- New Directions in Modern Economics series
Chapter 3: Historical Context
FINANCE CAPITAL AT THE TURN OF THE 19TH CENTURY The prominence of ﬁnance in the post-1980 world raises the question of similarities with the period of late 19th to early 20th century, as in this period too, ﬁnance was seen as the dominant force in the economy. Comparisons across eras may not be of too much use as there are too many factors to account for change and capitalism cannot necessarily be characterized by compartmentalized sub-epochs. However, these historical comparisons can still be useful in understanding the current forms of capital accumulation and institutional conﬁgurations. In this context, we can unravel the role of ﬁnance at diﬀerent points in time and gain a better understanding of the continuous adjustments and restructurings in the system. When we look at the US economy at the turn of the 19th century, we see a period that was characterized by a large and powerful ﬁnancial sector accompanied by a monopolization/oligopolization process in the economy. NFCs in the US were said to be under the inﬂuence (or under the control) of the Money Trust – an association of ﬁnancial ﬁrms under the leadership of J.P. Morgan’s bank.1 This was the result of investment bankers responding to the cutthroat competition of the 1880s and 1890s by turning their attention to the ﬁnancing of cartels, trusts and mergers (Heilbroner and Singer 1984: 208).2 For example, in 1904 a single ﬁrm or two ﬁrms that were put together by a merger controlled more than half...
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