Neocolonialism by Kwame Nkrumah 1965
THE second world war, fought as it was on an almost global scale, called for scientific and inventive genius in unprecedented measure, all towards one end: that of destruction. The need for vast quantities of equipment and the supply services that were ancillary to the purpose of wiping out people and cities, animated, as peace never did, governmental support for investigation and research into faster and more rational means of mass production. The United States, which became the prime arsenal and provider for its Western allies, was naturally foremost in adjusting its industrial machinery to the new methods at the close of the war. Since then the demands made by the reconstruction of ruined cities and the rebuilding of disjointed economies have accelerated the trend. The policy of containment, military adventures such as Vietnam, Cyprus and Korea, cold war stock-piling and the race in rocket assembly and space-shit building have added their own quota. Automation and the use of electronics are fast spreading and, as in America, taking hold wherever large-scale production finds it more profitable to replace human labour by push-button thinly-manned mechanisms.
The resulting tremendous bound forward in productive potential has created an increasing demand for the base materials of industry, and there has sprung up a rapidly enlarging assortment of synthetic raw materials, many of them supplementing natural products and often replacing them. This is having an effect upon the market prices of natural primary products, a fact given prominence by the chairman of Union Minière du Haut Katanga at the 1964 shareholders’ meeting. The London Metal Exchange, the body which still operates the world prices of metals, is largely under the influence of the leading producers and processors like Union Minière itself, and its associates Rhodesian Selection Trust, Conzinc-Rio Tinto, Amalgamated Metal Corporation, Minerais et Metaux and London Tin Corporation.
Cocoa users, for their part, are constantly threatening the producing countries that they will use synthetic substitutes and rubber-growing countries are up against the increasing use of the artificial product. Just as the high quotations and fluctuations of primary products are influenced by the monopoly producers, so the threat of the use of synthetics is no idle warning, since the controllers of the natural products are also the major producers of the artificial materials. For the same reason, the producers of synthetics will be careful not to compete too vigorously with the natural products. For example, it has been alleged that Dunlop were slow to begin synthetic rubber manufacturing because of their large plantation interests in Malaya.
All four of the American rubber-producing giants, Firestone, B. F. Goodrich, Goodyear and United States Rubber, are engaged in the production of artificial rubber. United States Rubber works 90,000 acres of rubber plantations in Malaya and Indonesia, as well as concessions in Brazil, Venezuela, Colombia and other Latin American countries. Its synthetic rubber and related plants, with the exception of that at Naugatuck, Connecticut, are placed, like those of its textile division, in the southern States of America, where labour is cheaper than in the north. In 1962 there was ‘significant expansion’ of the company’s plastic facilities, under which the production capacity of its ‘Kralastic’ material was increased. This is described as ‘tough plastic-rubber blend’, for which growing uses are being found in automobiles and various appliances, all formerly using rubber.
Goodyear, among the first twenty companies in the United States, has its own rubber plantations in Indonesia, Costa Rica, Brazil and Guatemala. It operates synthetic rubber plants at Houston, Texas and Akron, Ohio. A 30 per cent increase was made in the company’s facilities for research in rubber, plastics and other scientific exploration in 1961, for the company has become interested in chemicals and aeronautics.
Firestone is a byword in West Africa where, until the recent advent of iron-ore exploiting companies, it dominated the economy of Liberia. It is still ‘King of Rubber’ there and, like other rubber giants, gets its rubber also from plantations in the Latin American countries, as well as Ceylon. It has fifty-eight plants throughout the United States, including four for synthetic rubber and one working on what is described as ‘U.S. national defence’. Another fifty-three plants are spread around the world, principally in the western hemisphere.
B. F. Goodrich Company runs to the same form but, if anything, has wider plastics interests, since it is a producer of vinyl resins under the trade mark Geon, and among a long list of subsidiaries and other holdings controls British Geon, in collaboration with the Distillers Company, a combine controlling the whisky and gin trade of Great Britain, with over a hundred subsidiary companies engaged in biochemicals, industrial alcohol, plastics, magnesium alloys for jet engines, and many other operations. BTR Industries, which controls among other companies British Tyre & Rubber Company and the International Synthetic Rubber Company, is included in Goodrich’s affiliates. Rubber plantations worked by the Goodrich Company are to be found in Liberia as well as in Latin America and Malaya. This company is tied up with A.K.U. (Algemene Kunstzijde Unie) of Holland, in a company that manufactures synthetic rubber for special purposes, and controls the important French rubber manufacturers, Kleber-Colmbes. Like Firestone and United States Rubber, it also has companies in Japan.
These and the other main international rubber companies, such as the Italian Pirelli, the German companies, Continental and Phoenix, the French Michelin and Kleger-Colombes, and the British Dunlop, more or less complete the small circle of trusts that dominate the world’s production of rubber. They are all engaged in artificial rubber-making and the manufacture of other synthetics. The furious advertising that goes on in every country of the world to push their individual products leaves no doubt about their keen competition for markets, and all of them have factories as well as a multitude of agents and representatives spread across the globe.
This brief review of the rubber monopolies illustrates their inter-relations and their domination of both natural and synthetic rubber throughout the world. It becomes increasingly obvious as we delve deeper into the operations of the industrial monopolies that they have the developing countries at a complete disadvantage.
As providers of novel basic products for old and new industries on a continually extending scale, the highly industrialised countries are the major investors in and concessionaires for the starting materials that are obtained primarily from largely sub-industrialised sources. Among these we include Australia and the more advanced Canada, which are, for all practical purposes, financial colonies of American-dominated Western capital.
Because of the extremely high capital costs involved in discovering and bringing to perfection new products and their uses and in establishing plants and factories for their manufacture and processing, the production of these synthetic materials has become the monopoly of a few mammoth international organisations like Imperial Chemical Industries (I.C.I.), Du Pont de Nemours, Union Carbide, Courtaulds, Snia Viscosa, Montecatini, A.K.U., Unilever, the tripartite group of the former I.G. Farben – Bayer, Hoechst and B.A.S.F. – Dow Chemical, Texas Gulf Sulphur, Lonza and Seichime. The important Japanese offspring of the Mitsui complex, Toyo Rayon Company, is linked to the major American and European giants, Du Pont, I.C.I. and Montecatini by patent arrangements, Du Pont having taken a direct interest in the company during the American occupation of Japan immediately after the war. These giants join forces at certain focal points in the struggle for domination. All the time they carry on a ferocious competition to secure monopoly markets and original source material supplies, not only for synthetics production but for the metallurgical, electronics and nuclear industries that have become part and parcel of their post-war expansion. It is not surprising therefore that even a cursory glance at their interests should reveal involvement in African raw materials’ exploitation, even though their financial shufflings may appear superficially to be very far away from such engagements.
When Courtauld’s merger with I.C.I. was mooted in 1961 it had ‘world-wide repercussions’, which is not surprising when its own ramifications are reviewed and I.C.I.’s weight in the industrial and commercial markets of the world is recognised. Representing over 30 per cent of the British chemical industry, I.C.I. does 88 per cent of its turnover overseas in some fifty countries. Its issued capital is several times larger than the budget of most African States, standing at the end of 1962 at £303,393,910, larger even than that of South Africa, the continent’s most industrialised country. From chemicals, dyestuffs, paints, pharmaceuticals, fibres, plastics, heavy organic chemicals, explosives and fertilisers this vast organisation created a new holding company in 1962, Imperial Metal Industries Ltd., in order, so runs the company’s literature, to achieve a greater concentration of effort on a side of the company’s business which is materially different from its main chemical manufacturing activities: namely, its non-ferrous metal interests other than aluminium. In the latter field I.C.I. is linked on a fifty-fifty basis in Imperial Aluminium with Alcoa (Aluminium Company of America), the empire of the Mellon interests.
Imperial Metal Industries has an interest in Extended Surface Tube Company. So has Stewarts & Lloyds, a £60 million company working basic and foundry pig iron up to tubes of all varieties. Through subsidiaries, associated companies and agents throughout the world, Stewarts & Lloyds has a stake in all the international markets. Among these are a 70 per cent interest in Stewarts & Lloyds of South Africa Ltd., which controls six companies operating in South-West Africa, Rhodesia and South Africa itself; and a 13 per cent holding in the major steel conversion project in Zambia, the Rhodesian Iron & Steel Company, a subsidiary of Rhodesian Anglo American Ltd., which is controlled by Anglo American of South Africa. Stewarts & Lloyds have come up against American monopoly competition in South Africa, where their subsidiary has been negotiating for some months with United States and so-called Brazilian groups for establishing a plant beside its existing one at Vereeniging, near Johannesburg. The Americans and their Brazilian vassals were trying to jump the gun by enforcing a clause which would reduce the Stewarts & Lloyds participation from 51 per cent to 25 per cent in the event that the steel industry in the United Kingdom becomes nationalised or, in the opinion of the two outside partners, is likely to be nationalised.
I.C.I. is assisting the South African Government in building up its chemical and armaments industries through I.C.I. (South Africa) Ltd. and African Explosives & Chemical Industries, in which it partners De Beers. African Explosives will be supplying from its constructing complex at Sasolburg many of the materials for providing polymers to the nylon spinning plant which is being erected by British Nylon Spinners at a cost of £3 million on the site purchased by it in 1963 at Belville, near Cape Town. The Rhodesian subsidiary of African Explosives is behind the proposed £2 million fertiliser plant to be built at Livingstone, Zambia, with the backing of the government, in connection with which the company is constructing another plant at Dorowa, Rhodesia, for the exploitation of phosphate deposits.
Consumption of fuel and power and common minerals has jumped phenomenally since the war and the western capitalist countries as well as Japan have resorted to non-industrialised countries for quickly growing quantities. Before the war the industrialised countries relied largely upon their own reserves of iron ores or on those of other Western sources. Today the giant iron and steel corporations of Europe, America and Japan, in addition to their investments in Canada and Australia, are turning more and more for their base materials to Africa, where cheap labour, tax concessions and supporting government policies have opened up avenues of richer profits from huge, untapped resources. M. D. Banghart, vice-president of Newmont Mining, a leading American holding company with semi-permanent investments in mining and crude oil, has said that American firms could make a greater profit in Africa than from any comparable investment in the United States. Mr Banghart should know intimately what he is talking about, since Newmont Mining is joined in consortia operating the biggest exploitative undertakings in northern and southern Africa, such as the O'Okiep Copper Co., the Tsumeb Corporation, Palabora Mining, Soc. N.A. du Plomb and Soc. des Mines de Zellidja. It has a 12·1 per cent participation in Cyprus Mines, which gives it a vested interest in maintaining Cyprus for the NATO cause. The fact that United States miners earn an average of $2.70 an hour against the less than 10 cents average paid to African miners in South Africa makes it obvious how such super-profits are achieved. No wonder Newmont’s original investment in Tsumeb multiplied twenty times in value in the space of three years.
The African countries are faced with the need to turn subsistence economies into organisms that will generate viable and improved conditions of living for their populations. However, many African governments, instead of getting together in united action which would stimulate maximum capital accumulation and the construction of a solid over-all African economy, are granting concessions for the working of mineral, agricultural and forestry resources whose purpose is the drawing off of output to sustain and enlarge the industries and economies of the imperialist countries. Not one of the investing syndicates has any intention of founding in any one of these countries an integrated industrial complex that would give impetus to genuine economic growth. Nor are the returns on the export of primary products from mining, agriculture and forestry likely to provide to any important extent the looked-for capital for investing in industrial foundation.
Returns to source countries on exports of primary products are niggardly by comparison with the profits made by the monopoly concessionaires, who are both sellers and processors. A fair example to take in this connection might be Union Minière. In Katanga it operates over 34,000 square kilometres of concessions, on which it works three copper mines, one copper and zinc mine, five copper and cobalt mines, an iron mine and a limestone quarry. All of these are linked by road and railways owned by the company. First stage concentrates of copper, cobalt and zinc are milled at six plants. The company owns four electricity generating plants which work the foundry at Lubumbashi and the electrolysis plants at Jadotville-Shituru and Kolwezi-Luilu for the refining of copper and cobalt, of which it produced 295,236 tons and 9,683 tons respectively in 1962. The bulk of the copper and cobalt, however, go in concentrate form to the electrolytic refinery of its associate, Ste Générale Métallurgique de Hoboken, Brussels, which also treats the radium residues and uranium metals from Katanga, as well as refining the germanium also coming from the Union Minière production. The zinc is sent forward from Katanga in the form of raw concentrate.
The Katanga output is shipped through the Congo by the Cie des Chemins de Fer Katanga-Dilolo-Leopoldville, and overseas by the Cie Maritime Congolaise. Insurance is covered by the Cie Congolaise d'Assurances, the Cie Belge d'Assurances Maritimes or Ste Auxiliaire de la Royale Union Coloniale Belge. Banking is done through the Ste Belge de Banque, the Banque du Congo Belge, the Belgian-American Banking Corporation. Staff is flown in and out by Sabena. Union Minière has holdings in all of them, and many others as well.
It is the habit of these great monopolies – and we must remember that Union Minière is the world’s third producer of copper and its first of cobalt – to fix prices to suit their ideas of profit, subject to certain swings on the world markets, which frequently they operate and rig. Production at less than full capacity and the holding back of supplies are tactics that are often used. Most copper producers have, for the past three years been operating at no more than 85 per cent capacity, but are now returning gradually to fuller output. Following the strike at Mufulira during 1963, Rhodesian Selection Trust ran its plant at full capacity in order to replenish its stocks, but restricted its sales to 85 per cent. At the end of 1963 there was estimated to be some 300,000 tons a year of idle mine capacity throughout the world as a result of the voluntary restriction of output. Stocks accumulated outside the United States, in order to support prices, were put at 130,000 to 150,000 tons. The price had been stabilised at around £234 a ton for 1962/63. Demand for copper having risen, stocks were exhausted by mid-January 1964 and the price rose on the London Metal Exchange. Rhodesian producers, however, stepped up their price to £236, and from the remarks made by Union Minière’s chairman it would appear that the Exchange was forced into line, even though the producers were reducing their output cutback to 10 per cent. Despite the strike, and reduced output, turnover and net profits of Rhodesian Selection Trust were higher in 1963 than in 1962 and considerably above those of 1960, when prices were higher. Turnover in 1960 was £31,019,000; in 1962, £46,298,000; and in 1963, £50,931,000. Profits after tax were £7,600,000 for 1960; £7,735,000 for 1962; and £8,273,000 for 1963. This was the result of the offloading of stocks.
We constantly read about the high prices that are earned for copper, tin, zinc and so forth. What is little understood is that these are the prices for the commodities on the industrial market in their processed forms. The metals leave the countries of their origin mainly in their primary condition of ores or concentrates and sometimes in the first stage transformation, which fetch merely token returns to these countries. The returns are even more paltry when measured against the values that are added the moment the materials are placed on board the transportation carrier at the point of exit; the carrier usually, as we have seen in the case of Union Minière, being related directly or indirectly with the actual producer. The many more surpluses that accrue in the course of transit from producing country to the foreign transformation centres and through the subsequent stages of conversion fall to the concessionary combines and the shipping, transport, banking, insurance, manufacturing and selling organisations with which, in most cases, they are linked. As Victor Perlo dramatically summarises in American Imperialism, ‘weak countries, without adequate industry to build ships and airplanes, must pay tolls to the imperialist transportation monopolies for the goods they import and export. Countries without adequate financial resources must pay fees to the centres of finance capital for the use of banking facilities and for insurance’ (p. 62).
Amounts remaining behind in the producing countries in the form of wages are sadly fractional. Over 50 per cent of the Congo’s national income went regularly to European residents and foreign firms. The rest remained to be distributed over the various sectors of the economy. It is not surprising that the territory’s 14 million inhabitants live in the extremest poverty. In Gabon one-third of the income goes to the non-African population. Two-fifths of Liberia’s total income accrues to foreign firms (U.N. Report E/CN.14/246, 7 January 1964). And when independent African countries attempt to establish a certain rectification by levelling taxes on company profits, they draw resentment that is echoed in dire warnings in the imperialist press that they will stifle foreign investment if they continue such encroachments upon expatriate rights.
‘Ashanti hit by Ghana tax,’ shouted a paragraph headline in a London City journal dated 28 January 1964, and set forth figures to show that Ghana Government taxation had cut Ashanti Goldfields 1962/63 profits from £1,111,162 to £609,142. Nevertheless the company was still able to declare a total dividend of 37 1/2 per cent, a fall obviously from the 50 per cent and over that had been kept up for several previous years, but still a whacking return on an original capital of £250,000 which had been built up to its present £3 million from reserves out of past and current profits. That the company was able to pay the dividend is proof of the nicely cushioned reserves that have been accumulated over a period of operations, in addition to what has been drawn back into capital.
Diamonds are bringing some extra revenue to the West African countries out of new selling arrangements which are taking some of the profit that formerly went to CAST (Consolidated African Selection Trust) and its De Beers’ principals. Ghana has its own diamond market and a government marketing board which takes the commission which used to go to middlemen acting for De Beers. In Sierra Leone CAST profits were higher, but a service fee paid to the government board ‘under protest’ and higher production costs cut them somewhat. Nevertheless, CAST was able to declare a final dividend that left the total dividend for the year 1962/63 unchanged at 3s. 6d. on a 5s. share (70 per cent), of which there were 18,198,654 issued and paid up out of 20 million authorised. This issued capital, amounting to £4,549,663 10s. Was achieved in less than twenty years out of reserves made from an original capital of £250,000. Furthermore, stocks of diamonds held by the group at the end of the working year had an estimated value of £6 million.
Further profits are forced out of Africa in the form of the inflated cost of finished goods, equipment and services she is forced to buy from the monopoly sources that extract the prime materials. This is the big squeeze in which Africa is caught, one that grew tighter from the eve of the first world war. It was estimated by United Nations experts that the dependent countries had to pay $2.5 to $3 billion more for their imports of manufactured goods in 1947 than they would have had to pay if price ratios were the same as in 1913. For the period from 1950 to 1961, according to the Food and Agricultural Organisation of the U.N., the index of returns for primary materials fell from 97 to 91 (70 for cocoa, coffee and tea), while that for manufactured goods rose from 86 to 110. For steel, which is an indispensable commodity on an increasing scale for developing countries, it reaches the very much higher figure of 134. In terms of exchange as between primary producing countries and the exporters of manufactured goods, there has been a decline in ten years from 113 to 82, to the disadvantage of the former. The value of Ghana’s exports in 1962 was the same as that for exports in 1961, but the volume had increased by about six per cent. The value of imports in 1962 was reduced by 16 per cent but the volume fell by only 14 per cent. In the Congo Republic (Brazzaville), while 1962 saw an increase of 77 per cent in exports over 1961, and imports declined by 15 per cent, the value of the exports hardly covered half the value of the imports (E/CN.14/239, Part A, December 1963).