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From New International, Vol. VI No. 5 (Whole No. 44), June 1940, pp. 101–104.
Transcribed by Damon Maxwell.
Marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
THE military reverses suffered by the Allied armies, to whom Roosevelt had long ago pledged economic. political and moral support, has resulted in the sharpest reactions in the United States, drawing this country closer to a military participation in the second imperialist war. Battle lines are no longer confined to Flander Fields. In the imperialist world of an international economy there is not a single section of the globe which does not feel the reverberations of the war in Europe. Germany appears to be winning the war and this possibility has fundamental significance for the future of American capitalism.
In a historical sense, under conditions of normal capitalist development (the absence of wars or revolutions) the main economic antagonist of the United States is England. The Empire, up to the outbreak of the present war, along with the United States, formed the two dominant factors in the world market, with the former possessing the largest area of colonies. Their economic rivalry penetrated into every continent. British capitalism, however, is a decaying capitalism ruled by a degenerated aristocracy. The United States, with the greatest industrial organization in the world, never feared the Empire, because it has always felt that John Bull could in time be easily subdued.
United States imperialism, however, does fear a dynamic Germany, under the rule of a totalitarian regime. German industry is the finest on the European Continent. Latest technological improvements, extreme rationalization of production, and an enslaved proletariat, have enabled the Ger-man ruling class to overcome its post-war debilitation and to make its way once more as a serious rival in the arena of world trade and the struggle for a redivision of the earth.
The economic center of the world shifted to the United States in the post-war period. It emerged from the World War a creditor nation seeking to bring about a rehabilitation of Europe under its complete economic hegemony. Trotsky, in examining this phenomenon from the viewpoint of the continental proletarian revolution and the establishment of the United States of Socialist Europe (A Criticism of the Draft Program of the Communist International), foresaw an intense conflict between the revolution and America’s attempt to put Europe on “rations” (absolute control of economic life; dictating production, consumption, trade, wage standards, etc., in favor of American capitalism).
Throughout the twenties this was the prevailing tendency. In an effort to prevent complete economic domination of the continent by England and France, especially where it concerned German capitalism, the United States intervened time and time again to forestall the collapse of Reich economy (the Dawes Plan, the Young Commission, Hoover Moratorium, etc). The reasons were two-fold: to prevent a victory of the proletarian revolution in Germany and to balance off that country against Anglo-French imperialism.
The first problem was solved by Stalinism in a rather precarious way for the United States. Stalinism decapitated two revolutions and in concert with German social democracy paved the way for the victory of German fascism. The reactionary Hitler revolution resulted in a revivified Ger-man economy, a regrowth of Germany imperialism and the establishment of an enormous military organization.
Under Hitler, Germany has marched from victory to victory; it now demands a lion’s share of the world market and in particular, Britain’s colonial empire. But more important for the United States, it has closed the door to American economic domination of the Continent and has postponed – perhaps for many decades – the possibility of American imperialism placing Europe on rations. Naturally, an Allied triumph of devastating proportions, made possible through American military intervention in the war, would force the problem to the foreground once more, but this time American imperialism would proceed quickly to establish its domain over European economy. Europe under rations in that case and in the absence of a successful proletarian revolution, would become a fact! This development, however, is highly speculative when the fortunes of war point in an opposite direction.
Temporarily at least, there is a way out for the United States. Trotsky, in his brilliant observations on this problem, indicated that in the event of a successful continental revolution,
“The United States will try to overcome and get out of its difficulties and helplessness primarily at the expense of Europe – REGARDLESS WHETHER THIS WILL HAPPEN IN ASIA, CANADA, SOUTH AMERICA, AUSTRALIA or EUROPE ITSELF.” (Emphasis mine – A.G.)
Under present-day world conditions, complete domination of South America has become America’s principal objective.
The probability of an early European proletarian revolution has been temporarily avoided by recent events. But the victory of Hitler created, in a totally different manner, the same problems for the United States. German industry under Nazi rule strives to control world economy and therefore must, in the event of a military victory over Anglo-French imperialism, move against the United States. These two mighty industrial nations would become enmeshed in a struggle to the finish.
“In a critical epoch,” wrote Trotsky, “the hegemony of the United States will prove even more complete, more open, more ruthless, than in the period of boom”. We are now approaching such a development which will, in the ensuing months, become clear to everyone.
Roosevelt, his administration and the decisive section of America’s financial and industrial ruling class prepare to fortify their military organizations for the immediate future with two perspectives which are interlinked. The first, is an autarchic and totalitarian development in the United States so as to be in a position to engage an autarchic and totalitarian Germany. “Totalitarian means to fight totalitarian Germany”, is the watchword of the leading governmental spokesmen as they pay obeisance to democracy and democratic methods. The drive in this direction will gain added momentum with the continuance of the second imperialist war.
Revolutionary Marxists long ago predicted this development in the democratic states in the event of war. France and England have already adopted the necessary measures by which their governments more closely resemble the German example. These trends are being solidified so that even assuming an Allied victory, few expect a return to the pre-war democratic conditions in England and France.
There are many who vainly hope that the United States may avoid all foreign entanglements, especially war, by a policy of economic and political insulation. This hope is based upon the erroneous belief that American economy is self-sustained; that it can withdraw behind the protection of its borders and prosper on the basis of an all-embracing domestic economy, that is, upon an expansion of the home market.
The living factors of American economic existence, however, precludes such a development. A few facts will suffice to bear this out.
While the United States enjoys a favorable balance of trade, a preponderance of exports over imports, it requires, nevertheless, a quantity of raw materials unobtainable in domestic areas. These raw materials are of enormous importance to American industry.
For example, American imports all of its coffee, tea, cacao beans, and most of its cane sugar. Rubber is obtained from Malaya and the Dutch East Indies; jute from India; and manganese from Russia, Brazil, the Gold Coast and India. Chrome ore is brought from Russia; tungsten from China, and vanadium ore from Peru. The indispensable tin is derived from the Dutch East Indies, Malaya and Bolivia. Additional petroleum is obtained from Mexico, Venezuela and Colombia, while Chile supplies nitrates. Without these raw materials, a large number of industries would be greatly handicapped.
More important is the manner in which American economy is interwoven with world economy. Isolationists insist that American property is not dependent upon foreign trade or the world market because of the small percentage of production diverted into the channels of export trade. Figures are cited to illustrate the validity of this theory. For example, it is shown that between the years 1909 and 1935, the highest percentage of American production so diverted, stood at the figure of 12.8 (1921); that in 1929, at the height of the prosperity period, the figure dropped to 9.8, and that during the thirties, in the years of crisis, the figures ranged between 6 and 7.
Such a view is extremely shortsighted, because it fails to take into consideration the following fundamental facts in the imperialist development of the United States. First of all, the United States is an imperialist nation, and having acquired colonies, embarked on the road of colonial exploitation. Within these colonies, or “possessions”, American finance capital has poured heavy investments. A profit economy demands continuous expansion, either in the direction of acquiring additional colonies, or by way of expansion on the basis of the existing empire.
Export trade is only one aspect of the international economic problem of the United States. More decisive than this, is the existence of American investments beyond her borders, both portfolio (investments in foreign government bond, government guaranteed corporations, bonds and stocks of foreign controlled and managed corporations) and direct (investments in American corporations abroad).
An examination of this field of American economy shows that in 1900, many years prior to American entrance in the World War, foreign investments reached the total of a half a billion dollars, confined largely to Canada, Mexico and the Caribbean. Immediately prior to the World War, this figure was trebled and American interests became international, even though from the point of view of world economy, it remained at a modest figure. But at the end of the twenties, portfolio investments increased to $8,238,700,000 and direct investments to $7,866,000,000, making a total foreign investment of $16,104,700,000. These figures show without the slightest doubt the development of American economy as a world economy.
Withdrawal from world economy would signify immediate paralysis and decay for American imperialism. Quite the contrary, the United States cannot withdraw from the struggle for domination of the world market. It must push ever onward toward complete world hegemony. This is the fundamental course of American economy. Roosevelt understands this. So does his Administration. It was long ago clear to America’s leading financiers and industrialists.
The outbreak of the present war brought about a dislocation of world economy. The European market, except for the Allies, is largely lost. Trade with England and France is essentially a war trade and its permanence is dependent entirely upon results of the battle. Under the given circumstances the European market is a completely distorted one and may cease entirely. In Asia, that is to say, China, Japan is today the decisive factor. Here the United States faces a challenge which it must ultimately face, but there is first Europe and Hitler.
Heretofore, Europe has been the largest single field of American investment, with a figure of $4,929,200,000. The safety of these investments is today highly dubious. It is impossible to foretell what will happen to them, since a Hitler victory will mean their complete usurpation. The loss of the Asiatic and European markets must therefore be compensated for in some other sector of the globe. There remains the Western Hemisphere, Canada, Mexico, the Caribbean and South America.
The Americas as a group are the largest area of economic penetration by the United States. Total investments in the Western world are, despite the economic crisis, near the figure of ten billion dollars. Canadian investments alone, reach almost four billion dollars, followed closely by South America, Mexico and the Caribbean.
In search for avenues of escape from the impasse created by the world economic crisis and the war, the United States prepares to dominate completely the western world, more particularly, South America.
Canada already forms a large area of investment and trade and expansion here is quite limited. The same is in a considerable degree true of Mexico and the Caribbean, areas which are of immense importance for politico-military reasons. But South America with a population of over a hundred million, is a vast and unexplored field for exploitation.
As we have already indicated. South America now supplies the United States with considerable quantities of tin, copper, petroleum, nitrates and rubber. Planned production of rubber and tin to satisfy the needs of an immense military America, would help solve the problem of losses resulting from possible adverse developments in Africa and the Dutch East Indies. In addition thereto, with in-vestments of great masses of capital, the United States could enhance the general supply of raw materials from this end of the hemisphere.
It is in relation to the great potentialities of South America that the Administration envisages the development of a hemispheric division of labor wherein the immense industrial United States would exploit the tremendous agricultural reaches of those countries and insure a continuous supply of necessary raw materials to the north.
But South America is militarily vulnerable. The long periods of anti-American sentiment has offered a fruitful field in many parts to the operations of the German, Italian and Japanese propagandists in the guise of trade missions and organizations. The great numbers of German military and air instructors who flooded the southern continent in the period preceding German rearmament, have left an indelible pro-German stamp upon numerous sections. They remain sources of irritation to the American aim of solidifying the western hemisphere against the totalitarian states, but precisely because of these conditions, the United States is preparing to intervene actively in the economic, political and military life of the Spanish American countries.
The Pan-American conference is the strongest weapon in the hands of Washington now. The existence of the Inter-American Neutrality Committee and the Inter-American Economic Committee serve to tighten the bonds between the colossus of the north and the southern continent, and as is patently clear, the preponderance of power rests with the United States.
In more recent weeks the drive of Germany across the lowlands offered Roosevelt the pretext of direct intervention in the affairs of South America. Secret discussions have taken place in the State Department with Brazilian representatives on the matter of common defense of that nation, as of the rest of South America. Brazil is presumed to be most dangerously affected by a victory of the Berlin-Rome Axis, since it is that part of the continent which projects deeply into the South Atlantic ocean, within bombing range of the totalitarian airmen. It is also the country where American military experts expect the first landings of foreign troops. That is why Brazil is the immediate object of American intervention. Plans already exist for American naval, air and army bases in that country. Arrangements have been concluded for the training of Brazilian airmen by the US army using American equipment.
In one country after another, daily discoveries of German Fifth Columns are announced and America offers aid to the smaller South American nations, who presumably cannot alone resist German espionage and sabotage organizations. The USS Quincy sailed for Uruguay as a symbol of American “protective” power, and a warning to Germany, Italy and Japan. A campaign of political pressure has been unloosed for the purpose of preparing more direct American intervention of a permanent character.
The State Department is now pushing plans for a Inter-American Bank. The purpose is to unite the 21 Latin-American countries in a system of hemispheric finance. But as Marquis W. Childs points out, American capital will make up the chief resources of this bank. Through this bank the United States will dominate the financial struc-trading structure of South America. Childs writes:
“... the State Department has been working for a more intelligent interchange of commodities and manufactured goods between North and South America. The Inter-American Bank would facilitate this exchange. What all this looks forward to is hemisphere trading.”
Eight countries have already agreed to the establishment of this bank. whose initial shares will be subscribed by the United States. These economic efforts are frankly directed against the totalitarian states.
The more recent events illustrate the manner of American intervention. The press reports Fifth Column activities in every Latin American country. General Marshall, US Army Chief of Staff, forecasts trouble in this hemisphere within a month, elaborating that he has in mind South America. That is the area within which the President desires the use of the National Guard in emergency services.
Leading commentators demand the seizure of all foreign colonies in the western world. Others propose that the United States shall buy them – take them in payment for war supplies, or defaulted war debts. The State Department announces that the United States will not tolerate a new foreign power in North or South America; that it will fight any incursion by Germany, Italy or Japan.
Under the slogan of “the Americas for Americans”, the United States envisages complete control of both western continents. This time, however, intervention is not aimed for a momentary economic and political victory. There is a far greater effort involved: Hemispheric control of the new world by the United States, the establishment of an inter-continental division of labor favorable to the United States, what Alsop and Kintner, in their American White paper, describe as a “modified imperialism.” What is certain by this is the establishment and an economic and political dictatorship of Washington in all the Americas. The United States is preparing to place South America on rations, to thereby replace its losses on other Continents.
Unlike former “normal” imperialist expansion, initiated by the private financial oligarchs of the country, followed by the sword and flag, the phenomenon of expansion under the direct leadership of the government has emerged. In the case of the present American aims in South America it is Washington itself which initiates and directs the movement toward domination. Acting for the government the Inter-American Bank, as previously stated, will effect a financial dictatorship over all the Americas. The primacy of American industry in this hemisphere and the subjugation of Latin-American agriculture will be the task of the Administration, whether of Roosevelt, or any other to succeed him. To make conclusive this control of the New World, the American government will establish what will be tantamount to a political and military dictatorship over the two continents. All of this, to be sure, will be done in the interest of American finance and industry. That is to say, the Sixty Families, whose whole interests the government represents.
These developments are certain unless the bourgeois order is overthrown, unless the era of socialism replaces the decaying capitalism of the New World. The future rests with the enormous proletarian reserves of the United States and the many millions of oppressed in Latin America.
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