emands of expanding export markets, was abandoned. The privileges of nobility were also discarded. Eastern Europe found itself moving in the direction of a capitalist economy.
The industrialization of Eastern Europe manifested itself in various forms. Cities became more urbanized. Transport systems were developed. Factories were established. As a result, job growth flourished in an economy where previously employment consisted mainly of agricultural or home industry work. Concurrent with this industrialization, Eastern Europe experienced significant growth in population. This population growth created new markets for the goods produced as a result of industrialization. Consumer goods became available that hitherto had been rarities in the East: " . . . specialized agricultural tools, perhaps even agricultural machinery were to be seen; the railways, engines and railway carriages initially imported from abroad, and industrial productive equipment and investment goods . . . "
Another challenge that the Industrial Revolution posed for the East was a shift in the balance of military and political forces. Nations found themselves in a race to catch up with the West. In the new world system that evolved, Eastern Europe found itself set back and facing domination by the West.
Aside from its own attempts at industrialization, the Eastern periphery nations instituted a variety of reforms aimed at catching up with the West. The gold standard, an international monetary system was established. A modern banking system was instituted. Extractive industries were developed with the help of foreign financing. And stronger financial and credit relations were established.
The backward countries developed in a distinctly different industrialization process than the core countries, and a study of the banking system gives a prime example of this contention. According to Alexander Gerschenkron, " . . . industrialization pr...