The Business Cycle and the Rise of Finance Capitalism
Economists up to that time had given little intensive study to the business cycle and the reasons for the advances and recessions of economic life. Although the need for banking reform grew with the expanding economic life of the nation, Congress, dominated by Nelson W. Aldrich and other conservative senators, did nothing. Concentration of control over credit and with it the penetration of banker control over industry marked the dominance of finance capitalism. To the financial world the declaration of war brought a demoralization quite as complete as that in commerce and industry. Europe was demanding payment of obligations in gold despite the fact that sterling exchange had reached seven dollars a pound and shipments at the beginning of the war were almost physically impossible. In Europe, the Balkan War had the usual effect upon the money market: an increase in discount rates, sale of securities, withdrawal of gold, and importation of it from the United States.