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Albert Gates

How Europe Aided the United States

Aspects of the CCA Commerce Commission Report

(January 1950)


From New International, Vol. XVI No. 1, January–February 1950, pp. 9–14.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).


In recent decades Europe has given to the United States a great deal more than a synthesis of its varied culture. Ever since the first World War liquidated the strong foreign capital holdings of the bigger European powers in this country and lifted the United States from the position of a debtor nation to the world’s creditor, Europe has been paying dearly to the bourgeoisie of this country for the privilege of being exploited by it. The degree of this exploitation has scarcely been noted by the American bourgeois ideologues, and not at all by their isolationist colleagues, for the notion current in this country is that Uncle Sam is freely handing out dollars almost for the mere joy of giving. Nor have the Marxists always fully understood the real significance of America s new role as world economic dictator and exploiter, or the manner in which Europe has paid for American economic development.

The Report of the Commerce Commission of the ECA, issued in October, 1949, is therefore an illuminating document since it details the extensive exploitation of the European market by the United States over the past thirty years. This it spells out in such concrete terms that it supplies the necessary empirical evidence to bear out Trotsky’s old thesis that the United States was putting Europe on economic rations.

* * *

From July, 1914, through the year 1948, the United States exported goods and services to the value of $270 billion. In the same period, it imported a total of $169 billion, leaving a favorable trade balance of $101 billion. A considerable part of this was for war goods and services. Yet the production of war goods and services has become an increasingly permanent and normal feature of modern capitalism. However, even if we omitted the war years, the following ratio would still remain: For the years indicated below (exclusive of war years), exports reached the high figure of $170 billion as against imports of $118 billion, leaving an export surplus in favor of the United States of $52 billion, which accrued to private American capitalism. Divided into distinct periods, the Report shows the profits of this favorable trade balance to be:

1919–22

    

$11.5 billion

1923–29

     7.5 billion

1930–40

     7.5 billion

1946–48

   25.5 billion

Note carefully that, while the war years are eliminated, the figures for the years 1946–48 indicate that a qualitative change has taken place in U.S.-European relationships expressed in the overwhelming American economic domination over a part of Europe with a declining and dislocated economy. It is true that this tremendous favorable balance was assisted by the Marshall Plan, but it is likewise true that this relates to trade only with Western Europe and not the whole continent as was true in all the years prior to 1946.

So far as the total period of 1914 to 1948 is concerned, the favorable trade balance averaged nearly $3 billion yearly. Fully aware of the real trend of European capitalism, the Report cites the higher averages of the current postwar period: “In 1946, however, our export surplus was $7.8 billion; in 1947 it ran to $11.3; in 1946 it was $6.3 billion.”

If the above figures reflect American profits sucked out of Europe, the following figures, if only for the present post-war period, indicate the converse position of western Europe in this one-sided relationship. The Western European deficit in trade with the United States appears in this way:

1946

    

$4.2 billion

1947

   5.4 billion

1948

   3.5 billion

“If their overseas dependencies – formerly dollar earners – are included,” says the Report, “the corresponding deficits were actually somewhat larger ($4.5 billion in 1946, $5.7 billion in 1947 and slightly more than $3.5 billion in 1948).”

Compared to war expenditures or American production during and after this war, $101 billion, including the war years, does not seem to be a large total sum, but one has to bear in mind first of all European living standards and productivity, and not modern warfare or modem war production. Compared to American production of less than $100 billion during the 20’s, or the $32 to $72 billion in the 30’s, one can really see that for Europe, the loss of $52–$101 billions to the United States contributed not a little to a lowered standard of living for the people of the Continent and Great Britain.
 

Accentuated but Not Caused by Wars

How did Europe pay for this overall trade deficit of $101 billion? While the figures of the report seem not quite to coincide, they nevertheless show the avenues traveled to meet the heavy demands of American exporters, behind whom stands the mighty government in Washington.

Private remittances accounted “in a perfectly normal way for about $10.5 billion or one-tenth of the total excess of $101 billion. The flow of long- and short-term private capital abroad, heavily concentrated in the 1920’s, accounted for another $10.5 billion more or less. In addition, foreigners had to send us gold and liquidate their holdings of dollar assets to an aggregate amount exceeding $15.5.” (All the italics are mine – A.G.) The International Monetary Fund and International Bank for Reconstruction and Development contributed more than a billion. Finally, almost $68 billion was contributed by the government of the United States. This was divided into $49 billion in grants and $19 billion in loans. Of the loans, the greater part was made between 1912–22, rather than 1941–48.

No wonder, then, that the Report opens with a staccato first sentence: “World trade is fundamentally out of balance.”

The Report continues:

“The trade of the United States with Western Europe, and with the world as a whole, is so badly unbalanced that in our own interest we must seek a fundamental solution of this recurring problem.”

The authors of this amazing document are correct in observing that “the wars have accentuated but not caused the trend” toward American economic supremacy over the world. This observation, as it is developed in the report, becomes an annihilating indictment of capitalist society itself, for in seeking solutions to this economic obstacle to world progress, the report shies away from a “fundamental solution” and come up with contradictory and half-way measures, which in themselves point to the need for a socialist reorganization of society.

If it is true, as it undoubtedly is, that the wars merely accentuated the trend referred to, it is likewise true that the wars did not in themselves cause the present plight of European capitalism. In a social-historical sense, the very occurrence of the two world wars evidences the beginning of the decline of world capitalism, no matter if in this decline, the United States, coming late upon the world economic scene, prospers in the midst of a decaying capitalism. Great Britain, the oldest of the great powers, for example, exhibited many signs of economic senility even before the First World War broke out and she showed them most importantly in an outmoded industrial plant and in static productivity. While in the case of Great Britain we had the leading power in the world beginning its descent, in the case of Germany, the first rival of the United States, we had a rising economic power unable to break through an already divided world which barred her access to the sources of imperialist enrichment.

The two wars sealed the fate of world capitalism. If we are unable yet fully to grasp this historical fact, those who follow us will see it all too clearly. Certainly, the wars wrote an end to the economic, and therefore the political and military, power of Great Britain and Germany, and to Japan and Italy as well. France, too, has been reduced to a second-rate, or even a third-rate country economically. Joined to these facts, is the rise of Stalinism as a world power, and the expansion of the non-capitalist areas of the world, which have narrowed even more the possibilities of economic expansion and prosperity for Western Europe and the capitalist world as a whole. It is precisely this constriction of the areas of the capitalist world which stimulates the completely conscious drive by the United States for world economic domination and renders the proposals of the ECA impotent to solve the present crisis on the world market.

* * *

The imbalance in world trade is another way of saying that capitalism is today dominated by one nation, the United States. If that is true (it happens to be the fact) how shall some semblance of balance be attained? As the Report poses the problem, how can Europe, or any other part of the world, pay for American exports to reduce the present imbalance and create a greater equality between the nations in this interconnected and interdependent world in which the market plays so decisive a role in balancing the national economies?

Since the United States is the one rich and solvent nation, how, as the Report accurately states it from a capitalist point of view, can “we” buy more from Europe to enable the Europeans to pay for their present trade, or better yet, even increase our exports to and imports from Europe? Here is where the officials of the ECA meet rather insurmountable difficulties.

In writing of this problem, Paul G. Hoffman, ECA Director says:

Britain and several other European countries lost permanently their overseas investments during the war. Moreover, they lost, though perhaps temporarily, most of the dollar revenues from shipping, insurance and brokerage.

... sharp losses of dollar income to Europe result from the physical disruption and loosening of political ties in the Far East, accompanied by the development of synthetic materials in the United States. American purchases of rubber, silk, tin, jute and other raw materials from the Far East have only partially recovered since the war, and the flow of dollars available to Europe through triangular trade has been correspondingly reduced.

Within Europe itself, East-West trade has shrunk to an extremely low point and there are no prospects of its revival in the immediate future, at least. The Marshall Plan, put in motion for the purpose of reviving the Western European economy and thus achieving a combined economic-political advantage over the Stalinist bloc of nations, has not wholly accomplished either task. While assisting in the unquestioned revival of the economies in the member-nations, it has not closed the dollar gap or made it easier for Europe to pay for this revival. This is due in large measure to the rapacious way in which American capitalism has made Europe pay for the Plan. Only those who saw and continue to see in the Marshall Plan a purely altruistic attempt of the United States to save the European people, are unable to understand the economic effects of a scheme calculated to increase America’s share of the Western European economy. The Plan itself guaranteed in advance the conditions complained of by ECA because, as the Report says, it widened the dollar gap, reduced Europe’s ability to pay and contributed heavily to a disruption of the trade balance.

This is indeed a strange society, is it not?, that finds its separate nations improving their economies, modernizing their plants, increasing their productivity and yet remaining unable to achieve a genuinely prosperous life. The subordination of West Europe to the United States is so secure that its revival has resulted in an improvement of the profit position of the American bourgeoisie, and indirectly the wage position of the working class here. So, we ought to remember at least this much: American prosperity in the last thirty years has rested to a significant degree upon a declining economy in Europe, upon the latter’s subordination to the United States and worsening of the position of the European masses.

* * *

It was not on the basis of the celebrated “American ingenuity and inventiveness” alone that U.S. industrial power grew. Always present was a very co-operative national government which helped directly and indirectly in the growth of industry by grants of land, capital and resources. There was and remains the iniquitous protective tariff which enabled American capitalism to freeze out foreign competitors and to soak the citizens for its products. The same protective tariff, accompanied by wartime and post-war inflationary prices, has actually been a powerful barrier to European trade with the United States, and given the stipulations of the Marshall Plan, has forced Europe into this unfavorable trade relationship.

Again, who has paid for this enrichment of American enterprise engaged in foreign trade? The report says that the “government’s grants and loans to foreign countries have in effect been unconscious subsidies to American export industries.” Obviously this was not only to export industries, for given the integrated nature of the economy and the high tariff, this “unconscious subsidy” was passed along to a wider group of industrial and financial enterprises. In an economic sense, then, what has actually occurred is that the European and American people have paid for this prosperity of an American capitalism which at all times was underwritten by the government itself.

To bring about a change in this one-sided relationship, the ECA and its directors have presented a program to relieve Europe of some of its economic burdens, and to seek a new equilibrium in foreign trade which has today become the life-blood of capitalist well-being. In a paraphrase of the famous remark attributed to Hitler, “We export or we die,” the ECA declares, “We must buy in order to sell. If we do not import we will soon be unable to export.” The proposed program can be summarized as follows:

  1. Achievement of an international trade balance at a high level, rather than a low one. (The Report makes the point that the dollar gap could have been closed without UNRRA and ECA, since the plans accentuated it, but it would have been closed at a low level of trade, with these countries unable to purchase goods in great quantities. The reverberations on the American economy, under these circumstances, could have been catastrophic.)
     
  2. Loosening state controls over trade throughout the world, and as an afterthought, it is added, “maximizing private initiative.”
     
  3. Raising the living standard in Western Europe to provide a greater market for American goods, since a shrinkage of that market “will have a depressing effect on living standards in the United States.”
     
  4. Maintenance of ample markets for the United States.

sHere, then, is the dilemma which confronts the U.S. To maintain its present rate of production at least the present level of exports must continue. That would not suffice, however. For the expansion of production, an even higher level of exports is required. But it is already obvious that a saturation point has been reached in the ability of America’s debtors to continue the present unfavorable relationship. To resolve this dilemma, the ECA proposes an “integration” of the West European economy, an abolition of its trade barriers, the opening of its markets for free trade, and a rise in productivity and the mass market on the basis of “free enterprise.”

In turn, it also proposes that the United States remove its trade barriers by reducing or eliminating the high protective tariffs to enable a greater influx of European goods so that these countries may pay for the enormous American export, or any increasing export. Also, means must be found for permitting these European nations to participate in other areas of world trade.

If the United States does not permit a greater influx of European goods, trade with the Continent will drop precipitately, producing an immediate negative reaction in American production. To make possible this increase in imports, it therefore insists on a removal of existing trade barriers, and it insists on it all the more since it has already made the same kind of demands on Europe.

Already American capitalist interests have balked at this demand of the ECA. At a meeting of the National Retail Dry Goods Association, Mr. Hoffman found it necessary to condemn public appeals to “buy American” as economic nonsense “indulged in only to cloak an underlying demand for protection of industries,” as the New York Times reported it. To placate American industrialists, Hoffman added that the U.S. dollars spent abroad today would be back in the United States in sixty days. And if that is true, then whatreal meaning is there to ECA recommendations? On the one hand, ECA demands that more goods be bought from Europe so that it may conserve dollars, close the dollar gap, and thus purchase more goods, while on the other hand, its director promises businessmen that if they send dollars to Europe, these would return to the U.S. within sixty days!

So while ECA believes that in the total interest of American capitalism some of its components will have to take small losses, this will not come easy. ECA wants (1) an increase of U.S. exports, (2) an increase of West European exports, (3) a greater participation of all West European nations in the world markets at large, and (4) an increase of U.S. exports and foreign investments, in all areas of the world, – and all of this in a declining capitalist society and a shrinking capitalist market. These measures are required, says ECA, in order to end the Marshall Plan and ECA, which in any case is under severe attack at home and abroad, and cannot continue indefinitely.
 

Premises of an “Integration” Program

“The job can be done,” says ECA. Of this, we have our grave doubts. Hoffman’s pressure for “integration” of the West European economies meets with the stiff resistance of those nations. Like ECA and Hoffman, these nations proceed from the point of view of “national sovereignty” and in accordance with the Report’s plea for a revival of “free enterprise” and a revival of “competition” with each other. But these premises produced the present situation in the world economy. To insist upon these premises today, in view of the complete triumph of monopoly capitalism and the tendencies toward statification, is in contradiction to the inherent tendencies themselves, and more concretely to the demand for “integration,” if one takes the ECA Report seriously. It doesn’t help Hoffman’s case in Europe when he points out that the difficulties conjured up by the government officials there are not serious if the will is there, since the United States was unable after great difficulty to achieve uniform traffic laws for the several states!

As a matter of fact, integration of Western Europe on the premises demanded by ECA, would merely simplify American economic penetration of these countries, and create an even more unfavorable trade balance so long as the prosperity of the United States rests precisely upon such an imbalance. There is hardly a European who does not know this.

Any serious improvement in the economic existence of West Europe and Great Britain will have to come from other directions and through a fundamental departure from capitalist production and competition. The real hope for West Europe lies in genuine Western union, in a real unification of their economies so that these peoples may be in a position seriously to resist American economic exploitation, which can only guarantee a Europe on a static or low economic level, and Stalinist bureaucratic collectivism which would only enslave the masses.

This, we believe, is what is indicated by the ECA report. It is at present a record of American capitalist accumulation at the expense of the well-being of the European masses.


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