
the capital advanced for railroad building and mining, together with an
additional surplus value, is gradually realised. It is immaterial to the
situation as a whole whether this exported capital becomes share capital
in new independent enterprises, or whether, as a government loan, it
uses the mediation of a foreign state to find new scope for operation in
industry and traffic, nor does it matter if in the first case some of
the companies are fraudulent and fail in due course, or if in the second
case the borrowing state finally goes bankrupt, i.e. if the owners
sometimes lose part of their capital in one way or another. Even the
country of origin is not immune, and individual capitals frequently get
lost in crises. The important point is that capital accumulated in the
old country should find elsewhere new opportunities to beget and realise
surplus value, so that accumulation can proceed. In the new countries,
large regions of natural economy are open to conversion into commodity
economy, or existing commodity economy can be ousted by capital.
Railroad construction and mining, gold mining in particular, are typical
for the investment of capitals from old capitalist countries in new
ones. They are pre-eminently qualified to stimulate a brisk traffic in
goods under conditions hitherto determined by natural economy and both
are significant in economic history as mile-stones along the route of
rapid dissolution of old economic organisations, of social crises and of
the development of modern conditions, that is to say of the development
of commodity economy to begin with, and further of the production of
capital.
For this reason, the part played by lending abroad as well as by capital
investments in foreign railway and mining shares is a fine sample of the
deficiencies in Marx's diagram of accumulation. In these instances,
enlarged reproduction of capital capitalises a surplus value that has
already been realised (in so far as the loans or foreign investments are
not financed by the savings of the petty bourgeoisie or the
semi-proletariat). It is quite irrelevant to the present field of
accumulation, when, where and how the capital of the old countries has
been realised so that it may flow into the new country. British capital
which finds an outlet in Argentine railway construction might well in
the past have been realised in China in the form of Indian opium.
Further, the British capital which builds railways in the Argentine, is
of English origin not only in its pure value-form, as money capital, but
also in its material form, as iron, coal and machinery; the use-form of
the surplus value, that is to say, has also come into being from the
very beginning in the use-form suitable for the purposes of
accumulation. The actual use-form of the variable capital, however,
labour power, is mainly foreign: it is the native labour of the new
countries which is made a new object of exploitation by the capital of
the old countries. If we want to keep our investigation all on one
plane, we may even assume that the labour power, too, has the same
country of origin as the capital. In point of fact new discoveries, of
gold mines for instance, tend to call forth mass emigration from the old
countries, especially in the first stages, and are largely worked by
labour from those countries. It might well be, then, that in a new
country capital, labour power and means of production all come from the
same capitalist country, say England. So it is really in England that
all the material conditions for accumulation exist--a realised surplus
value as money capital, a surplus product in productive form, and lastly
labour reserves. Yet accumulation cannot proceed here: England and her
old buyers require neither railways nor an expanded industry. Enlarged
reproduction, i.e. accumulation, is possible only if new districts with
a non-capitalist civilisation, extending over large areas, appear on the
scene and augment the number of consumers.
But then, who are these new consumers actually; who is it that realises
the surplus value of capitalist enterprises which are started with
foreign loans; and who, in the final analysis, pays for these loans? The
international loans in Egypt provide a classical answer.
The internal history of Egypt in the second half of the nineteenth
century is characterised by the interplay of three phenomena:
large-scale capitalist enterprise, a rapidly growing public debt, and
the collapse of peasant economy. Until quite recently, _corvée_
prevailed in Egypt, and the Wali and later the Khedive freely pursued
their own power policy with regard to the condition of landownership.
These primitive conditions precisely offered an incomparably fertile
soil for the operations of European capital. Economically speaking, the
conditions for a monetary economy had to be established to begin with,
and the state created them by direct compulsion. Until the thirties,
Mehemet Ali, the founder of Modern Egypt, here applied a method of
patriarchal simplicity: every year, he 'bought up' the fellaheen's
entire harvest for the public exchequer, and allowed them to buy back,
at a higher price, a minimum for subsistence and seed. In addition he
imported cotton from East India, sugar cane from America, indigo and
pepper, and issued the fellaheen with official directions what to plant
and how much of it. The government again claimed the monopoly for cotton
and indigo, reserving to itself the exclusive right of buying and
selling these goods. By such methods was commodity exchange introduced
in Egypt. Admittedly, Mehemet Ali also did something towards raising
labour productivity. He arranged for dredging of the ancient
canalisation, and above all he started the work of the great Kaliub Nile
dams which initiated the series of great capitalist enterprises in
Egypt. These were to comprise four great fields: (1) irrigation systems,
in which the Kaliub works built between 1845 and 1853 take first
place--quite apart from unpaid forced labour, they swallowed up £m. 2·5
and incidentally proved quite useless at first; (2) routes for
traffic--the most important construction which proved ultimately
detrimental to Egypt being the Suez Canal; (3) the cultivation of
cotton, and (4) the production of sugar cane. With the building of the
Suez Canal, Egypt became caught up in the web of European capitalism,
never again to get free of it. French capital led the way with British
capital hard on its heels. In the twenty years that followed, the
internal disturbances in Egypt were coloured by the competitive struggle
between these two capitals. French capital was perhaps the most peculiar
exponent of the European methods of capital accumulation at the expense
of primitive conditions. Its operations were responsible for the useless
Nile dams as well as for the Suez Canal. Egypt first contracted to
supply the labour of 20,000 serfs free of charge for a number of years,
and secondly to take up shares in the Suez Company to the tune of £m.
3·5, i.e. 40 per cent of the company's total capital. All this for the
sake of breaking through a canal which would deflect the entire trade
between Europe and Asia from Egypt and would painfully affect her part
in this trade. These £m. 3·5 formed the nucleus for Egypt's immense
national debt which was to bring about her military occupation by
Britain twenty years later. In the irrigation system, sudden
transformations were initiated: the ancient _sakias_, i.e.
bullock-driven water-wheels, of which 50,000 had been busy for 7 months
in the year in the Nile delta alone, were partially replaced by steam
pumps. Modern steamers now plied on the Nile between Cairo and Assuan.
But the most profound change in the economic conditions of Egypt was
brought about by the cultivation of cotton. This became almost epidemic
in Egypt when, owing to the American War of Secession and the English
cotton famine, the price per short ton rose from something between £30
and £40 to £200-£250. Everybody was planting cotton, and foremost among
all, the Viceroy and his family. His estates grew fat, what with
large-scale land robbery, confiscations, forced 'sale' or plain theft.
He suddenly appropriated villages by the score though without any legal
excuse. Within an incredibly short time, this vast demesne was brought
under cotton, with the result that the entire technique of Egyptian
traditional agriculture was revolutionised. Dams were thrown up
everywhere to protect the cotton fields from the seasonal flooding of
the Nile, and a comprehensive system of artificial irrigation was
introduced. These waterworks together with continuous deep ploughing--a
novel departure for the fellah who had until then merely scratched his
soil with a plough dating back to the Pharaohs--and finally the
intensive labours of the harvest made between them enormous demands on
Egypt's labour power. This was throughout the same forced peasant labour
over which the state claimed to have an unrestricted right of disposal;
and thousands had already been employed on the Kaliub dams and the Suez
Canal and now the irrigation and plantation work to be done on the
viceregal estates clamoured for this forced labour. The 20,000 serfs who
had been put at the disposal of the Suez Canal Company were now required
by the Khedive himself, and this brought about the first clash with
French capital. The company was adjudged a compensation of £m. 3·35 by
the arbitration of Napoleon III, a settlement to which the Khedive could
all the more readily agree, since the very fellaheen whose labour power
was the bone of contention were ultimately to be mulcted of this sum.
The work of irrigation was immediately put in hand. Centrifugal
machines, steam and traction engines were therefore ordered from England
and France. In their hundreds, they were carried by steamers from
England to Alexandria and then further. Steam ploughs were needed for
cultivating the soil, especially since the rinderpest of 1864 had killed
off all the cattle, England again being the chief supplier of these
machines. The Fowler works were expanded enormously of a sudden to meet
the requirements of the Viceroy for which Egypt had to pay.[404]
But now Egypt required yet a third type of machine, cotton gins and
presses for packing. Dozens of these gins were set up in the Delta
towns. Like English industrial towns, Sagasis, Tanta, Samanud and other
towns were covered by palls of smoke and great fortunes circulated in
the banks of Alexandria and Cairo.
But already in the year that followed, this cotton speculation collapsed
with the cotton prices which fell in a couple of days from 27_d._ per
pound to 15_d._, 12_d._, and finally 6_d._ after the cessation of
hostilities in the American Union. The following year, Ismail Pasha
ventured on a new speculation, the production of cane sugar. The forced
labour of the fellaheen was to compete with the Southern States of the
Union where slavery had been abolished. For the second time, Egyptian
agriculture was turned upside down. French and British capitalists found
a new field for rapid accumulation. 18 giant sugar factories were put on
order in 1868-9 with an estimated daily output of 200 short tons of
sugar, that is to say four times as much as that of the greatest then
existing plant. Six of them were ordered from England, and twelve from
France, but England eventually delivered the lion's share, because of
the Franco-German war. These factories were to be built along the Nile
at intervals of 6·2 miles (10 _km._), as centres of cane plantations of
an area comprising 10 sq. _km._ Working to full capacity, each factory
required a daily supply of 2,000 tons of sugar cane. Fellaheen were
driven to forced labour on the sugar plantations in their thousands,
while further thousands of their number built the Ibrahimya Canal. The
stick and _kourbash_ were unstintingly applied. Transport soon became a
problem. A railway network had to be built round every factory to haul
the masses of cane inside, rolling stock, funiculars, etc., had to be
obtained as quickly as possible. Again these enormous orders were placed
with English capital. The first giant factory was opened in 1872, 4,000
camels providing makeshift transport. But it proved to be simply
impossible to supply cane in the quantities required by the undertaking.
The working staff was completely inadequate, since the fellah,
accustomed to forced labour on the land, could not be transformed
overnight into a modern industrial worker by the lash of the whip. The
venture collapsed, even before many of the imported machines had been
installed. This sugar speculation concluded the period of gigantic
capitalist enterprise in Egypt in 1873.
What had provided the capital for these enterprises? International
loans. One year before his death in 1863, Said Pasha had raised the
first loan at a nominal value of £m. 3·3 which came to £m. 2·5 in cash
after deduction of commissions, discounts, etc. He left to Ismail Pasha
the legacy of this debt and the contract with the Suez Canal Company,
which was to burden Egypt with a debt of £m. 17. Ismail Pasha in turn
raised his first loan in 1864 with a nominal value of £m. 5·7 at 7 per
cent and a cash value of £m. 4·85 at 8 1/4 per cent. What remained of
it, after £m. 3·35 had been paid to the Suez Canal Company as
compensation, was spent within the year, swallowed up for the greater
part by the cotton gamble. In 1865, the first so-called Daira-loan was
floated by the Anglo-Egyptian Bank, on the security of the Khedive's
private estates. The nominal value of this loan was £m. 3·4 at 9 per
cent, and its real value £m. 2·5 at 12 per cent. In 1866, _Fruehling &
Goschen_ floated a new loan at a nominal value of £m. 3 and a cash value
of £m. 2. The Ottoman Bank floated another in 1867 of nominally £m. 2,
really £m. 1·7. The floating debt at that time amounted to £m. 30. The
Banking House _Oppenheim & Neffen_ floated a great loan in 1868 to
consolidate part of this debt. Its nominal value was £m. 11·9 at 7 per
cent, though Ismail could actually lay hands only on £m. 7·1 at 13 1/2
per cent. This money made it possible, however, to pay for the pompous
celebrations on the opening of the Suez Canal, in presence of the
leading figures in the Courts of Europe, in finance and in the
_demi-monde_, for a madly lavish display, and further, to grease the
palm of the Turkish Overlord, the Sultan, with a new baksheesh of £m. 1.
The sugar gamble necessitated another loan in 1870. Floated by the firm
of _Bischoffsheim & Goldschmidt_, it had a nominal value of £m. 7·1 at 7
per cent, and its cash value was £m. 5. In 1872/3 _Oppenheim's_ floated
two further loans, a modest one amounting to £m. 4 at 14 per cent and a
large one of £m. 32 at 8 per cent which reduced the floating debt by
one-half, but which actually came only to £m. 11 in cash, since the
European banking houses paid it in part by bills of exchange they had
discounted.
In 1874, a further attempt was made to raise a national loan of £m. 50
at an annual charge of 9 per cent, but it yielded no more than £m. 3·4.
Egyptian securities were quoted at 54 per cent of their face value.
Within the thirteen years after Said Pasha's death, Egypt's total public
debt had grown from £m. 3·293 to £m. 94·110,[405] and collapse was
imminent.
These operations of capital, at first sight, seem to reach the height of
madness. One loan followed hard on the other, the interest on old loans
was defrayed by new loans, and capital borrowed from the British and
French paid for the large orders placed with British and French
industrial capital.
While the whole of Europe sighed and shrugged its shoulders at Ismail's
crazy economy, European capital was in fact doing business in Egypt on a
unique and fantastic scale--an incredible modern version of the biblical
legend about the fat kine which remains unparalleled in capitalist
history.
In the first place, there was an element of usury in every loan,
anything between one-fifth and one-third of the money ostensibly lent
sticking to the fingers of the European bankers. Ultimately, the
exorbitant interest had to be paid somehow, but how--where were the
means to come from? Egypt herself was to supply them; their source was
the Egyptian fellah--peasant economy providing in the final analysis all
the most important elements for large-scale capitalist enterprise. He
provided the land since the so-called private estates of the Khedive
were quickly growing to vast dimensions by robbery and blackmail of
innumerable villages; and these estates were the foundations of the
irrigation projects and the speculation in cotton and sugar cane. As
forced labour, the fellah also provided the labour power and, what is
more, he was exploited without payment and even had to provide his own
means of subsistence while he was at work. The marvels of technique
which European engineers and European machines performed in the sphere
of Egyptian irrigation, transport, agriculture and industry were due to
this peasant economy with its fellaheen serfs. On the Kaliub Nile dams
and on the Suez Canal, in the cotton plantations and in the sugar
plants, untold masses of peasants were put to work; they were switched
over from one job to the next as the need arose, and they were exploited
to the limit of endurance and beyond. Although it became evident at
every step that there were technical limits to the employment of forced
labour for the purposes of modern capital, yet this was amply
compensated by capital's unrestricted power of command over the pool of
labour power, how long and under what conditions men were to work, live
and be exploited.
But not alone that it supplied land and labour power, peasant economy
also provided the money. Under the influence of capitalist economy, the
screws were put on the fellaheen by taxation. The tax on peasant
holdings was persistently increased. In the late sixties, it amounted to
£2 5_s._ per _hectare_, but not a farthing was levied on the enormous
private estates of the royal family. In addition, ever more special
rates were devised. Contributions of 2_s._ 6_d._ per _hectare_ had to be
paid for the maintenance of the irrigation system which almost
exclusively benefited the royal estates, and the fellah had to pay 1_s._
4_d._ for every date tree felled, 9_d._ for every clay hovel in which he
lived. In addition, every male over 10 years of age was liable to a head
tax of 6_s._ 6_d._ The total paid by the fellaheen was £m. 2·5 under
Mehemet Ali, £m. 5 under Said Pasha, and £m. 8·15 under Ismail Pasha.
The greater the debt to European capital became, the more had to be
extorted from the peasants.[406] In 1869 all taxes were put up by 10 per
cent and the taxes for the coming year collected in advance. In 1870, a
supplementary land tax of 8_s._ per _hectare_ was levied. All over Upper
Egypt people were leaving the villages, demolished their dwellings and
no longer tilled their land--only to avoid payment of taxes. In 1876,
the tax on date palms was increased by 6_d._ Whole villages went out to
fell their date palms and had to be prevented by rifle volleys. North of
Siut, 10,000 fellaheen are said to have starved in 1879 because they
could no longer raise the irrigation tax for their fields and had killed
their cattle to avoid paying tax on it.[407]
Now the fellah had been drained of his last drop of blood. Used as a
leech by European capital, the Egyptian state had accomplished its
function and was no longer needed. Ismail, the Khedive, was given his
_congé_; capital could begin winding up operations.
Egypt had still to pay 394,000 Egyptian pounds as interest on the Suez
Canal shares for £m. 4 which England had bought in 1875. Now British
commissions to 'regulate' the finances of Egypt went into action.
Strangely enough, European capital was not at all deterred by the
desperate state of the insolvent country and offered again and again to
grant immense loans for the salvation of Egypt. Cowe and Stokes proposed
a loan of £m. 76 at 9 per cent for the conversion of the total debt,
Rivers Wilson thought no less than £m. 103 would be necessary. The
_Crédit Foncier_ bought up floating bills of exchange by the million,
attempting, though without success, to consolidate the total debt by a
loan of £m. 91. With the financial position growing hopelessly
desperate, the time drew near when the country and all her productive
forces was to become the prey of European capital. October 1878 saw the
representatives of the European creditors landing in Alexandria. British
and French capital established dual control of finances and devised new
taxes; the peasants were beaten and oppressed, so that payment of
interest, temporarily suspended in 1876, could be resumed in 1877.[408]
Now the claims of European capital became the pivot of economic life and
the sole consideration of the financial system. In 1878, a new
commission and ministry were set up, both with a staff in which
Europeans made up one half. In 1879, the finances of Egypt were brought
under permanent control of European capital, exercised by the
_Commission de la Dette Publique Égyptienne_ in Cairo. In 1878, the
Tshifliks, estates of the viceregal family, which comprised 431,100
acres, were converted into crown land and pledged to the European
capitalists as collateral for the public debt, and the same happened to
the Daira lands, the private estates of the Khedive, comprising 485,131
acres, mainly in Upper Egypt; this was, at a later date, sold to a
syndicate. The other estates for the greatest part fell to capitalist
companies, the Suez Canal Company in particular. To cover the cost of
occupation, England requisitioned ecclesiastical lands of the mosques
and schools. An opportune pretext for the final blow was provided by a
mutiny in the Egyptian army, starved under European financial control
while European officials were drawing excellent salaries, and by a
revolt engineered among the Alexandrian masses who had been bled white.
The British military occupied Egypt in 1882, as a result of twenty
years' operations of Big Business, never to leave again. This was the
ultimate and final step in the process of liquidating peasant economy in
Egypt by and for European capital.[409]
It should now be clear that the transactions between European loan
capital and European industrial capital are based upon relations which
are extremely rational and 'sound' for the accumulation of capital,
although they appear absurd to the casual observer because this loan
capital pays for the orders from Egypt and the interest on one loan is
paid out of a new loan. Stripped of all obscuring connecting links,
these relations consist in the simple fact that European capital has
largely swallowed up the Egyptian peasant economy. Enormous tracts of
land, labour, and labour products without number, accruing to the state
as taxes, have ultimately been converted into European capital and have
been accumulated. Evidently, only by use of the _kourbash_ could the
historical development which would normally take centuries be compressed
into two or three decades, and it was just the primitive nature of
Egyptian conditions which proved such fertile soil for the accumulation
of capital.
As against the fantastic increase of capital on the one hand, the other
economic result is the ruin of peasant economy together with the growth
of commodity exchange which is rooted in the supreme exertion of the
country's productive forces. Under Ismail's rule, the arable and
reclaimed land of Egypt grew from 5 to 6·75 million acres, the canal
system from 45,625 to 54,375 miles and the permanent way from 256·25 to
1,638 miles. Docks were built in Siut and Alexandria, magnificent
dockyards in Alexandria, a steamer-service for pilgrims to Mecca was
introduced on the Red Sea and along the coast of Syria and Asia Minor.
Egypt's exports which in 1861 had amounted to £4,450,000 rose to £m.
14·4 in 1864; her imports which under Said Pasha amounted to £m 1·2 rose
under Ismail to between £m. 5 and £m. 5·5. Trade which recovered only in
the eighties from the opening up of the Suez Canal amounted to £m. 8·15
worth of imports and £m. 12·45 worth of exports in 1890, but in 1900
the figures were £m. 144 for imports and £m. 12·25 for exports, and in
1911--£m. 27·85 for imports and £m. 26·85 for exports. Thanks to this
development of commodity economy which expanded by leaps and bounds with
the assistance of European capital, Egypt herself had fallen a prey to
the latter. The case of Egypt, just as that of China and, more recently,
Morocco, shows militarism as the executor of the accumulation of
capital, lurking behind international loans, railroad building,
irrigation systems, and similar works of civilisation. The Oriental
states cannot develop from natural to commodity economy and further to
capitalist economy fast enough and are swallowed up by international
capital, since they cannot perform these transformations without selling
their souls to capital. Their feverish metamorphoses are tantamount to
their absorption by international capital.
Another good recent example is the deal made by German capital in
Asiatic Turkey. European capital, British capital in particular, had
already at an early date attempted to gain possession of this area which
marches with the ancient trade route between Europe and Asia.[410]
In the fifties and sixties, British capital built the railway lines
Smyrna-Aydin-Diner and Smyrna-Kassaba-Alasehir, obtained the concession
to extend the line to Afyon Karahisar and also leased the first tract
for the Anatolian railway Ada-Bazar-Izmid. French capital gradually came
to acquire influence over part of the railway building during this time.
In 1888, German capital appeared on the scene. It took up 60 per cent
of the shares in the new merger of international interests, negotiated
principally with the French capitalist group represented by the _Banque
Ottomane_. International capital took up the remaining 40 per cent.[411]
The Anatolian Railway Company, a Turkish company, was founded on the
14th Redsheb of the year 1306 (March 4, 1889) with the _Deutsche Bank_
for principal backer, to take over the railway lines between Ada-Bazar
and Izmid, running since the early seventies, as also the concession for
the Izmid-Eskisehir-Angora line (525 miles). It was further entitled to
complete the Ada-Bazar-Scutari line and branch lines to Brussa, in
addition to building the supplementary network Eskisehir-Konya (278
miles) on the basis of the 1893 concession, and finally to run a service
from Angora to Kaisari (264 miles). The Turkish government gave the
company a state guarantee of annual gross earnings amounting to £412 per
km. on the Ada-Bazar line and of £600 per km. on the Izmid-Angora lines.
For this purpose it wrote over to the _Administration de la Dette
Publique Ottomane_ the revenue from tithes in the _sandshaks_ of Izmid,
Ertoghrul, Kutalia and Angora, with which to make up the gross earnings
guaranteed by the government. For the Angora-Kaisari line the government
guaranteed annual gross earnings of 775 Turkish pounds, i.e. £712 per
km., and 604 Turkish pounds, i.e. approximately £550, provided, in the
latter case, that the supplementary grant per km. did not exceed 219
Turkish pounds (£200 a year). The government was to receive a quarter of
the eventual surplus of gross earnings over the guaranteed amount. The
_Administration de la Dette Publique Ottomane_ as executor of the
government guarantee collected the tithes of the _sandshaks_ Trebizonde
and Gumuchhane direct and paid the railway company out of a common fund
which was formed of all the tithes set aside for this purpose. In 1898,
the Eskisehir-Konya maximum grant was raised from 218 to 296 Turkish
pounds.
In 1899, the company obtained concessions to build and run a dockyard at
Ada-Bazar, to issue writs, to build corn-elevators and storerooms for
goods of every description, further the right to employ its own staff
for loading and unloading and, finally, in the sphere of customs policy,
the creation of a kind of free port.
In 1901, the company acquired a concession for the Baghdad railway
Konya-Baghdad-Bazra-Gulf of Persia (1,500 miles) which connects with the
Anatolian line by the Konya-Aregli-Bulgurlu line. For taking up this
concession, a new limited company was founded which placed the order of
constructing the line, at first to Bulgurlu, with a Building Company
registered in Frankfort-on-the-Main.
Between 1893 and 1910, the Turkish government gave additional
grants--£1,948,000 for the Ada-Bazar-Angora line and 1,800,000 Turkish
pounds for the Eskisehir-Konya line--a total of £3,632,000.[412]
Finally, by the concession of 1907, the company was empowered to drain
the Karavirar Lake and to irrigate the Konya plain, these works to be
executed within six years at government expense. In this instance, the
company advanced the government the necessary capital up to £780,000 at
5 per cent interest, repayable within thirty-six years. In return the
Turkish government pledged as securities: (1) an annual sum of 25,000
Turkish pounds, payable from the surplus of the tithes' fund assigned to
the _Administration de la Dette Publique Ottomane_ to cover the railway
grants and other obligations; (2) the residual tithes over the last 5
years in the newly irrigated regions; (3) the net proceeds from the
working of the irrigation systems, and (4) the price of all reclaimed or
irrigated land that was sold. For the execution of this work, the
Frankfort company had formed a subsidiary company 'for the irrigation of
the Konya plain' with a capital of £m. 5·4 to take this work in hand.
In 1908 the company obtained the concession for extending the Konya
railway as far as Baghdad and the Gulf of Persia, again with inclusion
of a guaranteed revenue.
To pay for this railway grant, a German Baghdad railway loan was taken
up in three instalments of £m. 2·16, £m. 4·32 and £m. 4·76 respectively,
on the security of the aggregate tithes for the _vilayets_ Aydin,
Baghdad, Mossul, Diarbekir, Ursa and Aleppo, and the sheep-tax in the
_vilayets_ Konya, Adana, Aleppo, etc.[413]
The foundation of accumulation here becomes quite clear. German capital
builds railways, ports and irrigation works in Asiatic Turkey; in all
these enterprises it extorts new surplus value from the Asiatics whom it
employs as labour power. But this surplus value must be realised
together with the means of production from Germany (railway materials,
machinery, etc.). How is it done? In part by commodity exchange which is
brought about by the railways, the dockyards, etc., and nurtured in
Asia Minor under conditions of natural economy. In part, i.e. in so far
as commodity exchange does not grow quickly enough for the needs of
capital, by using force, the machinery of the state, to convert the
national real income into commodities; these are turned into cash in
order to realise capital plus surplus value. That is the true object of
the revenue grants for independent enterprises run by foreign capital,
and of the collateral in the case of loans. In both instances so-called
tithes (_ueshur_), pledged in different ways, are paid in kind by the
Turkish peasant and these were gradually increased from about 12 to
12 1/2 per cent. The peasant in the Asiatic _vilayet_ must pay up or
else his tithe would simply be confiscated by the police and the central
and local authorities. These tithes, themselves a manifestation of
ancient Asiatic despotism based on natural economy, are not collected by
the Turkish government direct, but by tax-farmers not unlike the
tax-collectors of the _ancien régime_; that is to say the expected
returns from the levy in each _vilayet_ are separately auctioned by the
state to tax-farmers. They are bought by individual speculators or
syndicates who sell the tithes of each _sandshak_ (district) to other
speculators and these resell their shares to a whole number of smaller
agents. All these middlemen want to cover their expenses and make the
greatest possible profit, and thus, by the time they are actually
collected, the peasants' contributions have swollen to enormous
dimensions. The tax-farmer will try to recoup himself for any mistake in
his calculations at the expense of the peasant, and the latter, nearly
always in debt, is impatient for the moment when he can sell his
harvest. But often, after cutting his corn, he cannot start threshing
for weeks, until indeed the tax-farmer deigns to take his due. His
entire harvest is about to rot in the fields, and the tax-farmer,
usually a grain merchant himself, takes advantage of this fact and
compels him to sell at a low price. These tax-collectors know how to
enlist the support of the officials, especially the Muktars, the local
headmen, against complaining malcontents.[414]
Along with the taxes on salt, tobacco, spirits, the excise on silk, the
fishing dues, etc., the tithes are pledged with the _Conseil de
l'Administration de la Dette Publique Ottomane_ to serve as security for
the railway grant and the loans. In every case the _Conseil_ reserves
to itself the right to vet the tax-farmers' contracts and stipulates for
the proceeds of the tithe to be paid directly into the coffers of its
regional offices. If no tax-farmer can be found, the tithes are stored
in kind by the Turkish government; the warehouse keys are deposited with
the _Conseil_ which then can sell the tithes on its own account.
Thus the economic metabolism between the peasants of Asia Minor, Syria
and Mesopotamia on the one hand and German capital on the other proceeds
in the following way: in the _vilayets_ Konya, Baghdad, Bazra, etc., the
grain comes into being as a simple use-product of primitive peasant
economy. It immediately falls to the tithe-farmer as a state levy. Only
then, in the hands of this latter, does it become a commodity, and, as
such, money which falls to the state. This money is nothing but
converted peasant grain; it was not even produced as a commodity. But
now, as a state guarantee, it serves towards paying for the construction
and operation of railways, i.e. to realise both the value of the means
of production and the surplus value extorted from the Asiatic peasants
and proletariat in the building and running of the railway. In this
process further means of production of German origin are used, and so
the peasant grain of Asia, converted into money, also serves to turn
into cash the surplus value that has been extorted from the German
workers. In the performance of these functions, the money rolls from the
hands of the Turkish government into the coffers of the _Deutsche Bank_,
and here it accumulates, as capitalist surplus value, in the form of
promoters' profits, royalties, dividends and interests in the accounts
of Messrs. Gwinner, Siemens, Stinnes and their fellow directors, of the
shareholders and clients of the _Deutsche Bank_ and the whole intricate
system of its subsidiary companies. If there is no tax-farmer, as
provided in the concessions, then the complicated metamorphoses are
reduced to their most simple and obvious terms: the peasant grain passes
immediately to the _Administration de la Dette Publique Ottomane_, i.e.
to the representatives of European capital, and becomes already in its
natural form a revenue for German and other foreign capital: it realises
capitalist surplus value even before it has shed its use-form for the
Asiatic peasant, even before it has become a commodity and its own value
has been realised. This is a coarse and straightforward metabolism
between European capital and Asiatic peasant economy, with the Turkish
state reduced to its real rôle, that of a political machinery for
exploiting peasant economy for capitalist purposes,--the real function,
this, of all Oriental states in the period of capitalist imperialism.
This business of paying for German goods with German capital in Asia is
not the absurd circle it seems at first, with the kind Germans allowing
the shrewd Turks merely the 'use' of their great works of
civilisation--it is at bottom an exchange between German capital and
Asiatic peasant economy, an exchange performed under state compulsion.
On the one hand it makes for progressive accumulation and expanding
'spheres of interest' as a pretext for further political and economic
expansion of German capital in Turkey. Railroad building and commodity
exchange, on the other hand, are fostered by the state on the basis of a
rapid disintegration, ruin and exploitation of Asiatic peasant economy
in the course of which the Turkish state becomes more and more dependent
on European capital, politically as well as financially.[415]