Financial Rescue

Financial Rescue


in capitalist countries, a system of measures taken to improve the financial condition of enterprises and prevent them from going bankrupt or to improve their ability to compete. The enterprises in question are usually joint-stock companies. Financial rescues may be carried out either by the capitalist enterprise, or by other, financially more powerful, companies, banks, or by the state. Financial rescue is one of the means by which capital is centralized and the financial oligarchy strengthened.

Methods of financial rescue include reducing the joint-stock capital by curtailing the issue of new shares and exchanging them for a greater number of old shares. The face value of shares may be reduced, resulting in the distribution of the profits over less capital. This serves as the basis for obtaining new credit, state subsidies, soft loans, and tax privileges and makes it easier for the enterprise to merge with or to be absorbed by another firm or company. Nationalization is another method of financial rescue.

In Imperialism, the Highest Stage of Capitalism, V. I. Lenin referred to the financial rescue of the Union Mining Company, a joint-stock company in Dortmund, by German Disconto-Ge-sellschaft, a major bank. As a result of the operation, the bank made more than 73 million marks in 30 years, and less than 5 percent of the shares remained in the hands of the original stockholders (Poln. sobr. soch., 5th ed., vol. 27, p. 353). Financial rescues of enterprises were especially common during the world economic crisis of 1929–33, which caused an unprecedented wave of bankruptcies. Government participation in financial rescue operations, which became common during this period, essentially represented the direct use by the monopolies of state funds—the taxpayers’ money.

Since World War II (1939–45) the imperialist states and the largest monopolies have frequently resorted to financial rescues. For example, in 1971, Rolls Royce, one of the largest British firms, went bankrupt because it was unable to fulfill a contract with Lockheed, an American company, to build aircraft engines for the TriStar planes. The British government saved Rolls Royce by nationalizing several of the firm’s key enterprises.


References in periodicals archive ?
financial rescue plan caused Tokyo stocks to fall sharply on Thursday.
But the financial rescue package is expected to go through, which may lead to further consolidation, with Liberty and NTL, Telewest's larger British rival, waiting in the wings for a merger.
MARCONI chairman Derek Bonham is to quit as soon as the ailing Coventry telecoms group has completed its financial rescue deal with the banks.
Eighty percent called for the Fed to ease interest rates; 69% were in favor of international financial rescue programs; and a minority (27%) advocated tax cuts.
NICOSIA, Cyprus, Rajab 18, 1435, May 17, 2014, SPA -- Cyprus' finance minister says international creditors have given a fourth straight positive review to the country's financial rescue program and are projecting that its economy will shrink this year slightly less than earlier forecasts, according to AP.
Global Banking News-November 13, 2012--Bank of Korea could purchase bonds of financial rescue fund in Europe(C)2012 ENPublishing - http://www.
Summary: Greece has appealed for emergency loans in the first financial rescue of a member of the euro zone.
Financial rescue operations that benefit even the unworthy can be accepted if they are seen as benefiting all u even if the unworthy gain more than their share of the benefits.
But deputy communities minister Des McNulty backed the Executive's rejection of the pounds 2million financial rescue package.
And chairman of Merseytravel, Cllr Mark Dowd, issued an ultimatum to all five local councils insisting they approved a financial rescue package for the tram on Friday, or he would consider aborting the project.
The government's financial rescue package for the Midlands made available to counter the effects of the Rover/BMW crises last year is paying dividends.
NICOSIA, Cyprus, Rabi'I 28, 1435, Jan 29, 2014, SPA -- International creditors were back in Cyprus on Wednesday to gauge whether the country is living up to the terms of its financial rescue program, AP reported.

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