From New International, Vol. V No. 1, January 1939, pp. 27–28.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
“THE EMPLOYMENT given by armament programs is false employment. It builds no permanent structure and creates no consumers goods for the maintenance of a lasting prosperity. We know that nations guilty of these follies inevitably face the day either when their weapons of destruction must be used against their neighbors or when an unsound economy, like a house of cards, will fall apart.” From a speech delivered by Franklin D. Roosevelt in Buenos Ayres. Date: 1936.
* * *
The Strange Case of Dr. Coster, or the Mystery of the Crude Drug Department, has now been presented in rich detail – which it certainly deserves – in the press. The story of how a convicted swindler and stool pigeon changed his name and became one of the big men of Wall Street, president of the respectable old $80,000,000 McKesson & Robbins drug house – this could hardly be improved on outside a novel. Indeed, it suggests, in its wild mixture of larceny, big business, and bourgeois respectability Bert Brecht’s satirical novel, A Penny for the Poor, which has just been published in this country. The press, of course, pretended that the Coster was something almost without precedent: the NY Times struck just the right note in its editorial attributing actual “genius” to Coster and implying that only such a superman could have gotten away with it on such a scale. But the Coster case was remarkable only in its details; capitalism, especially in its decline, breeds grand larcenies like maggots. Coster was smeared over the front page, but any one who had taken the trouble to follow last month’s financial pages – where the Coster affair, too, made its first modest appearances – could have compiled a dossier of business corruption:
* * *
“Publication of this book was purposely withheld during the September international crisis although Mr. Briffault had been working on it for two years and it had reached the publishers in August. Reason: it did not seem wise to weaken, however slightly, a democratic country’s already critical position.” (From an advertisement for Briffault’s The Decline & Fall of the British Empire.)
That’s awfully decent of you chaps, really.
* * *
Football is the opium of the bourgeoisie: “Analyzing the pages and departments of a newspaper, Dr. Phelps found on page 1 a record of the world’s failures. ‘Since August 1, especially, the front page has been devoted almost exclusively to failure and disaster,’ he said ... For a sense of victory instead of failure and defeat, readers might turn to the sports pages, he suggested.” (NY Times, Nov. 20.)
* * *
“BUSINESS GROWTH OF NATION IN PAUSE, HENDERSON ASSERTS” (Headline in the NY Times)
In capitalism, as in other organisms, it seems that the approach of old age is indicated by what is delicately termed “a change of life.”
* * *
Last month I pointed out that any talk of “prosperity” was mere demagoguery so long as new capital investment continued at the low level of the last eight years. Some further evidence now comes to hand as to the current stagnation in the two key sectors: bank loans and new security issues. A few weeks ago, the Federal Reserve System of New York announced the lowest weekly total of commercial loans reported by its members in several years. Time recently stated: “for the first time in history, banks are holding more cash than their outstanding loans.” And on November 30, the SEC reported on new security issues in October. At first glance, this looked more hopeful: the month’s total was $405,100,000, highest in almost two years, and far above the September total of $106,800,000. But on closer acquaintance, this total was Jess impressive. Most of it – 68% – represented public utility issues, of which less than 3% was new capital, the remaining 97% being merely the exchange of one bond issue for another. Of the $130,000,000 in non-utility issues, $100,000,000 was split 50/50 between General Electric and Firestone Tire & Rubber. GE’s issue was “in part” to refund an earlier issue. Firestone planned to use $33,000,000 to pay off bank loans, $13,000,000 to retire funded debt, leaving just $4,000,000 for possible new investment.
As new fields for profitable investment fail to open up, finance capital, the heart of the whole system, must inevitably draw more and more of its lifeblood from the State. A strange thing has happened to American banking under the New Deal: the economic base once supplied by private industry has crumbled and has been largely replaced by new foundations provided by the Federal government. Thus the same Federal report showed that the New York banks that week had $3,000,000,000 invested in US Government securities as against only $1,000,000,000 in “other securities.”
“The few big banks doing well today,” Time notes, “are those like Chicago’s Continental Illinois National and New York’s Manufacturers Trust, which have gone whole hog into buying Government bonds.”
This swing towards the State was symbolized at the recent convention of the American Bankers Association, when the anti-New Deal clique which three years ago seized control of the ABA was defeated in a bitter fight by a pro-New Deal group. The successful candidate heads a bank which derives more than its capital from the Reconstruction Finance Corporation. It is also interesting that the anti-New Deal group is also anti-big city and anti-branch banking and is led by a pious Mormon banker from Utah. The big city banks are drawing even closer to the New Deal, their chief source of revenue.
* * *
A mysterious correspondent who signs himself “Janus,” sends in a page of smart remarks. His more outrageous flights – such as his reference to “the dark Broun taste” in the Stalinists’ mouths after Munich and his query whether the liberals are scared of being “browderbeaten” by the CP – I must categorically refuse to circulate. But I pass along, with thanks, a few of his more reasonable maxims: Earl Browder claims that new members are rushing into his party. Scientific explanation: nature abhors a vacuum ... All is not Mike Gold that glitters with generalities ... Doubts are said to be assailing the editors of the Nation and the New Republic as to the Moscow Trials. They are also reported to be suspecting that Sacco and Vanzetti got a raw deal, too ... Fascism means war, says the CP. True enough, but it forgets that the converse is also true: war means fascism ... So far the revolution that Simon Gerson was to have fomented in the Manhattan Borough President’s office has not materialized. Probably because there was no objective revolutionary situation there ... Stalinism is twentieth century vigilantism.
Two ladies of doubtful virtue are quarrelling. “You’re a whore!” cries one. “So are you!” retorts the other. This came to mind when I read, in a recent issues of Workers Age, a little editorial headed: Why Such Hypocrisy? It seems that Frank N. Trager, writing in the Socialist Review, had sharply criticised the Lovestoneites for their opportunistic support of Murphy in the Michigan elections, and had claimed that the Socialists in the UAW had honorably refused such support. The Age pointed out that Walter Reuther, the most eminent socialist in the UAW, had not only come out for Murphy but also for the entire Democratic slate. “Doesn’t the whole thing smack somewhat of hypocrisy and double-dealing?” triumphantly concluded the Age. A bit too triumphantly, in fact, since obviously if it is scandalous that Reuther supported Murphy, it is also scandalous that Lovestoneites supported Murphy. Some time ago, Euclid pointed out that quantities equal to the same quantity are equal to each other.
* * *
Of late there have been indications that the Stalino-liberals are beginning to unhyphenate themselves and revert to their former status of liberals, pure and extremely simple. The moral degeneration of Stalinism, as unmistakably revealed in the Moscow Trials, was not enough to alienate these gentry. Disregarding the stench of mass murder, the Nation and the New Republic dutifully swallowed the trials. But since the Munich Pact, it has become clear that Stalinism is not only corrupt but also impotent. The mighty Red Army is no longer seriously considered by military experts, Soviet foreign policy has succeeded only in completely isolating the USSR, the map of Europe is being redrawn without even a formal consultation with the Kremlin. Russia, in short, has sunk to the rank of second-rate power. This is a much more serious matter. The Stalino-liberals are beginning to look around for a safer perch. In his new book, Max Lerner ventures a few cautious, but clearly heterodox, remarks about the dictatorship of the proletariat, 1938 model. (His refuge he has long been preparing: the US Supreme Court, whose liberal members he has been assiduously flattering in the Nation for years. His new berth – a professorship of constitutional law at Williams College – is much snugger than 35 East 12 Street, which has become rather drafty of late.) Malcolm Cowley is also said to be increasingly uneasy about the firmness of the CP as a base for a literary man who wants to get ahead. Even John Strachey has been quarrelling in print with the New Masses. I can’t help remarking on one curious aspect of all this: that the liberals, those specialists in ethics who are constantly protesting against Marxism as “amoral,” “unprincipled,” and even “cynical,” should fail to recognize the moral failure of Stalinism until its material failure had become patent.
* * *
The Walsh-Healey Act provides that all manufacturers holding government contracts must pay minimum wages, to be determined for each industry by a Public Contracts Board. This fall the Board, after lengthy hearings, set minimum rates for the steel industry. On the surface, it looks like a great victory for labor. The Board’s 45-cents-an-hour minimum in the South and its 62.5 cents elsewhere are well above the minimum rates now being paid by most steel companies. Some 75,000 steel workers are expected to benefit. Furthermore, as the CIO News points out:
“Little Steel’s basis for anti-union activities – its fear of losing its competitive position – has been cut out from under it.”
But there is another angle, not mentioned by the News: why should the Little Steel workers pay dues to the SWOC when
Something seems to have been cut out from under the SWOC as well.
The real victor here is not the SWOC but the US Steel Corporation, which harvests one more fruit of its shrewd alliance with the SWOC and the New Deal. The Steel Corporation backed up the SWOC in the hearings, and the new rates set by the Board are those already paid in the Corporation’s plants. Now the Corporation, for a number of reasons, can make steel more cheaply than most of the independents, especially the smaller ones. These companies can compete only by paying lower wages. (Bethlehem, for example, which is drastically affected by the new rates since it does more government work than any other steel company, has been paying from 56.5 to 59 cents an hour minimum, as against the new rate of 62.5 cents.) The small companies have been especially vociferous against the proposed new rates. Presenting a petition for reconsideration, their lawyer said: “Circumstances strongly support the suspicion that political considerations have played a part in the whole matter.” He was right. For two years the Steel Corporation, in the face of the indignation of its competitors, has been playing the New Deal’s game. This is one aspect of the present “appeasement” policy of the House of Morgan, whose relations with the White House have been ever more friendly. (The NY Times of Dec. 3 reports that TASS the Soviet news agency, has uncovered a “Fascist clique” in this country which is “preparing an offensive against the progressive measures of President Roosevelt.” TASS gave first place in this clique to “Financial King Morgan.” This is not the first time the Kremlin has been two years behind the march of history.)
The whole episode is a dramatic example of the illusory nature of working-class gains when they are won not by action of the workers themselves but by a three-cornered deal between labor bureaucrats, reformist politicians, and business men. The wage increases tie the workers more closely not to their own organizations but to the New Deal. And the Steel Corporation walks off with the main prize. Of all the big CIO unions, the SWOC is much the most rigidly bureaucratic, the least open to democratic rank-and-file influence. So long as this is the case, further “victories” of the SWOC, like this one, will simply mean that one group of capitalists has successfully used the SWOC against its competitors. And even if Little Steel signs up with the SWOC, it will mean only that its workers will be organized under one capitalist flag rather than another. For this the bloody and tragic 1937 strike was fought!
Last updated: 28 November 2015