Global Conflict and Elite Integration in the 19th and Early 20th
Centuries[1]
Kenneth Barr, Shoon Lio, Christopher Schmitt, Anders
Carlson,
Kirk
Lawrence, Jonathan Krause, Yvonne Hsu,
Christopher Chase-Dunn and Thomas E. Reifer
Institute for Research on World-Systems
University
of California , Riverside
v. 8-2-06 14,834 words
This is IROWS Working Paper #27
available at https://irows.ucr.edu/papers/irows27/irows27.htm
Introduction
National and international elites have in significant ways shaped each era of world-systemic transformation (Lachmann 2000, 2003; van der Pijl 1998). During the nineteenth and early twentieth centuries—a period marked by the formation and ongoing development of British hegemony—rapid financial, political, and technological changes allowed for unprecedented growth in international trade, investment, and global integration (Bairoch 1996; Haggard 1995; O’Rourke and Williamson 1999). Technological innovations in water transport (steam power and canals), communications (telegraph, overseas cables), and rapidly expanding railroad systems altered long-standing meanings of time and geography. In addition, emergent and efficient organizational forms, such as cartels and centralized banks, re-concentrated the fresh glut of wealth and influence among ruling elites—despite lower-echelon incursions by the rising middle-classes and entrepreneurs. Furthermore, the era was clearly marked by an increasing trend in not only the magnitude, but also the density of world commerce.
The convergence of these transformations created the possibility of global integration of states and their representatives for the first time, and the degree of elite integration and cooperation in this period was indeed unprecedented. The elites did not always act in unison; the relationships among elites were often marked by conflict and struggle over divergent interests. Accompanying that growth were inequalities, uneven development, and repressive elite reactions in response to shifting class boundaries as massive economic changes and technological developments occurred concurrently with the clashing global groundswells of capitalism, nationalism, liberalism, and secret accords, often culminating in violent domestic and international conflicts (Arrighi 1994; Polanyi 2001 [1944]; Snyder 1991, 2000). We contend that the patterns of global conflict and cooperation, and the related waves of globalization, were partial products of elite action because the nature of the relationships among the elites and the interests they represented were embedded in the structure of the world-system as a whole.
This paper presents vignettes drawn from our ongoing project on global elite integration to present a tentative description of the structure of relations among the various elites. In particular, we draw our narratives from case studies of elite networks in Great Britain, France, Germany, Russia, and the United States; all major rivals for world-systemic hegemony in the nineteenth and early twentieth centuries.[2] We argue that understanding the elites in each of these countries, and their relationships to other elites at a national and international level, is critical for understanding the contours of world-systemic conflict and cooperation in the years leading up to WWI.
Theoretical Framework
This paper is part of our broader
research project focusing on global class formation, conflict, and
integration. Here, we focus on national
and international elites, their networks, and the relationships of both to the
instances of conflict and cooperation in the second-half of the nineteenth and
early twentieth centuries. While our research agenda draws on several theoretical
perspectives to delineate the relationship between elites, hegemony and global
conflict, we rely heavily on the world-systems framework, which maintains that societies are subsystems
within a larger single system; therefore, in order to understand historical
societal development we must take a multi-level approach by focusing on
localities, regions, and the world-system as a whole. A world-system is defined
as a mesh of intersocietal networks in which the interactions are important for
the reproduction of the internal structures of the constituting units,
affecting in important ways changes occurring in the affiliated local
structures (Chase-Dunn and Hall 1997).
Our research on national and international elites and elite networks reveals that the relationships between and among various elites, and the states they were linked to, were sometimes mutually beneficial, often asymmetric, and in many cases decidedly exploitative. From a world-systems perspective, the outcomes of elite activity in micro-level encounters and in meso-level networks have macro-level implications—what could be considered a bottom-up flow of effects. The reverse flow, in which macro-level events, institutions, and processes shape the meso- and micro-levels, is also assumed. Applied to our project, we contend that local and international elites are the embodied nodes of elite networks. We argue, then, that understanding elite activity, and mapping elite networks and assessing their degree of integration and fragmentation, are important and necessary in generating an understanding of world-systemic history.
Another focus of this project is on the relationship between international trade and conflict. Here, we problematize the long-standing liberal view that international trade promotes social benefits such as economic prosperity, political negotiation, and, in particular, peace. The groundwork for a challenge to the assumed trade-peace linkage has already been laid, as scholars have specified boundary conditions that have helped determine if and when trade promotes peace versus when it creates situations of dependence, asymmetricality, or exploitation, and thereby fosters conflict (Boswell and Dixon 1990; see also Rueschemeyer, Stephens and Stephens 1992, chap. 5). In addition, other scholars have taken a critical approach to the assumed connection between trade and peace (Barbieri 2002; Rosencrance and Thompson 2003).
For our purposes, the perplexing relationship between trade and conflict calls for building on the extant research by generating a deeper understanding of both processes. In this paper, we will discuss the preliminary results of our research on elite networks. This qualitative research was undertaken in response to our belief that an analysis of the breadth and depth, as well as the meanings and types, of elite integration may provide insight into the trade/conflict relationship. That elites would know one another is not surprising and is therefore not the subject of this study; however, to our knowledge a nuanced understanding of elite networks and their functionality, or disfunctionality, and whether they affect, or effect, levels of conflict is currently not available. We believe these facets of elite integration and conflict must be thoroughly analyzed in the development of any theory pertaining to the relationship between elite integration and conflict. That is the focus of this portion of the research project. A concurrent sub-project analyzes the correlation between trade and conflict.[3] A synthesis of the two works-in-progress will then be performed. The overall research project, in sum, will utilize both quantitative and qualitative analyses to reveal the true connections between elite integration, trade, and conflict.
We
began our investigation in the early part of the nineteenth century, using this
period as the base line from which to appreciate the rise of transnational
linkages during the nineteenth and early twentieth centuries. This paper
focuses only on key elite networks and institutions within the states competing
for hegemony:
Micro-Histories
The Cannon and the
Kaiser
Modernization, liberalism, and
nationalism were the three most potent factors affecting the lives of
nineteenth-century Germans. Modernization was limited primarily to the economic
sphere, with social and political adaptations lagging far behind. Innovations
and development in business organization, industry, and finance propelled
Liberalism’s tenets of fraternite, liberte, and equalite posed
challenges and opportunities to both the time-honored social standing of the
ruling elites and the newfound affluence of the industrial bourgeoisie. Like
A solution came in the form of
conflict. After two hundred years of being
The German formula of military might and strong leadership coupled with key industries were embodied in elites such as its three rulers (William I, Frederich III, William II); four Chancellors (Bismarck, Caprivi, Hohenlohe, Bulow); and three military General Chiefs of Staff (Moltke the Elder, Schlieffen, Moltke the Younger) (Blackbourn 2003; Calleo 1978; Craig 1983; Feuchtwanger 2001; Kehr 1977; Kennedy 1987; Mommsen 1995; Rèohl 1994; Rosinski 1966; Snyder 1991; Wehler 1985). In addition, two exemplars from the rising bourgeoisie were especially connected with the military: Siemens (electrical power, engineering, and telegraphs) and Krupp (steel, railroads, and armaments) (Feldenkirchen 1999; Manchester 1968; Modelski and Thompson 1996). In the discussion that follows, relationships among these elites will be briefly characterized below by looking in more detail at Kaiser William II, Moltke the Elder, Krupp the cannon-king, and Siemens.
Working both in concert and in opposition to one another, the actions of these elites led to compartmentalization (Hughes 1987; Kitchen 1968; Rosinski 1966; Vagts 1959) and coalition politics (Calleo 1978; Kehr 1977; Kehr, Anderson, and Anderson 1973) steering German policies up to WWI. Prussia became the command center of Germany after its unification; the Prussian King was also the German Emperor, and the “supreme commander of the German Army in both war and peace” (Chickering 1996:460). The King’s army was led by an elite cadre of officers and staff drawn almost exclusively from the ranks of the Junkers (Kitchen 1968). Key industrial giants such as Krupp (Manchester 1968) initially produced the steel and railroads that made German victories possible. Krupp’s armaments were finally preferred by Kaiser William II over the objections of the military, and he provided the bulk of their heavy munitions, armor plates, and weaponry from 1890 on. Krupp and other industrialists were grudgingly admitted but not necessarily accepted into higher social circles as their usefulness increased. Tradeoffs of wealth and name in the guise of intermarriage among German aristocracy and bourgeoisie became increasingly common as the century wore on.
Connections of kinship and honor
served to integrate the ruling classes in
General Von Moltke was an exemplar
of the most critical considerations for upward mobility in the German military:
honor and aristocracy as evidenced by birth, political views, and religious
affiliation. Descended from thirteenth-century Teutonic knights, Moltke served
as a page to the King of Denmark; trained in Clausewitz’s army as a surveyor
under the military Chief of Staff von Moffing; performed exemplary service as
Prince Charles’ tutor and escort, and was consequently favored with the
delicate task of aide-de-camp to the dying Prince Henry of Prussia (brother of
King Frederich William III) (Whitton 1972:54). Following two promotions in
the same year, Moltke was commissioned to
Social networks played a similar
role for those Germans without blue blood, affording opportunities for
bourgeois advancement. Krupp’s steel business originated with his
great-grandfather who began the family steel mill, doing business during the
Napoleonic blockade of
Werner Siemens (then in the military); Georg Halske (a mechanic), and Johann Georg Siemens (a counselor of justice, as well as Werner’s cousin and also the father of Georg von Siemens, founder of Deutsche Bank) co-founded the company in 1847 (Feldenkirchen 1999:15). Siemens & Halske specialized in electrical engineering and design, manufacturing, and installation of telegraphs, steam, gas, and (electric and conventional) railroad equipment before entering the heavy electric industry and later, automobiles. It enjoyed clear market dominance because “none of its competitors could approach Siemens & Halske with regard to size, capitalization, differentiation of production, technical knowledge, experience, qualifications, standing, contacts, domination of the market, and power” (Feldenkirchen 1999:15). Werner’s initial patent for the telegraph was intended for military use, but diplomats and businessmen soon followed and business boomed. He retained his military rank while simultaneously selling his product to the Prussian Army (Feldenkirchen 1999:35).
Unable to open a market in France,
Siemens fared better in London, founding a branch in 1850; and in Russia, where
a further branch office was opened in St Petersburg in 1853; and developed from
there by laying (undersea and transcontinental) cables. (Feldenkirchen
1999:35-7). “Political, military, and economic considerations led the
Siemens’ main competitor was Emil
Rathenau, who founded the Deutsche-Edison company (1883) that grew into AEG.
Taken together, AEG and Siemens carved up Europe and parts of
During the nineteenth century and
up to WWI, German advances in the geopolitical, industrial, and economic
spheres placed modern
Witte and
For
nineteenth century
This
struggle, between the traditional, landed and military elite and the almost
non-existent bourgeoisie, would reveal itself most fully in the personage of
Sergi Witte, the Minister of Finance responsible for
The Russian economy of 1840-1880 was static, but from 1880-1917, however, change was exponential. While the Emancipation of 1861 did not immediately create an urban proletariat, eventually some peasants did vote with their feet and make their way into the cities. As their numbers began to swell, the Tsar, recognizing the importance of modern industry, began to encourage its development. Often times such encouragement took the form of financing growth through foreign debt and outright state ownership.
It would be the Ministers of Finance, from Bunge—the first to give lip service to industrialization—to Witte, who would focus their efforts on Russian industrialization. Under the direction of Sergi Witte, in the late nineteenth century, their efforts would begin to pay off and industrial growth would begin in earnest. Such quick change did not go unnoticed, and those with different interests became uncomfortable as the methods employed by Witte caused much distortion in the economy, transferring wealth from peasants and the landed elite to a small but increasingly threatening class of industrialists. This distortion of the economy was familiar to many in the west, as Witte was following the basic outlines of the modernization playbook developed by Frederic List, a German political economist who promoted autarky and protection of burgeoning national industry (List 2005). Following the Listian path meant large tariffs and protection for Russian industry.
The costs
of the tariffs imposed by Witte were enormous politically. A tariff war with
The tariff
spat was not the first instance of poor relations between
Exchanging
German for French creditors “did not eliminate the basic fact of Russian
dependence on foreign moneylenders (and their governments) or sweeten the
humiliation of such bondage” (Von Laue 1963: 26). This foreign debt is indeed significant when
understood through modern theoretical perspectives such as dependency
theory. It has been firmly established
(Bornschier and Chase-Dunn 1985; Dixon and Boswell 1996) that foreign investment
is significantly less likely to promote growth than domestic investment.
Even as late as 1880 foreigners
accounted for only about 17 per cent of all capital invested in industrial
corporations operating in
This documented growth reflects a switch in the logic of investment. Prior to 1860, the emancipation, and a concerted effort to industrialize, most investment had been commercial (McKay 1974). McKay writes, “as with the Dutch entrepreneurs of the seventeenth century, the foreign trade activities of leading merchants might lead to involvement in industrial pursuits, but for the most, commerce remained the primary focus” (1974: 340).
Because of
the trends discussed above, Witte and his policies were under heavy attack from
many directions. His most outspoken and
powerful opposition politically were the Ministers of the Interior, who
represented the landed aristocracy.
Witte also faced criticism from many economists of the day. P.V. Ol’, one such economist, documented
foreign investment in
The ability
of the Russian state to continue to receive foreign investment depended heavily
on a stable exchange rate, and therefore, the gold standard. Of his many contentious policies, Witte’s
implementation of the gold standard would be the one “most bitterly resisted
within and without the government” (Von Laue 1963: 139). Of course, such conflict did not stop Witte,
and
Witte, whose long term plan for
trade was nearing fruition, sought a secure hold in
While it is dangerous to
simplify the muddy waters of history in such a simple narrative, the limited
space available limits our ability to address the full complexity of the
period. What is clear, however, is that
the changes taking place in the world-system, themselves a result of the
industrialization of
The Rothschilds:
Financiers of the World-Economy
International finance had no bigger
player throughout much of the nineteenth century than the House of Rothschild.
A small businessman in the Jewish ghetto in 
The
Rothschilds also maintained a nearly global network of agents who conducted
business and gathered information on their behalf. “The most international of all great banking
houses” (Hobsbawm 1989:42), the House of Rothschild’s massive and diversified
capital portfolio placed the family in key locations in elite networks. The
Rothschilds individually, and through their firm, had a significant impact on
global elite integration and had varying degrees of influence on both conflict
and peace during the period of our study.
The Rothschilds’ ascendancy was the result of their development of a system to finance state debt by state-issued, fixed-interest, bearer bonds that were traded on international exchanges but that could also be traded privately. Indeed, the Rothschilds played a role in the financialization of the world, as they “destroyed the predominance of the land, by raising the system of state bonds to supreme power…endowing money with the same privileges as land” (Heinrich Heine, as quoted in Ferguson 1999:xxiv).
Rothschild coat of arms
In addition to their principal role
in state finance, other Rothschild businesses included bullion brokering and
refining, commercial bills, commodity trading, foreign exchange trading and
arbitrage, insurance, personal banking to wealthy individuals, and rail
financing in
Prices and yields of the state-bonds depended upon the debtor state’s ability to pay interest, which could be constrained by war and/or internal instability. In addition, the Rothschilds’ nearly global diversified portfolio was sensitive to possible causes of market shifts throughout the world. Mastering this system of international finance required access to the political and economic news that were critical in assessing risk, “this explains why,” as Ferguson notes, the Rothschilds spent so much time, energy and money maintaining the best possible relations with the leading political figures of the day” (1998:4-5). Participating in elite networks was therefore a key part of the success of the Rothschilds; as managers of the assets of elites and state debts, they played an important part in the politics that shaped the century (Corti 1928:109, 223). Indeed, the Rothschilds were very much at the center of political affairs: “True, no Rothschild yet occupied a throne, but when a throne became vacant they were asked to advise as to who should occupy it” (ibid:197). This political centrality, combined with an unparalleled international portfolio of financial and capital investments, would place the Rothschilds in nodal points in the elite networks that would impact the shape and duration of peace and war in the nineteenth century and in the years leading up to WWI.
Peace and War
The international movements of capital and of the financial groups who negotiated these movements are by some regarded as a leading cause of war, by others as a strong force for maintaining peace. During the period 1870-1914 they worked their effects in both directions, though seldom determining events in either. (Feis 1965:467)
Indeed, the Rothschild relationship to peace and war was
complex; at times it seems they were providing the means for war while at other
times they attempted to broker peace. This rather schizophrenic positioning has
received divergent treatments in historical analysis. On one hand, the
Rothschilds have been viewed as exploiting conflict for investment gain
(Ferguson 1998:21). The Napoleonic Wars provided a particularly profitable
opportunity. The
The years of relative peace that
followed revealed part of the reality of contradictions between peace and
profit. Thus, while the Rothschilds have been characterized as seeking to
maintain peace, both for ideological/moral reasons but arguably more
importantly to ensure the stability necessary for investment predictability
(Corti 1928:174, 177-94, 429; Ferguson 1998:20), they also knew that war was
quite profitable. The “fundamental paradox at the heart of Rothschild pacifism”
was that governments at peace have less need for military financing; therefore,
in the period following the Napoleonic Wars, “all the major powers effectively
ceased to be Rothschild clients. Peace seemed to be making the five houses
redundant” (Corti 1928:379). Given this threat to their asset base, the
Rothschilds acted quickly and the firm began financing the rearmament efforts
of
In the Crimean War of 1854-56, the
Rothschilds underwrote the debt of
In the
Franco-Prussian War, the Rothschilds played a significant role in the peace
process by negotiating peace with
In
Nathan Rothschild’s support of
Cecil Rhodes, who we will reveal in the next section to be a member of the
powerful elite Round Table, developed from the 1882 contact between Rhodes and
a Rothschild agent in
The relationship between Rhodes and
the Rothschilds became strained, however, as differences emerged between the
two parties over plans for expansion beyond British territory, particularly
with regard to the Boer republics. Rhodes was eager to mine for gold in the
Boer republics and also in the
The most significant outcome of the
Boer War for the Rothschilds was the loss of their position as primary lender
to European states. Whereas in previous conflicts the British government turned
to the Rothshilds for financial support, in the Boer War Great
South
and
World War I
The years immediately preceding WWI would find the Rothschilds seriously engaged in diplomatic efforts to maintain peace among the great powers. In 1912, Alfred de Rothschild sent a letter containing the following to German diplomat von Eckardstein, who forwarded it to Count Bulow, the Kaiser’s Chancellor:
…of recent years Germany’s policy
toward England has been a kind of “pinprick” policy, and, although a pin is not
a very impressive document, repeated pricks may cause a wound…I hope and pray
with my whole heart that no serious wound my result. I have done everything
possible over such a long period of years, and I feel now that you do not fully
appreciate the great advantage of a genuine understanding with
In 1912, Natty Rothschild continued the family’s attempts to
establish peaceful ties between
What have we [
This desire to facilitate a peaceful resolution to an
increasingly combative situation did not cease. Additional correspondence from
Natty indicates faith in peace until war was a certainty (Ferguson 1999:431-2).
On July 1, 1914, less than a month before
France is Russia’s greatest creditor, in fact the financial and economic conditions of the two countries are intimately connected and we hope you will do your best to bring any influence you may have, to bear upon your statesmen even at the last moment, to prevent this hideous struggle from taking place, and to point out to Russia that she owes this to France. (ibid:432)
In an attempt to avert war, Natty sent an appeal for peace to the Kaiser, but no response was received (ibid:436).
A massive financial crisis emerged
during the month of July when war became nearly certain. On July 27, the day
before war was declared, Natty informed the
As people searched for a way to make sense of what had largely been an inconceivable event, the role of finance received scrutiny. Writes the Nation in 1915, looking back on the causes of WWI:
The broad fact is that, whenever
politics can be made the servant of trade, money is forced to develop a
national personality. Finance may be in its essence cosmopolitan, but the
modern world has compelled it to acquire nationality…In a world where the
practice of Protection and the quest for places in the sun has obliged
financiers to constitute themselves into national groups, it is clear that this
economic rivalry makes for Imperialism, which itself underlies the whole struggle
for a balance of power. The national groups of financiers may not desire war;
but they do and must desire that the diplomacy on which they rely for their
future expansion shall be strong enough to seize and hold the concession or the
sphere of penetration which they desire. This rivalry helped to maintain armed
peace, and in due course the armed peace broke out in the world war. (as quoted
in
War
created significant hardships for the Rothschilds. Outside of the impact on
business operations, a number of Rothschilds fought for their countries in WWI,
including
Financially,
the
War
also disrupted the world system that the Rothschilds had mastered so well in
the nineteenth century. The ties between the
These
changes paled in comparison to the key blow to Rothschild dominance: the rise,
without their participation, of
Taken together, the reverberations from the world-system-wide shock of WWI would rattle the foundations of the House of Rothschild. The decline of the symbol of international financial success in the nineteenth century was imminent:
Although there is no question that the Rothschilds gained in one or two isolated respects from the war—which boosted demand for Vickers’ guns, New Caledonian nickel, and De Beers’ diamonds—its net effect was unquestionably negative. It is only a slight exaggeration to say that the world in which the Rothschilds had thrived came to an end in 1914 (ibid:454).
World War I, then, was the exemplar of the outcomes of war that the Rothschilds sought to prevent. Not only did the family suffer personal and financial losses, the severity and reach of the war would radically change the social, political, and financial system that they had thrived upon. World War I marked the end of the Rothschild reign.
In conclusion, the Rothschilds
leveraged technology, social networks, and exceptional business acumen to
become the strongest and most international financial firm throughout most of
the nineteenth century. Their power, and the resulting profit, was heavily reliant
upon positive relations with the governments of the states in which their
houses were based, a situation that at times created conflict for what was a
truly multinational firm. While they profited from war, most notably in
financing military build-ups, costs of operations, and post-war cleanups, they
knew that large-scale war would destabilize the political and financial systems
in which predictability was ultimately desired. While their role in the years
leading up to WWI certainly provided some of the fuel for the calamity that
would occur, the Rothschilds were clearly opposed to its outbreak, and for good
reasons. World War I’s disruption of the political, social, and financial
systems caused significant losses for the Rothschilds. More important, the War
also marked what had been a decline in the Rothschild reign that coincided, and
was precipitated by, the shift in the international financial center from
Anglo-American
Establishment: The Round Table
The nineteenth century was
“Britain‘s Century,” the period when the United Kingdom achieved hegemony
through its position as both the “workshop of the world” and the “commercial
and financial entrepôt of the world,” with London as its great clearinghouse
(Chapman 1984; Ingham 1984; Anderson 1987; Arrighi 1994; Rubinstein 1998). Up
to the final days of the Great Depression (1873-96),
The Cecil Bloc and the
Milner Group
Robert Arthur Talbot
Gascoyne-Cecil, who was the Viscount Cranborne and third Marquess of Salisbury,
formed the Cecil Bloc that became the nexus of power in
(a) a triple-front penetration in politics, education, and journalism; (b) the recruitment of men of ability (chiefly from All Souls) and the linking of these men to the Cecil Bloc by matrimonial alliances and by gratitudes for titles and positions of power; and (c) the influencing of public policy by placing members of the Cecil Bloc in positions of power shielded as much as possible from public attention. (Quigley 1981:15)
Members of the Cecil Bloc included his nephew Arthur
Balfour, Baron Quickswood, Sir Evelyn Cecil and others who served in key secretarial
positions under Lord Salisbury. Balfour had represented
The Secret Society of
Cecil Rhodes
The
South Africa Company was organized by Cecil Rhodes and a group of
After the death of Lord Salisbury,
the Milner group was formed out of the Cecil Bloc. Alfred Milner had shifted the emphasis on
family connections to ideological consensus in constituting the group (Quigley
1981:29). Through the influence of Stead, Brett and
The Rhodes-Milner Round Table Groups were
founded in September 1909 in a conference at the Estate of Lord Anglesey, Plas
Newydd in
Anglo-American Rivalry
for Hegemony: Carnegie and the House of Morgan
While the traditional story
emphasizes the role of the Robber Barons and US industrialists after the
American Civil War, we argue that for some time
During the
worldwide depression and intensified inter-enterprise competition of 1873-1896,
Carnegie used this moment of worldwide price deflation to vastly expand his
industrial empire. During these years of
ruinous competition and falling profits, railroad consolidation grew by leaps
and bounds. Railroad companies
increasingly turned to investment bankers, notably the House of Morgan, with
its access to European capital markets, for stocks, bonds and corporate loans
with which to consolidate the industry, which came under the control of the new
financiers (Chandler 1977: 187). Starting in 1874, Carnegie traveled to
In their
discussion of the early origins of the
transatlantic ruling class and "Atlantic military empire," Calleo and
Rowland (1973: 46-47) note that the US “nucleus of this geopolitical tradition
formed itself in the final quarter of the last century around a small circle of
friends and relations drawn from the older American elites: Henry and Brooks Adams, Henry Cabot Lodge,
Alfred Thayer Mahan, John Hay and Theodore Roosevelt.” This group of American elites knew Europe
well and had especially close connections with
In the late nineteenth and twentieth centuries, the full development of material expansions gave way to periods of financial capitalism, with the “rise [of] a class of pecuniary experts whose business is the strategic management of the interstitial relations of the system” (Veblen 1958: 20). Separate firms and “separate states had to compete for mobile capital, which dictated to them the conditions under which it would assist them to power” (Weber 1961: 247-249). As accumulation flowed beyond the bounds of profitable investment in peaceful trade and production, mobile capital took flight towards zones with the highest rates of profit and lowest protection costs, fueling interstate and inter-firm competition as well as more pure forms of financial speculation.
The Great Depression of 1873-1896
dramatically illustrated these contradictions, as new states emerged, which
with the space-time compression of the world system, were now able to overcome
internal barriers and mobilize more effectively their vast geographic and
industrial resources to compete with
This was a crucial period in the
formation of
Steel was far from being the only important industry in which military demand stimulus played a growing role in the expansion of profits and power (Brady 1943). The development of military power provided power elites with the means to expand state and business power overseas. This marriage of profits and power thus helped pave the way for a new alliance of business and governmental organizations that would give the American century its distinctive character. Carnegie’s old firm became the world’s first billion-dollar corporation with the advent of JP Morgan’s US Steel in 1901, which provided for the consolidation of industry under the dominance of this towering firm of the Anglo-American Establishment, as part of the Money Trust (de Long, 1992, 1997). Moreover, the superprofits provided to Carnegie helped his Foundation to finance the formation of the Anglo-American Establishment foreign policy network and the war preparedness movement (see Fabian 1985; see NSL, 1918, 1919).
With the ever-increasing burdens
that came with the commercialization and industrialization of war, interstate
capitalist classes were thus able to turn the intensified competition of states
into engines for the expansion of their own profits and political-economic
power, while states turned to wielders of money, industrial and commercial
capital to fund and supply their power pursuits (cf. Arrighi 1994: 107). The structural opportunities opened up to
capitalist agencies in this process were nowhere better exemplified in the
George Peabody, an American who had
turned from dry goods imports to diversified interest in trade and finance,
organized a merchant bank in 1857 with its headquarters in
Morgan’s first entree into the
ranks of high finance came from the London firm’s massive loan of 250 million
francs - roughly $50 million - to the French needed for the six month
Franco-Prussian War of 1870-1871; a loan made while the Prussians were still
attacking Paris. The emergency loan
provided the government with a source of funds for both the war effort and for
the forces with which to crush the Paris Commune. These loans netted the firm over a £1.5
million in profit and catapulted them to the top ranks of the world’s private
international banking fraternity centered on
The House of Morgan, allied with
like-minded of the world’s wealthiest Anglo-Americans such as Andrew Carnegie
and the Astor family, were the leading players in the growing Anglo-American
alliance solidified during the turn of the century. William Waldorf Astor, son of John Jacob Astor,
moved to
In June of 1898, a host of
Britain’s leading men got together to build an Anglo-American League composed
of over 1000 of the leading members of the Anglo-American Establishment was
formed to strengthen Anglo-Saxon solidarity so as to support US efforts to
conquer Cuba, Puerto Rico, the Philippines and Guam in its war with Spain
(Reuter 1924: 160; cf. Allen 1954: 564; van der Pij, 1984: 39). The General Committee of
The group represented leading
citizens of the nation, notably corporate elites and intellectuals throughout
government, finance, industry, religious institutions and schools. Thus was the American century ushered in
through the overseas expansion of
England’s own entrance into the
interstate competition during this period, including for mobile capital, led to
a tightening of the networks linking the British state, US political elites and
haute finance, control of which was now shifting from the Rothschilds to the Morgan bank. This structural geoeconomic shift was
understood by the crucial actors involved, who made their plans
accordingly.
Soon after Dawkins joined the firm,
another Englishman, Edward Charles Grenfell, whose father was a director of the
Bank of England, became a partner.
Edward soon became a Director of the Bank of England from 1905-1940 and
the “resident senior” member of the Morgan firm, renamed Morgan, Grenfell (Burk
1989: 59; Cassis 1994: 242-243). Earlier
in 1889 Dawkins had taken over from his close friend Alfred Milner - both of
them being Balliol,
Later Dawkins would relate to his
longtime friend Cecil Spring Rice - dear friend of Teddy Roosevelt, Henry Cabot
Lodge and JP Morgan, who became Ambassador to the US during WW I - that Arthur
Balfour, soon to become British Prime Minister and Colonial Secretary Joseph
Chamberlain, had ‘pressed’ the House of Morgan very hard to incorporate an
important bona fide Englishmen into the great merchant banking house (quoted in
Kynaston 1995: 190). Dawkins went on to
say that both Goschen and Milner, along with others in
The new prominence and prestige the
House of Morgan was enjoying was boosted by its financing of
Britain’s turn to the House of
Morgan for bond flotations during the Boer War thus “marked the beginning of
the transatlantic transfer of financial power” from London to New York and
helped sealed the future Anglo-American alliance of World War I, the second
major act in this ongoing transfer of world money and power (Ferguson 1999:
v). The creation of this Anglo-American
alliance of World War I, which continued the earlier rapprochement of
1898-1899, was a watershed event, as significant as
The overlapping networks of money
and power described above form the human counterpart to the unfolding
structural logic of the world-system as it presented itself to men in
power. This growth of
Conclusion
In this paper, we have discussed
a series of micro-histories; an archipelago of key national and international
elites in the period from the early decades of the nineteenth century to the
beginning of WWI. In
Each little history, each slice of the history of elites describes not only the individuals but also
the networks of their relationships and the social institutions in which they
were embedded, and which they produced and reproduced. The development and
interaction of this agent/structure interplay was possible for the first time
on a nearly global scale in this period due to rapid technological and
infrastructural growth as advances in rail, shipping, and communications
undergirded an expansion of international trade. The individuals, then,
provided an entry into the larger social structures that together impacted the
events which emerged during the nineteenth and early twentieth centuries. The
multi-level and multi-spatial analysis we undertook is therefore necessary for
an adequate understanding of the key components of the world-system that
characterized the history of this, and all, temporal periods.
We found that despite, and often
because of, the increasing density, depth, and reach of the elite networks and
their intersection with national and international social, political, military,
and financial institutions, conflict was not reduced during this period; the
Franco-Prussian, Crimean, Russo-Japanese, and Boer Wars, were only a sample of
the many conflicts that presaged WWI. In addition, major social upheavals took
place in this period, most notably in the revolutions of 1848, 1868, and in the
depression of 1873-96. However, in the face of conflict periods of peace also
occurred, and again, the elites, both
as nodes in their networks, and as participants in the social structures
they interacted with, played significant
roles in the calm.
At this point in the research
project, we are unable to make any sweeping claims regarding the relationship
between conflict and elite integration. Elite integration was indeed occurring,
as were peace and war; however, their relationship to each other eludes
relatively simple characterization. We can say that the relationship is
incredibly complex as the multi-faceted actions and interests of individuals
and groups were often opposed to those emerging in the networks in which they
were embedded. The goal, then, of our continuing research is to further map
elite networks and their impact on social structures and historical events in
order to untangle the complex web of interrelationships that shape
world-systemic history.
REFERENCES
Adams, Francis, Satya Dev Gupta, and Kidane
Mengisteab. 1999. "Globalization and the Developing World: An
Introduction." in Globalization and
the Dilemmas of the State in the South, edited by F. Adams, S. D. Gupta,
and K. Mengisteab.
Ananich, Boris.
2005. “Russian War Financing.” Pp. 449-465 in The Russo-Japanese War in Global Perspective: World War Zero,
edited by John W. Steinberg, Bruce W. Menning, David Schimmelpenninck van der
Oye, David Wolff and Shinki Yokote.
Anderson, Perry. 1987. "The Figures of Descent." New Left Review 161(Jan.-Feb.):20-78.
Angress, Werner
T. 1976. "
Arrighi,
Giovanni. 1994. The Long Twentieth
Century: Money, Power, and the Origins of Our Times.
Bairoch, Paul
1996. "Globalization Myths and Realities: One Century of External
Trade and Foreign Investment." Chap. in States Against Markets: The Limits of Globalization, edited by
Robert Boyer and Daniel Drache.
Barbieri,
Katherine. 2002. The Liberal Illusion:
Does Trade Promote Peace?
Beloff, Max.
1970. Imperial Sunset, Volume I:
Birmingham,
Stephen. 1967. "Our Crowd" The
Great Jewish Families of
Birnbaum, Pierre.
1982. The Heights of Power: An Essay on
the Power Elite in
Blackbourn,
David. 2003. History of
Bornschier,
Volker and Christopher Chase-Dunn. 1985. Transnational
Corporations and Underdevelopment.
Boswell, Terry
and Christopher Chase-Dunn 2000. The
Spiral of Capitalism and Socialism: Toward Global Democracy.
Boswell, Terry and William J. Dixon. 1990. "Dependency and Rebellion: A Cross-National Analysis." American Sociological Review 55(4):540-59.
Brady, Robert.
1943. Business as a System of Power.
Brown, Victoria.
1999. "Advocate for Democracy: Jane Addams & the
Burk, Kathleen.
1989. Morgan Grenfell 1838-1988: The
Biography of a Merchant Bank.
Calleo, David P.
1978. The German Problem Reconsidered:
Carosso, Vincent
P. 1970. Investment Banking in
Cassis, Youssef.
Chandler, Alfred.
1977. The Visible Hand: The Managerial
Revolution in American Business.
Chapman, Stanley
D. 1984. The Rise of Merchant Banking.
Chase-Dunn,
Christopher. 1998. Global Formation:
Structures of the World-Economy. 2nd edition,
Chase-Dunn,
Christopher and Thomas D. Hall. 1997. Rise
and Demise: Comparing World-Systems.
Chase-Dunn, Christopher, Yukio Kawano and Benjamin Brewer. 2000. “Trade Globalization since 1795: Waves of Integration in the World-System.” American Sociological Review 65: 77-95.
Chernow, Ron.
1990. The House of Morgan: An American
Banking Dynasty and the Rise of Modern Finance.
______. 1993. The Warburgs: The Twentieth-Century Odyssey of a Remarkable Jewish Family. New York: Random House.
______. 1997. The Death of the Banker: The Decline and
Fall of the Great Financial Dynasties and the Triumph of the Small Investor.
Chickering,
Roger. 1996. Imperial
Corti, Count Egon
Caesar. 1928. The Reign of the House of
Rothschild. Trans. Brian and Beatrix Lunn.
Craig, Gordon
Alexander. 1983. The Germans.
de Long, J.
Bradford. 1992. "Money Trust." Pp. 808-810 in The New Palgrave Dictionary of Money & Finance, edited by P.
Newman, M. Milgate, and J. Eatwell.
______. 1997.
"Did J.P. Morgan's Men Add Value? An Economist's Perspective on Financial
Capitalism." Pp. 191-224 in Reputation:
Studies in the Voluntary Elicitation of Good Conduct, edited by D. B.
Klein.
Dogan, Mattei. 2003.
“Is There a Ruling Class in
Fabian, Larry.
1985. Andrew Carnegie's Peace Endowment:
The Tycoon, the President and Their
Bargain of 1910.
Feis, Herbert.
1965.
Feldenkirchen,
Wilfried. 1999. Siemens, 1918-1945.
______. 1999. The House of Rothschild: The World’s Banker
1849-1999.
Feuchtwanger, E. J.
2001. Imperial
Galbraith, John S. 1974. Crown and Charter:
The Early Years of the British South Africa Company.
Gall, Lothar, et
al. 1995. The Deutsche Bank, 1870-1995.
Grenville, J. A.
S. 1964. Lord Salisbury and Foreign
Policy:Tthe Close of the Nineteenth Century.
Haggard, Stephan.
1995. Developing Nations and the Politics of Global Integration.
Hobsbawm, Eric J.
1989. The Age of Empire 1875-1914.
Hobson, J. A.
1965. Imperialism: A Study.
Howe, Anthony.
2004. "
Hughes, Daniel J.
1987. The King's Finest : A Social and
Bureaucratic Profile of
Ingham, Geoffrey. 1984. Capitalism Divided?
The City and Industry in British Social Development.
Kehr, Eckart.
1977. Economic Interest, Militarism, and
Foreign Policy: Essays on German History.
Kehr, Eckart,
Pauline Safford Anderson, and
Kennedy, Paul M.
1987. The Rise of the Anglo-German
Antagonism, 1860-1914.
Kitchen, Martin.
1968. The German Officer Corps 1890-1914.
Kynaston, David.
1995. The City of
Lachmann,
Richard. 2000. Capitalists in Spite of
Themselves: Elite Conflict and Economic Transitions in Early Modern
______. 2003.
“Elite Self-Interest and Economic Decline in Modern
List, Friedrich. 2005. National System of Political Economy: The History.
Magraw, Roger. 1986.
Mann, Michael.
1993. The Sources of Social Power, Volume
II: The Rise of Classes and Nation-States, 1760-1914.
Manning, Roberta
Thomson. 1982. The Crisis of the Old
Order in
Marlowe, John.
1976. Milner Apostle of Empire: A Life of
Alfred George the Right Hnourable Viscount Milner of St James's and Cape Town,
KG, GCB, GCMG (1854-1925).
Mayeur,
Jean-Marie and Madeleine Rebérioux.
1984 [1973]. The
McKay, John P.
1974. “Foreign
Michels, Robert. 1934. Umschichtungen in den herrschenden Klassen nach dem Kriege. Stuttgart-Berlin: W. Kohlhammer.
Misa, Thomas.
1995. A Nation of Steel: The Making of
Modern
Mitchell, Allan. 1971. Bismarck
and the French Nation 1848-1890.
Modelski, George
and William R. Thompson. 1996. Leading
Sectors and World Powers: The Coevolution of Global Politics and Economics.
Mommsen, Wolfgang
J. 1995. Imperial
Morton, Frederic. 1961. The
Rothschilds: A Family Fortune.
Ol’, Pavel Vasil’evich. 1983. Foreign capital in
O’Rourke, Kevin
H. and Jeffrey G. Williamson. 1999. Globalization and History: The
Evolution of a Nineteenth-Century Atlantic Economy.
Polanyi,
Karl. 2001 [1944]. The Great
Transformation: The Political and
Economic Origins of Our Time.
Quigley, Carroll.
1966. Tragedy and Hope: A History of the
World in Our Time.
______. 1981. The Anglo-American Establishment: From
Rèohl, John C. G.
1994. The Kaiser and His Court: Wilhelm
II and the Government of
Reuter, Bertha
Ann. 1924. Anglo-American Relations
During the Spanish-American War.
Rosinski,
Herbert. 1966. The German Army.
Rubinstein, W. D.
1998.
Rueschemeyer,
Dietrich, Evelyne Huber Stephens and John D. Stephens. 1992. Capitalist
Development and Democracy.
Semmel, Bernard.
1960. Imperialism & Social Reform:
English Social Imperial Thought, 1895-1914.
Stromquist,
Snyder, Jack L.
1991. Myths of Empire: Domestic Politics
and International Ambition.
_____. 2000. From
Voting to Violence: Democratization and Nationalist Conflict.
Sowerwine,
Charles. 2001.
Strouse, Jean. 1999. Morgan: American Financier.
Tilly, Charles,
Louise Tilly and Richard Tilly. 1975. The
Rebellious Century: 1830-1930.
Vagts, Alfred.
1959. A History of Militarism.
van der Pijl, Kees. 1984. The Making of an
Veblen,
Thorstein. 1958. The Theory of the
Business
Vilar, Pierre.
1976 [1969]. A History of Gold and Money
1450-1920. Translated by J. White.
Von
Laue, Theodore H. 1963. Sergei Witte and
the Industrialization of
Weber, Max. 1961.
General Economic History.
Wechsberg, Joseph. 1966. The Merchant Bankers.
Wehler, Hans
Ulrich. 1985. The German Empire,
1871-1918.
Weinstein, James.
1968. The Corporate Ideal in the
Whitton,
Frederick Ernest. 1972. Moltke.
Wolf, John B. 1963 [1940].
Woo, Jung-en.
1991. Race to the Swift: State &
Finance in Korean Industrialization.
Zysman, John.
1983. Governments, Markets and Growth:
Financial Systems and the Politics of Industrial Change.