Albert Moreau

The “Debt Moratorium” for Latin America

Source: International Press Correspondence, Vol. 11, No. 47, September 3, 1931
Transcription/Markup: Paul Saba
Copyleft: Internet Archive ( 2018. Permission is granted to copy and/or distribute this document under the terms of the Creative Commons License.

During the last week of June, while the treasurer of the United States government – Mellon – was negotiating with the European capitalist Powers on behalf of Hoover’s Plan for a debt moratorium for Germany, rumors were circulating in Washington to the effect that the head of American imperialism was “studying” a plan for a similar financial measure to be extended to Latin America. The rumors were immediately followed by an official statement by the White House which said:

There is absolutely no foundation for the stories circulated in the press to the effect that this government is considering plans or discussions concerning South American debts.

But this statement was the conclusion of conferences held in Washington between treasury officials and representatives of the Federal Reserve System which is the stronghold of American finance capital.

As a result of these conferences, two tentative plans were suggested by the Federal Reserve Bank in order to come to the assistance of the Latin American governments, the majority of which are on the threshold of financial bankruptcy. One was to “inspire” United States bankers to advance to the leading Latin American governments sufficient money to meet their interest payments. This way, it was believed, would relieve the drain on the national budget of these governments. The other was to advance loans either directly by the American government or by the Federal Reserve Bank. Both tentative plans failed to materialise. Meanwhile, the crisis in Latin America has been further deepened with constant fall of commodity prices, the depreciation of the valuta, etc.

The native bourgeoisies of Latin America, thanks to whom American finance capital was able to bind these countries to the economic and political chariot of foreign imperialism, are desperately clinging to the hopes for the materialisation of Hoover’s “moratorium” plan. The bourgeois press in Colombia, immediately upon the rumors of Hoover’s contemplated plan, and even previous to them, came out in big noise looking forward to the possibility of a financial relief from the United States and British bankers. On June 24th, the “Espectador” of Bogota, displayed in big letters: “Hoovers plan can be extended to South America”. The Chilean government (previous to Ibanez’ fall) went even further. In the face of its inability to pay $ 25,000,000 as interest to the foreign exploiters, it simply declared a temporary suspension of payments, of its own will.

Why are the American government and the whole consort of Wall Street bankers so much interested to find a solution to the threatening and actual bankruptcy of some of the Latin American governments? Because the inability of the Latin American governments to make payments to the huge interests and sinking funds means that the economic and agrarian crisis which is shaking the very foundation of imperialist domination and is the cause of this inability to pay, brings these countries nearer to the revolution. It means that the oppressed peoples, driven by ruination, starvation and despair, will rise to put an end to their conditions of misery and serfdom.

A revolution of the oppressed masses will drive American imperialism and the other imperialists out of Latin America, will overthrow the rule of the bourgeoisie and the landlords, will confiscate the big properties of these masters and the imperialist enterprises, will radically improve the conditions of the working class, will refuse to pay tribute to foreign bankers. In other words, the millions of dollars invested by the imperialists and their economic key positions in these countries, are in danger.

There is also another reason for which American imperialism and its government is so much concerned in this financial catastrophic situation of Latin American. British imperialism is trying to utilize the crisis in order not only to save its skin, but also to further penetrate these countries, seek for new markets as rivals of the United States capitalists. Dispatches from Washington expressed this fear when on February 14 it was reported that the “consolidation of Chile’s foreign debts under British bankers would mark the first step towards London’s predominance in the local financial field, a position hitherto held by American bankers”.

Now the question arises: why did not the famous plans of the Federal Reserve Bank materialise? Why did not the United States bankers come forward with loans or other measures? First of all because of the economic crisis in the United States. Furthermore, the situation in Germany makes it imperative for the United States government to turn the face in that direction in an effort to save German capitalism’ from the proletarian revolution. The Commercial and Financial Chronicle of July 18th says on the failure of the tentative plans for a Latin American “moratorium”:

... because of financial difficulties of Germany, which created a situation that made the establishment of new Latin American credits undesirable.

American capitalism is faced with the deepening economic crisis within the United States. Since November 1929 a series of bank failures occurred. Factories, shop and mills are constantly throwing their workers out in the streets. Unemployment is increasing. More than 10,000,000 jobless. Hoover was compelled to admit greater increase of the army of the unemployed for the coming winter. In addition to this, we have the growing agrarian crisis in the “land of prosperity”. The poor farmers are compelled to sell their farm products below cost. They are unable to pay their mortgages and debts. Thousands of them are ruined and there is no prospect for relief.

But the capitalists themselves admit that in case of a “debt moratorium” for Latin America, it would not even contribute to a temporary solution of the crisis. Therefore, the question is raised of new investments and loans. These new loans may temporarily avert bankruptcy. They will enable some of the governments to make payments on the debts. But these payments will have to be extracted from a more intensified exploitation of the workers and peasants of these countries.

The Latin American governments of Cuba, Argentina, Chile, Mexico, Peru, Bolivia, etc. are already indebted of more than $ 2,000,000,000 which means a crushing burden of interests. Further loans will mean a tremendous increase of this burden upon the toiling masses.

The fundamental condition put before the governments in all cases is the promise and guarantee for the regular payments of the interests and sinking funds. This means more supervision and control by the foreign bankers and the extension of political domination by American imperialism. Increased taxation of the working class and, the masses of the totting peasantry, the poor and middle class of the city. For the working class it means in addition the slashing of their wages, increase of tie working day, speed up, lay offs, fascist terror against its organisations, etc.

The Mexican Lamont-Montes de Oca Agreement provided for the reorganisation of the railroads through a loan extended by American bankers. The agreement was signed in July 1930. The agreement meant for the railroad workers a slash on their wages and lay offs. More than 1000 workers were discharged. The agreement was followed by a fascist Labour Code which prohibits and outlaws the strike action of the workers against the bourgeois-imperialist offensive. The Mexican bourgeoisie and the landlords, in alliance with American imperialism, have established a fascist dictatorship against the workers and peasants.

Yet, in spite of all the repressive measures, in spite of all the provisions of the agreement, the Mexican government was in default of the payment of $10,000,000 a few months ago.

The inflow of foreign capital in Latin America does not in any way contribute to the development of these countries, but on the contrary, retards their growth. Foreign capital monopolises the raw materials for foreign consumption and for the industries in the capitalist countries. Oil in Mexico, nitrates and copper in Chile, tin in Bolivia, etc. Chile, for instance, has rich deposits of metals to enable it to develop its home industries, but the policy of imperialism is to hinder the industrial development of the country and create a huge market for the consumption of the manufactured goods produced in the imperialist countries, such as United States and Great Britain. The imperialists consciously provide for the investment of their money in places where there is the greatest opportunity for them to extract huge interest, and help to maintain feudal relations in the village. If we see in some of these colonies or semi-colonies a more or less developed railway system in sections of the countries, it is because the railways serve as transportation of the raw materials monopolised by the imperialists.

The schemes for new loans to the Latin American governments will only permit the further penetration of imperialist robbery, will sharpen the fight between British and American bankers. The native bourgeoisie and landlords are only helping the imperialists. They are the native oppressors of the people.

The only possible solution to the crisis is the anti-imperialist agrarian revolution, a revolution of the workers and peasants, headed by the working class and led by the party of the proletariat. Only thus will the power of the landlords, capitalists and imperialists be broken. Only under a workers and peasants government will the masses put an end to their oppression and obtain their national and social freedom.