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Workers’ International News, January 1943


Andrew Scott

Anglo-American Relations

Behind the Façade of Co-operation


From Workers’ International News, Vol.5 No.8, January 1943, pp.1-5.
Transcribed by Ted Crawford.
Marked up by Einde O’Callaghan for ETOL.


Never was so much promised to so many by so few. The mythical Man from Mars might be excused for jumping to the conclusion that the mission of the British capitalist class is to bring about the Kingdom of Heaven upon earth. But no one else could be excused for jumping to that conclusion: and no one else is very likely to do so, least of all the British capitalist class.

For, even as they serve up their mock banquet to the workers, they are engaging in the most serious and. sober – not to, say pessimistic and ‘defeatist’ – talk about conditions after the war. The two worlds are entirely different, the world they promise, and the world they seriously discuss as a fast approaching, reality.

The principal discussions, of course, are reserved for the Clubs, the Stock Exchange, the Board Rooms and the private gatherings. But enough emerges into the clear light of day via the columns of the Times and the more expensive monthly reviews, together with the less careful speeches, to give some sort of indication as to the conditions and struggles that British capitalism sees ahead.

Looking ahead, the British capitalists see neither simple the picture nor the radiant picture that they hold before the masses. On the contrary, the picture is both complex and gloomy, While they piously talk in public about only one main enemy, Germany, they meantime discuss in private not a few other enemies – and in tones which are absent when they discuss Germany. Above all they discuss the revolutionary proletariat of Europe, the worker and peasant masses of the East, and, paradox of paradoxes, more greedy and more threatening in some ways than the others, more ambitious and domineering than the others, but (bitter thought for British capitalism) the only guarantee against them – the rival imperialists of America.

It is their relations with American imperialism that we propose to discuss here, for it is in this connection that they have revealed most clearly what will be the real state of affairs after the war, assuming that both German imperialism and the revolution are defeated.

“Terror and Timidity”

It may be remarked in passing that the British capitalists not only reveal what sort of dog-fight they envisage after the war but also a weakness and vacillation in face of coming events that can only encourage the workers in their struggle for a genuine solution of the problem. After the last war J.M. Keynes could write

“The terror and personal timidity of the individuals of this (capitalist) class is now so great, their confidence in their place in society and in their necessity to the social organism so diminished, that they are the easy victims of intimidation.”

Today, when a colony is lost every other month (either to enemy or ally) and when a -market is taken over every other month (either by ally or enemy) the terror and timidity of the capitalist class has slumped even front its 1918 standard. And today most of the intimidation comes from across the Atlantic.

The Coming Export Battle

The question of exports occupies most of’ the post-war horizon of British capitalism. Hugh Dalton, President of the Board of Trade, has pointed out that it is “impossible to exaggerate the importance of exports in the post-war years.” And Sir William Jowitt has added that “unless we could increase our exports and balance our trade we should be driven to the grave alternative of cutting down our imports, perhaps to the barest necessities.”

Here, then, is a task that would have to be solved before the slightest reality could be given to any idea of a higher standard of living, or “freedom from want”. But what are the chances of its being solved? What are the conditions in which they will attempt its solution? Sir William Jowitt concluded the above statement with the pious hope that:

“Surely this problem need not involve once more an unregulated scramble for exports, cutting prices, reducing wages, lowering the standard of living, one country after another debasing its currency to try and steal an advantage in the export market.”

He did not indicate any alternative, however, to this traditional method, and it is in such a stormy sea that any reformist plan for the raising of living standards or the abolition of want would be set adrift.

But that is only the palest outline of the true state of affairs in the struggle for export markets: for, it assumes merely a repetition of the conditions and methods of pre-war days. In reality, however, the position will be incomparably worse from the point of view of British capitalism. The Far East markets, for instance, may be taken out of Japan’s hands, but America is demanding in a louder and louder voice to have access to them. Australia may remain nominally within the Empire but the Australian market will be mainly a market for American goods. And already a Times Correspondent can say: “It is at America’s side rather than at Great Britain’s that the Australians whom I have seen feel that they are fighting.” Canada has already been penetrated economically. As for the future European market, America is not training its million “administrators” merely to give them a six months holiday on the Continent and then withdraw them in a gentlemanly fashion. America is deliberately preparing to make use of the entire world including the British Empire and Europe, as a gigantic market for its industrial products and its capital.

America’s Growing Domination

America went into the last war a debtor nation to the extent of approximately 3,000 million dollars and emerged a creditor nation so that in 1931 her net creditor position was about 14,000 million dollars. In 1913 the USA owed Europe 5 billion dollars, and in 1920 Europe owed the USA 4.3 milliard dollars in commercial debts and 8.5 milliard dollars in war debts. The national income of Britain expanded until 1896; it was more or less steady till the last war; but since then it has been falling. On the other hand, the national income of America was to 1941 92,200,000,000 dollars – an increase over the 1940 figure to the extent of 16,200,000,000 dollars – America entered the present war as the greatest creditors nation in the world, and is steadily improving her position during the course of it. And especially is this position improving in relation to Britain.

The first “neutral” period of the war proved a regular Eldorado for American imperialism. British purchases were on such a, scale that the gold and dollar resources simply melted away. By the end of the “cash and carry” period Churchill was forced to admit: “We did not know which way to turn for a dollar.” The £1,779,000,000 which was the estimated amount’ of British gold and dollar assets on September 1, 1939, had been exhausted in the USA during the first 18 months of the war. And the United Kingdom deficit of Canadian dollars had in March 1941 reached a figure of about 795,000,000 dollars.

Britain’s National Debt, which had risen from £650 million in 1914 to £7,435 million, in 1919 started off the present war at £8,163 million and by March 1942 had reached £14,073 million.

Britain: A Debtor Nation

A gigantic revolution in Britain’s economic position is taking place during the course of the war. From a great creditor nation she is being transformed into a debtor nation, and a nation heavily in debt at that. And not only is this taking place in regard to America, but even in regard to the Empire countries! Already the City is becoming anxious at the way in which India and Africa, for instance, are paying off their debts. South Africa has reduced its indebtedness to Britain during the war by at least £100,000,000. In regard to India, Oscar Hobson, City Editor of the News Chronicle notes:

“One of the most striking financial feats of this war has been the ability of India to pay off the bulk of its sterling debt.”

And the Times says:

“When the present transactions are completed Indian Sterling loans will have been virtually liquidated in just over two years.”

Just before the war this debt stood at £376,000,000, and the capitalists are getting worried about the next step after it is finally liquidated. When a similar position was reached in Canada an agreement was reached whereby Canada made a “free gift” of 1,000 million dollars to the Mother Country. But Hobson indicates: “naturally I am not suggesting that Canada’s example is one that India could or should follow.” No, perhaps in the present circumstances it would be better not to suggest that India should make a free gift of 1,000 million dollars to Great Britain. But the alternative may be to take steps towards the mobilising of the £300,000,000 of British commercial investments in India. And that, thinks the City, is a “difficult and complex problem”.

Industrialisation in Empire

Throughout the Empire, and, of course, the rest of the world, the process is taking place: Britain’s position has become one of debtor, not creditor. And at the same time another process, equally injurious to capitalism in the home country itself, is taking place. Plant is being set up in almost all of the formerly non industrial countries for the production not only of weapons of war but textiles, furniture, and many other goods formerly imported. India, for instance, according to the Times has shown “great activity in the production of iron and steel, chemicals, cement, coal, and in cotton manufactures, as well as in numerous smaller industries.” In Australia the number of factory workers increased from 566,000 just before the war to 692,000 in Jinn. 1941, and now considerably higher. The very exigencies of the war itself are assuring that after it is over British exports will be drastically cut even by this one process of the building up of the industry of the formerly “raw material” countries.

Expansion of American Industry

But the industrial power that is being built up above all others is that of America. The growth of industry in the Dominions, colonies and other regions such as South America is changing the balance as between these countries and Britain; but the phenomenal expansion of American plant and production is laying the basis for a complete revolution in the balance of world trade. Against the measure of that expansion the rosy pictures of the future painted by the British press have no relation to reality. And their protests are like the indignant chirping of a sparrow that finds a contracting company has arrived to build a sky-scraper where it has been in the habit of building its nest.

Already the Times has remarked with some misgiving that “by the middle of 1942 America had increased its steel-making capacity by as much as the whole annual output of this country.” Aeroplanes are being turned out at the rate of 4,500 a month, and some of them are of such types that the factories making them could easily switch over to the manufacture of gigantic civilian planes. British imperialism knows that it is already beaten in the coming struggle for the control of world air transport. Even the recent appointment of an ace British plane designer to a post in which he will make preparation for the coming struggle is no more than gesture of despair.

American capitalism is thoroughly conscious of the coming struggle for control of air transport. A House of Representatives Committee has already pointed out:

“Very seriously we say to you that the nation which is best prepared to enter world air commerce on a large and effective scale at the end of this war may be the first nation to recover its economic stability.”

And it adds, in a way that cannot but have a knell-like sound n British capitalist circles:

“The American aviation industry will be revolutionised after the present war.”

On another aspect of the same question the American magazine Time comments:

“The United States is pouring millions of dollars and invaluable aviation knowledge into huge air bases on British territories such as Bermuda, Fiji and the Solomon Islands, yet to date there is no assurance of landing rights after the war.”

It can be taken for granted that the pressure to obtain these landing rights (and more besides) will rise in direct proportion as the strength of the U.S. air force, navy and army rises. The question asked by Time: “Will Britain and the United States jockey to form rival imperialisms based on air power?” gives some flavour of what is to come.

In the manufacture of ships America has already taken steps that land it far ahead of Britain in the very technique of construction. Pre-fabrication, with all that it means in economy, has been widely introduced. By the end of the war America will not only have the biggest navy in the world but also by far the biggest merchant fleet.

In the making of tanks welding has been introduced, and progress in the actual technique of welding has been such that it is clear it will be capable of general application to all sorts of steel construction after the war.

In every sphere of American industry both the organisation of production in vast units and the improvement of technique are proceeding apace. Britain’s antiquated industrial machine is being left far behind, not only in the production of war goods but also in the coming struggle to produce and sell peace goods.

The war itself is screening the exact figures and facts of the increase in America’s power to produce. The “peace”, however, will leave no doubt of its astronomical scope.

Battle for Markets

This expansion of US productive capacity is going to be one of the most outstanding and influential phenomena of the next period of history. Its repercussions will be felt in every corner of the globe and indeed are already being felt. For American imperialism is going to have by the end of this war such a capacity to produce goods of every sort and to transport them that it will not dare to permit any markets in the world to be closed to them. Privileged groupings such as the British Empire before the war, or Nazi Europe at the present time, would represent in the future a lethal weapon aimed at the heart of American economy. Ottawa agreements would precipitate a crisis in the USA. Debarment from any big percentage of the world’s markets either by tariff walls or by military conquests would bring about such unemployment in America as has never been seen in any country before,. And of the truth of this the :American capitalists are only too well aware. Their policy is consciously based upon the necessity to have the entire world as a market.

They know the dangers to them of the sort of unemployment forecast for America by Darré, Nazi Minister of Agriculture, when he boasted that

“German industrial products will be sold at very low prices to the whole a world and thus cause the United States to have not million but 35-40 million unemployed.”

As one safeguard against such a potential menace the American capitalists are seeking to assure themselves access to every possible market.

See how the process has already started in the very first area they have occupied and how jealous are the former claimants of that market! In regard to the sending of goods and clothing to North Africa by America the Manchester Guardian, speaking for the British cotton manufacturers says:

“North-west Africa was bare of supplies of many foodstuffs and of textiles, and it seems clear, from the reports mentioned that the United States has undertaken to make good the deficiencies through the lease-lend machinery. The reopening of the important North-west African markets for cotton goods, accordingly, will bring no fresh business to Lancashire, which formerly did a large trade in that direction.”

North Africa is only the first step. America, which before the war with 6 per cent of the world’s population held 40 per cent of the world’s wealth; America, which now holds 95 per cent of the world’s gold; America which will soon have the world’s mightiest army, navy and air force; America, with the world’s most powerful industrial machine; America, which is already spending £50 million a day on the war; whose industrial output is a quarter of the world’s total, three times as great as that of the United Kingdom, and twice as great as that of Greater Germany; and whose major war industries possess little less than half the capacity of the whole world; this America is already started on what Trotsky described as “the greatest imperialist explosion in history”.

Lend-Lease – And Repayment

In the present stage of the battle for domination the outstanding weapon has been that of “lend-lease”. This instrument has been used both to secure domination over former creditors and to penetrate formerly closed markets. Once John Bull had used up his entire US holdings Uncle Sam kindly offered to continue providing goods, which could be repaid after the war. But the British capitalists know only too well that they will not be permitted to repay in goods. Even after the last war American tariff walls had to be raised to enormous heights to keep out British and other goods. After the present war they will be even higher. When one British paper calls on America to accept payment in imports of goods and asks for the reduction of the “gigantic barrier of the Hawley-Smoot tariff”‘ it is merely voicing a forlorn hope. And when it adds that if this is not done then “we can just treat the Atlantic Charter as a well-meant if rather clumsy joke”, it is speaking no more than the truth.

What, then, will be the coin in which America demands payment of “lend-lease” aid? Nothing less than markets, together with strategic bases. And already this process has begun. In the West Indies and off the coast of Canada several bases have already been occupied. In East Africa, Eritrea is both base and market; in West Africa, Liberia provides a stepping stone to vast areas; North-west Africa provides for the interests both of strategy and trade; in the East Indies the same process will take place, butt, perhaps with a greater boldness and haughtiness; and, when Europe eventually is invaded and (as they hope) the Revolution crushed, that, too, will be a market for American goods.

From the last war Britain emerged victorious over her greatest capitalist rival on the Continent. Lloyd George expressed himself shortly afterwards in the subject in the following words:

“The truth is that, we have got our way. We have got most of the things we set out to get ... The German navy has been handed over, and the German colonies have been given up. One of our chief trade competitors has been most seriously crippled, and our Allies are about to become her biggest creditors. That is no small achievement.”

With only slight alterations these words could be used to describe the thoughts of an American capitalist statesman emerging victoriously from the present war. To be sure, Britain’s navy need not be handed over but it will be reduced to comparative feebleness in relation to that of America. Apart from that the statement is practically precise.

400,000,000 – Customers

In China, one of the biggest of all potential markets, the British capitalists still have great hopes, and these are indicated by a recent paragraph in the City page of the Manchester Guardian:

“There is something cheering about a Reuter message from Chungking reporting the opening of the first British bank branc in Free China ... What avenues of wishful thinking this report opens. One day the Japanese will be thrown out of China and the world’s greatest reconstruction job will begin the rivers to be dammed, the roads and railways to be built, the farms to be equipped. There is enough demand to keep all the industrial countries employed for years.”

But into this market too has penetrated the sharp point of “lend-lease”, and America’s position across the Pacific will be much more favourable than Britain’s with two continents between. [1]

America Reviews Britain’s Problem

Writers in America have been much more outspoken about the total effects of all the forces that are operating to transform Britain’s economic position than have any British circles. The National Planning Association of Washington, for instance, has issued a, report on what it describes as “the revolution in Britain’s economic position.” In this they stress the two items: a) the dissipation of Britain’s overseas investments yielding about £200,000,000 annually in interest, and b) the damage to Britain’s export trade through the establishment in the importing countries of plant to make many of the things they used to buy from Britain. They do not, of course, stress the gigantic role of American competition. But the effect of this revolution, in the opinion of this body, may well be to produce an annual deficit of about £200,000,000. In reality, of course, this deficit could not be allowed to materialise as a deficit, but its equivalent in imports would have to be kept out of the country. The results of this in the war against Sir William Beveridge’s Giant “Want” can be imagined. Out of a total pre-war import of about £1,000 million, £200 million would be cut down, that is 20 per cent. In other words, Field Marshall Beveridge would inevitably lose 20 of his 100 Divisions in the very first major operation of the “war against Want.”

The authors of this same memorandum then go on to discuss a number of possible solutions and it, is symptomatic of the real attitude of ruling class circles to “after the war” that one of these is large-scale emigration to the Dominions. And by “large-scale” they apparently mean eight to ten million people. But even this solution is given up as impracticable and the document winds up with the suggestion that British export industry may be saved by “new products and more efficient means of production.” But the tide is not flowing in that direction. Antiquated British industry is becoming more antiquated in relation to American as the war continues, not less so. Even now such an elementary advance as welding instead of rivetting, particularly in shipbuilding, has not been adopted by more than a tiny fraction of British industry.

Fascism – British Capitalism’s Only Solution

The solution of its export problem to which British capitalism would inevitably and instinctively turn would be that of cutting its price, right down to the lowest possible competitive level, and it has only one way of doing this – by slashing wages ruthlessly. The cost of modernising British industry :and bringing it to the level of America’s industry is beyond anything that capitalism can afford as it slides from its old position into that of a second rate power little above the level of France. But in slashing wages there is one great difficulty in the way. The British workers are still organised in great and growing trade unions, and the Labour Party is still in existence. To be sure, during the course of the war the collaboration of the leaders of the trade unions and the Labour Party with the capitalists has reached record levels of cynicism and treachery. On the surface it would appear that they could put over anything to the workers. But during the period of the war wages have not been slashed. On the contrary, many concessions have been made, and, even though it is a fact that the union leaders have opposed almost every single wage demand made during the course of the war, they have done so in a period when wages were going up, even if not at the same rate as the cost of living. Very different, however, will be the post-war period, and if they want to maintain any sort of position and exert any influence on the workers the labour and TU leaders will have to fight against the inevitable wage-cutting policy of the government in some sort of way. But this is just what the government and the capitalist class will not be able to tolerate. And it is precisely here that the transformation in Britain’s economic position will begin to express itself politically. The whole logic of the position will force the capitalists into a direct struggle against the Labour movement, for while it is in the way they can never compete on the world market on terms that would offer them anything remotely like their previous princely rate of interest. It was not without thought that a Conservative wrote recently in the “Sunday Times” about the smouldering fires of revolution which may yet set Europe aflame, and from which perhaps even our own country may not remain immune. The inevitable tendency of British capitalism after the war will be toward, not any high-minded war against disease, poverty, want, or anything of the sort, but toward Fascism. Nothing also is open to them if they are to live.

Meaning of “State Control of Industry”

Meantime, they brace themselves for the struggle. In the Times and elsewhere they have been discussing the necessity for a continuation and even extension of State control of industry after the war. It is clear that there is no major disagreement in principle on this question among the dominant section of time capitalists. The only disagreement is in relation to the machinery of control. One section apparently wants a species of complete self-government for industry, with special co-ordinating committees linking the main industrial council with the Government. Another section favours the more traditional machinery at present in operation.

Whatever attempts are made to dress this increasing measure of State control as “Socialism” – and such attempts will be made – its real purpose is clear. British capitalism is girding its, loins for battle. Battle first of all against American competition; but battle also, as an essential part of that, against the British working class. Such a battle cannot be fought without the greatest possible measure of centralisation and control. For each capitalist or each combine at the present stage of imperialism’s development, to carry on an individual fight would be as crazy as for each regiment to wage its own individual war. The Times itself points out that, “The individualist philosophy is a little fly-blown.” And when this same [the] Times adds: “Institutions must stand or fall by the extent to which they are judged to be in the social interest” it intends the expression “social interest” to represent “capitalist interest”. It also clears its plan of any charge of “Socialism” by pointing out: “We must beware of the people who advocate socialism in order to remake the world safe for capitalists.”

Already in North Africa the subterranean struggle between British and American imperialism has erupted above ground in political disagreements. Only the urgent need to assure the defeat of the common enemy, German imperialism, and to prepare for counter-revolutionary intervention in Europe and Asia keeps the lid clamped down on the seething, bubbling brew in the imperialist cauldron dignified by the name of “The United Nations.” But that simply means that when the open struggle does come it, will be all the more violent. Snatching, not at mere colonies, but at Continents; forcing open the gates of the markets of their “allies”; seizing international airports; obtaining by force, fraud and threat naval bases for the domination of the world’s oceans; cutting prices, slashing wages, lowering conditions, increasing mass unemployment; driven desperate by the very fecundity of the means of production they control; the British and American imperialists will toss humanity out of the frying pan of the present war into the fires of its aftermath.

Coming Opportunities for the Workers

Here then is a true picture of the post-war idyll, or at least of a section of it, for we have confined ourselves mainly to economic and trade questions. The political conclusions flowing from the economic struggle, however, are clear and, far from pointing towards a Beveridge Heaven they indicate something much closer to a Fascist Hell. However, such a capitalist future could only come to pass on the assumption that the workers proved incapable of rising to their historic responsibilities and taking the power into their own hands is order to give reality to their hope of a better future. And they will have such opportunities to do so in the coming period that that is by far the more likely alternative.

Amphion, son of Jupiter, was reputed to have built up the walls of Thebes by the music of his lyre. Joshua was reputed to have caused the walls of Jericho to crumble by the music of his trumpets. But the British capitalist class hope to outdo those feats. They bend their efforts to buttressing up the crumbling walls of their system by the music of the tin whistle playing the shrill notes of There is a Happy Land. This itself can only be a source of encouragement to the workers and an indication of the terror and timidity of their rulers.

But another sound is in the air. The sound of tramping feet. The war of capitalism itself is setting them on the march and already in Europe and in far-off India it rings ominously in the ears of the capitalists. The star of American capitalism may be rising, but it is rising within the framework of a world system that is falling – and falling fast. For that reason the American capitalists are all the more aware of the dangers that lie in even the smallest of revolutions at the present day.

The truly miraculous power to transform nature’s raw materials into man’s everyday needs which is being built up in America and to a lesser extent in Britain can either be the basis of the most profound misery and of future wars, or it can lay the foundation for a truly great raising of the level of life throughout the world. Which road will be taken depends upon whose hand is at the wheel of the vehicle which is at present plunging humanity recklessly along the road to destruction. We have no doubt that the workers will rise to the level of this supreme task. With Engels we can turn to the capitalists and say:

“This, my lords, princes and statesmen, is where in your wisdom you have brought old Europe. And when nothing more remains to you but to open the last great war dance – that will suit us all right. The war may perhaps push us temporarily into the background; may wrench from us many a position already conquered. But when you have unfettered forces which you will then no longer be able again to control, things may go as they will at the end of the tragedy you will, be ruined and the victory of the proletariat will either be already achieved or at any rate inevitable.”



1. There is, of course, the question of how either the USA or Britain would make the Chinese and other markets sufficiently prosperous to buy their increasing supplies both of consumer goods and capital goods. But that goes beyond the scope of the present article. It is sufficient to say here perhaps, that the matter reminds us of the contribution of Sir Joseph Cook to the discussions about intervention in Russia after the last war.

“He thought the fear of Bolshevism was exaggerated. It was a movement caused by high prices. The only cure was to try to bring prices down in our own countries.”

This antidote to Bolshevism was distinguished by its simplicity – but also, unfortunately, by its impracticability for the capitalists.

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