Chapter XXI: Section III: is broader, more vigorous and in general more rewarding than (17)

'The burden of mortgages upon farms, homes, and land, is unquestionably discouraging in the extreme, and while in some cases no doubt this load may have been too readily assumed, still in the majority of cases the mortgage has been the result of necessity.... These mortgages ... drawing high rates of interest ... have to-day, in the face of continued depression of the prices of staple products, become very irksome, and in many cases threaten the farmer with loss of home and land. It is a question of grave difficulty to all those who seek to remedy the ills from which our farmers are suffering. At present prices the farmer finds that it takes more of his products to get a dollar wherewith to buy back the dollar which he borrowed than it did when he borrowed it. The interest accumulates, while the payment of the principal seems utterly hopeless, and the very depression which we are discussing makes the renewal of the mortgage most difficult.'[389]

According to the census of May 29, 1891, 2·5 million farms were deep in debt; two-thirds of them were managed by the owners whose obligations amounted to nearly £440,000.

'The situation is this: farmers are passing through the "valley and shadow of death"; farming as a business is profitless; values of farm products have fallen 50 per cent since the great war, and farm values have depreciated 25 to 50 per cent during the last ten years; farmers are overwhelmed with debts secured by mortgages on their homes, unable in many instances to pay even the interest as it falls due, and unable to renew the loans because securities are weakening by reason of the general depression; many farmers are losing their homes under this dreadful blight, and the mortgage mill still grinds. We are in the hands of a merciless power; the people's homes are at stake.'[390]

Encumbered with debts and close to ruin, the farmer had no option but to supplement his earnings by working for a wage, or else to abandon his farm altogether. Provided it had not yet fallen into the clutches of his creditors like so many thousands of farms, he could shake from off his feet the dust of the 'land of promise' that had become an inferno for him. In the middle eighties, abandoned and decaying farms could be seen everywhere. In 1887, Sering wrote:

'If the farmer cannot pay his debts to date, the interest he has to pay is increased to 12, 15 or even 20 per cent. He is pressed by the banker, the machine salesman and the grocer who rob him of the fruits of his hard work.... He can either remain on the farm as a tenant or move further West, to try his fortunes elsewhere. Nowhere in North America have I found so many indebted, disappointed and depressed farmers as in the wheat regions of the North Western prairies. I have not spoken to a single farmer in Dakota who would not have been prepared to sell his farm.[391]

'The Commissioner of Agriculture of Vermont in 1889 reported a wide-spread desertion of farm-lands of that state. He wrote: "... there appears to be no doubt about there being in this state large tracts of tillable unoccupied lands, which can be bought at a price approximating the price of Western lands, situated near school and church, and not far from railroad facilities. The Commissioner has not visited all of the counties in the State where these lands are reported, but he has visited enough to satisfy him that, while much of the unoccupied and formerly cultivated land is now practically worthless for cultivation, yet very much of it can be made to yield a liberal reward to intelligent labour."'[392]

The Commissioner of the State of New Hampshire issued a pamphlet in 1890, devoting 67 pages to the description of farms for sale at the lowest figures. He describes 1442 farms with tenantable buildings, abandoned only recently. The same has happened in other districts. Thousands of acres once raising corn and wheat are left untilled and run to brush and wood.

In order to resettle the deserted land, speculators engaged in advertising campaigns and attracted crowds of new immigrants--new victims who were to suffer their predecessors' fate even more speedily.

A private letter says: 'In the neighbourhood of railroads and markets, there remains no common land. It is all in the hands of the speculators. A settler takes over vacant land and counts for a farmer; but the management of his farm hardly assures his livelihood, and he cannot possibly compete with the big farmer. He tills as much of his land as the law compels him to do, but to make a comfortable living, he must look for additional sources of income outside agriculture. In Oregon, for instance, I have met a settler who owned 160 acres for five years, but every summer, until the end of July, he worked twelve hours a day for a dollar a day at road-making. This man, of course, also counts as one of the five million farmers in the 1890 census. Again, in the County of Eldorado, I saw many farmers who cultivated their land only to feed their cattle and themselves. There would have been no profit in producing for the market, and their chief income derives from gold-digging, the felling and selling of timber, etc. These people are prosperous, but it is not agriculture which makes them so. Two years ago, we worked in Long Cañon, Eldorado County, living in a cabin on an allotment. The owner of this allotment came home only once a year for a couple of days, and worked the rest of the time on the railway in Sacramento. Some years ago, a small part of the allotment was cultivated, to comply with the law, but now it is left completely untilled. A few acres are fenced off with wire, and there is a log cabin and a shed. But during the last years all this stands empty; a neighbour has the key and he made us free of the hut. In the course of our journey, we saw many deserted allotments, where attempts at farming had been made. Three years ago I was offered a farm with dwelling house for a hundred dollars, but in a short time the unoccupied house collapsed under the snow. In Oregon, we saw many derelict farms with small dwelling houses and vegetable gardens. One we visited was beautifully made: a sturdy block house, fashioned by a master-builder, and some equipment; but the farmer had abandoned it all. You were welcome to take it all without charge.'[393]

Where could the ruined American farmer turn? He set out on a pilgrimage to follow the wheat centre and the railways. The former had shifted in the main to Canada, the Saskatchewan and the Mackenzie River where wheat can still thrive on the 62nd parallel. A number of American farmers followed--and after some time in Canada, they suffered the old fate.[394] During recent years, Canada has entered the world market as a wheat-exporting country, but her agriculture is dominated to an even greater extent by big capital than elsewhere.[395]

In Canada, public lands were lavished upon private capitalist companies on an even more monstrous scale than in the United States. Under the Charter of the Canadian Pacific Railway Company with its grant of land, private capital perpetrated an unprecedented act of robbing the public. Not only that the company was guaranteed a twenty years' monopoly of railway-building, not only that it got a building site of about 713 miles free of charge, not only that it got a 100 years' state guarantee of the 3 per cent interest on the share capital of £m. 20--to crown it all, the company was given the choice of 25 million acres out of the most fertile and favourably situated lands, not necessarily in the immediate vicinity of the permanent way, as a free gift. All future settlers on this vast area were thus at the mercy of railway capital from the very outset. The railway company, in its turn, immediately proceeded to sell off 5 million acres for ready cash to the North-West Land Company, an association of British capitalists under the chairmanship of the Duke of Manchester. The second group of capitalists which was liberally endowed with public lands was the Hudson Bay Company, which was given a title to no less than one-twentieth of all the lands between Lake Winnipeg, the U.S. border, the Rocky Mountains, and Northern Saskatchewan, for renouncing their privileges in the North-West. Between them, these two capitalist groups had gained possession of five-ninths of all the land that could be settled. A considerable part of the other lands was assigned by the State to 26 capitalist 'colonising companies'.[396] Thus the Canadian farmer was practically everywhere ensnared by capital and capitalist speculation. And still mass immigration continued--not only from Europe, but also from the United States!

These are the characteristics of capitalist domination on an international scale. Having evicted the peasant from his soil, it drives him from England to the East of the United States, and from there to the West, and on the ruins of the Red Indians' economy it transforms him back into a small commodity producer. Then, when he is ruined once more, he is driven from the West to the North. With the railways in the van, and ruin in the rear--capital leads the way, its passage is marked with universal destruction. The great fall of prices in the nineties is again succeeded by higher prices for agricultural products, but this is of no more avail to the small American farmer than to the European peasant.

Yet the numbers of farmers are constantly swelling. In the last decade of the nineteenth century they had grown from 4,600,000 to 5,700,000, and the following ten years still saw an absolute increase. The aggregate value of farms had during the same period risen from £150,240,000 to £330,360,000.[397] We might have expected the general increase in the price of farm produce to have helped the farmer to come into his own. But that is not so; we see that the growing numbers of tenant farmers outstrip the increase in the farming population as a whole. In 1880, the proportion of tenant farmers amounted to 25·5 per cent of the total number of farmers in the Union, in 1890 it was 28·4 per cent, in 1900 35·3 per cent, and in 1910 37·2 per cent.

Though prices for farm produce were rising, the tenant farmer was more and more rapidly stepping into the shoes of the independent farmer. And although much more than one-third of all farmers in the Union are now tenant farmers, their social status in the United States is that of the agricultural labourer in Europe. Constantly fluctuating, they are indeed wage-slaves of capital; they work very hard to create wealth for capital, getting nothing in return but a miserable and precarious existence.

In quite a different historical setting, in South Africa, the same process shows up even more clearly the 'peaceful methods' by which capital competes with the small commodity producer.

In the Cape Colony and the Boer Republics, pure peasant economy prevailed until the sixties of the last century. For a long time the Boers had led the life of animal-tending nomads; they had killed off or driven out the Hottentots and Kaffirs with a will in order to deprive them of their most valuable pastures. In the eighteenth century they were given invaluable assistance by the plague, imported by ships of the East India Company, which frequently did away with entire Hottentot tribes whose lands then fell to the Dutch immigrants. When the Boers spread further East, they came in conflict with the Bantu tribes and initiated the long period of the terrible Kaffir wars. These god-fearing Dutchmen regarded themselves as the Chosen People and took no small pride in their old-fashioned Puritan morals and their intimate knowledge of the Old Testament; yet, not content with robbing the natives of their land, they built their peasant economy like parasites on the backs of the Negroes, compelling them to do slave-labour for them and corrupting and enervating them deliberately and systematically. Liquor played such an important part in this process, that the prohibition of spirits in the Cape Colony could not be carried through by the English government because of Puritan opposition. There were no railways until 1859, and Boer economy in general and on the whole remained patriarchal and based on natural economy until the sixties. But their patriarchal attitude did not deter the Boers from extreme brutality and harshness. It is well known that Livingstone complained much more about the Boers than about the Kaffirs. The Boers considered the Negroes an object, destined by God and Nature to slave for them, and as such an indispensable foundation of their peasant economy. So much so that their answer to the abolition of slavery in the English colonies in 1836 was the 'Great Trek', although there the owners had been compensated with £3,000,000. By way of the Orange River and Vaal, the Boers emigrated from the Cape Colony, and in the process they drove the Matabele to the North, across the Limpopo, setting them against the Makalakas. Just as the American farmer had driven the Red Indian West before him under the impact of capitalist economy, so the Boer drove the Negro to the North. The 'Free Republics' between the Orange River and the Limpopo thus were created as a protest against the designs of the English bourgeoisie on the sacred right of slavery. The tiny peasant republics were in constant guerilla warfare against the Bantu Negroes. And it was on the backs of the Negroes that the battle between the Boers and the English government, which went on for decades, was fought. The Negro question, i.e. the emancipation of the Negroes, ostensibly aimed at by the English bourgeoisie, served as a pretext for the conflict between England and the republics. In fact, peasant economy and great capitalist colonial policy were here competing for the Hottentots and Kaffirs, that is to say for their land and their labour power. Both competitors had precisely the same aim: to subject, expel or destroy the coloured peoples, to appropriate their land and press them into service by the abolition of their social organisations. Only their methods of exploitation were fundamentally different. While the Boers stood for out-dated slavery on a petty scale, on which their patriarchal peasant economy was founded, the British bourgeoisie represented modern large-scale capitalist exploitation of the land and the natives. The Constitution of the Transvaal (South African) Republic declared with crude prejudice: 'The People shall not permit any equality of coloured persons with white inhabitants, neither in the Church nor in the State.'[398]

In the Orange Free State and in the Transvaal no Negro was allowed to own land, to travel without papers or to walk abroad after sunset. Bryce tells us of a case where a farmer, an Englishman as it happened, in the Eastern Cape Colony had flogged his Kaffir slave to death. When he was acquitted in open court, his neighbours escorted him home to the strains of music. The white man frequently maltreated his free native labourers after they had done their work--to such an extent that they would take to flight, thus saving the master their wages.

The British government employed precisely the opposite tactics. For a long time it appeared as protector of the natives; flattering the chieftains in particular, it supported their authority and tried to make them claim a right of disposal over their land. Wherever it was possible, it gave them ownership of tribal land, according to well-tried methods, although this flew in the face of tradition and of the actual social organisation of the Negroes. All tribes in fact held their land communally, and even the most cruel and despotic rulers such as the Matabele Chieftain Lobengula merely had the right as well as the duty to allot every family a piece of land which they could only retain so long as they cultivated it. The ultimate purpose of the British government was clear: long in advance it was preparing for land robbery on a grand scale, using the native chieftains themselves as tools. But in the beginning it was content with the 'pacification' of the Negroes by extensive military actions. Up to 1879 were fought 9 bloody Kaffir wars to break the resistance of the Bantus.

British capital revealed its real intentions only after two important events had taken place: the discovery of the Kimberley diamond fields in 1869-70, and the discovery of the gold mines in the Transvaal in 1882-5, which initiated a new epoch in the history of South Africa. Then the British South Africa Company, that is to say Cecil Rhodes, went into action. Public opinion in England rapidly swung over, and the greed for the treasures of South Africa urged the British government on to drastic measures. South Africa was suddenly flooded with immigrants who had hitherto only appeared in small numbers--immigration having been deflected to the United States. But with the discovery of the diamond and gold fields, the numbers of white people in the South African colonies grew by leaps and bounds: between 1885 and 1895, 100,000 British had immigrated into Witwatersrand alone. The modest peasant economy was forthwith pushed into the background--the mines, and thus the mining capital, coming to the fore. The policy of the British government veered round abruptly. Great Britain had recognised the Boer Republics by the Sand River Agreement and the Treaty of Bloemfontein in the fifties. Now her political might advanced upon the tiny republics from every side, occupying all neighbouring districts and cutting off all possibility of expansion. At the same time the Negroes, no longer protected favourites, were sacrificed. British capital was steadily forging ahead. In 1868, Britain took over the rule of Basutoland--only, of course, because the natives had 'repeatedly implored' her to do so.[399] In 1871, the Witwatersrand diamond fields, or West Griqualand, were seized from the Orange Free State and turned into a Crown Colony. In 1879, Zululand was subjected, later to become part of the Natal Colony; in 1885 followed the subjection of Bechuanaland, to be joined to the Cape Colony. In 1888 Britain took over Matabele and Mashonaland, and in 1889 the British South Africa Company was given a Charter for both these districts, again, of course, only to oblige the natives and at their request.[400] Between 1884 and 1887, Britain annexed St. Lucia Bay and the entire East Coast as far as the Portuguese possessions. In 1894, she subjected Tongaland. With their last strength, the Matabele and Mashona fought one more desperate battle, but the Company, with Rhodes at the head, first liquidated the rising in blood and at once proceeded to the well-tried measure for civilising and pacifying the natives: two large railways were built in the rebellious district.

The Boer Republics were feeling increasingly uncomfortable in this sudden stranglehold, and their internal affairs as well were becoming completely disorganised. The overwhelming influx of immigrants and the rising tides of the frenzied new capitalist economy now threatened to burst the barriers of the small peasant states. There was indeed a blatant conflict between agricultural and political peasant economy on the one hand, and the demands and requirements of the accumulation of capital on the other. In all respects, the republics were quite unable to cope with these new problems. The constant danger from the Kaffirs, no doubt regarded favourably by the British, the unwieldy, primitive administration, the gradual corruption of the _volksraad_ in which the great capitalists got their way by bribery, lack of a police force to keep the undisciplined crowds of adventurers in some semblance of order, the absence of labour legislation for regulating and securing the exploitation of the Negroes in the mines, lack of water supplies and transport to provide for the colony of 100,000 immigrants that had suddenly sprung up, high protective tariffs which increased the cost of labour for the capitalists, and high freights for coal--all these factors combined towards the sudden and stunning bankruptcy of the peasant republics.

They tried, obstinately and unimaginatively, to defend themselves against the sudden eruption of capitalism which engulfed them, with an incredibly crude measure, such as only a stubborn and hide-bound peasant brain could have devised: they denied all civic rights to the _uitlanders_ who outnumbered them by far and who stood for capital, power, and the trend of the time. In those critical times it was an ill-omened trick. The mismanagement of the peasant republics caused a considerable reduction of dividends, on no account to be put up with. Mining capital had come to the end of its tether. The British South Africa Company built railroads, put down the Kaffirs, organised revolts of the _uitlanders_ and finally provoked the Boer War. The bell had tolled for peasant economy. In the United States, the economic revolution had begun with a war, in South Africa war put the period to this chapter. Yet in both instances, the outcome was the same: capital triumphed over the small peasant economy which had in its turn come into being on the ruins of natural economy, represented by the natives' primitive organisations. The domination of capital was a foregone conclusion, and it was just as hopeless for the Boer Republics to resist as it had been for the American farmer. Capital officially took over the reins in the new South African Union which replaced the small peasant republics by a great modern state, as envisaged by Cecil Rhodes' imperialist programme. The new conflict between capital and labour had superseded the old one between British and Dutch. One million white exploiters of both nations sealed their touching fraternal alliance within the Union with the civil and political disfranchisement of five million coloured workers. Not only the Negroes of the Boer Republics came away empty-handed, but the natives of the Cape Colony, whom the British government had at one time granted political equality, were also deprived of some of their rights. And this noble work, culminating under the imperialist policy of the Conservatives in open oppression, was actually to be finished by the Liberal Party itself, amid frenzied applause from the 'liberal cretins of Europe' who with sentimental pride took as proof of the still continuing creative vigour and greatness of English liberalism the fact that Britain had granted complete self-government and freedom to a handful of whites in South Africa.

The ruin of independent craftsmanship by capitalist competition, no less painful for being soft-pedalled, deserves by rights a chapter to itself. The most sinister part of such a chapter would be out-work under capitalism;--but we need not dwell on these phenomena here.

The general result of the struggle between capitalism and simple commodity production is this: after substituting commodity economy for natural economy, capital takes the place of simple commodity economy. Non-capitalist organisations provide a fertile soil for capitalism; more strictly: capital feeds on the ruins of such organisations, and although this non-capitalist _milieu_ is indispensable for accumulation, the latter proceeds at the cost of this medium nevertheless, by eating it up. Historically, the accumulation of capital is a kind of metabolism between capitalist economy and those pre-capitalist methods of production without which it cannot go on and which, in this light, it corrodes and assimilates. Thus capital cannot accumulate without the aid of non-capitalist organisations, nor, on the other hand, can it tolerate their continued existence side by side with itself. Only the continuous and progressive disintegration of non-capitalist organisations makes accumulation of capital possible.

The premises which are postulated in Marx's diagram of accumulation accordingly represent no more than the historical tendency of the movement of accumulation and its logical conclusion. The accumulative process endeavours everywhere to substitute simple commodity economy for natural economy. Its ultimate aim, that is to say, is to establish the exclusive and universal domination of capitalist production in all countries and for all branches of industry.

Yet this argument does not lead anywhere. As soon as this final result is achieved--in theory, of course, because it can never actually happen--accumulation must come to a stop. The realisation and capitalisation of surplus value become impossible to accomplish. Just as soon as reality begins to correspond to Marx's diagram of enlarged reproduction, the end of accumulation is in sight, it has reached its limits, and capitalist production is _in extremis_. For capital, the standstill of accumulation means that the development of the productive forces is arrested, and the collapse of capitalism follows inevitably, as an objective historical necessity. This is the reason for the contradictory behaviour of capitalism in the final stage of its historical career: imperialism.

Marx's diagram of enlarged reproduction thus does not conform to the conditions of an accumulation in actual progress. Progressive accumulation cannot be reduced to static interrelations and interdependence between the two great departments of social production (the departments of producer and consumer goods), as the diagram would have it. Accumulation is more than an internal relationship between the branches of capitalist economy; it is primarily a relationship between capital and a non-capitalist environment, where the two great departments of production sometimes perform the accumulative process on their own, independently of each other, but even then at every step the movements overlap and intersect. From this we get most complicated relations, divergencies in the speed and direction of accumulation for the two departments, different relations with non-capitalist modes of production as regards both material elements and elements of value, which we cannot possibly lay down in rigid formulæ. Marx's diagram of accumulation is only the theoretical reflection of the precise moment when the domination of capital has reached its limits, and thus it is no less a fiction than his diagram of simple reproduction, which gives the theoretical formulation for the point of departure of capitalist accumulation. The precise definition of capitalist accumulation and its laws lies somewhere in between these two fictions.

FOOTNOTES:

[376] Until recently, in China the domestic industries were widely practised even by the bourgeoisie and in such large and ancient towns as Ningpo with its 300,000 inhabitants. 'Only a generation ago, the family's shoes, hats, shirts, etc., were made by the women themselves. At that time, it was practically unheard-of for a young woman to buy from a merchant what she could have made with the labour of her own hands' (Dr. Nyok-Ching Tsur, 'Forms of Industry in the Town of Ningpo' (_Die gewerblichen Betriebsformen der Stadt Ningpo_), Tuebingen, 1909, p. 51).

[377] Admittedly, this relation is reversed in the last stages of the history of peasant economy when capitalist production has made its full impact. Once the small peasants are ruined, the entire work of farming frequently devolves on the women, old people and children, while the men are made to work for their living for capitalist entrepreneurs in the domestic industries or as wage-slaves in the factories. A typical instance is the small peasant in Wuerttemberg.

[378] W. A. Peffer, _The Farmer's Side. His Troubles and Their Remedy_ (New York, 1891), Part ii, 'How We Got Here', chap. i, 'Changed Conditions of the Farmer', pp. 56-7. Cf. also A. M. Simmons, _The American Farmer_ (2nd edition, Chicago, 1906), pp. 74 ff.

[379] Report of the U.S.A. Commissioner of Agriculture for the year 1867 (Washington, 1868). Quoted by Lafargue: _Getreidebau und Getreidehandel in den Vereinigten Staaten_ in _Die Neue Zeit_ (1885), p. 344. This essay on grain cultivation and the grain trade in the U.S.A. was first published in a Russian periodical in 1883.

[380] 'The three Revenue Acts of June 30, 1864, practically formed one measure, and that probably the greatest measure of taxation which the world has seen.... The Internal Revenue Act was arranged, as Mr. David A. Wells has said, on the principle of the Irishman at Donnybrook Fair: "whenever you see a head, hit it, whenever you see a commodity, tax it"' (F. W. Taussig, _The Tariff History of the United States_ (New York-London, 1888), pp. 163-4).

[381] Ibid., pp. 166-7.

[382] 'The necessity of the situation, the critical state of the country, the urgent need of revenue, may have justified this haste, which, it is safe to say, is unexampled in the history of civilised countries' (Taussig, op. cit., p. 168).

[383] Peffer, op. cit., pp. 58 ff.

[384] Ibid., p. 6.

[385] 'Agricultural Competition in North America' (_Die landwirtschaftliche Konkurrenz Nordamerikas_) Leipzig, 1887, p. 431.

[386] Lafargue, op. cit., p. 345.

[387] The Thirteenth Annual Report of the Commissioner of Labour (Washington, 1899) tables the advantages of machinery methods over hand methods so far achieved as follows:

----------------------------------------------------------------
| _Labour time per unit_
|---------------------------
_Type of work_ | _Machine_ | _Hand_
|-------------+-------------
|_hrs._|_min._|_hrs._|_min._
------------------------------------+------+------+------+------
Planting small corn | -- | 32·7 | 10 | 55
Harvesting and threshing small corn | 1 | -- | 46 | 40
Planting corn | -- | 37·5 | 6 | 15
Cutting corn | 3 | 4·5 | 5 | --
Shelling corn | -- | 3·6 | 66 | 40
Planting cotton | 1 | 3 | 8 | 48
Cultivating cotton | 12 | 5 | 60 | --
Mowing grass (scythe _v._ mower) | 1 | 0·6 | 7 | 20
Harvesting and baling hay | 11 | 3·4 | 35 | 30
anting potatoes | 1 | 2·5 | 15 | --
anting tomatoes | 1 | 4 | 10 | --
Cultivating and harvesting tomatoes | 134 | 5·2 | 324 | 20
----------------------------------------------------------------

[388] Wheat exports from the Union to Europe:

_Year_ _Million bushels_ _Year_ _Million bushels_

1868-9 17·9 1885-6 57·7
1874-5 71·8 1890-1 55·1
1879-80 153·2 1899-1900 101·9

(Juraschek's _Uebersichten der Weltwirtschaft_, vol. vii, part i, p. 32).

Simultaneously, the price per bushel wheat _loco_ farm (in cents) declined as follows:

1870-9 105 1896 73
1880-9 83 1897 81
1895 51 1898 58

Since 1899, when it had reached the low level of 58 cents per bushel, the price is moving up again:

1900 62 1903 78
1901 62 1904 92
1902 63

(Ibid., p. 18).

According to the 'Monthly Returns on External Trade' (_Monatliche Nachweise über den Auswärtigen Handel_), the price (in marks) per 1,000 _kg._, was in June 1912:

Berlin 227·82 London 170·96
New York 178·08 Odessa 173·94
Mannheim 247·93 Paris 243·69

[389] Peffer, op. cit., part i, 'Where We Are', chap, ii, 'Progress of Agriculture', pp. 30-1.

[390] Ibid., p. 4.

[391] Sering, op. cit., p. 433.

[392] Peffer, op. cit., pp. 34 f.

[393] Quoted by Nikolayon, op. cit., p. 224.

[394] 49,199 people immigrated to Canada in 1902. In 1912, the number of immigrants was more than 400,000--138,000 of them British, and 134,000 American. According to a report from Montreal, the influx of American farmers continued into the spring of the present year [1912].

[395] 'Travelling in the West of Canada, I have visited only one farm of less than a thousand acres. According to the census of the Dominion of Canada, in 1881, when the census was taken, no more than 9,077 farmers occupied 2,384,337 acres of land between them; accordingly, the share of an individual (farmer) amounted to no less than 2,047 acres--in no state of the Union is the average anywhere near that' (Sering, op. cit., p. 376). In the early eighties, farming on a large scale was admittedly not very widely spread in Canada. But already in 1887, Sering describes the 'Bell Farm', owned by a limited company, which comprised no fewer than 56,700 acres, and was obviously modelled on the pattern of the Dalrymple farm. In the eighties, Sering, who regarded the prospects of Canadian competition with some scepticism, put the 'fertile belt' of Western Canada at three-fifths of the entire acreage of Germany, and estimated that actually only 38,400,000 acres of this were arable land, and no more than 15,000,000 acres at best were prospective wheat land (Sering, op. cit., pp. 337-8). The _Manitoba Free Press_ in June 1912, worked out that in summer, 1912, 11,200,000 acres were sown with spring wheat in Canada, as against 19,200,000 acres under spring wheat in the United States. (Cf. _Berliner Tageblatt, Handelszeitung_, No. 305, June 18, 1912.)

[396] Sering, op. cit., pp. 361 ff.

[397] Ernst Schultze, '_Das Wirtschaftsleben der Vereinigten Staaten_', _Jahrb. f. Gesetzg., Verw. u. Volkswirtschaft 1912_, no. 17, p. 1724.

[398] Article 9.

[399] 'Moshesh, the great Basuto leader, to whose courage and statesmanship the Basutos owed their very existence as a people, was still alive at the time, but constant war with the Boers of the Orange Free State had brought him and his followers to the last stage of distress. Two thousand Basuto warriors had been killed, cattle had been carried off, native homes had been broken up and crops destroyed. The tribe was reduced to the position of starving refugees, and nothing could save them but the protection of the British government which they had repeatedly implored' (C. P. Lucas, _A Historical Geography of the British Colonies_, part ii, vol. iv (Geography of South and East Africa), Oxford, 1904, p. 39).

[400] 'The Eastern section of the territory is Mashonaland where, with the permission of King Lobengula, who claimed it, the British South Africa Company first established themselves' (ibid., p. 72).

_CHAPTER XXX_

INTERNATIONAL LOANS

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.