Neocolonialism by Kwame Nkrumah 1965
REALLY to understand what goes on in the world today, it is necessary to understand the economic influences and pressures that stand behind the political events. The financial columns of the world’s press give, in fact, ‘the news behind the news’. Every few days we come upon such newspaper announcements as: ‘Morgan Grenfell participates in new French bank'; or ‘African Banking Group'; or ‘Consortium gains voting power in Hulett’ (South African sugar monopoly); or ‘New factoring company set up in Germany’.
These are newspaper headlines actually taken at random. However, when examined even briefly, the facts reveal an attenuated line of connection between powerful financial groups that exert the most decisive pressure upon the happenings of our time. The facts relate to the men and interests directly involved or indirectly connected with the rearrangements the articles cover. Not that the full facts are ever revealed. On the contrary, they are more often concealed, and it takes knowledge of the careers of the personalities and groups which the articles link to see behind them the inevitable direction of the reported arrangements and their intrinsic meaning in terms of economic and political power.
Let us take the item of the Morgan Grenfell participation in the new French bank (Financial Times, London, 18 December 1962). Morgan Grenfell & Co. acts effectively as the London end of the important American banking house of J. P. Morgan & Co. which, in 1956, already owned one-third of the British company. It should not, therefore, surprise us to learn that the new ‘continental’ bank in which Morgan Grenfell is participating is called Morgan et Cie; more especially, since 70 per cent of the capital of 10 million new francs is held by the Morgan Guaranty International Finance Corporation, and 15 per cent by Morgan Grenfell. What about the remaining 15 per cent? This is divided between two Dutch banks – Hope & Co. of Amsterdam and R. Mees & Zoonen of Rotterdam – both of which the Morgan group has had close association over many years. This association has been drawn even closer by the acquisition in March 1963 of a 14 per cent in both of them by the Morgan Guaranty International Banking Corporation, a subsidiary of Morgan Guaranty Trust.
How was this done? Through the purchase of stock in Bankier-compagnie, a company that consolidated the activities of the two Dutch banks, which, nevertheless, continue to do business under their own names. This form of one in two is the accepted formula by which the great combinations attempt to delude the world about their compact formations.
Chairman of Morgan et Cie is Mr Pierre Meynial, vice-president of Morgan Guaranty Trust in Paris, whose brother, Mr Raymond Meynial, is a director of the Banque Worms. Vice-president of Morgan et Cie is the Rt. Hon. Viscount Harcourt, K.C.M.G., O.B.E., a managing director of Morgan Grenfell and chairman of four important British insurance companies – British Commonwealth, Gresham Fire & Accident, Gresham Life Assurance, and Legal & General.
‘French African bankinking move’ captions an item of rather less than eight lines in the Financial Times of 26 July 1963, which informs us shortly that ‘the network of the Banque Commerciale Africaine in Senegal, Ivory Coast, Cameroun and Congo Republic has been taken over by Société Générale, France’s second largest bank’. It is in the single comment the newspaper allows itself that we find the grist: ‘The arrangement will result in a substantial increase in the volume of deposits held by Société Générale’.
Société Générale was founded under Napoleon the Third in 1864. One of the chief participants was Adolphe Schneider, a member of the Schneider iron and steel empire, who was at the same period also one of the regents of Banque de France. Both Banque de France and Société Générale have now been nationalised. This means in effect that the French Government has a direct interest in the network of the Banque Commerciale Africaine that Société Générale has taken over.
Nationalisation does not stand in the way of the closest association with the world’s most powerful private banking institutions, as the facts given under the title ‘African banking group’ (West Africa, 22 September 1963) illustrate.The title, however, is misleading. There is little that is ‘African’ about the group, the body mainly concerned being the Bankers International Corporation, a subsidiary of Bankers Trust Company, which shares with Morgan Guaranty Trust the commercial business of J. P. Morgan & Co. The others are Société Générale and other unnamed European financial institutions.
This combination of Western banks, topped by the long-armed Morgan interests, is to extend the formation of banks in just those territories where Société Générale has acquired the interests of Banque Commerciale Africaine, namely, Ivory Coast, Senegal, Cameroun and Congo (Brazzaville). The American Federal Reserve Board has given its approval to the Morgan extension, as have the governments of the African countries concerned. Comment is unnecessary, since we can readily accept the view of the senior vice-president and head of the international banking department of the Bankers Trust, Mr G. T. Davies, who happily announced that participation in these four nations will substantially increase the scope of Bankers Trust company’s activities in Africa, a continent in which we are vitally interested. The news item concludes with the information that Bankers International Corporation has equity interests in the Liberian Trading & Development Bank (Tradevco), and in the United Bank of Africa, Nigeria.
The fact that another sugar consortium (Financial Times, 8 November 1962) has managed to obtain over 50 per cent of the ordinary shares and thereby the majority voting power in the South African sugar monopoly of Sir J. Hulett & Sons appears, on the surface, to be entirely unrelated to the other newspaper items we have already scrutinised. But let us go on with our examination.
Behind the combination of sugar companies that has gained ascendancy in the Hulett monopoly are visible the hands of two important South African share issuing and underwriting houses, Philip Hill Higginson & Co. (Africa), and Union Acceptances Ltd.
Harold Charles Drayton is the dominating personality in the Philip Hill chain of financial and investment companies, based in London. Harry F. Oppenheimer of South Africa is chairman of Union Acceptances. Among Mr Drayton’s company appointments are those of chairman of European & General Corporation, Second Consolidated Trust, and director of Midland Bank and Midland Bank Executor & Trustee Co., Eagle Star Insurance Co., Standard Bank, Consolidated Gold Fields of South Africa and Ashanti Goldfields Corporation.
Mr Oppenheimer, among his more than seventy company appointments, includes those of chairman of African Explosives & Chemical Industries, Anglo American Corporation of South Africa, De Beers Consolidated Mines, and First Union Investment Trust. He is a director of African & European Investment Co., Barclays Bank D.C.O., British South African Co. and Central Mining & Investment Corporation.
Deputy chairman of Anglo American Corporation is Sir K. Acutt, who is also a director of British South Africa Co. and Standard Bank. Co-director with the deputy chairman of Anglo American Corporation on British South Africa Co. is Mr Robert Annan, who sits beside Mr Drayton on the board of Consolidated Goldfields. Mr Annan also has the distinction of being an extraordinary director of Scottish Amicable Life Assurance Society.
A colleague of Mr Drayton’s on both the Midland Bank and the bank’s Executor & Trust Co. is the Rt. Hon. Lord Baillieu, K.B.E., C.M.G., who happens to be at the same time deputy chairman of the Central Mining & Investment Corporation, on which Harry F. Oppenheimer is to be found. Lord Baillieu sits also on English Scottish & Australian Bank.
Another director of Standard Bank is Mr William Antony Acton, whose close ties with the banking world are seen in his deputy chairmanship of the National Bank and directorships on the Bank of London & Montreal, Standard Bank Finance & Development Corporation, Bank of London & South America and Bank of West Africa. It is certainly not sheer coincidence that Lord Luke of Pavenham has a seat with H. C. Drayton on the board of Ashanti Goldfields and occupies which Mr Acton is seated. Nor can it be by mere chance that Mr Esmond Charles Baring, former director and London agent of Anglo American Corporation and associated with a number of other companies in the Oppenheimer group, is a member of the family that operates the merchant house of Baring Bros. and maintains the closest links with the investment world.
Other important personages who graced the board of British South Africa Co. in 1963 were the late Sir Charles J. Hambro, P. V. Emrys-Evans, and Viscount Malvern, P.C., C.H., K.C.M.H. Sir Charles Hambro was the senior director of the Bank of England. He chaired the biggest of the City of London’s merchant banks, the £176 million Hambros Bank, and presided over Union Corporation, the South aFrican mining finance group which embraces numerous of the Anglo American interests associated with the Harry F. Oppenheimer concerns.
The Standard Bank of South Africa crops up once more among the directorships of Lord Malvern, which included Scottish Rhodesia Finance and Merchant Bank of Central Africa. The last-named bank is a creation of the Rotschild banking group, in which one finds Banque Lambert, one of the important Belgian banks, some 17·5 per cent of whose interests are concentrated in Africa, notably in the Congo. The bank also has an interest in another Rothschild creation, the Five Arrows Securities Co., an investment house operating in Canada, and under Rockefeller influence. Mr Paul V. Emrys-Evans, British South Africa Co.’s vice-president, is now president of Oppenheimer’s expansive Anglo American Corporation and also upon that of Barclays Bank D.C.O. A seat on Rio Tinto Zinc Corporation brings Mr Emrys-Evans into the company of Lord Baillieu, its deputy chairman, and his associations with H. C. Drayton.
Several of the leading British banks and insurance companies and some of their European associates participate in the Standard Bank. Its chairman, Sir Frank Cyril Hawker, used to represent the Bank of England, and its vice-chairman, Sir F. W. Leith-Ross, represents the National Provincial Bank. W. A. Acton’s banking associations have already been outlined above. H. C. Drayton brings in the interests of his own financial groups, as well as those of the Midland Bank and Eagle Star Insurance. Sir E. L. Hall Patch, a director of the Standard Bank of South Africa who resigned at the July 1963 annual general meeting, is director of Commercial Union Assurance Co. Sir G. S. Harvie-Watt is an associate of H. C. Drayton on Eagle Star Insurance and the Midland Bank. He is chairman of Consolidated Gold Fields and a director of American Zinc Lead & Smelting Co. of the U.S.A.
John Francis Prideaux brings the interests of the Commonwealth Development Corporation into the bank, as well as those of Westminster Bank, the Bank of New South Wales and sundry other financial and investment concerns. William Michael Robson as vice-chairman of the Joint East & Central African Board of the Standard Bank, brings to bear all those vested interests joined in the Board, while he represents separately the investments of the finance holding, merchant, shipping and plantation companies of the Booker Bros. McConnell group, which has a monopoly grip upon the economy of British Guiana. Charles Hyde Villiers holds a brief for Banque Belge Ltd. and Sun Life Assurance Society. Banque Belge Ltd. is the London outlet of Banque de la Société Générale de Belgique and controls in its turn, among others, Banque du Congo Belge, Belgian-American Banking Corporation, Belgian-American Bank & Trust Co., Continental American Fund (America-fund) of Baltimore, U.S.A., and Canadafund Co., Montreal, Canada.
The headline, ‘New factoring company set up in Germany’ (Financial Times, 4 October 1963), has a superficially innocuous look. However, the briefest glance at the test takes us at once right into the world of international banking. For we meet extensions of British and American capital that have stimulated and supported an international factoring venture which has expanded in a very short time across four continents. The focal point is a Swiss holding company, International Factors AG. of Chur. Its nominal capital is Sw. Frs. 6,000,000 (about £490,000). It has now established activity in Germany, where a company, International Factors Deutschland, has been set up in conjunction with three German banks, the Chur company retaining 50 per cent of the capital. Of the rest, 20 per cent is held by the Frankfurter Bank, 25 per cent by Mittel-rheinische Kreditbank Dr Horback & Co., and five per cent by a private bank in Frankfurt, George Hauck. Frankfurter Bank’s portion, however, will be enlarged by the fact that it has acquired a 51 per cent stake in Horback & Co., by way of a share exchange.
The heavy banking interests behind the international factoring venture, which has affiliates in Switzerland, Australia, South Africa, Israel, and now Germany, are the First National Bank of Boston, and M. Samuel & Co. of London. A holding company under Samuel influence, Tozer Kemsley & Milbourn (Holdings), is a third. The First National Bank of Boston, once firmly inside the great Morgan financial empire, has, since 1955, come increasingly under Rockefeller influence, though it still has significant ties with Morgan. It is joined with Chase National Bank (Rockefeller) in the American Overseas Finance Corporation.
Chairman of M. Samuel & Co. is Viscount Bearsted, a director of the Rothschild creation, Alliance Assurance Co. and its affiliate, Sun Alliance Insurance. Chairman of both these insurance companies is Mr T. D. Barclay, a director of Barclays Bank, Barclays Bank (France) and British Linen Bank, a Barclays Bank affiliate.
At the beginning of February 1963, the First National City Bank of New York, through International Banking Corporation, institutions controlled by the Rockefeller interests, bought a 17 per cent share in M. Samuel & Co., represented by 600,000 ordinary shares, a cost of £1,900,000. First National City placed the chairman of its executive committee, R. S. Perkins, upon the Samuel board. The shot in the arm injected by the Rockefeller capital has enabled the Samuel banking firm to spread itself into the European Market, where it has joined the European bankers association brought together by the important French bank, Banque de Paris et des Pays-Bas. This is Groupement d'Etudes pour l'Analyse des Valeurs Européennes, whose purpose is to canalise what is called ‘institutional investment’.
The house of M. Samuel has also been placed in charge of managing another Common Market organisation, domiciled in London, New European & General Investment Trust, in which it is associated with Banque Lambert, Banque de Paris et des Pays-Bas, the prominent German banking house of Sal Oppenheim & Cie., the Dutch bankers, Lippmann, Rosenthal & Co., the Credito Italiano of Italy, Banco Urquijo of Spain and Union de Banques Suisses of Switzerland.
We may appear to have gone at some length into the intricacies of the financial and economic interests behind some innocent-looking headlines. Yet these are in fact the merest directional indications of today’s trend of ever-tightening links between a short list of incredibly powerful groups that dominate our lives on a global scale. The take of taking their detailed significance farther is the main purpose of this book.
Nevertheless, even this brief breakdown provides illuminating evidence of the serpentine interlocking of financial monopoly today. What we observe, above all, is the constant penetration of a few banking and financial institutions into large industrial and commercial undertakings, creating a chain of links that bring them into a connective relationship making for domination in both national and international economy. The influence exercised by this domination is carried into politics and international affairs, so that the interests of the overriding monopoly groups govern national policies. Their representatives are placed in key positions in government, army, navy and air force, in the diplomatic service, in policy-making bodies and in international organisations and institutions through which the chosen policies are filtered on to the world scene.
This process had already reached a high enough pitch before the outbreak of the first world war to call forth a number of important studies of its growth and potentialities. Two of these studies, Imperialism, by the English Liberal, J. A. Hobson, published in 1902, and Finance Capital, by the Austrian Marxist, Ruolf Hilferding, published in 1910, were used by Lenin as the main basis of his study of Imperialism, which he described as ‘the highest stage of capitalism’.
It came at the stage at which competition transformed into monopoly, the so-called combination of production, that is to say, the grouping in a single enterprise of different branches of industry, and monopoly itself became dominated by banking and finance capital. Lenin’s study was written in 1916. Since then the domination of financial monopoly has speeded up tremendously.
How is it possible that capitalism, rooted in free enterprise and competition, has arrived at a stage where competition is being eroded to the point where pyramidal monopolies exercise dictatorial rights? The possibility lay in the very fact of free enterprise itself. The spur of competition led to invention on several planes. New machinery was devised to increase output and profit, factories grew larger. Small units became unprofitable and were either driven out or swallowed up by bigger ones. Rail communication improved distribution and better ocean transport stimulated overseas trade and the bringing in of foreign raw materials.
The joint stock company that encouraged the growth of rail and ocean transport served as a forcing instrument for banking and insurance growth. New company laws assisted its extension to industrial and commercial enterprises in which the individual investor’s risk was lessened by the limitation upon his liability.
Competition moved on to another level. Companies that possessed large capital or were able to call upon it on their own security were able to wield an unequal influence against weaker ones. Profits became hinged to the elimination of competition. The enormous expansion of industry and the end of last century and the beginning of the present, was accompanied by a rapid concentration into even larger enterprises.
Combination of production was established as a cardinal feature of capitalism. Firms that had begun by concentrating upon one function of an industry spread into a group enterprise that represented the consecutive stages of raw materials processing, or were ancillary to one another. Trading houses extended their activities into distribution and then into actual production of finished goods from primary materials produced from plantations and mines they acquired in overseas territories.
Hilferding, in his classic work on the subject, Finance Capital, explains the reasons behind this process:
‘Combination levels out the fluctuations of trade and therefore assures to the combined enterprises a more stable rate of profit. Secondly, combination has the effect of eliminating trade. Thirdly, it has the effect of rendering possible technical improvements, and consequently, the acquisition of super-profits over and above those obtained by the “pure” (i.e. non-combined) enterprises. Fourthly, it strengthens the position of the combined enterprises compared with that of the “pure” enterprises, strengthens them in the competitive struggle in periods of serious depression, when the fall in prices of raw materials does not keep pace with the fall in prices of manufactured goods.’
As monopoly of industry and commerce extended, the reliance upon banking capital also increased. New methods of production, the division of factories and businesses into departments, research into the possibilities of new materials and fresh ways of employing both old and new ones – all these, while they eventually reinforced monopoly and enlarged profits, called for capital sums that only the banks and their associates in the insurance world were able to provide. Thus side by side with the process of amalgamation of industrial enterprises went the concentration of banks and their penetration into the large industrial and commercial enterprises to whose capital they heavily contributed.
From middlemen, originally performing the role of simple moneylenders, the banks grew into powerful monopolies, having at their command almost the whole means of production and of the sources of raw materials of the given country and in a number of countries. This transformation of numerous humble middlemen into a handful of monopolists represents one of the fundamental processes in the growth of capitalism into capitalist imperialism. [Imperialism, Lenin, p. 45.]
Union was established between the industrialist and the banker, in which the latter dominated. In the U.S.A., for instance, the United States Steel Corporation, which was an amalgamation of several giant steel firms controlling half the steel production of the country, was controlled by J. P. Morgan’s banking interests because of the large investments they had in the industry. Before the end of the first decade of the present century, the inter-volutions of industry and banking had already taken place to a high degree. In Germany, for instance, six of the biggest banks were represented by their directors in a total of some 750 companies engaged in the most diverse branches of industry: insurance, transport, heavy industry, shipping, restaurants, theatres, art, publishing, etc. Conversely, there sat on the boards of these six banks in 1910, fifty-one of the biggest industrialists, including Krupp, iron and steel magnate, armaments manufacturer and director of the powerful Hamburg-American shipping line.
Today this process has gone very much deeper, and is spreading its roots more embracingly every day. The six German banks included the four giants, the Deutsche Bank, Dresdner Bank, Disconto Gesellschaft, Commerzbank, all of which have grown even more powerful. Allied with them today, as in 1910, are the big German industrial trusts and cartels. Krupp, A. E. G Bayer, Badische Anilin & Soda Fabrik, Farbwerke Hoechst (the last three the components into which the great I. G. Farben was broken by the allies at the end of the second world war), the explosives and armaments manufacturers connected with the massive I.C.I. and its continental affiliate, Solvay. For example, the Deutsche Bank is now Germany’s leading bank and is placed as eleventh among the foremost in the world. In 1870 the Deutsche Bank had a capital of 15 million marks which it had been able to increase to 200 million by 1908. In 1962 it disposed of funds amounting to 1,100 billions of old French francs.
The rule of the financial oligarchy is maintained through the principal device of the ‘holding company’, often established with a purely nominal capital but controlling direct and indirect subsidiaries and affiliates utilising vastly superior finances. Assuming that a 50 per cent holding of the capital is sufficient to control a company (sometimes it can be and is considerably less), it is possible with an investment of, say, £100,000 to control tens of millions in subsidiary and interlocked enterprises.
Concentrated in the hands of a few, finance capital exercises a virtual monopoly, by reason of which it exacts enormous and ever-increasing profits from company flotations, share under-writings, debenture holdings, state loans, and bond issues. The Deutsche Bank, for instance, adopts a specific procedure for gaining control of enterprises and drawing in fresh profits. When participating in the launching of new ventures or extensions of already existing ones, it finds the whole of the required capital from its own and associated resources. When the formation is complete, the shares are unloaded at a premium, the bank holding just sufficient to give it a commanding voice in the direction of affairs. At the same time, it takes a profit on the original capital.
Flotation of foreign loans provides one of the highest yielding fields of monopolist profits. Usually a borrowing country is lucky if it gets more than nine-tenths of the loan sum. Frequently it is less, particularly if it is a developing country. Liberia’s loans are a revealing and classic example of how monopoly finance operates in conjunction with governments to increase its profits.
In Liberia, in 1904, President Arthur Barclay reported that the English seven per cent loan of 1871, originally £100,000, of which only £27,000 actually reached the Liberian Treasury because of certain official defalcations, was the largest item of the country’s indebtedness and would require three years’ revenue to cover it. A desperate Liberian Government succeeded in arranging an international loan of $1,700,000. This was subscribed by British, French, Dutch and German banking house associated with the United States financial institutions of J. P. Morgan, the National City Bank, First National Bank of New York and Kuhn Loeb & Co.
In this instance, the most arbitrary means were used in applying and securing repayment of the loan. An American Receiver General was appointed by the United States and sub-receivers by Britain, France and Germany, an arrangement which continued until America took over full control of Liberia’s finances during the first world war. Little actual cash went to the Liberian Government, but fancy profits went to the banks and loan issue houses. Bonds to the value of $715,000 were delivered in London, $225,000 in Germany, $460,000 in Amsterdam and $158,000 in New York to creditors of Liberia in payment of their outstanding claims. It required reparations money from the sale of German properties in Liberia to liquidate subsequent debts incurred with the then British Bank of West Africa to try and meet the claims on this loan.
It was only after a new loan was negotiated with the Firestone Corporation of America in 1926 that the Liberian Government was able to use $1,180,669 to pay off the principal and accumulated interest on the 1912 loan. The loan offered by Firestone was in the region of $5 million, at an interest rate of seven per cent, but by 1945 still only half of this amount had been subscribed. Firestone stipulations included the abolition of the office of Receiver of Customs and its replacement by a Financial Adviser. It was under pressure of these debts that Liberia was obliged to cede large concessions for rubber planting to Firestone, and later to the Goodrich Rubber Company.
One of the principal functions of finance capital is the issue of securities on which the discount rates are ridiculously high. It is also an important method of consolidating financial oligarchy. In boom periods the profits are immense. During periods of depression, the banks acquire holdings by buying up small or failing businesses, or engage in their reorganisation at a profit. Money is made by the banks and the sphere of control is extended. Financial assistance to land speculators is extended. Financial assistance to land speculators is also a means of entrenching control and inflating profits in times of industrial expansion. Ground rent monopoly merges with communications monopoly, since an important factor governing rise in land prices is good means of communication with town centres.
In his book Monopoly: A Study of British Monopoly Capitalism published in 1955 by Lawrence and Wishart, Sam Aaronovitch has shown how the financial resources of Britain have become concentrated in the hands of a small number of big banks and financial institutions. Between them, the ‘Big Five’ banks exercise immense power. In 1951 their 147 directors held 1,008 directorships of which 299, just under a third, were in other financial institutions. Of these 299, 85 were in other banks and discount companies; 117 were in insurance companies and 97 in investment trusts and finance companies.’ (p. 49.)
‘Talk about centralisation!’ wrote Karl Marx in Capital (Vol. 3, Ch. 33):
‘The credit system, which has its centre in the so-called national banks and the great moneylenders and usurers about them is an enormous centralisation, and gives to this class of parasites a fabulous power ... to interfere with actual production in a most dangerous manner – and this gang knows nothing about production and has nothing to do with it.’
Hegemony of the money institutions over industry is assured by the vast reserves built up out of the various ways by which capital is advanced to industry at high profit and drawn from it through holding companies and interlocking directorates. This process emphasises the separation of finance capital from industrial capital. When this separation has attained major proportions and the domination of finance capital has become supreme, the stage of imperialism has been reached. This stage can be said to have been brought to maturity at the turn of the century.
From free competition, the fundamental characteristic of its early stages, capitalism at its highest stage, has polarised into monopoly, expressed in syndicates, trusts and cartels, with which the capital of a small number of banks has merged. The trusts and cartels have assumed an international character and divided up the world among themselves. Monopoly extends to the control of raw materials and markets, for the possession of which, highly developed capitalism engages in an even more intense struggle.
At its imperialist stage, finance capital’s primary need is to find spheres of overseas investment which will return profits at a greater rate than can be obtained at home. The export of capital, therefore, becomes the dynamo of imperialism which turns the export of commodities and leads to the capture of colonies as the means of assuring monopolist control. Upon this economic process is built the political ideology, the non-economic superstructure, that infuses the battle for colonial conquest. Hilferding expressed this ideology in a single concise sentence: ‘Finance capital does not want liberty, it wants domination’. Possession of colonies gives a guarantee to the financial oligarchy of the owning country of the monopoly of actual and potential sources of raw materials and outlets for manufactured goods.