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Roosevelt and Wall St.

Roosevelt Planned War Program from First Term On;
Economic Crisis Forces Move to Aid Big Business

(16 November 1940)

From Socialist Appeal, Vol. 4 No. 46, 16 November 1940, p. 4.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).


The “New Deal” was indeed short-lived. As early as June 1935 Roosevelt had declared, “All the basic innovations of the New Deal are completed.” Business appeasement became the key-note of his 1936 campaign.

Relief appropriations began to be tapered off. The Federal Emergency Relief Administration was then liquidated at the initiation of Roosevelt. From June 1935-Noveber 1935, six million jobless families faced outright starvation What F.D.R. saved in this period was partially added to the 1936 WPA appropriation for use just prior to the 1936 election campaign.

But from the very start of his Presidential career, Roosevelt held an “ace in the hole.” Starting with 1933. war appropriations began to sky-rocket. Each year thereafter the arms budget was accelerated; and each succeeding appropriation was termed “the greatest in America’s peace-time history.” By 1939, the Roosevelt administration extracted from the masses over 10 billion dollars in war appropriations.

It must be remembered that these appropriations were approved by Democrats and Republicans alike. For they were the material expression of the real policy of America’s ruling class, its “long-term” policy taking precedence ever all divisive domestic issues.

These appropriations were the calculated initial preparations for the time, in art epoch of world capitalist crisis, when American capitalism would dispute with armed might for control of the world markets and resources.

Roosevelt intensified his war drive with his famous Quarantine the Aggressors speech in Chicago, October 1937. It was timed for the precipitate business collapse following a flash-in-the-pan “boom,” which had reached its peak in August 1937.

It was at this point that Roosevelt openly abandoned the methods of priming the pump from the bottom, to greasing it at the top.

Roosevelt began in earnest to give direct “relief” to the capital or heavy goods industries, steel, auto, railroads, etc. “The augmented arms program was intended, in part, to provide immediate profits to the capital goods industries, whose continued depression charted the chronic fever of American and world capitalism.

But beyond this was an impelling drive toward imperialist war, the inevitable outgrowth of capitalism itself.

By the beginning of Roosevelt’s second term, it became transparently clear to Roosevelt that his New Deal “reforms” could never cure the deadly ills of American economy. At the peak of the Roosevelt business “boom” in 1937, a national census had revealed 11,000,000 unemployed as living symptoms of the chronic capitalist disease.

For the inability of American capitalism, despite all internal measures, to unload huge unmar Retable surpluses on the domestic market drives it to seek markets abroad. And this task is hampered by the equally stalemated capitalist nations everywhere.

The collapse of the internal economies of every capitalist nation in the world has meant an intensified fight over exploiting foreign holdings, over defending these ’holdings from competitors and expanding into new areas.

American and British capitalism arrived first on the imperialist “ground floor.” The “late” nations, like Germany and Japan, must “hijack” their way in. Thus two sets of gangsters fight for the right to thrust “protection” on the masses.

World capitalism, of which the American sector is the most highly developed, struggles wildly in a strait-jacket of contradictions. The re-arming of German capitalism was done with the aid and consent of British and American imperialism, an off-set to French control on the European continent. French capital has had a thousand links with German. Even while their opposing troops slaughtered each other. French steel flowed into Germany; German coal, into France.

General Motors, whose chief executive, William S. Knudsen, heads the National Defense Commission, owns the huge Adam auto plants in Germany. In 1933. these plants produced 36,000 autos. In 1938, they produced 140,000 units, plus tremendous equipment for the Nazi war machine. Standard Oil is half-owner of the Hydrierwerks Poelitz, which supplies synthetic fuel for the German war tanks and planes.

American policy toward South America, of which Roosevelt has been a chief exponent, likewise reflects this fantastic pattern. While aiding German production, American capital fights against German penetration into Latin American markets. German methods of direct barter of manufactured surpluses for raw materials are violently denounced. With the aid of the British blockade South America is deprived of the German and European market.

Corn piles up in Argentina Chilean nitrate exports shrink Brazil sadly contemplates 6 million bags of unmarketable coffee. The U.S. cannot absorb these products. No wonder one Chilean delegate at the Pan-American conference, considering Roosevelt’s plea for unification of the Western Hemisphere countries against the menace of Nazi dictatorship, declared, “Freedom is no satisfaction if you cannot sell your crops.”

Now the Roosevelt administration offers $500,000,000 through the Export-Import Bank to buy up Latin American surpluses, thus indirectly financing U.S. exports. This is likewise one of the ways in which the “cash and carry” clause of the Neutrality Act can be evaded; America lends the cash to Argentina, for instance, which buys up war materials to re-sell to Great Britain.

Like a squirrel in a revolving cage, the faster capitalism runs, the less it travels. Driven to madness, it smashes itself against the prison bars of profits. Through the violence of war, it seeks its “escape.”

Roosevelt may “loathe war” and “hate war now more than ever,” but he also loves capitalism. This greater love dictates his course. He is married to the system which breeds war.

War will come, with or without any directly hostile act, either of Germany or Japan. The Magazine of Wall Street, September 7, made this fact crystal clear, declaring:

“We will not (at least for several months) consider joining the war ‘unless the war comes to us’. Germany has been scrupulously careful to avoid any incident which would give us an excuse to declare war, but we have done many things which a victorious Germany could well hold against us for aiding and abetting her enemy. Administration spokesmen have made it clear that there is no doubt that if England is defeated the war will come to us, AND NOT NECESSARILY THROUGH ANY OVERT ACT OF GERMANY.” (our emphasis)

The Magazine of Wall Street never kids its own ruling-class subscribers. Wall Street turns the lie manufacturing over to the dally press, which is read by the workers.

Indeed, peace would be a major catastrophe for Wall Street. While Willkie, the Wall Street mouthpiece, was attempting to demagogically corral anti-war sentiment, the Magazine of Wall Street, September 7, was stating:

“There is not the slightest doubt that the American armament program will eventually produce an industrial boom the like of which we have never known before – PROVIDED WHOLLY UNEXPECTED WAR DEVELOPMENTS DO NOT PERMIT US TO SCALE DOWN THE EXPENDITURES NOW CONTEMPLATED (our emphasis).”

The article adds:

“For years we have been speculating about some major new industry that would be capable of stimulating the economy ... This is it.”

And how! And it’s the chief reason why [the] majority of Wall Street supports] Roosevelt’s re-election with tongues in cheek.

Stetinius, U.S. Steel president and Roosevelt appointee to the National Defense Commission, isn’t too broken up over U.S. Steel profits increasing 1740 percent in the first half of 1940 over 1939.

Knudsen can sleep easy knowing the DuPonts won’t starve on the $113,575,460 net profits General Motors cleared for the first six months of 1940, although only 13 percent over the mere $100,992,531 take for the first six months of 1939.

And John Biggers, president of the Libby-Owens-Ford glass monopoly, can’t complain too loudly because his patriotic sacrifices on the NDAC promise to net his corporation a 1940 profit increase of 95 percent.

Wall Street calmly re-assured its following during the fake bluster by Roosevelt about “taking the profits out of war.” As early as August, Forbes, an authoritative big business monthly, declared, “What are new Federal taxes going to do to business profits? What happened during our last great re-arming period provides one clue. As the chart shows, Federal taxes took a big slice of corporate net income; but war orders so increased net income before taxes that the profits remaining after taxes had been paid were substantial.”

Substantial indeed! For the accompanying chart reveals that net corporate profits for the four years preceding the last, war averaged 3.8 billion dollars yearly; for the war years, 1916–1919, net profits were 6.9 billion dollars yearly, with a 1917 peak of 8.6 billion dollars.

When the Excess Profits bill was finally passed and signed by Roosevelt, it provided such a brazen guarantee of unlimited war profits, that even the expectant Wall Street magnates gasped!

And when the Russell-Overton Amendment, which permits the government to “take over” plants at a “fair rental” if the owner refuses “emergency” war orders, was attached to the Conscription bill – eliciting the cry of “state socialism” from Willkie – Barrons, Wall Street financial weekly, September 2, candidly admitted:

“It should be added that there is no sign of any intention on the part of anyone to misuse the power (to take over non-cooperative businesses). SO LONG AS KNUDSEN, BIGGERS AND CO. ARE IN CONTROL, THERE WON’T BE.” (our emphasis)

And they are in control, despite the efforts of Sidney Hillman, and the rest of the pro-Roosevelt labor stooges, to convince the workers differently.

National Business magazine, in September, at the time when many corporations were refusing defense orders to bring pressure for a favorable Excess-Profits bill, reported:

“The Defense Commission is defending business against charges of a capital strike, putting profits before patriotism, etc. ... AND SO FAR IT HAS BEEN SUPPORTED IN THIS BY PRESIDENT ROOSEVELT. CONTRARY TO EXPECTATIONS. THE NEW DEAL REFORM ELEMENT HAS BEEN KEPT COMPLETELY OUT OF THE DEFENSE PICTURE.”

Yes, Roosevelt in the saddle in Washington is riding for Wall Street. When, in the name of “National Unity,” he placed Henry L. Stimson and Frank Knox, two big-business Republicans, at the head of the War and Navy Departments, this was Roosevelt’s fire-side way of telling Wall Street, “Don’t shove, boys! You don’t need more than your snout in the trough!”

(To Be Continued)

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