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The Dollar versus the Pound

Wall St. and Lombard St. Fight for World Financial Supremacy

(July 1932)

From The Militant, Vol. V No. 30 (Whole No. 126), 23 July 1932, p. 2.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

For years the American imperialists have been fighting their British competitors, struggling to obtain Dollar supremacy over the Pound, and now the capitalists of the United States can boast that they have accomplished this task. Step by step, since the world war, the Dollar has fought the Pound in every corner of the globe, taking advantage of the decay of the British Empire in order to gain world domination. The Pound ruled when capitalism was expanding, and was able to draw the best of the capitalist profits and plunder toward London, but America has this dollar supremacy in the decay of capitalism, and with the post war reparation tangle, the present deepening crisis, the American capitalists have only been able to reap a whirlwind of entangling world political problems that their Washington office boys are not capable of untangling,

The tremendous productive forces the over abundance of capital and of means of production laid the base for the present Dollar domination. This enables the American imperialists to stand on the top of the heap of the exploiting capitalist nations. But it is not an expanding and growing world economic structure, that is pouring tribute into the Wall Street. The tribute paid is the tribute of dying “victims” to a master who will give them a little longer lease on life. This forces the American capitalists to face problems unparalleled hitherto in the world of capitalism. Problems that will cut short the fruits of the victory of Dollar domination.

In an attempt to extract itself from the crisis, American imperialism has been forced to give more immediate attention to problems in South America, Asia and Europe than to internal developments. The capitalists, however, have not neglected the problems within the country. On the contrary, they have handled them remarkably well in the interest of the financiers. Every measure of importance taken has been by and for and of the financiers at the expense of the workers, the farmers, the middle class, and the small industrialist. The financiers the monopolist and the big industrialists are being cared for satisfactorily. The class nature of the drastic measures taken by the government within the country stand out with distinct prominence but the increasing international problems have required even more drastic steps.

In Germany the class struggle is at a higher level and threatening revolution or imperialist war needs measures equal to the task of insuring the position of the American capitalist. When the American workers will begin to press harder upon the exploiting classes, when the revolutionary movement here will surge upward, the more drastic measures, as well as demagogic steps, will be taken internally. In this case it is up to the Communists to be equal the task.

Several months ago when England was forced off the gold standard, the American Dollar won a signal victory in replacing the Pound. New York supplanted London as the gold center. But the present reparations “settlement” throws light upon the manner in which New York replaced London in the period of decay of capitalism. England has no choice in retreating from the gold standard. This was a move to reorganize the British economic structure. Now England is trying to make a come-back. America is trying somewhat different steps. But the purpose of each is the same – to reorganize in order to be in a position to defeat the other imperialist in the struggle for the redivision of the world. By economic war as long as possible – and by imperialist war when necessary. The lowering of wages, and the reduction of the standard of living in America are necessary capitalist steps in this direction. Our class tasks lie in the opposite direction.

After America obtained Dollar domination, other capitalist nations led by France made drastic attacks on the dollar, hoping to dislodge it from the key position. They were successful for a time in badly shaking the American financial structure. It can now be said that the first victory over the Pound has been followed up by a second victory over the other imperialists in retaining the dominating position after the attacks. The question confronting American capitalism now is – can the American imperialists follow this up and transform the events into their favor? The American capitalists are not yet sufficiently reorganized to give a positive answer to this question. They are busy with measures to strengthen their position to enable them to carry through the next step. It will not be the other imperialists who will prevent the fulfillment; it can only be the world imperialist under Communist leadership.

If the developing German civil war or an imperialist war does not alter the course, the American capitalists have a favorable chance. At home the financiers have forced the other exploiters to follow their lead. The measures prior to the Two Billion Credit Pool were preliminary steps. The Credit Pool had its positive side for the bankers as well as its negative side for the other classes. The Glass $1,000,000,000 inflation bill is another step to peg up the Dollar in an attempt to enable it to hold its dominating position. The inflation bill will force through another indirect wage cut upon the American workers and enable the bosses to garner a huge profit even though the rate of profit has fallen.

It is only a temporary measure but such measures are necessary in these trying days. Any measure the capitalists take today will only intensify the contradictions tomorrow. But they cannot wait. The life of dying capitalism is at stake and measures must be taken today.

The capitalist remedy for deflation is inflation, yet neither can touch the core of the problem. The financiers are pressing hard for the Branch Banking Law. And since they started the public campaign many months ago for Branch Banking they have gained considerable headway. This measure will be a worthwhile breathing spell for them if they are able to push it through.

The dollar stands, but the crisis deepens. The financiers have been able to deal some blows through their imperialist agents but the main test is still ahead. The moratorium, the reparations and the German situation holds much in store for the fate of Dollar supremacy.

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