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The first and most fundamental function of banks is to serve as an intermediary in payment. In so doing they transform inactive capital into active capital, that is, into capital producing a profit; and, collecting all kinds of revenues, they put them at the disposal of the capitalists.

In proportion as banking operations develop, and as they become concentrated in a small number of establishments, the banks become transformed, and instead of being modest go-betweens they become powerful monopolies dealing with almost all capital, and with almost all capitalists (and small proprietors); and similarly dealing with the biggest part of the means of production and of the sources of raw materials of a country or of several countries. The transformation of numerous little intermediary concerns into a handful of monopolists constitutes one of the essential elements of the change from capitalism to capitalist imperialism. And so we must begin by dwelling on this question.

In 1907-08, the deposits of all the German private banks (joint stock companies), which handled a capital of more than a million marks, amounted to 7,000 million marks, while in 1912-1913 they amounted to 9,800 million marks. They had thus increased by 40 per cent. in five years. Let