It’s somewhat disconcerting to learn from Judith Raum’s investigations that the scarves and ponchos worn by Peruvian peasants in the late nineteenth century were made in the north-eastern tip of Bavaria, close to what is now the Czech border, and that these apparently indigenous items were in fact close cousins to the ethnically-distinct shawls worn by rural Anatolians amongst other geographically disconnected peoples around the world. The surprise perhaps lies in realizing that such a distribution attests to a depth of globalization that one assumes to be a result of today’s international exploitation of cheap labour, networked systems of production and trade, rapid transport, quick consumption, corporate standardization and homogenization, and so on, but which was in place over a century ago. Moreover, Raum does not limit our perplexity at a globalization that may have preceded us by several generations to the tangible and material manifestations of production and goods. Her exploration and presentation of the Deutsche Bank archives draws us into the complex interplay between the realization of the trade channels, the objects whose production-distribution they enabled, and the shift of state power from its imperial form to modern nation-statehood – more accurately, an international-financial-statehood.
On both sides: as much as the Anatolian scarves and other fabrics and clothes were manufactured in all their ethnic specificity in Germany and exported from there so, inversely, the Ottoman empire’s drive to modernity followed the then-standard model of export-linked rail construction, only for it to cede control, income and construction of the railway and its extension to foreign, privately-owned banks from 1875. The latter ‘investments’ were key to the speculative-mercantile endeavour of the many German businesses encouraged or financed by the privately-owned Deutsche Bank in its efforts to commercialize Anatolia in order to enhance German national-corporate interests internationally and also domestically. The reach of such speculation was extensive and microscopic at the same time: from the interests of the German cotton production company at the heart of Raum’s archival research in the land cultivation and peasant labour of the region, to the possibility of trade in its minerals, pottery, goat skins, and so on, to the construction of a provincial German industrial architecture peppering the Anatolian landscape alongside the Deutsche Bank-financed extension of the Ottoman railway. We shall return to these alien fabrications once the logics for their incongruous construction have been better understood.
It’s well known that industrial modernity was shaped by the growth of national railway systems and steam-powered shipping enabling the unprecedented growth of national and international trade through fast large-scale freight transport. Eager to enter the expanding markets of Europe, the Ottoman government began construction on a rail system from the Istanbul port town of Haydarpasa in 1871, extending it to Ízmit along the North Marmarian coast by 1873. However, with fifty-five per cent of its state budget going towards servicing external debt repayments, the Empire defaulted on its loans to mainly European creditors in 1875. As a result state enterprises became difficult to finance and in 1880 the Ottoman government handed management of the extant railway to a British private company for a return of sixty percent of gross receipts. The outsourcing of Ottoman infrastructure to foreign control was generalized to the entire Empire a year later with the founding of the Ottoman Public Debt Administration. This body was tasked with restructuring the Ottoman external debt which it did by channeling the Empire’s taxes and state revenues to its European creditors, eventually directing its export industries so that the increased revenues would improve its balance of payments by securing repayments to its creditors while opening further control of Ottoman industries to foreign investors through credit channels.
The initial plan to extend the line to Ankara and then Mesopotomia (now Iraq) could not be realized while such debt claims prevailed in the Ottoman economy. The block was relieved in 1888 by Deutsche Bank’s managing director Georg Wilhelm von Siemens (son of the founder of the Siemens electrical industrial company) agreeing to the bank financing of the line to Ankara thanks to the Ottoman government guaranteeing a revenue of 15,000 Francs per kilometer per year from the line. However, it was not the secured income that financed the railway’s extension but the sale of securities issued by Deutsche Bank’s specially-created subsidiary, the Zürich-based Bank für Orientalische Eisenbahnen. It was this capital raised from European financial markets that facilitated the founding in October 1888 of the Société du Chemin de fer Ottoman d'Anatolie (CFOA) as another wholly owned subsidiary of Deutsche Bank, the company being established to build and run the railway from Ízmit to Ankara. Construction of the line, undertaken by the German company Philipp Holzmann as the main subcontractor to the CFOA, began in May 1889. The initial 99-year concession to Deutsche Bank was extended to 114 years (that is, to 2002 – coincidently the very year that the Holzmann company went bust) when the line was extended to the Baghdad Railway. This final extension was only completed in 1940, as the Nazi-led German powers looked to secure a stable route for oil supplies from the Middle-East through the then relatively new states of Iraq, Syria and Turkey.
Such tales of outsourcing, long-term privatization of state-public resources and infrastructure, debt-financing by speculators operating in international capital markets and so on are familiar enough though perhaps more from their contemporaneity to us rather than through such a potted history. These are manoeuvres typical of the neo-liberalism that has increasingly prevailed since the 1980s, a century after the machinations of accumulation just described. And they have prevailed notably in the same kind of partial-sequestering of public services to private corporations as service-providers for core state services, which corporate profits are then increased and quasi-guaranteed by a revenue-base organized on the back of public taxation. Such, at least, was the deal-maker for Deutsche Bank’s financing and leasing of the Ottoman Railways. However, the similarities and common practices between the accumulation structures and operations organized between the State and privately-owned commerce in high liberalism and neo-liberalism must be qualified: waged labour, the nation-state and international capital markets across the two periods have distinct configurations and limitations. More precisely, each of these periods and the interval between them involves a convulsive common history for labour, the nation-state and international capital. Specifically, and in turn:
- Wage Labour: Raum notes that by the mid-nineteenth century the patterned textiles from Helmbrechts were produced entirely for export, their looms occupying their entire living spaces, literalising the abolition of a private or domestic space independent of the wage economy. If weaving is a metaphor for interconnected networks of all kinds, what is critical at that juncture in its history is that the once locally then regionally patterned textile production in Helmbrechts came to be organized and oriented to a world-market network from which it is geographically disconnected other than through abstractly presented mercantile channels. Abstract because the commercial reasons for Helmbrechts’s production now lay primarily well outside of the town itself, in the hands of a commercial class who brought the world-market and its demands into the weavers’ very homes. The domestic spaces of this small village in South-Eastern Germany are in other words expropriated from themselves by the mercantile imperative for their production, an importing of the demands of international export trade into the material organization of the domestic itself. That is, world-scale demand for the Helmbrechts weavers’ labour expropriated their cross-generational habitation, melding it inextricably with the mercantile reliance upon their work-tradition and demand for it. That tradition was paradoxically maintained and consolidated by being alienated from itself, constituted and organized instead by a worldwide commerce. In this, it was a modern reconstitution of traditional labour, manufacturing the aesthetics of geo-ethnically particular textiles at a world-market scale. And it was also modern because the conditions for that international expropriation of domestic production (whatever the domestic might then mean) were galvanized by the emergence of Germany as a nation-state, in particular its orientation towards international capital markets from even before its foundation.
- The Nation-State: The victory of the North German Federation in the Siege of Paris of September 1870 - January 1871 marked the end of the Franco-Prussian war that had begun two months earlier. While the causes for the war are to be found in episodes and national-diplomatic rivalries stemming from the Napoleonic wars of the early nineteenth century, the siege led to two contrary political formations that have been central to modern Europe since. One was the Paris Commune of April-May 1871, in which workers and National Guards combined to form a popular armed struggle against the badly compromised French government that signed the peace agreement with Germany in May 1871. The uprising presented a counter-statist precedent for what Karl Marx and Friedrich Engels would theorize under the name of communism. The second was the unification of German free cities and Southern provinces with the Prussian-dominated Federation to form the modern nation-state of Germany with the proclamation of Wilhelm I. as the new Empire’s Kaiser at the Versailles Palace outside of Paris in January 1871. The construction of the German state under Bismarck’s leadership exemplifies how the relation between capitalism and the nation-state constitutes the modernity that communism rails against. Germany in particular since its statehood has been tied from the beginning to the consolidation and expansion of modern configurations of industrial and financial – which is to say, private – capitalism; a configuration that continues to be contemporary to us with global capital accumulation, an inextricable commercial-statist amalgamation that does not require overt national-territorial acquisition for its expansion. Commercial channels organized through existing and stable state formations are instead sufficient. Motivating the reliance on private capital as a political statist operation was Bismarck’s caution over the financial and military costs to the still-nascent German state of colonial power in resource-poorer territories at a time when it was also seeking to secure its new borders by maintaining established if precarious intra-European power relations. To keep the overt political balance, German international expansion and influence was mobilized instead through mercantile and other commercial trade activities, dominated at the time by industrial modes of capital accumulation. These are the ‘harmless entrepreneurs’ in one of Raum’s titles, the phrase reassuring anyone who would hear it that the commercial expansion of such entrepreneurship was a ‘merely’ private concern rather than the nascent German state’s proto-imperialist adventure, the latter running counter to its regional neighbours’ interests and the balance of power maintained in Europe as well as overseas. However, such accumulation could not take place simply on the basis of production and distribution but, as seen with the financing and construction of the CFOA, through dependable financial and credit structures. These structures, without which Germany would have been unable to quickly consolidate itself as a leading modern European power either domestically or internationally, were composed mainly of private companies with international concerns; for example, the formation of the private banking concern Deutsche Bank in March 1870, less than a year before the foundation of modern Germany, a specialist in foreign commerce with branches opening in cities such as Shanghai (1872) and London (1873) not long after the first were established in Bremen (1871) and Hamburg (1872). London was of particular importance as a trading and financial base because the price of gold was set there and the value of Sterling was pegged against gold. Being ‘as good as gold’ and with London’s importance as a colonial centre, the British currency quickly became the key currency for international trade and investment. This informal institutional arrangement was institutionalized thanks to the policies of the newly founded, state-controlled but privately owned and financed German National Bank, the Deutsche Reichsbank. Founded in 1876, the Reichsbank in its early years was mainly preoccupied with processing the large war reparations payments from France to Germany through the new country’s economy, the revenue influx causing first a boom followed by a hard depression, while it simultaneously established the Goldmark as the new currency superceding the variety of gold, silver and bimetallic based coins and bills issued by the various regional German banks. The Reichbank’s primacy policy was to secure the conditions of investment and financing in and from the new nation-state which it did by securing its currency against the price of gold, de facto stabilizing its exchange-rate with the Bank of England, enabling secure trade without risk of exchange-rate fluctuations. This it achieved to such a degree that by the end of the 1870s the currencies of the central industrialized nations were all pegged to the price of gold, effectively meaning the Pound, establishing what is now known as the Classical Gold Standard.
- International Capital Markets: In sum, international capital and trade flows within the gold standard economies from the time of the foundation of the modern German state to the First World War were characterized by the predominance of international finance. Interest rates were integrated to a degree greater than today, transaction fees were relatively cheaper than now and there were fewer restrictions on cross-border movement of assets or labour. The Gold Standard acted as a proxy guarantor for sovereign debt, permitting countries observing it to command deficits without losing creditworthiness or punitive increases to their base lending rates or taxation levels (to the capital-owning classes). All this consolidated what Maurice Obstfeld and Alan Taylor have called ‘an overarching liberal world order’ coupled to ‘a vast expansion in world trade’ to a depth unmatched even now (given variations in scale). Given its relative mobility and transferability in the Gold Standard bloc, credit in this period extended equally outside of it as within it. Consequently, credit flowed to poorer non-industrialized countries as well as the rich ones whether or not the former were part of an Empire. These ‘rich-poor’ flows of credit have ceded in the current period in favour of a predominance of ‘rich-rich’ credit flows, meaning that foreign investment in poorer countries is now comparatively less than it was a century ago, even though a much greater proportion of global output and population is located in the poorer regions. Furthermore, capital financing is directed now more to short-term hedging and risk-sharing rather than long-term investment and its mediation with savings across regions – worldwide capital interdependence – as it was in the classic Gold Standard era, resulting in poor countries having less access to international capital investment. In other words, liberalism has been reconstructed after the post-Second World War settlement as a credit system kept primarily to the countries in which capital accumulation is already well established.
These three histories are integrally constituted. The earlier development of commercial liberalism was not an automatic or unassisted development of liberal ‘free markets’; as seen, it was a British-centered political economy consolidated and promulgated by the policies of the emergent German nation-state in order to secure its own power as a politically conservative centre for industrial-scale production, trade and commerce in Europe and therefore worldwide, and to establish itself thus without politically-territorially aggravating its neighbours. The Ottoman Railway materialized the interrelation of international capital markets and the emergent nation-state in its ‘diplomatic’ enhancement of modern Germany’s sphere of interest as privately organized international capital finance and state-guaranteed revenues. The returns for both diplomatic and capital investment strategies on the self-declared ‘harmlessness’ of the German mercantile and financial classes were reliant upon the long-term state-indebtedness and continued stability of the Ottoman empire as a revenue-source for private capital. This was a commercial relationship that served well the unstated but well-understood development of militarily strategic channels to Middle East oil-fields for the resource demands of the new nation-state of Germany.
It is not then just that the imported alien designs of the Ottoman railways’ architecture structurally mirror-invert the imported alien designs to which the Helmbrechts weavers worked, but that these are two moments in the one systematic organization of capital accumulation. The specific materials, weaves and decorative patterns of the Helmbrechts textiles are determined by its destination markets, which is to say by the orientation of international trade from Europe to poorer regions, an export channel from which the European merchant-class made its profits, commandeering the very homes of the domestic craft-based German population itself. And through the intermediary of the banking-finance sector, it is this capital amongst others that is invested in the cheap, relatively unrestricted debt-financing of revenue-extractive ventures in the service of the region, such as the CFOA. The formation of the modern German state secured these private capital extractive formations from both domestic and foreign territories. Like every other modern nation state, it sustained – and continues to sustain – the exodus of its own population from the very traditions and culture that it thereby upholds, a promotion of a capital-intensive insecurity at the core of its ‘native’ interests.
Textiles manufacturing in Helmbrechts had then a complex ontogeny: the ethno-cultural origins of its products were distinct from its material origins, and these material origins were themselves dual in their reliance on Helmbrechts’s locally organized, traditional skill-base as much as its ordering by the demands of an export-directed mercantilism financing and financed by a highly integrated international capital market. It’s again familiar enough from Marxist critique of industrial capitalism and the State that such alienated forms are indexes of modernity, but the production of the Helmbrechts textiles and trade in them to which Raum brings our attention also tell us that the perpetuation of the traditional indexes of non-alienated culture were at that time no less produced through distinctly modern structures of capital accumulation. That is, the deregionalization of Helmbrechts’s traditional cultural production was indirectly advanced by the formation of the modern German state. For all its difference, this is also the case for the alien forms of German vernacular railway architecture in the Ottoman territory and, for this reason, no less for the alienation of the Ottoman territory from its own traditions by the construction of these buildings in it.
These latter alien constructions are in some ways a precedent for the proliferation of deracinated, default-design goods of today’s globalization. They are the large-scale, blanded out counterparts to the particularized domestic and personable material objects, fabrications and reflections Raum puts back into circulation, from both the archives and then again through her own constructions. The material-cultural juxtapositions and constructions of the archive-object she mobilizes with her own contemporary re-inventions take up the national-commercial logics of international expansion and intensification prevalent both at its modern formation and in the time and space in which its new forms continue to be constructed qua globalization. The inherent involvement of the modern nation-state with international capital markets, key to Germany in particular from even before its foundation, is not distinct from such particularized rather than anonymous alien fabrications. The Helmbrechts textiles remind us – through the complex of their original production, their archive, and Raum’s re-iteration – that with the consolidation of the commercial-industrial nation-state as the dominant term of modern politics the prospect of a non-alienated culture as a point of refuge or exit from that modernity was only ever that: a prospect. Built on a misapprehension that a highly mobile financial and mercantile capital had not preceded it, however minimally, what is known since Helmbrechts – as one of many other industrialized-crafts with which it is comparable – is that at a world-scale such a prospect has never been realized, and perhaps for this reason. The politics that returns in its stead through these materials and their perhaps ancient, perhaps newly-produced constructions is rather that of the modern nation-state in its structuring of labour and constitutive reliance on international capital markets.
Reference Matter : All websites consulted May-June 2011.
Birdal, Murat, The Political Economy of Ottoman Public Debt: Insolvency and European Financial Control in the late Nineteenth Century. London: Taurus, 2010. CFOA - Chémins de Fer Ottomans d'Anatolie. Trains of Turkey. http://www.trainsofturkey.com/w/pmwiki.php/History/CFOA. de Long, Brad, ‘The Pre-World War I Gold Standard ‘ in Slouching Towards Utopia?: The Economic History of the Twentieth Century, 1997. http://www.j-bradforddelong.net/tceh/Slouch_Gold8.html. McGouldrick, Paul, Operations of the German Central Bank and the Rules of the Game, 1879-1913. In: Michael D. Bordo and Anna J. Schwartz (ed.s), A Retrospective on the Classical Gold Standard, 1821-1931, Chicago: University of Chicago Press, 1984, pp. 311-360. www.nber.org/chapters/c11132. Obstfeld, Maurice and Alan M. Taylor: Global Capital Markets: Integration, Crisis, and Growth. Cambridge University Press: Cambridge, (2004). Ottoman Public Debt. Turkeyswar.com. http://www.turkeyswar.com/economy/publicdebts.htm. Wikipedia pages on: Siege of Paris, German Empire, Congress of Berlin, German Colonial Empire, Chemins de Fer Ottomans d'Anatolie, Gold Standard, Deutsche Bank, Reichsbank.