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Albert Gates

The Inter-American Cartel

(August 1940)

From New International, Vol. VI No. 7 (Whole No. 46), August 1940, pp. 133–137.
Transcribed & marked up by Damon Maxwell for the Encyclopaedia of Trotskyism On-Line (ETOL).


The Dream of Bolivar

SIMON Bolivar, the great South American revolutionary, first conceived of a plan for the unity of the Western World. Bolivar’s ideal was never realized despite the enormous energy he spent to fuse the countries of the two continents. The Panama conference of 1820, was representative enough. Most of the countries were present, although of the American delegation of two, one had died in transit and the other arrived only after the conference had adjourned. Yet, despite the general acceptance of Bolivar’s proposals at the conference, one country alone ratified its decisions.

Bolivar had hoped to establish a single powerful united states from the Hudson Bay to Patagonia. He looked forward to a unified economic, political and military development of the new world as the sole hope of civilization. Thus, the new world would be contrasted to the decay of Napoleonic Europe then engaged in mutual self-destruction. Bolivar, it is clear, did not understand the positive effect that Napoleon’s campaigns had upon future capitalist development in the old world, nor did he understand, that the Little Corporal had dealt mortal blows to the remnants of the feudal order.

The collapse of the conference had a disastrous effect upon him. The failure to ratify the Panama decisions brought an end to the movement toward hemispheric unity. It was not to arise until more than a hundred years later and then only as a result of the imperialist needs of the most powerful nation in the world, the United States.

The one country which could have strengthened Bolivar’s ideal was America. But in 1820, the United States was completely absorbed in its own development as a nation. The War of 1812 had only shortly been concluded. The Louisiana Purchase opened gigantic vistas in the westward movement of the new people, and as the frontier pushed toward the Pacific Ocean the product of Bolivar’s dream world was realized on a national scale by the new vigorous republic of the North.

Bolivar’s Plan Utopian

Bolivar’s plan, however, was essentially utopian. Most of the South American countries had, primarily through his efforts, only just achieved their independence. Others were still under the heel of European feudal and new capitalist powers bent upon colonial expansion. The economy of the Latin American countries was almost wholly agricultural. Handicraft production could not supply anywhere near the simplest needs of the many millions of people. As in the United States, national developments were incomplete and the cultural level of the masses insufficient to grasp the significance of hemispheric unity. Above all, in the period of rising capitalism, of national unifications, the idea of hemispheric unity was totally incongruous.

If hemispheric unity appears to be a reality in the twentieth century, it is due essentially to the imperialist epoch of modern capitalism, the triumph of international economy, the existence of a world division of labor and mass production, the period of social decay. Under these conditions, however, hemispheric unity is possible in only two ways: Either under domination of the most powerful capitalist nation, or through the victory of the socialist revolution and the establishment of the Socialist United States of North and South America.

America’s Orientation

At the recently held Pan-American conference in Havana, Cuba, the United States presented its program of hemispheric unity. In my article, A New Horizon for American Imperialism, (The New International, June 1940), I traced the effects of a possible German victory on American diplomatic and military policy and showed it to be obligatory for the United States to make up its losses in the European and Far Eastern markets by a complete domination of the entire hemisphere. Having failed to put Europe on rations, faced with a permanent loss of the European market, likely to fall to Nazi Germany, and having been rudely expelled from the Far East by Japan’s policy for “a new order in Asia”, there is no avenue of escape for the United States other than complete control of the two Continents. The success of American policy means driving Germany, Italy, Japan and England out of the new world.

In the same article I treated with the possibility of a conjunctural stalemate in the struggle for world domination. Under such a condition, the United States would control the Americas while Germany is master in Europe, Africa and the Near East, and Japan dominates Asia and the Far Eastern Pacific. This situation could be only temporary, preceding war on a planetary scale between these three powers.

In the meantime, while she remains outside of the present conflicts in two decisive areas of the world, the United States is rushing its plans. How does the present Administration propose to achieve hemispheric unity? What methods will be employed? What are the possibilities of their success and what effects will they have upon the future development of the new world and the struggle tor socialism?


Inter-Continental Unity and The War

Inter-continental unity in 1940 is an American plan based upon imperialist needs. In its decisive aspects, especially economically, it conflicts with the needs, aims and interest of many Latin American nations. The Administration in Washington is clearly cognizant of the great barriers that rise before it, and therefore, the program is developed in progressive, but natural stages.

At the outbreak of the war in Europe, the State Department pushed into existence the Inter-American Neutrality Committee for the ostensible purpose of keeping the war from American shores. In reality it made possible oceanic surveillance by the United States navy of American shores. It served as a warning to the Axis that the United States was determined to make this part of the world its “sphere of influence”. At the same time, it opened the way for military collaboration with South America for the purpose of establishing American bases there. Secret discussions have been and are taking place on the subject of military defense of the hemisphere in the event of any untoward development in the European war. The extension of the military arms of the United States in Latin America must necessarily impose the closest political and economic collaboration between them, whether it is voluntary or not.

The Havana Conference

The Havana conference, which met under the initiative of the United States, marked a tremendous step forward in the plans of the Roosevelt Administration. Persistent pounding by the American delegation forced Argentina, Brazil and Uruguay into line. They finally succumbed to Hull’s proposal to oppose the transference of European colonies in the new world, which is to say, to Germany or Italy. The agreement was reached, when it became clear that the United States was prepared to make genuine economic concessions to Latin America, that is, was prepared to foot the bill for the terrible economic dislocation that has taken place since the outbreak of the war and the establishment of the European blockade.

In the midst of the conference. President Roosevelt asked congress for a half a billion dollars for the Export-Import Bank which has heretofore engaged in improving trade relations between the United States and South America, providing the necessary capital to ease the existing stringent conditions. While dull-headed and ignorant congressmen and senators object to what they believe to have discovered as a “subsidy” to South America, they will soon learn that it will be necessary to increase that sum many times in the interests of American capitalism.

Havana Deliberates

An interesting and significant decision of the Havana conference, was the Act of Havana. Relating directly to the question of the European colonies, the clause permits the military action of a single nation in preventing their transference without first awaiting the agreement of other Latin American countries. It is clear that this permission is given to the United States and only to it. No other country is in a military position to act on the basis of the clause, and no other country is so vitally effected by a transference of the colonies to Germany and Italy as is the United States.

The agreement on the struggle against “Fifth Column and subversive movements”, while presumably directed against Germany, Italy and Japan, is more in the nature of a warning to dissident groups and native revolutionary movements in all countries. A meeting of American jurists is scheduled to discuss the legal means of enforcing the Havana agreement. Already, the conference agreed to aid each other by exchanging information, carrying out joint forays, and in general to perpetuate the existing systems of government in power. Thus, the struggle against “Fifth Column” activity is at once the most treacherous action and the most dangerous to the movement of socialist emancipation of all the Americas.

Finally, the Havana meeting came to the question of economic cooperation of the United States and Latin America. The American delegation did not press for the creation of the long discussed inter-American cartel. The brain-child of Mr. A. A. Berle, assistant to Secretary Hull, and regarded in many quarters of bourgeois opinion as the leading intellect in the State Department, met with powerful opposition prior to the conference which resulted in its temporary abandonment. It was patently clear beforehand that insufficient spadework had been done to enable its passage with the active cooperation of the twenty countries. There-upon, the conference merely decided to establish “close economic cooperation and to consider at some future date the more extended American plan.” The next stage will witness a determined drive to set up the cartel.


What Is the Cartel

Cartels as a phenomenon of capitalist economy arose at the turn of the century. It was one segment of the monopolistic development and became a basic feature of economic activity. Cartels were established by capitalist enterprises for the purpose of pooling resources, controlling conditions of sale, terms of payment, division of the market, fixing prices and dividing profits. Unlike the huge trusts in which the single enterprise was integrated into the trust at the loss of its own independence, the cartel is a much looser organization. At any time, the cartel may be dissolved, or any one enterprise may withdraw from the organization. Thus, on a national scale, cartels arose naturally in period of rising trusts and syndicates, to meet competition in the market and to wage a more effective struggle for existence.

The plan of Mr. Berle proposes to establish a similar organization on an inter-continental scale. Its magnitude already creates new conditions which hitherto could not and did not affect national cartels. International cartels and trusts have existed and do exist, to be sure. But these trusts and cartels are agreements between private financial and industrial organizations. The American proposals are govern-mental proposals! The inter-American cartel is conceived of as a cartel initiated and directed by the governments of Latin and North America in collaboration with private industry and finance. By that very fact, totalitarian development in government and autarchic development in economy are inevitable.

On the face of it, the inter-American cartel appears to be a simple plan. It proposes 1. to take up the surplus commodities and raw materials of Latin American which have been accumulating since the war destroyed the European markets of the leading Latin-American nations, 2. to establish an export division of the cartel to dispose of these surpluses to the advantage of “all” the Americas, and 3. to establish a controlled and “planned” production of agriculture, and exploitation of the resources and industries of Latin America on an intercontinental plane. No secret is made of the fact that this measure is proposed as the economic means to fight Germany, Italy and Japan, to drive them from the markets of South America. What is not made clear is the fact that the inter-American cartel is a plan by which the United States will establish its hegemony over the entire western world.

U.S. Hands Out A Subsidy

America already dominates the smaller and unimportant countries. To achieve the cartel she must obtain the agreement in one way or another of Argentina, Brazil, Chile, Bolivia, Peru, and Uruguay.

The cartel aims to meet the German barter system of low prices and credits, and Germany is determinedly fighting the cartel because, if successful, it will eliminate her from the American markets. But the cartel, on the other hand, is not merely an economic weapon in the hands of Washington. It is a first line measure of defense, and the United States is determined to succeed in its establishment. When congress agrees to the additional $500,000,000 capital for the Export-Import Bank, a total of $700,000,000 will have been given to it for the purpose of strengthening American relations to the southern countries. Anywhere from $200,000,000 to $2,000,000,000 are estimated as the initial capital required to organize and sustain for a time, the cartel.

Yes, despite the obvious desire of Washington to hand out necessary capital to the Latin American, those countries are extremely hesitant to accept the cartel. Argentina led the opposition to it. The permanence of the cartel has been a subject of discussion. Will the cartel remain if the war is ended? Will the cartel destroy economic relations between the South American countries and the European markets if it dissolves at the close of the war and normal relations are reestablished? What are the U.S. intentions in urging the cartel? Will it lead to complete Yankee domination and destruction of the independence of South America? These questions, as can readily be seen, are decisive for the orientation of all the Americas since they contain the very essence of the future development of American imperialism, and they will decide the character of existence of every South American country.


Economic Conflicts

The chief obstacles to the realization of the inter-American cartel is the economic conflict between the United States and Brazil, Argentina, and others. The South American nations have relied primarily upon European markets tor disposal of their commodity surpluses. While South America is the largest area of American capital investments, the American market absorbs only a small part of the South American agricultural production. South America is potentially an important field for American export, but under existing relations, the United States establishes a favorable balance of trade with it, and conversely, creates an unfavorable trade balance for those countries.

The simple fact is that the economies of the U.S. and South America are not interdependent. Trade is most important to the existence of those countries. They are primarily agricultural nations, sources of raw materials and minerals of great variety and importance. The greater part of Latin America is unexploited and a rich field known to contain millions of tons of coal, iron, silver, copper, oil, platinum, manganese, and vast acres of timber. In the agricultural field, we find that the southern continent is an exporter of enormous quantities of corn, wheat, cotton, coffee, rice, wool, – in most instances, commodities in competition with American agriculture, or minerals and ores obtainable in vast quantities in the United States.

What South America Produces

While much of the economy of Latin America is a “colonial” economy (resources developed by foreign capital), native capital is reinvested in native lands, and as in the case of Argentina, invested in other Latin-American countries. Argentina, the most powerful opponent of the cartel, is the richest nation in South America. With only thirteen million people, she is the strongest nation on her continent. Immensely wealthy, with an economy dependent primarily on her export of agricultural commodities, Argentina is decisively interested in the European markets. At the present time, with over 64 million acres in cultivation, she is the largest agricultural nation in the world excluding the United States, China, India and the Soviet Union. She is the 4th largest wheat producer in the world, the world’s greatest exporter of wheat, and the world’s greatest exporter of corn. Her conflict with the U.S. is expressed in the slogan: We buy from those who buy from us. America buys little from Argentina. To increase imports from that country is to invite a veritable crusade by the American agricultural interests. Remember Argentine beef!

Brazil is the coffee center of the world, capable of supplying one hundred per cent of the world’s needs, where she now supplies about seventy. Two-thirds of South America’s cotton crop is grown in Brazil, and she has taken away much of the American cotton market. She is the largest tobacco grower in Latin America as well as the greatest source of vegetable oil in the world. Brazil also has the greatest timber reserve in the world. With the exception of coffee and cocoa, Brazil is a competitor of the U.S.

Chile vies with the United States in the production of copper, while her tremendous nitrates industry is now being displaced by the production of synthetic nitrates. Venezuela has tremendous oil reserves which are exploited in the main by the United States. Bolivia is an important source of tin, as yet not fully exploited and still dominated by Great Britain. The other countries, without exception, in one form or another produce similar agricultural commodities or have resources akin to the U.S.

The one-sided agricultural development of the South American nations has brought into existence movements of “national self-sufficiency”. The aim of these movements (Mexico, Argentina, etc.) is to establish a balanced economy, industrial and agricultural, improve economic standards, and reduce reliance upon exports and foreign capital. Proceeding with greater independence, Argentina has made tremendous headway in the direction of industrialization. Mexico, as is well known, has exceeded all other Latin American efforts to establish economic independence and attempts industrialization with a partial system of planning. But the efforts of Cuba to adopt a plan of national self-sufficiency was brought to sharp halt through the direct intervention of the United States in the person of Under-Secretary of State Sumner Welles.

The Difficulties of The Cartel

One can readily imagine the immense problems which confront the United States in her efforts to establish the inter-American cartel. American economy rests upon the greatest industrial apparatus in the world, an industry which is becoming more and more dependent upon the world market, that is, upon export trade. The capture of the entire trade of Latin-America, which is what is required to drive the Axis powers from this world, means that the United States must take the huge agricultural surpluses of those countries and become the tradesman of the new world. But despite the enormous development of an industrialized America, she too, has a large agricultural economy. The agricultural population of the United States is around the figure of 32 million that is, almost three times the population of Argentina alone. American agriculture, it should be remembered, has been in a permanent crisis since the World War. While the United States is herself a great exporter of agricultural commodities, wheat, corn, cotton, and meat products, she can in no way solve the economic problems of the Latin American countries. The situation is the same in the oil industry.

Thus, J.H. Carmical, in the New York Times points to the problem when he writes: “Since Latin America and the United States have as good as the same products to sell in the export markets, the question naturally arises as to how production can be maintained at or near current levels, and the surpluses thus created disposed of in other areas which will probably be self-sufficient, or nearly so, in a few years. In the meantime, the question is how are any of these groups going to be in a position to buy our products on a large scale without exporting their goods, since their gold reserves are being rapidly depleted.

“Formation of a Western Hemisphere cartel probably would have a disturbing influence, particularly at first, for it would disrupt established trade channels.”

The view of the New York Times writer is essentially correct. And yet, the United States must overcome all of the aforementioned obstacles, because American imperialism cannot exist without overcoming them. Unless she is able to obtain control over the western world, she cannot hope to control the world. If she loses in South America, that is the beginning of the end of American imperialism.


America Must Control

It is not merely an economic question. It is a political question of the first magnitude. Since the war closed the European market and Japan holds the key to the Far Eastern situation, America must move fast. The domination of South America, as we have already pointed out is a question of defense. Thus, the owner of the Nation, Freda Kirchwey, proposes the establishment of a “democratic totalitarianism” as a means to “resist the absolutist totalitarianism of the European continent. Planning is necessary, centralized control is necessary, and some sort of merchandising cartel, as suggested by the Administration, may be the best instrument through which to achieve both.” And then, this pathetic woman adds, “But such a system must be worked out and administered collectively and not under the domination, however benevolent, of the United States. Otherwise it will not work at all.”

Under the conditions of Laissez-Faire, given a completely industrialized United States with no agriculture to speak of, the establishment of American domination of this world would be a relatively simple one, and in some respects a natural one. An inter-American customs union would in all likelihood have already existed for some time. A balance of trade could easily be established which would redound to the interests of all the countries. But capitalist economy has long passed that period. And American capitalism is not English capitalism. How then can the United States succeed in the establishment of the cartel and make it function?

Toward Hemispheric Reorganization

It can do so by first creating the political and military conditions to affect such economic relations and make possible “a unified hemisphere”. There is entailed a reorganization of economy in the western world. It means market control, price control, and above all, production control. Economic unity of the hemisphere means a reorganization of finance, the establishment of an inter-continental currency under the domination of Wall Street and the United States Treasury. Above all, for the cartel to be successful, for American domination of the new world to become a fact and a bulwark against her rivals, agriculture in the United States must be liquidated as a potent sector of American economy. The United States must seek to establish an inter-continental division of labor between the industrial Yankees and agricultural Latin-America. It will have to call a halt to the endeavors of South American nations to industrialize themselves, to attempt national self-sufficiency. We do not believe that the United States is “the legitimate heir to Canada, New Zealand or Australia”, or any British possession, but it is clear that when it will become necessary in the interests of American imperialism to establish its heirship over those countries, as well as South America, it will do so, legitimately or illegitimately.

The movement toward the cartel is only in its initial stages. The complete program will be long in being achieved, if ever it is completely realized. But it should be clear to every class-conscious worker, to every revolutionist, what is in store. America is preparing to become the greatest military power in the world. If domination of North and South America does not come with the “assent” of the Latin American countries, it will come about through the forceful intervention by U.S. arms. And if the cartel is established, then the United States will move swiftly toward “economic unity”. It will mean putting South American economy on rations. It will be told what it can produce, when it can produce, where it shall produce and what will be its share. Clearly, the United States cannot permit a balanced economy in South America. It must make of South America a vast agricultural area, a source of supply of raw materials, minerals and ores. In this process, the United States must itself be transformed into a vast work shop.

Thus, the American orientation! Dominating the new world it can begin the struggle for world mastery with powerful reserves at hand. We shall witness a new series of wars, far more gigantic, far more destructive than any yet experienced. But that period will bring with it the unrest of millions. It will provoke the revolutionary protest of the great masses of the world, not in the least, the toiling mil-lions of the western hemisphere.

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