Main FI Index | Main Newspaper Index
Encyclopedia of Trotskyism | Marxists’ Internet Archive
From Fourth International, vol.3 No.10, October 1942, pp.291-295.
Transcribed, Edited & Formatted by Ted Crawford & David Walters in 2008 for the ETOL.
Roosevelt’s Ultimatum to Congress – The Economic Factors Making for Government by Decree – Why the Farm Bloc Resists – Why Roosevelt Cannot Stop Price Rises: The Example of the French Revolution – For Unity of the Workers and Dirt Farmers Against All the Capitalist Programs
The “Europeanization” of America has reached a new stage with President Roosevelt’s Labor Day message to Congress. Government by decree – the kind of authoritarian government conducted in Germany by Bruening and Von Schleicher, the immediate predecessors of Hitler; in France by Daladier, the organizer of France’s defeat – is on the order of the day, Roosevelt declared, in the following words: “In the event that the Congress should fail to act and act adequately, I shall accept the responsibility, and I will act.” Unless Congress, before an October 1 deadline, changes its parity legislation on farm products, Roosevelt would violate the existing law.
Some of the implications of Roosevelt’s ultimatum to Congress were well enough summarized in an editorial in the New York Times:
“In other words, if Congress fails to do what he asks, and within a few weeks, the President will himself nullify part of an act of Congress on his own responsibility.
“If the President carried out this threat, where would it leave the powers of Congress? If he can carry out this threat on this occasion, on the plea of averting ‘a disaster which would interfere with the winning of the war,’ what constitutional barrier would prevent his using the same plea for whatever other powers he wished to exercise, for whatever other laws of Congress he wished to suspend? What effect would this have on our constitutionally guaranteed liberties of all kinds? It may be replied that the President would assume only the powers necessary to win the war. But should the President himself be permitted to be the sole judge of which powers these are? Should the President be the sole judge of what Congressional Laws ‘interfere with the winning of the war’ – even if those laws deal solely with internal economic questions? Would not this whole doctrine, as Senator Taft has declared, leave Congress ‘a mere shell of a legislative body’? The President has taken a grave position that cannot be allowed to pass unchallenged.” (New York Times, September 9.)
But after the first shock, the New York Times and virtually the entire capitalist press did allow Roosevelt’s move to pass unchallenged. Indeed, before the month was out the New York Times was buttressing Roosevelt’s ultimatum to Congress by enunciating the following conception:
“Each Congressman is elected from a particular State or district. Most of them feel responsible only to the voters of their particular district. They will play a particular local interest against the whole national interest if they think that the voters of their district are greedy or short-sighted enough to approve such action.
“Under our system the only unifying force, the only official who is elected to represent the interests of the whole country, is the President. It is to him that the people traditionally look to enforce the national interest against the competitive pulls of a thousand local interests.” (New York Times, September 27.)
This utterly false doctrine of the “national” superiority of the President over Congress is being heard more and more as a justification of the establishment of government by presidential decree. The Times and other capitalist spokesmen have stifled their constitutional doubts, their knowledge that Roosevelt is moving to destroy traditional “democratic” government. Like Roosevelt they consider that the needs of American capitalism justify Roosevelt’s unconstitutional program. “Necessity knows no law” is the maxim they are following. The fact that a few capitalist groups are still objecting should not obscure the much more important fact of the virtual unanimity of the major sections of the capitalist class. Ordinarily none too friendly to Roosevelt, for example, the Scripps-Howard newspapers are now going all the way with him on this question: “Congress is kicking itself out of the place it should occupy in the American democracy,” declares an editorial in the September 24 New York World-Telegram – a euphemistic way of saying that Roosevelt is kicking Congress out of that place.
The capitalists know that government by decree is in their favor. They have not had to wait long for proofs. Roosevelt has followed up his Labor Day threat with a few examples of presidential decrees. On September9 he decreed the abolition of all premium pay for week-ends and holidays, thereby abrogating with a stroke of his pen the many provisions in existing union contracts providing for such overtime pay. On September 14 he decreed that the 2,300,000 federal employes could henceforth be transferred from job to job, into factories or other work, as Manpower Commissioner McNutt sees fit; thereby in effect he abrogated all existing civil service legislation. Likewise on September14 he ordered that workers in the lumber and non-ferrous metals industries in twelve western states may not leave their jobs without permits, on pain of reclassification and drafting into the army; this decree put teeth in a September 7 order by McNutt freezing to their jobs the workers in these industries.
These first giant steps of decree government indicate what is coming if Roosevelt has his way. Why government by decree? Why does the ruling class of big capitalists, on whose behalf Roosevelt governs, feel it necessary to reduce Congress to the role of a rubber stamp and, if it resists, to push it aside altogether? “Necessity knows no law” is dangerous doctrine. The workers will learn from it! Only the most pressing urgency can have driven Roosevelt to this unprecedented step.
Roosevelt was driven to this move by the economic situation. We cannot enter into a discussion with those who would ascribe his ultimatum to Congress to any tendency on his part toward personal dictatorship. Such a discussion would be sterile and useless. One thing is clear: Roosevelt, as chief of the government of the capitalist class, sees the danger of inflation looming. The steps that he demands of Congress and threatens himself to take if Congress does not act are attempts to postpone inflation to as late a date as possible.
It is well at this point to state that not all price rises are due to inflation. The loose usage of the term “inflation” by various capitalist spokesmen, from Walter Lippmann to Dorothy Thompson, is an index of the mental poverty and economic ignorance of these intellectuals. Price rises can have various causes. Inflation is a price rise caused by a debased currency. There has been no inflation of the currency – yet. The dollar is still worth 1/35 of an ounce of gold, as it has been since January1934. But there is great danger of inflation beginning soon, unless the government takes drastic steps. Such steps were proposed by Roosevelt.
Inflation was a characteristic method of financing all major wars up to World War I. The Revolutionary War was financed by debased currency, as the eloquent phrase, “Not worth a Continental” testifies. The Civil War was financed through greenbacks. In World War I Germany, despite all efforts, suffered inflation. In the immediate post-war period, as a result of the war and of deliberate moves of the governments to wipe out their war debts, most of Europe went through inflation.
At this stage, however, the Roosevelt administration is determined to avoid inflation as long as possible. But vast economic forces, set in motion by war production, are encouraging inflationary tendencies.
War production to date has passed through the following states:
“The price rises which have occurred since September,1939, will increase by 35 billions of dollars the money cost of the war program now authorized. The total cost of the first World War by comparison, was 31 billions.”
This gigantic figure of extra-governmental costs has been increasing since then. Were this process to continue uninterruptedly, as it would under laissez-faire, the government’s credit – and therefore its currency – could not survive intact. This process would inevitably mean inflation.
The alternative to inflation as a means of financing the war is wage-fixing and taxation. For the masses, in either case, the end result is much the same. Inflation turns high monetary wages into a fiction. Wage-freezing and sapping of this fixed wage by a system of intense taxation, both direct and indirect, likewise slashes the workers’ standard of living.
For the capitalist class, however, it is of great importance which of these two methods are chosen.
Outside of certain sections of the farming capitalists, there is no doubt that the capitalists hate and fear the inflationary process. Their feelings have been articulated by Henderson, in his April 28 statement accompanying his price-fixing order:
“The pattern of disaster which attends the final stage of inflation is well known. In this stage prices are revised upward weekly and then daily. Incomes enter into a crazy race with prices. Money is something to be passed on as quickly as possible. It is no longer a symbol of stability but a mark of social disintegration. Thrift and saving become incompatible with self-preservation. Savings, investment life insurance policies, all the results of past thrift, become worthless. Legitimate business disappears; speculation and profiteering remain. Organized government itself is undermined.
“The hopelessness and frustration of the early stages of inflation soon turn to anger and despair.
“To think of mobilization of resources for war in such an environment is the merest fancy.”
Henderson’s last point is particularly important now. Modern war economy requires a large measure of a capitalist type of economic planning by the government, expressed in rationing, priorities, allocations, government orders, price maxima and minima, wage-freezing, manpower shifts, etc. The basis of any planning, of course; is measurement. The function of money is to measure economic values. Inflation destroys the use of money as a stable measure of value, and without such a measure rigorous government control and “planning” becomes an impossibility. Inflation always means economic chaos.
Of course, when the capitalist class does find it necessary to resort to inflation, the monopolists easily contrive to make an extremely lucrative thing out of it. As smaller capitalist concerns die, the large corporations are able to buy them up with the nearly valueless depreciated currency. The wages of the workers are made a valueless factor and capitalist profits mount to astronomical heights on exports. How the industrial magnates of Germany enriched themselves during the period of extreme inflation is pointed out by Professor J. Laurence Laughlin in The Madness of inflation (1924):
“The industrialists now (1924) possess a vast increase in plant and equipment, for which they paid out paper money which cost them little or nothing. The paper became worthless in the hands of workmen or shopkeepers ... Thus a depreciating and uncertain standard was used as a means of redistributing wealth, the poor and middle classes being crushed, while the industrialists emerged with more capital in the form of fixed construction.”
Although the large corporations can thus find ways to turn inflation to their benefit, it is, however, a desperate gamble, It brings to a breaking point the contradictions in modern society. Above all, it tends to get out of control. Once entered on the road of inflation, the end result is likely to be a revolutionary crisis such as that in Germany in 1923. To the most sluggish worker and farmer it becomes clear that capitalism cannot run society, a new class must take over production, and the masses turn to the revolutionary party of the proletariat. As Henderson says, “the hopelessness and frustration of the early stages of inflation soon turn to anger ...”
It should be clear by now why Roosevelt prefers the policy of taxation and wage-fixing to inflation. Inevitably, we believe, if the war drags on, it will he necessary for the government to finance the war through inflation. To hold this moment off as long as possible is the aim of the President’s demands on Congress and will be the subject of his decree laws.
The farm bloc has waxed indignant at Roosevelt’s attempt to strip Congress of its powers. But it would be fatal to think for a moment that in this conflict the farm bloc represents a democratic tendency. While the farm bloc is a heterogeneous combination, its main pillar in Congress is the poll-tax gang. The grotesque and vicious Bilbo of Mississippi is typical of its leadership. Politically, much of the farm bloc is starkly reactionary, sponsoring the worst anti-labor bills. One of the main grievances of the farm bloc is that wages were not frozen long ago, so that two million agricultural workers who have left would have had less incentive to turn to the war industries in the cities. Economically, the farm bloc represents the exploiting elements in agriculture: the cotton and peanut planters of the South who grind down the sharecroppers; the factory farms of Oklahoma operated with agricultural workers; also in the bloc are the “middle farmers” of the mid-West, who employ farm labor at least for part of the year.
Price-fixing and extended taxation will cut down their profits whereas rising prices means more income for them. They bitterly resent the fact that their section of the capitalist class is not being permitted to share equally in war profiteering. As the “big four” farm organizations of the bloc wrote on September 25 to the Senators in charge of their bill: “They cannot understand the attitude of those who give their approval to cost-plus for industry ... but demand cost-minus for farmers.”
Their present resistance, moreover, is sharpened by the realization that this may be their last chance. They understand very well that their over-representation in Congress – a result of the deliberate aim of the bourgeoisie to lead on the backward rural areas as against the city proletariat – has become utterly disproportionate to their real economic and political power. They know that out of this war, thanks to the government contracts which always favor Big Business, the great monopolies are emerging with ever increasing economic and political power, while considerable sections of small business, including agricultural enterprises, are being wiped out. It was a representative of these smaller capitalists who wrote in one of the Truman Committee reports: “A large number of small businesses are already closing their shops ... Great care must be taken to assure that we do not destroy the American way of life by adopting the wrong methods of defending them.” And in another report: “It is clear that the competitive position of the big corporations in the economy of the nation is being vastly improved by the war, and at a time, moreover, when tens of thousands of small businessmen are being forced to stop production while they watch the value of their plants destroyed ...”
The competitive position of the farm bloc, both politically and economically, is thus being destroyed before their very eyes by the war. After the war it is unlikely that it will have the forces in Congress to put up a battle. Monopoly will cut down its strength on one side, while on the other the next wave of labor resurgence is certain to extend union organization and a Labor Party to the share croppers and farm laborers. The bitterness of the farm bloc is that of a dying class. Its resistance is blind, too, like that of a class without a possible perspective.
Perhaps the most unfortunate aspect of the present activity of the farm bloc is that under its banner it is dragging along a large section of the dirt farmers who till the soil themselves without hired labor. These dirt farmers are the natural allies of the city proletariat. It is a crime to permit Bilbo to corral the dirt farmers for his reactionary ends. Yet that is what the AFL and CIO leadership are doing by their support of Roosevelt’s price-fixing program. The united front of the trade union leaders with Roosevelt thus divides the toilers of the nation who should be making a united front against both the deflationary and inflationary programs of the capitalist class. Similarly, despite their resistance to Roosevelt’s program, the farm bloc is helping him to keep the toilers divided.
Certain trade union leaders are arguing privately – publicly they are supporting the Roosevelt program as one which will preserve labor’s standard of living – that, after all, wage freezing and steep taxation will be better than the alternative of continued price rises. Roosevelt’s program is, for them, a lesser evil, since it will keep prices at their present levels.
But will it? Inextricably part of Roosevelt’s program is ever greater curtailment of civilian production. It is this diversion of manpower, machinery and goods (including food) from civilians to the war which is the main factor making for price increases. That is, scarcity creates the pressure, opportunity and temptation for raising prices, whether legally or illegally. Given increasing scarcity, the prevention of price rises is dependent on adequate policing.
Can a capitalist government police its own capitalist class sufficiently rigorously to prevent it from seeking to profit by price rises? In issuing the OPA price-fixing order of April 28, 1942, Henderson stated: “The idea that we will have a whole army of people searching for violations will not be an important part of the picture.” Henderson was also quoted as saying that “little time was spent by the experts who devised the order in figuring out means for putting people in the hoosegow.” Does Henderson, then, expect that American businessmen will abide by the golden rule? The example of England and all Europe shows that something more is needed. Henderson pretends for the present to ignore this fact because neither he nor anyone in Washington has a serious program for policing prices. Government functionaries are ransacking the libraries, studying the experience of all countries during periods of goods scarcity and inflation, for ways and means of policing prices during the coming period in America.
We recommend to these earnest students the one example in Modern history of successful price-fixing under conditions of war: the French Republic during 1792-94. Fighting victorious wars against all reactionary Europe, necessarily draining the country of manpower and goods, nevertheless the French government maintained the “general maximum,” as price-fixing was called. However, with the fall of Robespierre on July 27, 1794 and the coming to power of the Thermidorian reaction, price-fixing soon collapsed and inflation set in. Why did price-fixing work under Robespierre and not under the Thermidorians? Listen, followers of Roosevelt, to the explanation given by the great French historian, Albert Mathiez:
“In order to feed the towns and armies, and at the same time to support the assignat (currency), the great Committee of Public Safety under Robespierre, by an ingenious system of requisitioning, had gained control over the whole of French production, which it distributed through the agency of a central commission. By exercising its right of pre-emption and requisition this Central Commission of supply in effect dictated prices, which it fixed by means of the law of the maximum ... In order to carry out the requisitioning and ensure the observance of the maximum, strong measures of control and vigorous means of enforcing the1aw were necessary. The economic terror rested upon the political terror. In spite of all its faults and the vast bureaucracy which it necessitated, it held its own, worked, and to a large extent attained its object.”
The “political terror” consisted not only of government coercion but rested on the vast network of revolutionary Jacobin clubs, from the members of which came the civil servants who handled requisitioning and price-fixing, and which gave the whole system a genuinely popular base of support in the population. Any attempt at profiteering was immediately noted by the members of one or another of the Jacobin clubs; a warning from such a member was enough to stop the practice. Thus the government had eyes and ears everywhere; it was the dictatorship of the masses that assured the success of Robespierre’s economic policy.
Then, after the fall of Robespierre, the Thermidorians destroyed the network of Jacobin clubs. Mathiez tells us what happened then:
“As a rule the Thermidorians relied upon the support of the property-owning classes, who were interested in the restoration of commercial liberty. They expelled the lower classes from all posts and replaced them by people in comfortable circumstances. They put an end to the Terror or, rather, they turned it against their adversaries. The first result was that the economic laws of the Revolution lost their power. They could only be put in force by compulsion, because they were injurious to all private interests, and there was no longer any compulsion ...
“The immense purchases for equipping the army and feeding the towns now ceased to be made at the tariff fixed once and for all by law and applied by the Commission of Commerce and Supply. In future the State had to pay the prices demanded by the owners. When we remember that the war was still going on, that access by sea was closed and stocks exhausted as a result of the war, which was now in its third year, we may estimate the consequences inevitably bound to result from the abolition of the maximum ...
“Boissy d’Anglas, one of those moderates who became rabid when their class interests were at stake, was placed at the head of the food supply service instead of Robert Lindet, who was removed on the plea that he was a terrorist. Boissy d’Anglas was obliged to admit that the provisioning of Paris was imperilled ... He obtained the passage of a decree restoring the former penalties for delinquents (prison, fines, requisitions paid for at the current rate for the date when they ought to have been carried out, etc.). But who was to secure the application of the decree now that all the governing bodies had been purged and the ‘terrorists’ replaced by fraudulent trades or their accomplices? .. It was no use. Boisay could not command obedience as Robent Lindet had done.” (The Thermidorian Reaction by Albert Mathiez, pp.156-165. Our italics.)
The successful policing of prices under Robespierre was, thus, based on the direct participation of the masses through the Jacobin clubs. Bureaucratic policing, under a government of the same class; which benefited from profiteering, failed under the Thermidorians and has failed ever since – and will fail today. Mathiez’ description of the Thermidorians reads like, a picture of the system of dollar-a-year men under Roosevelt.
The workers and the dirt farmers are the two main productive classes in modern capitalist society. Both classes of toilers are exploited and victimized by the same parasitic Sixty Families who, through the banks, own or control a great part of the land as well as the factories, railroads and other means of production, transportation and distribution.
It is a central point in the political strategy of the capitalist class to keep the workers and dirt farmers in a state of violent antagonism to each other, as both Roosevelt and the leaders of the farm bloc are now doing. Equally central to proletarian strategy must be the building of the union of the two classes in common struggle against capitalism. We must have a policy on the question of high prices which will meet the needs of the dirt farmers as well as the wage-workers.
Roosevelt – and in this he has the complete support of the capitalist class – attempts to use the increasing prices as a means of maintaining the division between the workers and the dirt farmers. He tells the masses that the high food prices paid by city workers result from the high prices paid the farmer and that the high prices the farmer is paying for industrial products is due to high wages. In his Labor Day message to Congress, Roosevelt said:
“Our entire effort to hold the cost of living at its present levels is being sapped and undermined by further increases in farm prices and wages, and by an ever-continuing pressure on prices resulting from the rising purchasing power of our people.”
Roosevelt thus completely exonerates the basic factor which impoverishes the worker and the dirt farmer: the capitalist class which is utilizing this opportunity to secure the maximum of possible profits.
It is of course true that the workers, since war production began, have been able to secure more wages in an attempt to make up for the lean and hungry years of the depression from 1929 to 1939. In no sense has this increased income compensated for the lowered living standards of the working class as a whole through the long depression.
As the workers find themselves cut off from buying durable consumer goods, they tend to increase their purchases of food and clothing. This naturally places additional pressure on the prices of these commodities, the raw materials of which are mainly derived from the farm.
How much has the dirt farmer gained from the higher farm prices? Before the dirt farmer, the tenant, sharecropper and mortgage slave receive any benefit from the rise in prices, the major part is first skimmed off by the retailers, wholesalers, processing companies, railroads, landlords, banks and taxes.
According to the Department of Agriculture, about 40 per cent of the consumer’s food dollar is paid to the farmer. From this he has to pay rent, interest on mortgages, monopoly prices on farm equipment, part of the expenses of marketing and transportation. The subtraction of all these items leaves the dirt farmers with considerably less than the 40 per cent.
Between the consumer and the farmer stand the railroads and trucking companies, the food processors such as the packing houses, the canning and dairy companies, the wholesalers and retailers. All of these functions are necessary in modern life. However, operated under the control and ownership of the capitalist class, their first and only concern is the extraction of profits from the worker and the victimization of the dirt farmer. We have seen that the dirt farmer gets only a small share of the consumer’s food dollar and is not a basic factor in the price rise. Now let us see to what degree wage increases are responsible for price rises. We will use as our example the food processing industries.
Taking these industries as a group, the government census figures show that in the year 1939 the value of the products sold equalled $10,618,000,000. Of this raw materials, containers such as cans and bottles, fuel and purchased electric power, equalled $7,062,000,000. Thus the value added by manufacture totalled $3,556,000,000.Of the value added by manufacture, labor received 26 per cent or $913,000,000 in wages. For every dollar he received in wages the worker produced nearly three for the capitalist class as profits and to pay for wasteful overhead expenses such as advertising and selling campaigns. The “share” of the capitalist class which is triple that of labor is completely disregarded by Roosevelt as he attacks the workers’ wages.
Waste is a necessary part of capitalist economy, above all in the field of distribution. This waste arises from competition with its unnecessary expenditures of natural products and human labor. As an example of the savings to be realized by a simple measure of organization, the Yearbook of the Department of Agriculture for 1940 states that a study of “fluid milk marketing in Milwaukee indicates that savings of more than two cents per quart might be achieved through a unified, non-competitive system of milk distribution.” But capitalism cannot organize and plan production and distribution.
From Roosevelt we can expect only a defense of capitalism. His concrete program is summarized in a few words. Cut the standards of the workers and the dirt farmers but do it in such a way as to create least danger of inflation. That program is to be carried out by the “stabilization” of wages, the placing of ceilings on the prices of agricultural goods, as the first step toward this “stabilization,” and then to make the “stabilized” wages a vacant shell through taxation.
Congressional response to the Labor Day message was nearly instantaneous in one field. Within a few days the Senate Finance Committee finished its work on the new tax program which will cut the workers’ incomes to the bone.
In opposition to the various programs of the capitalist class, we advance a program in the interest of the workers and dirt farmers. This program is based on the following points:
The beginning of decree rule shows that the choice for the future has narrowed down; either the authoritarian rule of the capitalist class or the centralized but democratic rule of the workers and farmers. The seeming third alternative of yesterday, the continuation of capitalist “democracy,” is being thrown into the discard by the capitalists. Their decree rule will become more and more dictatorial, moving toward outright fascism. Either the open dictatorship of the exploiters or the workers’ and farmers’ democracy of the producers. These are the only real alternatives amid the death agony of capitalism.
– C.C.
– F.M.
Main FI Index | Main Newspaper Index
Encyclopedia of Trotskyism | Marxists’ Internet Archive
This work is in the Public Domain under the Creative Commons Common Deed. You can freely copy, distribute and display this work; as well as make derivative and commercial works. Please credit the Encyclopedia of Trotskism On-Line as your source, include the url to this work, and note any of the transcribers, editors & proofreaders above.
Last updated on 13.9.2008