Max Shachtman

The Revolver at the Head of France

The Hoover Reparations-Debts

(July 1931)

From The Militant, Vol. IV No. 13, 4 July 1931, pp. 1 & 4.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

The multi-millionaire representative of the American government, Mellon, has arrived in Paris and is holding the revolver to the head of the French bourgeoisie: Swallow the Hoover plan for a war debt-reparations holiday or – prepare to engage in combat with us, your superiors in every field! As these notes are being written, no final accord has yet been reached between France and the United States. Driven by the pressure of the trans-Atlantic colossus the Frenchmen have already yielded to the point of discussing only whether the suspended reparations payments are to be made up by Germany in five years or, as Hoover proposes, in twenty-five years. Whether the compromise is reached on a ten or a twelve year period will not radically effect the essence of the whole scheme.

What is the nature of this proposal which has been acclaimed almost universally by the bourgeoisie of most countries, hailed by the social democrats of Germany, England and Belgium, and given the accolade of approval by such lesser socialist and liberal “statesmen” as Morris Hillquit and Oswald Garrison Villard? In two words: Germany is allowed to suspend all reparation payments for a year; the European debtors are allowed to suspend all war debts to the United States for the same period.

What has necessitated this proposal made so suddenly by Hoover, pressed with such impatience and intolerance of discussion or revision?

Germany is being wracked by one of its severest crises, acutely accentuated by crushing burdens of the imperialist treaty of Versailles. Its individual life, which must be maintained in order to make possible the payment of reparations to the Allies, is being stifled because the same Allies cannot afford to yield to Germany a greater share of the world market. Taxation rises to tremendous heights. The army of the unemployed increase without abatement. The wage level reduced to a miserably tenuous existence. The financial condition of the country is just short of catastrophic. Its gold reserves diminish at an alarming fate. The last Reichsbank report showed a decline of 750,000,000 gold marks, or one-fifth of the reserve. Ever-increasing sums of money are being exchanged for foreign currency. A marked flight of capital to other countries is observable. So ominous has the situation become that the Reichsbank – in the face of the crisis in which discount rates have dropped universally – was compelled to announce, effective from June 13, a sensational rise in, the discount rate from 2 percent to 7 percent – with America’s rate at 1.5 [1] percent, France’s at [?], England’s at 2.5 and Switzerland’s at 2.

The Crisis in the Young Plan

The world decline in commodity prices has had a unique effect on Germany. German industry must now produce 40 percent more in order to pay the charges under the Young plan, fixed in marks Chancellor Bruening reports that instead of alleviating the Dawes burden by an annual 700,000,000 marks, the Young plan – under the conditions of the crisis and of price falls – has caused an additional payment of 200,000,000 marks annually.

The way out? Union with Austria perhaps? Hardly! Even were the French buccaneers to countenance it its effectiveness is “Zukunftsmusik” – music of the future. The open road to the Danubian grain-producing countries is travelled only one way, by their exports of grain to Germany, but not by their imports of industrial goods. Higher taxes? The measures already taken have only multiplied the general misery and advanced the question of social revolution to the top of the social agenda. The vicious system of Versailles is wreaking havoc throughout Europe. The only way but for the masses is the proletarian victory.

But the tenacious bourgeoisie have one final resource: the assistance of the powerful, fabulously wealthy master across the sea who saved them once before. Suspend the reparations payment ere we perish under their pressure! Do not bleed to the death Germania, the bulwark against Bolshevism! With these cries on their lips, Bruening and Curtius pled their case before MacDonald at Chequers. His Majesty’s Most Loyal Socialist Footmen, no less the foe of revolution than the Germans, were only too willing to accede to the latter’s demands – if only the United States would let up on the war debts. That is why the London Observer warned the grasping Americans to this effect: Do not be short-sighted. Consider your own interests. The bankruptcy of Germany, a revolutionary wave flooding Central Europe, mean the end to the annual interest pavements on your huge German investments!

It is this warning that Hoover has heeded in the new plan. In 1924, the U.S. saved Germany from the effects of a revolutionary crisis which the revolutionists had fumbled. In 1931, it hopes to prop up decadent German capitalism from the impending revolutionary assaults. The Hoover plan is de[vised to] be as direct a blow to the [imminent] revolution as was the stab in the back delivered by Hoover’s agent, Captain Gregory, to the Hungarian revolution in 1919. But American imperialism is not merely interested in the maintenance of the German bourgeoisie for their own sake; its interests are less ... “generous”.

Why is Hoover so ready to forego “for a year” the millions due the U.S. in war debts, providing reparations payments are suspended? Because there is more than that involved if Germany is forced to go into bankruptcy and perhaps yield to the victory of a proletarian revolution. The United States according to the Department of Commerce, has more money invested in Germany (end of 1930) than in Great Britain, France and Belgium put together. Some sources put the figure of the total American investments in Germany (government loans, municipal loans, industrial enterprises, securities, etc.) at about 4 billion dollars! With a return on these investments of from 7 to 8 percent, “our” investors stand to loose the lucrative annual income of almost a third of a billion dollars. American bankers have more involved in their loans and investments in the municipality of Berlin and the Berlin City Electric than in the original Dawes loan ($200,000,000) or the Young loan ($100,000,000). Why not forego – for the moment – the war debt payments in face of the bankruptcy or revolutionary threat to the bankers’ interests?

There is yet another point. Under pressure from the ruthless Americans England has lost considerably in influence, power and prestige on the Continent. The U.S. has gained, but so has France, the best armed power in Europe, the most lavish spender of money for armaments. After England – comes France. Through its delegate McKelvie the United States has already spiked the French plan at the London Grain Conference to organize a Danubian grain producers’ entente under its hegemony. McKelvie simply made the hardly veiled threat to dump the tremendous American surplus. Now the United States is laying the ground for cutting into France’s military strength by financial blackmail. Of the important countries involved, only France stands to lose substantially by the Hoover plan. Unlike England, even after it pays the U.S. war debt, France still has a gratifying surplus left from the German reparations. Does it complain about that? Mellon and Hoover will soon suggest a “way out of the complication”. Balance your budget, M. Laval, by cutting down on armaments expenditures. This ingenious form of blackmail turned the trick for America at the Washington Naval Conference in 1921, where it first achieved “parity” with the British. It worked at the London conference in 1929. In short, the dominance of the American dollar has torpedoed more British vessels than the Germans could hope to sink in the Battle of Jutland. Why should it not succeed in being just as effective against France? MacDonald the faithful outpost in Europe of Wall Street, has already advanced the idea, with an eye at France, in the House of Commons.

A Solution of the Crisis?

But the crisis? Will it be solved by the Hoover plan? Fantasy! The stock market may experience a few jerky rises and falls for a while, but the army of unemployed remains just as large, industrial production just as low, the markets of the world just as contracted and congested. More than Hoover’s suspension plan will be required to undo these difficulties.

Then the German crisis, at the very least? Beyond a doubt it will be ameliorated. But only for a brief time. The postponement of the big collapse will only make it more earth-shaking when it does take place. There is an inexorable fatality in Wall Street’s plans to save Germany from Bolshevism: The Dawes plan lasted almost five years before it had to be scrapped for the Young plan. The Young plan never outlived its father – two years of life and it is mourned at the grave only by France. The Hoover plan? Will it last even two years? It is doubtful. In the ability of the German Communists to solve the crisis of misery and despair by a successful proletarian revolution, lies the final answer to all the plans of imperialist conquest and slavery.

Footnote by MIA

1. In the printed form the number given is “15” but from the context “1.5” would seem to be more appropriate.

Shachtman button
Max Shachtman
Marx button
Marxist Writers’

Last updated on 5.1.2013