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From Labor Action, Vol. 8 No. 35, 28 August 1944, p. 4.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
(This is the first of three articles on the Bretton Woods Monetary Conference.) [1]
If a union member rose on the floor of a union meeting to discuss the recently concluded conference of Allied nations’ representatives at Bretton Woods, N.H., he would be faced with yawns or boos and probably be called out of order for discussing something that had nothing ing to do with union business.
Yet the Bretton Woods agreement may have an effect in determining whether union members go back to apple-peddling, whether coffee-burning in Brazil and ploughing-under of corn in the United States occurs when the cupboard is bare again.
The conference, composed of delegates from forty-five nations, white men and black, yellow men and brown, met to consider the problems of world-scale post-war financing. The conference drew no color lines, but it drew an unmistakable class line: no working people’s representatives participated. But they decided on matters that affect us. Therefore, we must translate the complex language of international money experts into that of our own needs.
Presided over by U.S. Secretary of the Treasury Morgenthau, the conference proposed to establish an international monetary fund, a pool of United Nations’ money of $8,800,000,000, and a Bank for International Reconstruction and Development to the tune of $9,100,000,000.
The original fund and bank plan originated with the United States. The dominion of the U.S. was obvious throughout the conference. Not only did the U.S. have the chairman. The conference was held here. America’s contribution to the fund more than doubled that of the nearest competitor, Great Britain, and her share in the bank is thirty-six per cent of the total of all participating countries combined.
Of the conference, Henry Morgenthau said: “The purpose is very simple, wholly within the American tradition and completely outside political considerations. The United States wants, after the war, full utilization of its industries, its factories and its farms, full and steady employment of its citizens, particularly its ex-servicemen, and full prosperity and peace. It can have them only in a world with a vigorous trade.”
Again on the parley’s aims, Morgenthau stated: “We are to concern ourselves here with the essential steps in the creation of a dynamic world economy in which the people of every nation will be able to realize their potentialities in peace; will be able, through their industry, their inventiveness, their thrift, to raise their own standards of living and enjoy, increasingly, the fruits of material progress on an earth infinitely blessed with material riches ... Prosperity has no fixed limits ... the more of it that other nations enjoy, the more each nation will have for itself.” So much for the alleged high-sounding aims.
One of the stated aims of the U.S., and its actual need, is for a thriving post-war world trade. “Whereas in the five pre-war years, U.S. exports amounted to three billion dollars, in the post-war years we must have seven billion dollars of exports or accept a depression,” stated one of the conferees. In order to trade, there must be a period of stability, and other nations must have the wherewithal to buy products.
The other powers represented at the conference, England, France, Russia, China, etc., all have as their primary aim the rebuilding of their war-devastated economies.
How are, the fund and the bank supposed to solve these problems? The Stabilization Fund is a kind of international Office of Price Administration. It would try to prevent underselling, accomplished through “competitive depreciation of currency,” as was done in depression days due to the shrinking world market.
The aim of the World Bank, also couched in a catchword of the Roosevelt regime, as Morgenthau expressed it, would “drive the usurious money-changers from the temple of international finance.” It would make long-term loans at relatively low rates of interest, or back loans of private investors. If a default on a loan occurred, the bank would make good. Will the conference do what it proposes – by harmonizing world trade, assure peace everlasting and plenty for all? This question can be answered only by looking at world trade as it exists today.
We live in the era of monopoly capitalism. By this we mean that in a few advanced countries, such as the United States, England, Germany, huge manufacturing enterprises and much of the farm land is in the hands of a few owners. Instead of many small, competing firms, we have a few giants controlling the market, as exist in auto, coal, steel, rubber, etc. And control is reduced to fewer hands through control by financiers of more than one company, thus largely eliminating competition. The workers have nothing but their ability to labor and, periodically, jobs. This is what Labor Action means when it say the Sixty Families own and control America. The same situation exists in other countries.
Now, these profiteering monopolists squeeze dry their home populations. They produce as cheaply as they can, pay as low wages as they can, and sell at a profit. A time comes when the home market is exhausted, and they can’t make a profit at home. So they go abroad.
In the past, before the world was divided up and possessed by the powerful nations, they obtained these markets for their excess goods and money by outright robbery, cheap goods to crowd out competitors or small wars. Now, since the world is an economic unit and all of it is under the ownership or control of one or another group of capitalist powers, a world war is the inevitable outcome of this struggle for markets, for land, for raw materials.
Depressions today are the result of monopoly capitalism. Home markets become exhausted. The fight for world markets becomes intense. So many powers fight for the same thing that, in time, the world markets are also glutted. The monopoly-capitalist stops producing, since no possibility of making profits exists.
The capitalist is slightly inconvenienced, too. He has his accumulated billions to weather the hard times, of course, but the golden stream of prosperity profits has been reduced to a mere trickle. This condition always gives rise to sharper competition between the capitalist powers, each trying to emerge from the crisis at the expense of the others.
How can the fund and bank prevent depressions and assure prosperity through expanding world trade?
Example: England borrows from the bank to rebuild its damaged industry. She starts producing again – iron, steel products, rubber goods, etc. The loan comes due. Can she pay by exporting her manufactured goods? She can’t send them to the U.S. We already have them. South America? The U.S. gobbled up that market through producing cheaper than England, and taking advantage of her earlier preoccupation with war. India? India already is owed four billion dollars by Britain. Asia? She conflicts with U.S. interests there.
The only way England can pay her loan is to lower the prices of her goods and consequently lower the wages, raise the taxes and depress the standards of the English workers.
Another example: India wants to participate in vigorous post-war trade. England owes India over four billion dollars for war goods. By Empire agreement (the sterling bloc), India cannot use her credit to purchase elsewhere except in England. But England has nothing to give India.
S.A.D. Shroff, representative of the Indian delegation at the conference, proposed that four billion dollars of British indebtedness to India, represented by this blocked sterling, be converted into American dollars at the rate of forty to sixty million dollars a year. Shroff compared India to “a man with a billion dollars in the bank balance but not enough money to pay his taxi fare.” Britain refused to unfreeze Indian money in a statement by her monetary seer, J.M. Keynes, who said Britain had fought the war “on the principle of an unlimited liability and reckless disregard of economic consequences.” England needs the Indian market and Indian goods and will not release its hold.
These two examples suffice to show that no world prosperity will issue from the Bretton Woods agreement. The United States, financial and therefore political master at the conference, can expand its trade – at the expense of the workers of the rest of the world. But by depressing other nations, she will eventually find herself without a market.
The old days of “Prosperity is just around the corner” will be with us again!
(Next week: Mechanism of bank and fund, and U.S. domination)
1. In fact only two articles were published.
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