LIEFMANN, HOLDING AND FINANCING COMPANIES (original) (raw)

Vladimir Ilyich Lenin

NOTEBOOK “ι”

(“IOTA”)

LIEFMANN, HOLDING AND FINANCING COMPANIES

Professor Dr. Robert Liefmann, Holding and Financing Companies, Jena, 1909 (A Study of Modern Capitalism and Securities) (x + 495).

[cf. especially p. 11 of the extracts]

((The author is a double-dyed idiot, who makes a great fuss about definitions—very stupid ones—all revolving around the word “substitution”. His factual data, however, mostly quite raw, are valuable. Opponent of the labour theory of value, etc., etc.))

pp. 104-449: “Descriptive part.” The theoretical part =nonsense

p. 9: Against Sombart for following “wholly in the wake” of the Ricardo-Marx labour theory of value.

numberofshareholders p. 33: “In Prussia, the number of _share_-holders is only 2 per cent of the population.”There are more in Britain and America.“According to the estimate for Prussia inthe 1909 Bill for taxation of joint-stockcompanies, the average shareholding inPrussia is not even 10,000 marks. Theseholdings are distributed among approxi-mately 700,000 persons. All suchestimates, however, are very unreliable”(34).

“There are no general statistical data at the present time on the spread of stock capital.... Philippovich (Outline, 7th edition, p. 164) estimates that 40 per cent of the British national wealth is in ‘securities’ (i.e., stocks and, mortgages). Schmoller (statistical supplements to the Minutes of the Stock-Exchange Enquiry Commission, 1892-93) estimated in 1892 that about one-quarter of total Prussian capital, nearly 16,000-20,000 million marks, was invested in securities. Sombart (The German National Economy in the Nineteenth Century, p. 224) puts the stock capital of Germany in 1900 at 31,000-32,000 million marks” (37). “Today this figure is definitely too low; German stock capital should be put at 45,000-50,000 million marks, which nevertheless is only about one-fifth of the country’s national wealth, estimated at 250,000 million marks” (37).

In America (✕) the national wealth in 1904 was 107,000 million dollars. About one-third was stock capital. “For Great Britain he (✕) gives the stock capital as 26,000 million dollars, for France—19,500 million dollars. The figure for the whole of Europe is about 75,000 million dollars” (38).

(✕) Charles A. Conant, “The Concentrationof Capital in New York and Those Who Manage It”, Bankers’ Magazine, November 1907 (quoted, p. 38). N.B.
Thus:
Stockcapital America 35 thousand million dollars
Great Britain 26 ” ” ” } 58.0–
France 19.5 ” ” ” 75
Germany 12.5 ” ” ” 58
93.0 difference 17
✕ 5 = 465,000 million francs
[but Neymarck reckons 60 0,000 million]
44: ...“extraordinary interweaving of alleconomic interests”. 51: The Union (mining, etc., joint-stockcompany in Dortmund) ((see also Stillichα pp. 38 and 41[1])). Formed in 1872. “Sharecapital was issued to the amount of nearly40 million marks in 1872 and the marketprice rose to 170 per cent after it had paida 12 per cent dividend for a year. Afterthat, however, no dividends were paid until1880, and already in 1875 the first of thereconstructions had to be undertaken, whichsince then were repeated in almost everyperiod of unfavourable market conditions....And every time the chief sufferers were theoriginal shareholders.”[2] “Even companies founded with other aimsthan these (‘speculation in stocks’) in factoften go over more or less exclusively to spe-culation in stocks. This may happen partlybecause the shareholders do not pay enoughattention to the activity of their directors,and partly because in this respect they aredeceived by the latter” (67).
170%
(12%-0%)
N.B.
N.B.
N.B.

71: In different countries, different types of companies predominate:

In America—control over other companies.

” Germany—take-over (Übernahme) companies.

” France—capital investment companies.

” Holland (“as a rentier state”, p. 71)—ditto.

Belgium—à la Germany.

Great Britain—investment trusts....

Jeidels, Relation of the German Big Banks to Industry, Leipzig, 1905.

Dr. Riesser, On the History of the Development of the German Big Banks, with Special Reference to Concentration Trends, 1906.

p. 117—one of many examples of shareholding by the Belgian Société générale (December 31, 1906—shares and bonds amounting to 198 million francs, a host of companies).

p. 136-37. One example:

anexampleofspeculation The London and Colonial Finance Corpo-ration, “with a paid-up capital of only£21,745 in 1890 obtained a net profit of£80,567 = 370 per cent of capital andpaid a 100 per cent dividend.”
goodexample Capital investment company (Kapital-anlagegesellschaft)——Aktiengesellschaft für rheinish-west-phälishe Industrie. Founded October 1871(p. 156).
Dividend: 1872 — 35% — 35!!
N.B. 1873-1883 — 0 — 0
1884-1895 — 3-9%
N.B. 1896-1899 — 10-21%
1900 — 60% — 60 !!
1901-02 — 0 — 0
1905-06 — 40% — 40
1907-08 — 6-4%

Dr. Emil Wolff, The Practice of Financing, etc., Berlin, 1905.

Francis Cooper, Financing an Enterprise, Two vols., New York, 1906.

Edward Carroll, Principles and Practice of Finance, 1902 (New York).

W. Lotz, “The Technique of Securities Issues”. In Schmoller’s Jahrbuch, 1890, p. 393 et seq.

“Thus nothing has come of using capital investment companies ‘to ensure small owners the profitability of the big’ (✕)” (163).

p. 64: “Louis Hagen, the Cologne banker, sat on theSupervisory Boards of 35 firms; the Deutsche Bank,according to Jeidels (✕ ✕), had its directors onthe Supervisory Boards in 101 companies, and itsown Supervisory Board members in 120 companies”(p. 64). N.B.

(✕) Jörgens, pp. 45-46.

(✕ ✕) Jeidels, Relation of the German Big Banks to Industry, 1905.

Various companies repeatedly issue stock for one and the same assets.

Example (American)... “their (railway com-panies’) assets appear repeated five timesover in the stock of the companies directly orindirectly controlling them” (182). N.B.fivetimesrepeated

Ch. A. Conant, “The Tendencies of Modern Banking” (Bankers’ Magazine, 1905).

The Northern Pacific Railway Co. Capi-tal = 80 million dollars of foundation shares.Struggle between Harriman and Hill. Hill acquired foundation shares tothe amount of 15 million. “This ‘raid’ forced upthe market price of Northern Pacific sharesnearly 1,000 per cent.... On May 9, 1901, therewas a crisis on the Stock Exchange, ruininga large number of smallholders, while thechief participants, according to Harriman’stestimony, suffered no losses through thismanipulation” (184).
1,000%andcrisis
“With the further development of stockcapitalism, the methods of fleecingthe public of large _sums of money_and diverting it into one’s own pockets havebecome more subtle. Today the methodis to form, and graft on one another newcompanies, to which one and the same materialassets are sold or leased; these assets passfrom one company to another” (180).
(myitalics)N.B.
Liefmann’sitalics

The Standard Oil Company was founded in 1900.

N.B. “It has an authorised capital of 150,000,000.Itissued150,000,000.It issued 150,000,000.Itissued100,000,000 common and$106,000,000 preferred stock. From 1900to 1907 the following dividends were paidon the latter: 48, 48, 45, 44, 36, 40, 40, 40 percent in the respective years, i.e., in all$367,000,000. From 1882 to 1907, out oftotal net profits amounting to 889,000,000,889,000,000,889,000,000,606,000,000 were distributed in dividendsand the rest went to reserve capital”[3](212).
N.B.
N.B.(newtechnique_500_%dividend.... “In 1907 the various works of the UnitedStates Steel Corporation employed no lessthan 210,180 people (1908—165,211)....The largest enterprise in the German miningindustry, Gelsenkirchener Bergwerksgesell-schaft, in 1908, had a staff of 46,048 workersand office employees, and 43,293 in 1907”[4](p. 218).Internationale Bohrgesellschaft (in Erke-lenz).... “Founded in order to apply the drillingmethod invented by engineer Anton Raky...(235)... the company paid a 500 per centdividend in each of the years 1905-06 and1906-07” (236).
“In fact, experience shows that it is suffi-cient to own about 40 per cent of the votingshares of a company in order in normal timesto direct its affairs”[5] (258). Further, thereare also (especially in America) “non-votingshares” (259), bonds, etc., and if these areshares of a company controlling a number ofother companies, then “he [the capitalist],with his own capital of five million dollarscan control a capital 40-50 times as great”(259).
N.B.

...and even “an amount of capital” “80—100 times as great” (as he owns) (260)....

“In Germany and other leading countries the trade in metals, other than iron, especially copper and zinc, also rare metals, is extremely concentrated” (301)... “small number of firms” (mostly in private hands)....

...“very many German gas works of the earlier period were built by British firms and with British capital”... (321)....

...“only a comparatively few people haveachieved virtuosity in this sphere” (355)—infinancial matters, etc. ha-ha!!

...“The Swiss Credit Institute administers it [the Zurich Electrical Development Bank] for the ‘Bank’ is not an institution or office but, like all companies of the kind, is, so to speak, a large portfolio in which its securities and a few business books are kept” (376)....

Allgemeine Elektrizitäts Gesellschaft (A.E.G.)
—shares — 100 million marks
bonds — 37 ” ”
“securities owned” — 23 million marks, etc.
South African gold mines. “The huge profits,particularly in the late eighties and early ninetiesprompted British capital, and also, especially,French, as well as German, Belgian and Dutch, toacquire shares in the mines.... Share pricesjacked up, reaching their peak in the ‘boom’,which ended in 1895. The decline in miningsecurities was further increased by the Transvaalwar”... (414).
N.B.
N.B.N.B. “The more developed an economic system is, themore it resorts to risky enterprises, or enterprisesin other countries, to those which need a great dealof time to develop, or finally, to those which areonly of local importance.[6] Hence, special financingcompanies have been established in these fields, forenterprises requiring a long time for development,for example, railway and mining enterprises”...(etc.) (434).[The more developed, the more risky... N.B.]Schulze-Gaevernitz repeats this almost word-for-word in an article “_Banking_”, p. 21.(Book III. Principles of Social Economics, Section V,Part II.)
N.B.
N.B.
“Especially if, as in the case of American control-ling companies, real activity is centred in the subor-dinate companies, the parent company being nomore than the owner of their stock, and the share-holders learn nothing of the activities of the subor-dinate companies, then it is clear that all legalregulations to assure maximum public control overthe company’s enterprises can be made unworkable.That danger can arise in all companies based onthe substitution of stock, indeed in all caseswhen one company has considerable holdings inanother” (439).
N.B.
N.B.

“At the end of 1904, 3.8 per cent of all limited liability companies had a capital of over one million marks, 9.1 per cent had a capital of over 500,000 marks each. The 3.8 per cent, however, represented 45.2 per cent of the total capital of all limited liability companies, and the 9.1 per cent accounted for 60.5 per cent of this capital” (459).

(In Germany? Apparently.)

460: Author’s proposal: to oblige companies to “declare” in their accounts amounts of securities which are >1/20 “of the paid-up share capital”.

((Idiotic red-tape-ism!))

“In all probability mankind will see furtherimportant technical revolutions in the near futurewhich will also affect the organisation of the economicsystem”.... Electricity and aviation.... “As a generalrule, in such periods of radical economic change, speculation develops on a large scale”,[7] and judgingby previous experience a considerable role willdoubtlessly be played by the principle of stock sub-stitution and by the holding and financing companiesfor carrying out necessary large-scale capitaltransactions” (465-66).... N.B.
N.B.

But, he says ... joint-stock capitalism has passed its “period of youth”. The public has become wiser.... And with big technical inventions, “Gründungsschwindel” (flotation of bubble companies) “hardly”, etc.... (466-67)... ((“Harmonist”))

...“the essence of trade is in general the substitution of demand”... (475).

((Ha-ha! “Theoretician”!))

...“commerce is an occupation having for its object the collection, storage and supply of goods” (476). ((In bold-face italics. Idiot!))[8]

Nil in theory

End.

Notes

[1] See pp. 52-63 of this volume.—Ed.

[2] See present edition, Vol. 22, p. 235.—Ed.

[3] See present edition, Vol. 22, p. 203.—Ed.

[4] Ibid—Ed.

[5] Ibid., p. 228.—Ed.

[6] See present edition, Vol. 22, p. 208.—Ed.

[7] Ibid., p. 209.—Ed.

[8] Ibid., p. 227.—Ed.

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