72/YOUR MONEY OR YOUR LIFE!1500 and 1750, some 1 billion English pounds (gold sovereigns)
were transferred from the colonies to Western Europe. 'This is more
than the total value of capital invested by 1800 in all European
industrial companies' (Mandel, 1968, pp. 150-1).
DEBT CRISES IN THE NINETEENTH CENTURY AND EARLY
TWENTIETH CENTURY
Semi-Periphery and Financial DependenceUse of foreign debt as a weapon of domination played a key role in the
policies of the main capitalist powers in the late nineteenth and early
twentieth centuries towards subordinate powers that could have
themselves become central capitalist powers. The Russian Empire,
the Ottoman Empire and China took in foreign investment to deepen
capitalist development. They took on heavy debts in the form of
government bonds issued in the financial markets of the main
industrial powers. In the cases of the Ottoman Empire and China, dif
ficulties meeting debt payments progressively led them to be placed
under foreign tutelage. European officials set up and oversaw special
debt repayment accounts in these countries. They had virtual control
over government revenues, which they ensured went towards
fulfilling international debt obligations. This loss of financial
sovereignty led the Ottoman Empire and China to negotiate their debt
away against port, railway and trade concessions. Russia, facing the
same fate, chose another path after the 1917 revolution: it repudiated
all debts taken on by the Czarist dictatorship (Adda, 1996).
Unlike China, the Ottoman Empire and Russia, Japan did not take
on foreign debt. As such, it is the only example of successful capitalist
development in the late nineteenth century by a country from the
'semi-periphery'. Japan experienced genuine autonomous capitalist
development in the wake of a bourgeois revolution (1868) which,
among other things, prevented Western finance from taking hold on
its soil while eliminating obstacles to the circulation of domestic
capital. By the late nineteenth century, Japan had emerged from its
autarchy of lore to become a rapidly expanding imperialist power.
Lest there be any misunderstanding, the point here is not to suggest
that the absence of foreign debt was the determinant factor in Japan's
successful run at capitalist development. This is not the place to go