Let us pass now to Great Britain, the richest and most powerful country in Europe. During the war we grew accustomed to saying that Britain was getting rich from the war, that the British bourgeoisie had plunged Europe into war and was feathering its nest. This was true, but only within certain limits. Britain made profits in the initial period of the war but began to suffer losses in the second period. The impoverishment of Europe, especially of Central Europe, acted to disrupt trade relations between Britain and the rest of the continent. In the last analysis this had to hurt and did hurt Britain’s industry and finances. Moreover, Britain herself was compelled to shoulder enormous war expenditures. Today Britain is in a state of decline, and this decline is becoming more and more precipitous. This fact may be illustrated by industrial and commercial indices which I shall presently cite, but the fact itself is incontestable and is corroborated by a whole series of public and wholly official declarations by the most eminent British bankers and industrialists. During the months of March, April and May, the respective British publications carried the annual reports of corporations, banks, and so on. These authoritative gatherings, where the leaders of the various enterprises make their reports, assessing the general state of affairs in the country or in their own particular branch of industry, provide exceptionally instructive material. I have gathered a whole file of such reports. All of them bear out one and the same thing: Britain’s national income, i.e., the aggregate income of all her citizens and the state, has dropped considerably below the pre-war total.
Britain is poorer. The productivity of labour has fallen. Her world trade for 1920 has, in comparison to the last year before the war, declined by at least one-third, and in some of the most important branches, even more. Especially sudden is the change undergone by the coal industry which used to be the main branch of British economy, or more precisely, the root and trunk on which Britain’s entire world economic system rested. For the coal monopoly was the root of the power, vigour and prosperity of all other branches of British industry. Not a trace of this monopoly remains today. Here are the basic factual data on the state of British economy. In 1913 Britain’s coal industry supplied 287 million tons of coal; in 1920 – 233 million tons, i.e. 20 per cent less. In 1913, the production of iron amounted to 10.4 million tons; in 1920 – a little more than 8 million tons, i.e., again 20 per cent less. The export of coal in 1913 amounted to 73 million tons; in 1920 – all told only 25 million tons, i.e., one-third of the pre-war total. But during the current year, 1921, the slump in the coal industry and coal exports took on absolutely abnormal proportions. In January the coal output was 19 million tons (i.e. below the 1920 monthly average); in February – 17; in March – 16. And then the general strike erupted and the coat output verged on nil. For the first five months of 1921 the exports are 6 times below what they were for the same period in 1913. Expressed in prices, Britain’s entire export for May of this year is three times below that of May of last year. As of August 1, 1914, Britain’s national. debt was £700 million: on June 4 of this year – £7,709 million, i.e., an elevenfold increase. The budget has swelled threefold.
If you thumb through the reports of the directories of banks and industrial enterprises far March and April you will find that Britain’s national income has declined one-third or one-quarter as against the pre-war period. That is how matters stand in Britain, the richest country in Europe, a country which suffered the least from military operations and gained the most from the war in its initial period.
The most graphic proof of the decline of British economic life lies in the fact that the British pound sterling is no longer a pound sterling; that is, it is no longer equivalent to the set of figures which once exercised their sway everywhere and which are still imprinted on it. Today it is only 76 per cent of what it pretends to be. As against the incumbent sovereign of the money market – the US dollar – the pound has lost 24 per cent of its nominal magnitude. What could better characterize the instability of our epoch than the fact that the most stable, absolute and incontestable thing in the whole world – the British sovereign (in English this word signifies both “pound sterling” and “ruler”) – has lost its former position and has become transfigured into a relative magnitude! Considering nowadays in Germany the sphere of philosophy has become activated over relativity – and I refer here to Einstein’s philosophy – one ought perhaps to interpret German philosophy as an act of revenge against British economics, inasmuch as the British pound sterling has finally become – relative. Incidentally, it has always been the custom in Germany to reply to economic poverty by exacting revenge in the field of philosophy.
From the report to the Third World Congress of the Communist International on
The World Economic Crisis and the New Tasks of the Third International, 23rd June 1921.
The growth of France’s influence in Europe, and partly in the world as well, during the past year, is due not to the strengthening of France but to the patent progressive weakening of Britain.
Great Britain has conquered Germany. This was the chief issue settled by the last war. And in essence the war was not a world war but a European war, even though the struggle between the two mightiest European states – Britain and Germany – was resolved with the participation of the forces and resources of the entire world. Britain has conquered Germany. But today, Britain is much weaker in the world market, and generally in the world situation, than she was before the war. The United States has grown at Britain’s expense much more than Britain has at the expense of Germany.
America is battering Britain down, first of all by the more rationalized and more progressive character of its industry. The productivity of an American worker is 150 per cent above the productivity of a British worker. In other words, two American workers produce, thanks to a more perfectly equipped industry, as much as five British workers. This fact alone, established by British statistical researches, testifies that Britain is doomed in a struggle with America; and this alone suffices to push Britain towards a war with America, so long as the British fleet maintains its preponderance on the oceans.
American coal is crowding out British coal throughout the world and even in Europe. Yet, Britain’s world trade has been based primarily on her export of coal. In addition, oil is now of decisive significance for industry and defence; oil not only runs motor cars, tractors, submarines, aeroplanes, but is greatly superior to coal even for the big ocean liners. Up to 70 per cent of the world’s oil is produced within the boundaries of the United States. Consequently, in the event of war all this oil would be in the hands of Washington. In addition America holds in her hands Mexican oil, which supplies up to 12 per cent of the world output. True, Americans are accusing Britain of having cornered, outside the United States borders, up to 90 per cent of the world oil sources and of shutting off the Americans from access to them, while American oil fields face exhaustion within the next few years. But all these geological and statistical computations are quite dubious and arbitrary. They are compiled in order so as to justify American pretensions to the oil of Mexico, Mesopotamia, and so on. But were the danger of exhaustion of American oil fields actually to prove real, it would constitute one more reason for speeding up the war between the United States and Britain.
Europe’s indebtedness to America is a touchy question. The debts on the whole amount to $18 billion. The United States always has the opportunity of creating the greatest difficulties in the British money market by presenting its demands for payment. As is well known, Britain has even proposed that America cancel British debts, promising in turn to cancel Europe’s debt to Britain. Since Britain owes America much more than the continental countries of the Entente owe her, she stands to profit from such a transaction. America has refused. The capitalist Yankees showed no inclination to finance with their own funds Great Britain’s preparations for war with the United States.
The alliance between Britain and Japan, which is fighting America for preponderance on the Asiatic continent, has likewise aggravated in the extreme the relations between the United States and Britain.
But most acute in character, in view of all the indicated circumstances, is the question of the navy, Wilson’s [1] Government, upon running up against Britain’s opposition in world affairs, launched a gigantic programme of naval construction. Harding’s government has taken this programme over from its predecessor and this programme is being rushed through at top speed. By 1924 the US navy will not only be far more powerful than that of Britain, but also superior to the British and Japanese fleets put together, if not in tonnage, then in firing power.
What does this mean from the British point of view? It means that by 1924 Britain must either accept the challenge and try to destroy the military, naval and economic might of the United States by taking advantage of her present superiority, or she must passively become converted into a power of the second or third order, surrendering once and for all domination of the oceans and seas to the United States. Thus the last slaughter of the peoples, which “settled” in its own way the European question, has for this very reason raised in all its scope the world question, namely: Will Britain or the United States rule the world? The preparations for the new world war are proceeding full speed ahead. The expenditures for the army and the navy have grown extraordinarily as compared with pre-war times. The British military budget has increased threefold, the American – three and a half times.
The contradictions between Britain and America are being transformed into a process of automatic proliferation, an automatic approach closer and closer to tomorrow’s sanguinary conflict. Here we actually are dealing with automatism.
From the report to the Third World Congress of the Communist International on
The World Economic Crisis and the New Tasks of the Communist International, 23rd June 1921.
Economically, the strongest country and the one least damaged by the war in Europe is Britain. Nevertheless, even with regard to this country one cannot say that capitalist equilibrium has been restored after the war. True, thanks to her world organization and her position as victor, Britain has attained certain commercial and financial successes after the war: she has improved her trade balance and has raised the exchange rate of the pound and has recorded a fictitious surplus in her budget. But in the sphere of industry Britain has since the war moved backwards not forwards. Both the productivity of labour in Britain and her national income are far below the pre-war levels. The situation of the basic branch of her industry, the coal industry, is getting worse and worse, pulling down all other branches of her economy. The incessant paroxysms caused by strikes are not the cause but the consequence of the decline of British economy ...
The British Empire is today at the peak of its power. It has retained all its old dominions and has acquired new ones. But it is precisely the present moment that reveals that Britain’s dominant world position stands in contradiction to her actual economic decline. Germany, with her capitalism incomparably more progressive in respect to technology and organization, has been crushed by force of arms. But in the person of the United States, which economically subjected both Americas, there has now arisen a triumphant rival, even more menacing than Germany. Thanks to its superior organization and technology, the productivity of labour in US industry is far above that of Britain. Within the territories of the United States 65-70 per cent of the world’s petroleum is being produced, upon which depends the motor industry, tractor production, the navy and the air force. Britain’s age-old monopoly in the coal market has been completely undermined; America has taken first place; her exports to Europe are increasing ominously. In the field of the merchant navy America has almost caught up with Britain. The United States is no longer content to put up with Britain’s world overseas cable monopoly. In the field of industry Great Britain has gone over to the defensive, and under the pretext of combating “unwholesome” German competition is now arming herself with protectionist measures against the United States. Finally, while Britain’s navy,, comprising a large number of outdated units, has come to a standstill in its development, the Harding [2] administration has taken over from Wilson’s administration the programme of naval construction intended to secure the preponderance of the American flag on the high seas within the next two or three years.
The situation is such that either Britain will be automatically pushed back and, despite her victory over Germany, become a second-rate power or she will be constrained in the near future to stake in mortal combat with the United States her entire power gained in former years.
That is just the reason why Britain is maintaining her alliance with Japan and is making concessions to France in order to secure the latter’s assistance or at least neutrality. The growth of the international role of the latter country – within the confines of the European continent – during the last year has been caused not by a strengthening of France but by the international weakening of Britain.
Germany’s capitulation in May on the question of indemnities signifies, however, a temporary victory for Britain and is the warrant of the further economic disintegration of Central Europe, without at all excluding the occupation of the Ruhr and Upper Silesian basins by France in the immediate future.
From The Theses on the International Situation and the Tasks of the Communist International,
drafted by Trotsky and adopted by the Third World Congress
of the Communist International, 4th July 1921.
Briand [3] left for Washington hoping for success in a diplomatic game resembling one he had played more than once in the French Parliament. To the proposal to limit land armies Briand replied in the negative. He pointed out that the Versailles Peace required not the reduction but the strengthening of French armaments. That is correct. France was maintaining with an armed hand the system of slavery and the conjunction of contradictions and ruthless hostility which over the last three years we have been in the habit of calling the Versailles Peace. When it came to the question of naval armaments and their possible limitation, the decomposition of the old Entente became clearly revealed even to the uninitiated.
France miscalculated, and she miscalculated in that Britain proved more realistic than she expected. Britain had also added up her gold balance, her Navy, shipyards and so on and compared them with the United States. She became only too clearly aware that the British pound sterling, which was accustomed to being the ruler of the world money market, had long ago been forced to make a big leap downwards – to a quarter of its pre-war value by comparison with the American dollar. As a result of her calculations Britain agreed to accept the balancing of her Navy with that of the United States. Thus, after her struggle with Germany for world power and the rule of the universe, and after Versailles, we are now witnesses to Washington. The United States refused to join the so-called League of Nations, which is nothing other than a decorative cloak for Britain’s domination over Europe exercised through the intermediary of France’s military and political rule on the continent. The United States refused to sign the Versailles Peace or enter the League of Nations. Conscious of the preponderance of her industry and her gold reserve, America appeared at Washington to re-make or finish off what in her opinion had not been sufficiently well and sufficiently firmly finished at Versailles. The centre of gravity of the capitalist world edifice was moved from Versailles to Washington. Washington made first and foremost an attempt to calm and pacify the so-called Pacific Ocean, which however is fraught with major international storms. There an attempt was made to reach an international agreement based on progressive international disarmament. France, intoxicated with her supposedly unlimited power, was sure that at Washington she would be able to turn the world antagonism between Great Britain and the United States to her advantage and secure a majority for the solution for which she would vote and thus strengthen her domination.
After her struggle and her victory Britain was no longer the first naval power that she was before the war, and now does not even dare to contemplate her Navy equalling the navies of the two next largest naval powers. At present the United States Navy is not yet equal to the British but it will catch up in the near future.
Before the work had time to be finished a new location for the same work appeared. This place is beautiful Genoa and it is supposed that the equilibrium necessary to Europe will be found here. [4] We have been invited there and we may possibly take part in the work of the conference. However, here things are not quite so simple. The great disorder in inter-state relations will come to the surface. Some states will not be too ready to participate in a conference to which Soviet Russia has been invited. And we must state that it will be the hardest of all to turn France on to this new path. It has to be said that Lloyd George [5] has taken up this problem as strenuously and energetically as he had formerly set the counter-revolutionaries against us. It took him a lot of trouble to bend Briand to accept participation in the negotiations, and in reply to Briand’s objections he delivered a speech which our ROSTA [6] reported in full. He said in this speech: “France, by holding talks with Turkey in the person of Bouillon, is shaking the eastern robber by the hand; now she turns up her nose (I don’t know exactly what word Lloyd George used but the meaning was just that) and refuses to shake the northern robber by the hand.” By “northern robbers” Lloyd George means of course you and me. As we do not make a particular issue over etiquette, leaving that to the mandarins of the bourgeois delegations, we are prepared to accept his not very flattering definition. He also said: “When you go to international negotiations then be prepared for the worst and take a bar of disinfected soap with you, because you will have to shake all sorts of hands”. He meant the hands of the robbers of the North and East, but, let me add, every other sort too. We have always born this circumstance in mind in our international relations, and we too carry disinfected soap in our pockets on such occasions. How Lloyd George finally convinced Briand is hard to know, but the fact is that the Washington fiasco knocked a large part of France’s conceit away, and Briand, on returning to Paris, sensed that France’s international position had become much more difficult.
From a speech to the Moscow Soviet, 16th January 1922.
1. Woodrow Wilson (1856-1924), President of the United States 1913-1921; re-elected on an anti-war platform in 1916, Wilson brought the US into the war in April 1917; architect of the Versailles Treaty and the League of Nations.
2. Warren Harding (1865-1923), American Republican politician, president of the US (1921-1923); died in office.
3. Aristide Briand (1862-1932), the French Foreign Minister at that time, was a renegade socialist.
4. The Economic and Financial Conference was held in Genoa from 10th April to 11th May 1922, and was attended by all European countries with the object of regularising economic and political relations between Europe and Soviet Russia and working out a plan for international economic and political relations between Europe and Soviet Russia and working out a plan for international economic reconstruction. It had little practical result since the attempts by France with other capitalist powers to penetrate the Soviet economy and obtain repayment of debts incurred under Tsarism were unsuccessful.
5. David Lloyd George (1863-1945), Welsh Liberal politician, responsible as Chancellor of the Exchequer (Finance Minister) for the introduction of old age pensions, unemployment benefit and sickness benefits; prime minister from 1916 to 1922.
6. Russian Telegraph Agency, forerunner of TASS.
Last updated on: 2.7.2007