MONEY, BANKS AND FINANCIAL POLICY

Nationalization of the banking system proceeded much faster than that of industry and commerce. It was a firm point in the Bolshevik programme and a justifiable outcome of the ideology of socialism.

The growing importance of banks in Western industrial society was a theme that socialist literature had seized upon before the development of Marxism. In the early nineteenth century Saint-Simon already understood that banks were able to influence economic life. Through advancing capital to industry, banks had a direct influence on the volume of investment. The Saint-Simonians developed this idea. They proposed the creation of a single central bank controlled by big industries and divided up into separate branches, in order to channel capital to the most efficient uses. The technocratic approach of the Saint-Simonians to investment control may have exerted some influence on Lenin's approach to this question. Lenin decided to end his essay on imperialism by a critical reference to Saint-Simon's ingenuity.

The unfortunate history of the French Republic further justified belief in the necessity of central control over banking. Centralization of credit in the hands of the state through a national bank was considered by the Communist Manifesto of 1848 to be the initial step towards centralization of all the means of production under state power. Marx claimed that the French Bank had a crucial role in discrediting the republic when credit operations were suspended, and he suggested that the French Government should not have hindered financial bankruptcy.