ORGANIZATION OF CAPITAL


The Second Industrial Revolution had a very big impact on formation of many new industrial sectors (Metal industry, Electrical power industry, Automotive industry, Chemical industry, Optical industry and Aerospace manufacturing) and fastened the progress of already existent industries. For progress of modern industry was necessarily large investments and capital which was in the hands of very few individuals. Technical and scientific researches became so expensive that individuals could not cover alone the financial investments in modernization of industry.

In the period of the Second Industrial Revolution major changes occurred also in banking system. Besides changed role of the Bank of England which began to issuing the English banknotes and was guarantee for English banking system was in the middle of 19th century also established the Bank of Paris which as first began to accept the savings of the depositors. Bank invested one part of the profit into companies and the other part to depositors as interests for deposits. As consequence of financial transactions occurred the stock exchange. Stock gave the owner right to a share in annual profit (dividends).

Also in Belgium and German states were established credit, investment and mortgage banks. Because there was not enough capital in certain states eventually occurred the international capitalistic association Fast progress of industry, enormous investments and improved transport enabled rapid progress of world trade and formated a global capitalistic system.

Small industrialists with outdated technology and with to little capital were not able to follow the industrial and technological progress. Their factories in competition with companies with low production costs began to decline. Small and middle big companies either run out of business or voluntarily associated with major companies.