The Imperialist Attempt to Overcome the Crisis

The causes of the actual economic crisis are of two kinds: on the one hand they evolve out of the “normal” course of capitalist production. A crisis usually follows a period of favourable trade conditions. On the other hand the crisis is rendered more acute by the economic breakdown of continental Europe – a breakdown which we have described in No.14 of our journal. The situation of the United States in comparison to Europe is analogous to that of England in comparison to continental Europe. The United States cannot sell their goods on the European markets because the countries ruined by the war are not in a position to purchase them. Hence the depreciation of the currency of the whole world; a colossal agio on the American currency, which leads to the result that American goods cannot compete in the world market, and moreover even more that that, the goods of the countries with a low rate of exchange are competing with American goods within the limits of the United States. This agio on American currency has greatly increased since the war, and it is continuing even now, notwithstanding the acute crisis through which the United States are passing.

The rate of exchange of the dollar in comparison with the currency of the other principal countries amounted on March 21st, 1921 (The Times) to:

We see that the currency of all the European countries, even that of the rich neutral Holland. has greatly fallen in comparison with the dollar; in respect to pounds sterling the decrease amounts to over 20 per cent; the Italian lira is quoted at 18 per cent of its value; the mark about 7 per cent; the rate of exchange of the East European countries, for instance, Austria, Hungary, Poland, has sunk to 1 per cent of the nominal value.

It is quite comprehensible that under these conditions the normal sale of American goods in the above-mentioned countries is almost impossible. Of all the countries of the world only Japan and Switzerland have a full-value currency in comparison with the United States; the currency of Canada is almost on a par, as well as that of some of the South American States. But the population and the purchasing capacity of these countries are too insignificant for the United States export.

American capital has made an attempt, in the same way as English capital, to support the purchasing power of the foreign countries by investing American capital in foreign enterprises. The United States have become the world banker. During the war American capital was mostly invested in the State loans of the allied countries: the debts of the countries of the Entente amount. approximately to 15 milliard dollars. After the war almost all the countries and loans, as well as the larger joint-stock enterprises, knocked at the doors of the American money market and begged for a loan. If we look through the communications in the Economist for the last six months, we shall find the names of almost all the countries of the world as debtors of America: the states of South America, the Belgian railways, Danish towns, English banks, “completely trustworthy enterprises paying 8 per cent interest.” The direct investment of American capital is also widely practised. Formerly the European capitalists owned American shares and bonds; at present the American capitalists are buying up shares and enterprises throughout the whole of Europe, and paying fabulously low prices. One million dollars is equal in Central Europe to 25 million lire, or 60 million marks, or 600 million Austrian kroner, etc.

In this way, in spite of the bad trade conditions and unfavourable exchange, American capital succeeded in maintaining its export trade during the first period of the crisis. In October 1920 the export trade of the United States was higher than ever. Only in November an abrupt fall began; the export trade was 67 million dollars less than in 1919. Since that time affairs are going on in the same way from month to month.

The investing of capital in foreign enterprises, the danger of the loss of the European market in consequence of the disorganisation of the European public economy – all this compels the United States to carry on a world policy in spite of the resistance of some of the conservative circles! All the attempts to return to the old American continental policy, all attempts to “fence oneself off” from Europe, suffer a defeat before the exactions of economic necessity. At the present moment the United States is the most Imperialist power in the world!

In order to complete the picture we must stop to consider closely the facts, which characterise this American Imperialism and the tendencies of the latter. In substance it does not differ in anything from British and German Imperialism, except perhaps by its still retaining false pacific phraseology. During the last five years, ever since the Americans occupied Haiti, American soldiers and sailors have killed 3250 men, according to the official data of the Ministry of Marine. Under the sound of Wilson’s pathetic speeches on the “rights of peoples” the United States have occupied Nicaragua and Costa Rica, and introduced a military dictatorship in these states. (Labour Leader, October 21st, 1920) Militarism is revealing itself ever more acutely, both on land and sea. The United States withdrew from the League of Nations because they would not submit to the hegemony of England. At present the United States are on the surest way to become the strongest military power in the world. They are entering into a conflict which is acquiring an ever more acute form with the two other world powers, England and Japan (we cannot consider France a world power in spite of her high sounding policy). Affairs have reached a point when America is seriously looking forward to the possibility of an Anglo-American war.

What is the cause of Anglo-American antagonism?

First of all the question of the war debts. The cautious United States lent money for carrying on the war to England directly – chiefly to England, and the latter supplied France, Italy, Belgium, etc. under the present unfavourable rate of exchange these debts are now laying an extremely heavy burden on the countries of continental Europe. The demands of England on these countries are creating a considerable risk. France’s ruthless altitude towards Germany is partly due to the fact that she is oppressed by her debts to England. Therefore the English politician, Keynes, in his book on the peace of Versailles proposed as the only way of solving the question that America should annul her demands to all the allies and debtors, that England should do the same in respect to the continental countries of Europe, while France should reduce her demands for the reparation of her war losses to the proportions which would be acceptable to Germany. However, the semi-official attempt of England to obtain the consent of the United States for the carrying out of this financial plan met with a decisive refusal. The capitalist rulers of the United States are in no wise inclined to sacrifice their milliards in order to restore European capitalism. This is to our advantage, but England was annoyed by this fiasco.

On the other hand, the United States is displeased with Europe: “Europe has fallen in the eyes of all respectable Americans, in view of her constant wars and revolutions and her non-desire to implant a peaceful industry,” and so on. (The Nation, November 6th, 1920)

The activities of the League of Nations are arousing to a still greater degree the displeasure of the United States, especially when the mandate for Mesopotamia was given to England and the mandate given to Japan for the possession of the former German cable station on the Isle of Yap, and also for the possession of the German cables. The United States are interested in Mesopotamia chiefly on account of the latter’s oil fields. On November 26th of last year the United States protested sharply against the Mesopotamian mandate for England. At first sight it is difficult to understand why the United States, the largest producer of oil in the world, should protest so strongly on the subject of Mesopotamia. But at present oil is the only commodity which in spite of the crisis is in great demand on the market: therefore its price is continuing to increase in spite of the general fall of the prices in the world market. The American production of oil (kerosene) is utterly unable to keep pace with the rapid increase of the number of automobiles. Matters have become still more complicated by the fact that British capital has secretly bought up or taken possession of the oil areas lying beyond the limits of the United States territory, including the Mexican oil fields. The situation was described by Senator Mackellar in the Senate on January 1st, 1921. “Great Britain receives from the United States about 8 per cent of the oil for her commercial and military fleet at a price varying from 10 shillings to 13 shillings and 4 pence per barrel, while she herself is supplying American ships in the Near East at the price of £2 to £3 0s. 6d. per barrel. America possesses only one-sixth of the world reserves of oil, but she consumes approximately three-fourths of the world output.” Mackellar gave a list of the British oil possessions: “large areas” in Persia, Mesopotamia, Egypt, India and smaller fields in Canada, the East Indies, producing almost one-fourth of the world output. He adds: “Great Britain or her citizens are greatly interested in the oil fields of Mexico, the United States, Russia, China, the East Indies and other countries. This circumstance permits her to control almost half of the world output of oil”. The orator remarks that under the actual consumption the American reserves will be exhausted approximately within 15 to 30 years because England is grasping the diminishing American reserves while keeping her own untouched. The United States have sufficient power to “press England to the wall” by refusing to grant permission for her to purchase American oil. England asserts that she cannot pay her debts to America, while at the same time she is buying up the oil fields of the whole world.

But Mackellar was surpassed by Mr. Phelan, a Democrat from California, who said that the Englishmen “are imitating the Huns.” When they appealed to America to help during the war, saying they were “in a fix,” they simultaneously began to purchase oil fields in foreign countries: they obtained from America four milliard dollars (one milliard pounds sterling), and used their own money in order to monopolise the world output of oil.

Mr. Phelan then passed over to the Japanese question. In California the Japanese are buying kerosene from the British Company at the price of 10 shillings the barrel while the Californians have to pay 13 shillings and 4 pence. A limit will be laid to the acquisition of the Californian oil field by the English by the passing of a general bill “against foreigners.” The orator mysteriously mentioned “underground sources” through which he had obtained information regarding a recent meeting of English and Japanese representatives at which, the Japanese were being encouraged to oppose this bill as being “cause for war.”

In view of such an acute state of affairs, it, is not surprising that one of the most aristocratic of American papers, The Nation, speaks openly of the possibility of an Anglo-American war. (The Times, February 5th, 1921)

The English are trying by all means to mollify the displeasure of the United States in regard to the oil question – but evidently without success (see Barker’s article on World Oil Reserves in the United States in the November issue of the Contemporary Review and other English papers). This displeasure has increased under the influence of the Anglo-Japanese alliance. The results are obvious; an ever-increasing armament on the land and on the sea. We have already mentioned the gigantic, shipbuilding programme of America; it is being carried out without respite, especially after the proposition on the part of America (made probably only for form’s sake) regarding the cessation of all military construction for a whole year, had been rejected by Japan, At the end of 1920 the Senate passed a resolution to reinforce the Panama Canal by constructions supplied with the strongest artillery in the world (Frankfurter Zeitung, December 31st, 1920), The work for the preparation of military technical means is continuing, liquids as well as gases producing an absolutely deadly effect are being manufactured. The United States are striving to create bases on all the seas, and they are carrying on an Imperialist world policy in the spirit of old times, They are protesting against the cession of the isle of Yap to Japan, and entering into an agreement with Portugal for the right of creating an American marine base on the Azores, etc.

But they have directed their chief attention to the countries which are as yet on the threshold of capitalist development, without being at the same time colonies of some European State, such as South America and China, America wishes to guarantee for herself the possession of these States a colonies, and then not only to separate herself from “sick” Europe by a wall of high custom duties or if necessary by prohibiting all imports – but to fence herself off from all imports on the part of countries with a low rate of exchange. Such is the economic significance of the victory of the Republican Party at the election, such is the inner meaning of Harding’s policy; i.e. of the policy of big American capitalism, which, like England and Germany of pre-war limes, has but one issue at present, the policy of Imperialism.

What is the prognosis of the economic future of the United States?

We presume that the highest point of the crisis has been attained already, symptoms of improvement of the economic conditions are to be observed. One may say with assurance that, owing to the colossal wealth of the country, imperialist capitalism will be able to cope with the crisis. But, notwithstanding all this wealth, in spite of the efficacy of the policy which is seeking in South America and China compensation for the loss of the European markets – the restoration of American public economy is impossible if the breakdown of European capitalism should continue at the former rate. The future must lead inevitably to a collision between three world Powers – the United States, England and Japan – a collision which is called forth by the efforts of each of these countries to acquire possession of the, as yet healthy, elements of the world public economy. This second world war will call forth then a crisis of the capitalist countries similar to the one which has at present taken hold of continental Europe.