Finance Capitalism, Industrialization, and Imperialism
Finance Capitalism
In the late 19th century, industrial capitalism was replaced by finance capitalism.
Energy Innovations
- Electricity: In 1867, Bergès designed a hydroelectric generator. In 1879, Edison invented the electric light bulb.
- Oil: Processes were discovered to refine oil and produce new fuels like kerosene and petrol.
Technology
Innovations like improved versions of the Bessemer converter made it cheaper to produce steel for railways, cars, or skyscrapers. Stainless steel was used to make precision instruments, and new fibers like silk were developed.
New Industries
Electrical technology became an important industry. Important German companies emerged, along with new food industries using metal tins, and the chemical industry (perfumes, medicines, and dynamite).
Finance and Investment
Businesses requested loans from banks, and banks invested in industry. Businessmen formed companies and sold shares to investors.
New Business Structures
- Cartels: Associations of different companies working in the same industry.
- Trusts: Giant businesses comprising various companies working in different industries, controlling the market and eliminating competitors.
- Holding Companies: Large financial companies that earned profits by buying and holding shares.
Consequences of Finance Capitalism
- Consumerism: People demanded more goods, and businesses used advertising to increase sales and profits.
- Economic Instability: Economic crises occurred, with less demand for goods reducing profits and leading to high unemployment.
- International Trade: New roads and railways were built. Modern vehicles (cars, lorries, steamships) were introduced.
- Trade Imbalances: Industrialized countries bought raw materials in less developed countries at low prices, manufactured goods with them, and sold the goods to poorer countries at higher prices, creating imbalances.
- Increased Industrial Productivity: Factories used the assembly-line system, improving productivity.
Turn-of-the-Century Economy
In the late 19th century, industrialization continued. The biggest industrial producers were:
- Germany: Became Europe’s leading industrial producer, due to its powerful iron and steel industry. The electrical and chemical industries also played an important role.
- U.S.A.: Industrialized rapidly. Increased immigration provided a larger workforce for industry. The Transcontinental Railway was constructed.
- Japan: The Japanese government built its own factories, established banks, and introduced measures to increase the country’s exports.
Imperialism
Developed countries took control of other regions, and these lands became colonies.
Colonial Empires
European powers, along with the U.S.A. and Japan, colonized areas of Africa, Asia, and Oceania. The largest colonies belonged to Great Britain (the largest one, with India and Australia) and France (with colonies in Africa and Asia).
Causes of Imperial Expansion
The main factors that led to imperial expansion were the emergence of finance capitalism and rapid industrial development.
- Colonies provided industrialized countries with cheap raw materials and new markets where they could sell goods produced at home.
- For imperial powers, colonies were a symbol of international prestige. Imperial expansion made a country powerful.
- Colonies were attractive destinations for European emigrants. Many working-class people emigrated to colonies because machines replaced them.
Consequences of Imperialism
- Colonies were controlled by a minority that imposed European culture. Native people had second-class status, and racial segregation was common.
- Rivalry between imperial powers was one of the causes of the First World War.
- The world economy was imbalanced because wealthy nations controlled industry and trade, exploiting less developed countries.