From Fourth International, vol.4 No.2, February 1943, pp.36-39.
Transcribed, Edited & Formatted by Ted Crawford & David Walters in 2008 for the ETOL.
“A THOUSAND YEARS,” ROARED HITLER, “The Third Reich will endure!”
Last month the humorless Gestapo spent a puzzled week wondering why Czechs on the main street of their town were turning their heads away to guffaw. The reason, discovered too late, was a movie theater’s marquee reading “The Thousand-Year Reich – Ends Thursday.”
January 30, 1943 was the tenth anniversary of Hitler’s assumption of the Chancellorship. And how does the Third Reich stand?
Its boasted rationalization of industry and abolition of unemployment were measures exclusively for war, and in that war it has visibly passed its apogee. With two to three million dead, countless other millions maimed, it is now reeling back before the Red Army, while at home not all the enormous labor drafts from the rest of pillaged Europe can keep its production level from falling, its overstrained plant from wearing out. Despite desperate exchange restrictions its bankruptcy is internationally visible, with the Reichsmark quoted at 3½ cents on the free bourses of Switzerland. Its tired people are hungry, and rapidly approaching the semi-starvation level of the occupied nations. Its “New Order” in Europe is one unending nightmare of assassinations, sabotage, slow-downs and bloodily ineffective mass-murders of hostages, where it is not (as in Yugoslavia) open civil war.
The repeated cashiering of Reichswehr generals and their replacement by either Nazi Party generals or compromise candidates indicate a deepening split between the NSDAP and the Prussian military caste. Hitler has been withdrawing to safety the units of the party’s army-within-an-army, the Waffen SS; and again last month recruiting appeals for this special Nazi echelon were launched not only among the civilian populace but also within the regular army. Howard K. Smith, in his Last Train from Berlin, has described how, even as long ago as the autumn of 1941, the Schützstaffel were setting up blockhouses and munitions-depots in all big German cities, especially in the workers’ quarters. The latest indication of the degree of Hitler’s uneasiness was a January 7 dispatch from Berlin to the Stockholm Dagens Nyheter reporting that the Stürmabteilung, the old Brownshirts (dissolved in 1941), are now summoned to begin in February two months of “special” training, consisting of rifle-practice and grenade-throwing, under special instructors from the Schützstaffel regiments withdrawn from the Russian front.
There, then, stands the “eternal” Third Reich: only ten years, and its monolithic structure shows crevices and cracks running in every direction.
Under a Red Army attack essentially not superior to last year’s, 220 crack Reichswehr divisions are being pressed back. And this is taking place in a period when Anglo-US imperialism is not on the European continent, as it must be if it is to become the determining factor. The American bourgeoisie well knows what the signs and portents inside Germany mean in terms of revolutionary potentialities. This can be seen from a worriedly frank statement in an editorial of the authoritative New York Times. After pointing out in detail the visible signs of Hitler’s growing weakness, the Times blurts:
“This is an opportunity for the Allied forces, but it is a peril, too, for it suggests that there may already be greater weakness than we realized under the façade of Nazi power. The decisive battle may develop, in fact, before we are ready to fight it.” (Our italics, New York Times, November 20, 1942.)
A peril to whom, please, gentlemen of the Times? Their worried words are a remarkable revelation. They deserve considerable mulling over.
As long as one year ago, trustworthy reports were received here about negotiations between the German General Staff and the British cabinet concerning what terms a successful military palace revolution could expect. The German offer was then rejected ...
Lately there has been a concerted press-campaign – including the Stalinist sheets – of “hate” articles whose general purpose has been to identify Hitlerism and the German people. Their basic theme has been that the German people chose Hitler, therefore the German people ... etc. That the German working class never chose Hitler, but was betrayed into his hands, is the irrefutable historical fact demonstrated by Terence Phelan’s A Reminder: How Hitler Rose to Power, which we publish in this issue. That the German working class, the most important proletariat of western Europe, will rise to power on the ruins of Hitler’s Reich.
For the gentlemen of the New York Times, Hitler’s weakness is a “peril,” the peril of socialist revolution. The “decisive battle” against Hitler, for socialism, may indeed develop before Allied imperialism can arrive to try to crush it, either in person or through the instrumentality of monocled Prussian generals. In any event, we have abiding faith in the revolutionary future of the German and European proletariat. It is the symbol of Europe’s growing hope, that Czech theater marquee under the nose of the Gestapo: The Thousand-Year Reich – Ends Thursday.
“THE REPORT ON THE STATE OF THE UNION” WAS the traditional title of President Roosevelt’s annual message to Congress on January 7. But his hearers listened in vain, if they expected Roosevelt to describe the basic developments within the country in the course of his administration’s conduct of the war. Certainly the most important developments are: the new stage of the concentration of the productive forces of the nation into the hands of a small group of supergiant monopolies; war profiteering on a scale which beggars the figures of World War I; the immunity of a lion’s share of these profits from taxation; the consequent placing of the main burden of the war upon the masses through ever-growing taxes and ever-rising prices. Not a word of all this appeared in Roosevelt’s address on the state of the nation. Yet Roosevelt knows very well the facts and the meaning of these facts. In the days when he found it useful to inveigh against the “economic royalists,” Roosevelt sent a message to Congress on April 29, 1938, explaining the importance of a proposed study of monopolies. In it he said:
“The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism ...
“Among us today a concentration of private power without equal in history is growing.
“This concentration is seriously impairing the economic effectiveness of private enterprise as a way of providing employment for labor and capital and as a way of assuring a more equitable distribution of income and earnings among the people of the Nation as a whole.
“Private enterprise is ceasing to be free enterprise and is becoming a cluster of private collectivism; masking itself as a system of free enterprise after the American model, it is in fact becoming a concealed cartel system after the European model.”
In accordance with this presidential message Congress then created the Temporary National Economic Committee, which completed its work in March 1941 – 82 large volumes, 37 of hearings and 43 of special monographs, proving conclusively the stranglehold of the monopolies on American economy and politics. One of the key conclusions reached was:
“Speaking bluntly, the Government and the public are ‘over a barrel’ when it comes to dealing with business in time of war or other crisis. Business refuses to work, except on terms which it dictates. It controls the natural resources, the liquid assets, the strategic position in the country’s economic structure, and its technical equipment and knowledge of processes. The experience of the [first] World War, now apparently being repeated, indicates that business will use this control only if it is ‘paid properly.’ In effect, this is blackmail, not too fully ‘disguised.” (TNEC Monograph No.26, Economic Power and Political Pressures, 1940, p.172.)
This “blackmail” was “apparently” being repeated already in 1940. What has happened in the intervening years? Roosevelt remained silent on this basic question.
DESPITE ROOSEVELT’S SILENCE, THE FACTS ABOUT monopoly growth through control of war production are beginning to come to light. Before Pearl Harbor, the facts were relatively available in the reports of various governmental bodies; we assembled the facts as of that time in War and the Monopolies in the February 1942 Fourth International. Since the government’s official entry into the war, however, the growth of monopoly and war profiteering appears to have become largely official secrets. To tell the facts has, indeed, become a crime in at least one major instance: In the proceedings instigated by the Department of Justice seeking to bar from the mails our sister weekly, The Militant, the postal authorities cited as “seditious” numerous excerpts from The Militant which bared the wartime growth of Big Business and its war profiteering. Those facts which do come through government channels hardly ever get into the kept press. In the last month, however, there have been several important disclosures which show that, since Roosevelt in 1939 viewed with “disquiet” the danger to “the liberty of a democracy” from growth of monopoly, the monopolies have far outstripped their previous strength.
These disclosures, it is significant to note, did not come from those organs of government which are in control of war production – the Big Business-controlled WPB and the powerful oligarchies of the War and Navy Departments which alone have the power to sign contracts for war orders. Typical of the “facts” made public by these departments was the statement by Navy Undersecretary James W. Forrestal to the Truman Senate Committee on the number of companies holding Navy contracts. He said:
“It is impossible to determine the actual number of companies and contracts, but I am told that a rough estimate would indicate that over 3,000,000 prime contracts and subcontracts are held by more than 80,000 companies.” (New York Times, January 22, 1943.)
HOW MISLEADING THIS NAVY STATEMENT IS, becomes clear when we contrast it with the figures cited by Lou E. Holland, head of the Smaller War Plants Corporation: “71 per cent of all war contracts are now being allotted to 100 manufacturing concerns out of the 184,000 manufacturers in the United States,” Mr. Holland declared on December 30, 1942, in an address at the Advertising Club in New York. Mr. Holland’s statement was the first time in nearly a year that a government official gave figures indicating the extent of monopoly control of war production. His speech made it plain that his corporation – set up last June by Congress to spread war contracts to small companies – had proved powerless to halt the forward march of Big Business and the resultant extirpation of many small businesses. Perhaps the information he gave has something to do with the fact that, less than three weeks later, on January 19, Mr. Holland was removed from his post by Roosevelt.
A HITHERTO SECRET OPA STUDY MORE THAN corroborates Mr. Holland’s figures. This four volume study of war production and profits was printed in November, but is still kept from the public. Its existence was unknown until Jonathan Stout of the New Leader managed to see a copy and began publishing a series of articles on it, the first one appearing in the January 9 New Leader. The January 18 CIO News also disclosed some of the facts in this OPA study. As yet the January 15 PM is the only daily newspaper which has breathed a word about it. On the extent of monopoly control of war production, Mr. Stout cites the following paragraphs from the OPA study:
“By the end of 1941 ... over 70 per cent of the [war] contracts had been awarded to 100 large companies, mostly producers of durable goods. Thirty-eight companies in three industries – aircraft, autos and steel – held half of the total contracts.
“An additional 15 per cent of the contracts was scattered among 42 companies engaged in shipbuilding or the manufacture of industrial machinery, railway equipment, auto parts and accessories and chemicals.” (New Leader, January 16.)
One hundred companies holding 70 per cent of all war contracts; 38 of them holding half of all contracts, 80 of them holding 65 per cent of all contracts – these figures illuminate too glaringly the kind of society which is resulting from the war. No wonder Roosevelt did not choose to include them among the empty generalities of his report on the state of the nation.
THE MEANING OF WARTIME GROWTH OF Monopolies for post-war economy was indicated by testimony given this month by Secretary of the Interior Harold L. Ickes before the Senate Small Business Committee. Traditionally an “anti-monopolist,” Ickes is now an impotent figure in Washington, pushed aside by the corporation chieftains and brass hats of the WPB and the War and Navy Departments; he knows whereof he speaks. None of the daily newspapers reported his key figures, which the January 23 Nation cites as follows:
“In 1939, 170,000 small plants turned out 70 per cent of our productive goods; the 100 big ones, ‘the blue-chip corporations,’ accounted for the remaining 30 Per cent. Today this situation has been reversed. The 100 big concerns turn out 70 per cent of the productive business, mostly war work; 20 per cent of productive output has been eliminated by war-time diversions; the survivors of the 170,000 small plants are trying to get along on the balance of 10 per cent.”
These figures dramatize an almost incredible rate of speed of growth of the monopolies at the expense of small business and the workers. In 1939 Roosevelt said: “Among us today a concentration of private power without equal m history is growing.” How would he characterize the enormously accelerated development of that situation today, if he were not silently abetting it? The Nation wailingly “hopes that Senator Murray and his colleagues of the Small Business Committee will fight at this session for a Metals and Minerals Administration to be set up in the Interior Department under an Ickes rather than an Eberstadt [WPB vice-chairman].” But why the Nelsons and Eberstadts and their associates in the War and Navy Departments are in control, while Ickes is impotent to stem the tide – that neither the Nation nor any of the liberal supporters of Roosevelt dare try to explain.
THE DISASTROUS CONSEQUENCES TO PRODUCTION of monopoly control has been explained by us on several previous occasions. Before Pearl Harbor, the Truman Committee of the Senate and the Tolan Committee of the House issued several reports showing that monopoly control led to unused plants of the smaller corporations while the monopolies, with an eye to post-war problems, resisted expansion of production – most notably in steel, auto, aluminium and copper. The pretext for not spreading war contracts to more smaller plants has been the lack of materials. But this apparent lack, Ickes indicated in his testimony to the Senate Small Business Committee, is itself due to monopoly control. Vast additional amounts of materials could be drawn from the smaller mines and mills, but the monopolists in charge of the WPB refuse to grant the necessary loans and facilities required to open up these additional potential sources. For example, Ickes cited great metallurgical industries now operating in Germany, Sweden and Norway, based on “low-grade” ores either worse or no better than non-monopoly ores in this country which the WPB and War Department dismiss as of no commercial value. Ickes’ Bureau of Mines has developed a successful process for ending the aluminium bottleneck by obtaining aluminium from low-grade clay; but use of the process would destroy ALCOA’S aluminium monopoly; hence it remained unused while ALCOA uses up ships to bring aluminium ore from abroad. What we are saying is of course not at all new to Roosevelt; one of the TNEC monographs three years ago said, it very well:
“Monopoly impairs democracy’s ability to defend itself in time of war. National defense requires an expansion of output: monopoly seeks to augment its profit by restricting output and maintaining price. 1t thus obstructs the procurement of arms and supplies, increases the cost of defense, adds to the burden of debt and taxation, and undermines national morale. When the Nation is attacked, it may even turn the balance from victory to defeat.” (TNEC Monograph No. 21, Competition and Monopoly in American Industry, 1940, p.18.)
Roosevelt knows very well what is happening; but, as the TNEC monograph previously quoted says, “The Government and the public are ‘over a barrel’ when it comes to dealing with business in time of war or other crisis.” Or, to use Marxist terminology, the government is, fundamentally, the executive agency of the capitalist class as a whole.
THE GARGANTUAN PROFITS REAPED BY THE monopolists from war contracts is indicated by the figure, cited by the CIO News from the OPA study, that “some 200 holders of government contracts increased their profits – after taxes – from $781,292,000 in 1939 to $1,401,722,000 in 1941 – a rise of 79 per cent.” It is not clear whether the 200 contractors cited include the 100 who monopolize 70 per cent of war contracts; none of the material so far published has separated out and analyzed this key group of 100. But this group is included in published figures covering 1,753 big companies (obviously in many cases including both corporations and subsidiaries each counted separately). This number represented less than one per cent of the total number of corporations reporting net income, but their profits were more than half of the total of all corporations. Concerning this group Mr. Stout cites the following paragraphs from the OPA study:
“In 1939, income taxes absorbed 18 per cent of the profits of all 1,753 corporations, while in 1941 almost 50 per cent was paid in taxes. Nevertheless, aggregate 1941 profits after taxes showed an increase of 56 per cent over the 1939 level.
“For durable goods producers 1941 profits after taxes were almost double those of 1939; for non-durable the increase amounted to over 36 per cent, and for trade and services 25 per cent.”
Even these startling figures do not tell the whole story for, the OPA study notes, many companies set up huge “reserves” for taxes which were far larger than required for taxes, and thus kept 1941 profit figures lower than the reality.
The “almost double” increase of profits of the heavy industry oligarchy in 1941 over 1939 was still in a “peace” year. What about 1942, a war year in which higher taxes were operating? The so-called war profits (excess profits) tax was supposed to “take the profits out of war,” in accordance with Roosevelt’s promise that there would be no “war millionaires” this time, This tax at first glance seems heavy – formally set at 90 per cent but, with a 10 per cent post-war refund, actually set at 80 per cent of all profits over “peacetime average” (usually the 1936-39 average). When, however, a corporation is reaping three, four and five times the amount of 1936-39 average profits – 69 war contractors jumped in 1941 to between 400 and 500 per cent of peacetime profits – and, in addition to “average” profits and “reserves” retains 20 per cent of all its excess profits, the net result remains profiteering on a gigantic scale. The annual reports for 1942 have not yet been issued by the big corporations, but the ultra-reactionary United States News of October 30, 1942, estimated that: “With refund, net profits of all corporations after taxes will be about five per cent under 1941; will be nearly 25 per cent above 1940. This is a very favorable picture.”
As for this year of 1943, when corporation taxes will be collected under the brazenly reactionary 1942 Revenue Act (see our analysis of it in the November 1942 Fourth International) profiteering will again be rocketing skyward, beyond the fabulous levels set in 1941.
IN ESTIMATING THE GROWTH OF THE MONOPOLIES during the war the item of profits is but one factor; so far an even more important factor is the expansion of plants and equipment with government money. Of the 18 billions reported expended by the Reconstruction Finance Corporation in its December 15, 1942, report, the CIO News estimates that “well over 12 billions” have gone to government-financed new plants which are principally in the hands of the 100 prime contractors. As we explained in detail in the February 1942 Fourth International, most of these plants will inevitably remain the property of the monopolies without much cost. They are already “buying” them by a five-year tax amortization provision under which they are charging off the cost against taxes, or will buy them from the government at next to nothing after the war. In its pre-Pearl Harbor reports, the Truman Committee took it for granted that such government-financed plants were in effect gifts by the government to the corporations which are operating them.
“The liberty of a democracy is not safe” under monopolies said Roosevelt in 1938. Apparently the growth of the monopolies has reached the point where he dare no longer mention them in his annual report on the state of the union. The international reactionary role of this monopoly-dominated economy in the post-war world is ably demonstrated by C. Charles’ Wallace’s Utopia and Post-War Reality, in this issue.
CARLO TRESCA WAS OUR COMRADE-IN-ARMS against the fascists and Stalinists, and on January 11 fell by a bullet which certainly came from the camp of his political enemies. Our opinion on who killed him is substantially that expressed by Luigi Antonini, the head of the Italian-American Labor Council which represents 300,000 trade unionists of New York:
“Carlo Tresca needs someone to square his accounts with the Communist Party. Naturally I cannot point my finger at his assassin, but if I had to choose between the Fascists and the Communists [Stalinists], I will give the Communists 95 per cent that they did it, and the Fascists 5 per cent because the Fascists at this time are running ... And I think the Communists are in better position to do it in revenge on this man.” (New York Times, January 22.)
The brazen Stalinist argument that the crime cannot be laid at their door because, as “Marxists,” they do not employ individual terror, must be dismissed with contempt by anyone who knows the long record of assassinations by the Stalinists and the GPU. Even the New Republic, in seeking to absolve the Stalinists of this present crime, finds it necessary to concede that the GPU has previously assassinated political opponents, citing the murder of our comrade Ignace Reiss in Switzerland in 1938 and the “probable” GPU assassination of Leon Trotsky in Mexico in 1940. (Incidentally even that “probable” comes two and a half years late – at the time the GPU killed Trotsky the New Republic was silent.)
Our attitude toward Carlo Tresca was succinctly expressed in the letter which Leon Trotsky sent to him on April 19, 1939:
“Dear Comrade Tresca:
“In spite of all the profound divergences, which neither you nor I have the habit to deny or attenuate, I hope that you will permit me to express my deepest esteem for you, as for a man who is every inch a fighter. Your sixtieth birthday is being celebrated by your friends, and I take the liberty of counting myself among them. I hope that your moral vigor and revolutionary ardor will be conserved for a long time to come.
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Last updated on 12.9.2008