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Hugo Oehler

The Question of War Debts

World Bourgeoisie Upset by Sharp Conflicts over Problem

(December 1932)

From The Militant, Vol. V No. 49, 3 December 1932, p. 4.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The elections are over and the politicians can again talk openly about what the bankers have been discussing privately. The war debt question has pushed Itself to the fore and has taken some of the columns devoted to the beer question. Hoover and Roosevelt are discussing this issue. The democrats and republicans arc trying to iron out some of the difficulties to enable Congress to present a working basis in order that the capitalists may have a suitable Christmas present this year.

The question of the American loans is one of the most important knots the capitalists have to unravel. Its Importance is due to the fact that the war debts is one side of the question of markets. And markets is a life and death question for the capitalists of the United States. The extension pf long and short term credits to other capitalist nations out of the vast accumulation of the American capitalists has its many-sided difficulties in this decay stage.

The history of the American loans to the allies, Americas entrance into the war and the continuation of heavy borrowing by Europe after the war, expressed by the struggle over Reparations, has been given first attention by the American capitalists, even though the middle-class congressmen would have us believe otherwise.

Since the Lausanne Conference, reparations from Germany, for the allies, is a thing of the past; so the allies want to consider the debts in the same light. But Uncle Sam is not so foolish. According to the latest figures the American capitalists and their government loaned $7,077,000,000 to Europe during the war, and $3,261,000,000 after the war, making a total of 10 billion dollars. In principle and interest the borrowers agree to pay 22 billion dollars and have paid $2,628,000,000 before the Hoover Moratorium. Now the low world price level has doubled the debt when considered in the light of payment in kind.

When the last world war broke out the loans to these European nations meant, considering the relationship of forces – European War plus American loans produced rich new markets for the American capitalists. The Americans were able to take over markets in all parts of the world. Loans to rival imperialists in Europe enabled the United States capitalists to invade the long protected European markets. Factories hummed and profits rolled in while the reformers and the labor leaders behind the workers to American imperialist plans.

The decision of America to enter the war on the side of the “allies” like all other problems, for the determining reason, sifted down to the question of economic interest. The bankers’ judgement has proven fruitful but the objective conditions of decay capitalism has reduced and contradicted the measures for further world domination.

As soon as the war was over Great Britain and the other allies took immediate steps to get out of the clutches of the American dollar. The British Government withdrew orders for American commodities at war time prices. The cancellation of these orders would shatter the structure and hopes of the American imperialism. Hoover who was the United States Food Administrator at the time wrote President Wilson:

“Our manufacturers have provided the particular types of manufacture required by each of these governments and have enormous stocks of these material on hand ready for delivery.”

“If there should be no remedy to the situation we shall have a debacle in the American markets, and with the advance of several hundred million dollars now outstanding from the banks to the pork-products industry we shall not only be precipitated into a financial crisis but shall betray the American farmers who have engaged in these ends. The surplus is so large that there can be no absorption of it in the United States, and it, being perishable, will go to waste.”

The American capitalist were caught in a structure of their own making. They could not withdraw without losing their key position. They were forced to wade deeper into international problems. From this flows the post war loans. To protect and extend American markets.

As soon as the Dollar “solved?’ one contradiction a new one, more menacing grew out of the “solution”. Additional loans preserved her markets and held off the day of reckoning. By 1923 the extension of the October revolution had outgrown other dangers and a series of measures from the Dawes plan down to the present have been taken – to save tottering capitalism, to hold in check rival Imperialism and to insure markets for America. Expensive markets, but nevertheless markets.

American loans to Europe had its positive political side in the past but the quantity of the loans has reached such proportions, particularly with Germany, that a quantity change has taken place and further loans on the same basis shakes the structure of American economy.

The contradictions have grown. In the past the allies paid what Uncle Sam extended in loans. The American loans through the Dawes Plan and the Young Plan kept ahead of the reparation payment .on the one hand and the repayment of loans by the allies on the other hand. In addition to this between 1923 and 1928 American exports to Europe have increased by $281,000,000 but American loans in the same period increased in value by $490,000,000. American accumulation of capital is the concrete expression of Marx’s abstraction in Das Capital.

During the war America loaned to the allies commodities in the form of munitions, textiles, cereal and tobacco. In return, the American capitalists obtained expanded markets, larger profits and interest. After the war, American loans were necessary to retain these markets, and prop up decay capitalism. The capitalists desire payment of the debts but Europe cannot pay in gold and America does not want too many of her commodities. They must find a way out They talk about capacity to pay and inability to pay but under it all revolves the question of the redivision of the world markets. Hearst and other jingo mongers suggest the allies pay with colonies, but the bankers know a better way.

United States is the creditor nation of the capitalist chain. And Europe represents the greatest market of the American capitalists. Today the war debts stands in between European markets and American export of commodities and capital. The task of the American capitalists is to turn the revision of war debts into a lever to open up some American markets. It is a difficult task but not an impossible one.

The reparation “settlement” has left England and the other “allies” with no war indemnities. But Uncle Sam calls for payment. They are at the mercy of the United States, providing the American capitalists do not make any false moves.

The policy of Hoover and Roosevelt in essence is the same. Both are against cancellation. Both leave the door open for further consideration. Roosevelt does not want a Debt Commission, but both are for separate dealing with the creditors, and that is the vital point of agreement. The present line up, with the allies caught in between the Reparation settlement and America’s demand for “payment” opens the door for a possible “European United Front” against the United States. This is a desire, but contradictions in Europe will not allow it to become a fact, providing American capitalism uses ordinary intelligence.

In dealing separately, the United States is taking advantage of the differences between these other nations, as well as using it as a blow against the most difficult conditions. The notes to England and France are entirely different, leaving room for “talk” with England and demanding payment from France. It was France, with her gold supply that led the attack on the American dollar and Wall Street will not forget this, and would like to relieve her of part of this weapon against the Dollar supremacy. It was England which mapped out a program at Ottawa which when carried into effect will reduce the exports of American capitalism to the British Empire by at least 200 million dollars. America is ready to “talk” about war debts providing she can use this to her advantage against France and to get to the problem of markets and the stone wall of the Ottawa conference results.

The American capitalist press and leading organized capitalist bodies know what the War Debt talk is all about. The Chamber of Commerce report, says among many things, that,

“The best interests of the United States requires that modification should be conditioned upon definite provisions for such treatment of our trade by the debtor nations as will assure access of American goods to its markets on fair competitive terms.”

The New York Times in an editorial on War Debts on November 26th informs Congress that, “Realization of the interdependence of the world is wanted in Congress today.” It starts the editorial with the above sentence and makes the following conclusion: “If, by our attitude toward Great Britain and France, the hope of Germany to progress is destroyed, what barrier will remain against the spread of Communism.” In the decay of capitalism American must not only protect herself and her markets but sue cannot put this above the capitalist interest to prevent the spread of the October revolution.

It looks as through the American capitalists and their government are in an impasse. Gold and commodities in payment according to the world price level is out of the question. There is another way which will enable the American imperialists to gain an advantage point in the present world struggles.

The Moratorium was an important preliminary step for the realizing of the line up of the imperialists for the coming war. Now the American imperialists are making haste to gain an advantage point in the present world struggle through further use of the War Debts as a club over the heads of her allies. The allies of course are trying to turn the loans into a club over America’s head.

The discussion over the war debts, is taking on the plan, no matter what form they cloak the barter for cancellation or reduction of loans in, of America’s struggle as the leading imperialist to extend her domination over greater sections. The U.S. aim is:

  1. for trade concessions,
  2. for secret agreements for the United States in the re-alignment of world forces in preparation for the approaching war,
  3. and the struggle to rebuild a world financial structure with Dollar supremacy,
  4. and to prop up decay capitalism.

The question has been posed in bold relief by the world crisis and the imperialists are struggling to answer it in their own way, to their own liking. But they are not the only ones concerned with the problems or are they the only ones who are “sitting in the game”.

The proletariat and their party the Communist party, threaten to upset the whole structure. With the Marxian theory of the permanent revolution the revolutionists can alter the whole course.

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Last updated: 6 December 2014