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Chapter 3
The
Wilson Offensive
For
the bourgeoisie of the liberal age, the circulation sphere still largely served
as the context in which they defined and legitimized their hegemony, but the
money-capital concept differed from a merely mercantile perspective by its
comprehensiveness in regard to the totality of capitalist production. This
implied the incorporation (albeit on a still subordinate level) of an industrial
point of view, as well as. a concern over working-class and popular support for
expansion abroad. Indeed, the internationalization of the circuit of money
capital depended on the conscious construction of a mass political consensus to
support it. This was the contribution of the great architects of social
imperialism like Cecil Rhodes and Chamberlain
in Britain or Rathenau in Germany. 1
In
Europe, intense national rivalries tended to subsume the 'social' dimension of
imperialism into traditional national chauvinism, climaxing in the rallying of
the Social Democrat majorities to their respective bourgeoisies in 1914. In the
context of the Atlantic economy, however, a social imperialism crystallized
which tended to assume a more universalist, 'ultra-imperialist' quality (as
Kautsky typed it in a famous 1914 article).2 Eventually, through the Wilson
intervention and with the shift of the centre of gravity of capitalism to the
North Atlantic basin, this brand of social imperialism laid the foundations for
working-class support for Atlantic integration at a later stage and made it
swallow the 'passive revolution' Atlantic capitalism had in store for it.
1.
Capitalist Universalism and Anglo-Saxon Chauvinism
The
dream of the Rhodes trustees and Joseph Chamberlain to make British imperialism
part of a wider Anglo-Saxon union was reciprocated from the other side of the
Atlantic. Here, Anglo-Saxon chauvinism developed in the context of
Progressivism, a disparate social and ideological movement through which the
American bourgeoisie and middle classes responded to the rise of the trusts and
mass immigration after the turn of the century. Idealizing the past for its
gentlemanly democracy and individualism, the descendants of the first
generations of colonists, mostly of British descent, felt particularly
threatened by the hordes of immigrants from Southern and Eastern Europe crowding
the rapidly expanding cities and subscribing to alien ideologies like Anarchism
and Marxism. Progressivism, for all its exaltation of good government and
municipal reform, scarcely concealed its quest for ethnic purity.
The
anti-trust and petty-bourgeois orientation of the Progressive Movement did not
prevent important segments of the American ruling class from subscribing to its
goals. The foreign expansion of US
capital, then
coming of age, and the threat posed by urban mass politics
to WASP civic hegemony, provided a framework for working out a new concept of
control along the lines of social imperialism. The task was taken up notably by
the National Civic Federation, constituted in 1900. In the NCF, forward-looking
elements in the American bourgeoisie with an interest in the
internationalization of capital worked out a new flexible attitude towards the
working class.
In
politics, Theodore Roosevelt and Woodrow Wilson were the most prominent
representatives, not of the original Progressivism, but of the synthesis
resulting from its adoption by the ruling class. As Woodrow Wilson put it,
circumstances forced him to become a Progressive 'because we have not kept up
with our changes of conditions, either in the economic field or in the political
field'.4 Reform and regulation, demanded by Populists and Progressives, and
undertaken by 'responsible' government, therefore adjusted social aspirations to
the new forms of capitalism rather than the other way
around. 5
Anglo-Saxon chauvinism as it developed in Progressive America had many affinities with European social imperialism. In Bukharin's opinion, Anglo-Saxon 'love of liberty' was only “a less vulgar but no less untenable attempt to advance a territorial-psychological theory. The place of "race" is here taken by its substitute, the "middle European", "American" or some other humanity.”6 In the American working class, it fostered various forms of ethnic and racial prejudice—the latter exemplified by the segregation practices of the American Federation of Labor (AFL). The AFL, organizing skilled craftsmen of Anglo-Saxon or old-immigrant descent, became under the leadership of Samuel Gompers a crucial support of American expansion abroad. As the American black leader, W.E.B. DuBois wrote in 1915, 'It is no longer simply the merchant prince, or the aristocratic monopoly, or even the employing class, that is exploiting the world. It is the nation, a new democratic nation composed of united capital and labor'. 7
However, the position from which the United States embarked upon a course of foreign expansion differed fundamentally from the trajectory of British imperialism. Whereas in Britain, social imperialism had to be subordinated to the defence of existing imperial interests and hence acquired the narrowly national, and even reactionary quality referred to already; in the United States, Anglo-Saxon chauvinism could be inserted in a much more positive doctrine, since American capitalism expanded abroad by establishing an informal empire cutting across the existing division of the world into formal colonial empires. Democracy at home, made visible by reforms, thus was complemented by international democracy, proclaiming national self-determination and the 'Open Door'. The combination, giving expansion abroad the aura of a civilizing mission, is captured by the notion of universalism, defined by Schlesinger as a view of the world by which 'all nations share a common interest in all the affairs of the world' and as such distinguished from the sphere-of-interest view by which 'each great power would be assured by the other great powers of an acknowledged predominance in its own area of special interest'. 8
Significantly,
the 'Open Door Notes' in which the principles of American expansion abroad were
laid down, and the already mentioned Chamberlain proposal for an Anglo-American
union, were products of the same episode. In 1898, the British, who because of
their preponderant position in the China trade had traditionally defended a
policy of free access in that country, solicited American support against
interlopers seeking exclusive railway and mining concessions from the Chinese
government. The Americans at first did not respond at all, much to the dismay of
the US ambassador in London, John Hay. Hay, according to a Rhodes Trust
propagandist writing in the 1930s, was the 'chief advocate of English-speaking
solidarity (among American statesmen)',9 And when he later in 1898 became
Secretary of State, he elevated the idea of the Open Door to a general
principle. The British in the meantime had taken a major step towards securing a
sphere-of-influence of their own by the lease of Kowloon in June, which exposed
the opportunist quality of their appeal to free trade and of Anglo-Saxon
solidarity. On the other land, the Open Door henceforward remained associated
with Anglo-American understanding, reinforcing the democratic connotation of
Anglo-Saxon chauvinism as it functioned in the context of American expansion.
At
this juncture, the looming conflict between British imperial interests and
American universalism could still be reconciled on account of specific
complementarities suggesting common interests. This applied notably to both
countries' dependence on naval power. The United States has certainty after a
very high order', the advocate if American sea-power, Captain Mahan,
wrote to Theodore Roosevelt in 1904, 'that the British Empire will stand
substantially in the same lines of world privileges as ourselves; that its
strength "will be our strength, and its weakening an injury to US'. 11
The
Washington Naval Conference of 1921-22 in this respect was the last episode of
mutual agreement; in World War Two, Churchill's attempt to formulate Atlantic
unity in these traditional terms was overruled by Roosevelt's universalism.
The famous journalist, Walter Lippmann, eventually became, as a result of his role in World War One, the most prominent spokesman both for universalism and for the Atlantic dimension which it would assume later in the Roosevelt offensive. Lippmann's writings drew heavily on Anglo-Saxon chauvinism, and like Morgan partner Thomas Lamont and scholar Whitney Shepardson, Lippmann was a member of the American Round Table group, a branch of the British Round Table. In the New Republic, a liberal publication sponsored by the Whitney family (utility magnates) and Morgan partner Willard Straight, Lippmann on 9 December 1916 wrote that the American feeling for France 'is the free friendship men give to those 'Ihom they meet only in their leisure', whereas with the British, 'we have to-day the discordant intimacy of business partners and family ties'.12
As American entry into the war became a more urgent requirement to the British and to the US (especially Morgan) interests supporting them, Lippmann's arguments became more explicit in pointing out their community of interests and he coined the notion of a wider Atlantic community. Discussing the threat to the routes posed by German submarine warfare, Lippmann in a February 1917 article entitled 'The Defence of the Atlantic World' 'wrote that 'the safety of the Atlantic highway is something for which America should fight. On the shores of the Atlantic Ocean there has grown up a profound web of interests which joins together the Western World. Britain, France, Italy, even Spain, Belgium, Holland, the Scandinavian nations, and Pan-America are in the main one community in their deepest needs and their deepest purposes. They have a common interest in the ocean which unites them, they are today more inextricably bound together than most even as yet realize.'
Lippmann's
objective, in line with the general thrust of American universalism, was not to
preserve the existing state of imperialism, but, rather, to restructure if into
a more dynamic configuration capable of dealing with new challenges like
nationalism and socialism. He saw German imperialism in particular as the
embodiment of reactionary system of international relations, incapable of
withstanding the impact of socialism. US involvement was necessary to imbue
European capitalism with new confidence (as well as to shore up the Western
Front). American association with an Atlantic community, according to Lippmann
in another New Republic article, 'would weight it immeasurably in favor
of liberalism, and make the organization of a league for the peace an immediate
practical object of statesmanship. By showing that we are ready now, as well as
in the theoretical future, to defend the western world, the cornerstone of
federation would be laid.' In such a federation, a democratic Germany eventually
could be included as well.
At
the same time, Lippmann took care to emphasize the Open Door tenets central to
Wilsonian universalism, which put him apart from the British imperialists he was
associated with in the Round Table group. Arguing that national sovereignty as a
concept no longer 'governed the facts', he put his pleas for internationalism in
the perspective of 'cooperative control of those vital supplies on which human
life depends'. 15
Obviously,
this was a position that conservative imperialism could not possibly subscribe
to, although bank capital represented a cosmopolitan interest in Europe as well.
16 Only
where the industrial point of view had been integrally incorporated into liberal
internationalism, could a position like Lippmann's acquire a resonance. In this
respect it is significant that Walter Rathenau of AEG in 1913 argued the
objective necessity of arriving at a global system of shared control of raw
materials in almost identical terms. 'No territory of the earth should be
definitively and autonomously sequestrated by a power incapable of making the
riches of its soil and surface useful to the general welfare. The earth is not
big and rich enough to allow the luxury of autonomous semi-civilizations to
exist to the detriment of world production.'17 This apparently disinterested
universalism, which Rathenau attempted to insert into a social-imperialist
consensus in order to stave off socialist revolution after World War One, was,
however, unacceptable to the conservative German bourgeoisie and cost him his
life in 1922 at the hands of an ultra-nationalist assassin. At this juncture
only American capitalist ideologues were in a position where they could afford
to propose transcendent schemes of bourgeois universalism.
Lippmann
on account of his excellent credentials with the Atlanticist fraction in both
countries was selected to explain Wilson's Fourteen Points to the British
government in 1918. From Europe, he continued to urge Wilson to intervene in
European affairs and thus save European capitalism from collapse. 'Utterances
from the United States. . . will show the way to the Liberals in Great Britain
and in France, and therefore will restore national unity in purpose', Lippmann
wrote in a co-authored memorandum to the President dated January, 1918. 'These
liberals will rapidly accept the leadership of the President if he undertakes a
liberal diplomatic offensive, because they will find in that offensive an
invaluable support for their internal domestic troubles'. IS
Hitherto, the
European liberal bourgeoisie had been able both to contain domestic
working-class pressures and to maintain a degree of autonomy vis-a-vis the
United States,
19 but
the Russian Revolution threw them into the arms of Wilson
and the universalist policy he had been cultivating for several years.
The
Crusade for Democracy
The
revolution would not have been confined to Russia had it not been for the entry
of the United States in the crucial final stage of the war and the tremendous
power thus thrown into battle on the side of liberal capitalism by the
internationalist fraction of the American bourgeoisie led by Wilson. By his
handling of the crisis of European imperialism and the revolutionary challenge
that arose from it, Wilson set a historical example of how to bring unity of
purpose to the liberal capitalist world and isolate its opponents.
The
World War had been largely ignited by rivalries arising from intersecting
circuits of money capital and related railway and armaments programmes in
Eastern Europe. These rivalries drew France to the side of Russian expansion
towards the Mediterranean, while allying Germany with the Austrian-Hungarian
attempt to block it or deflect it upon the disintegrating Turkish Empire.20
Britain sided with the enemies of Germany for a host of reasons and commitments,
but its rivalry with Germany centred on the challenge posed to British supremacy
in world commerce and finance.21 However, as we have seen, the thrust of British
capital exports into the Atlantic circuit was increasingly bringing about a
geopolitical rapprochement between the United States and Britain. When the
defeat of the Central Powers cut down German imperialism to size, and the
Russian Revolution struck two decades of capital investment from the books of
French and Belgian capitalists, the Atlantic circuit, with Britain now a debtor
of America, 22
could serve
as a viable launching ground for an experiment
in ultra-imperialism.
Universalism
combined the Open Door and national self- determination with reformism at home.
'If you want to oust socialism you have to propose something better', Wilson
told a New York audience in 1912.23 Faced with the real revolution, Wilson by
his League of Nations project and his bold encouragement of national
self-determination succeeded to a considerable extent in recapturing historical
initiative from socialism. 'Instead of allowing the gigantic scale and
complexity of recent developments to frighten him into status-quo thinking',
Mayer writes, Wilson 'courageously formulated both his thought and action with a
view to steering the onrushing
historical forces into orderly channels'.
The
Wilson policy was a perceptive anticipation of the underlying social capacities
of capitalism which would take the New Deal and World War Two to fully
materialize in the corporate-liberal synthesis. The universalist concept of
world order went beyond the deflationary liberalism of the financiers and
already represented an attempt to combine a growing domestic industrial economy
with commercial and financial expansion abroad. Lacking a firm basis in the
contemporary class structure, Wilson's strategy of progressive
counter-revolution was supported by a bourgeoisie frightened by the
spectre of Bolshevism - and
was discarded as soon as that threat had subsided.
By
the time of the First World War, American public opinion had become considerably
more cautious in its attitude towards military adventures, especially when
compared to the jingoism which had applauded the exploits of Theodore
Roosevelt's 'Rough Riders' during the Spanish-American War. Widespread pacifism
and isolationism were accompanied by the demands for reforms at home. This time,
Roosevelt and other East Coast internationalists found no audience among the
population for their appeals that America enter the war at the side of the
Allies. This task was left to Wilson.
Participation
on the side of the Entente was, in one sense, a predetermined fact. As Britain
and the United States, traditional foes, grew considerably closer in the decades
before 1914, American relations with Germany were deteriorating in the face of
commercial rivalry in Latin America, and as a result of popular US revulsion to
German militarism. Morgan's and other bankers' loans had been overwhelmingly to
the Allies, and American war industries were in dire need of a replacement
market when the US administration in late 1916 refused to accept British and
French treasury notes as payment for arms purchases after gold and dollar stocks
had been exhausted. Wilson's policy capitalized on the new primacy of Wall
Street in the Atlantic circuit, but the democratic label which Wilson wanted to
attach to his interventionist policy required that he first succeed in adjusting
and redirecting popular aspirations for social reform to the international
aspirations of American capital. 26
Wilson's
universalist application of American political and economic traditions, and the
comprehensive peace design which he proposed, transcended the narrow, warlike
sphere-of-interest policies of the European powers. Meanwhile popular
indignation was aroused by German submarine warfare, and the pro-British
Secretary of State Lansing pressed for a break with the Germans. But during the
summer and autumn of 1916, there was a backlash of anti-British sentiment after
the ruthless suppression of the Irish uprising. The Administration, therefore,
was forced to reserve the election year 1916 for the long overdue enactment of
key Progressive reform projects. In Link's words, Wilson in this year 'became
almost a new political creature, and under his leadership a Democratic Congress
enacted the most sweeping and significant progressive legislation in the history
of the co\.mtry up to that time'.27 Before the actual election campaign started,
rural credits regulation and labour protection were enacted, and the
Presidential support for an eight- hour day was secured. Business interests were
compensated by a degree of protectionism, modifying the earlier trade
liberalism.
Having
manoeuvred himself into a strong position by asking for a popular mandate for
peace and cementing approval with progressive legislation, Wilson proceeded to
translate the results into freedom of manoeuvre in foreign affairs by publicly
stressing the 'popular' nature of his international proposals. In December,
1916, the President asked the belligerents to define the objectives for which
they were fighting. In January, he repeated this request before the Senate. The
President justified this gesture by reference to the need for clarity about the
details and the nature of the peace guarantee which the American people were
about to underwrite. Since the Germans at about the same time announced
unrestricted submarine warfare, the die was cast, although Wilson was still
concerned about the future of 'white civilization' if the United States
intervened. Final Congressional approval for American entry into the war still
required a brief episode of outright manipulation of public opinion, for which a
fake German diplomatic note (the 'Zimmermann telegram'), made public when
Congress refused to grant war powers to
the President, served as the instrument.
As
Sumner Welles would write, between 1914 and 1917 the American people were
gradually prepared 'to heed the inspired phrases of Woodrow Wilson when in 1917
he summoned them to assume their obligations as citizens of the world and to
recognize their own responsibility for preserving the free institutions which
had made this country great.' In this process, the Americans 'also seemed to see
clearly that the triumph of the policies Wilson urged on them was indispensable
if they were to safeguard their own future welfare'.29 Facilitating the
integration of popular aspirations and expansionist designs, Anglo-American
chauvinism came strongly to the surface once the war was on. This was expressed
by outright feelings of self-righteousness putting the Americans and British on
a moral plane superior to that of the Germans, but also more subtly in the
assumptions underlying the League of Nations project. It also developed in
dialectical interplay with the new prominence of the South in the Wilson
offensive.
Like
the East Coast financiers, the big Southern cotton and tobacco merchants imbued
their home regions with their pervasive internationalism. With cotton prices
rising until World War One, the basic rationale of Southern internationalism -
the region's
dependence on the world market for the sale of its cotton and tobacco -
acquired a
fresh relevance and a specific Atlantic dimension at that. 'The South had an
immediate and continuing need for access to overseas markets', Lerche writes.
'Exporting cotton and tobacco to Europe and importing European manufactures
freed Southerners to some extent from the dominance of Northern industry and
gave them a sense of being participants in a broader economic system'.31 In
addition to the economic determinants, there was also a strong ethno-cultural
aspect fostering identification with Britain. In the American South, a
contemporary British advocate of Atlantic unity could observe, 'racial integrity
is held inviolate and the torch of Anglo-Saxon ideals high aloft'. 32
Still it was
the experience of the world war which mobilized Southern internationalism into a
major support for at least the first two of the US offensives in the context of
Atlantic integration.
Wilson
was the first Southern President since the Civil War. 'Influenced as he was by
such sons of the South as Colonel Edward House and Ambassador to Great Britain
Walter Hines Page, Wilson approached his major crises completely in harmony with
Southern predispositions. When the showdown finally came in the aftermath of the
war, the South was prepared to go all the way with Wilson'. 33
When the
Northern financiers and industrialists were still divided over the value of
Wilson's League of Nations project, the South provided domestic support almost
irrespective of the precise implications of the project. On the other hand, the
social-imperialist element was lacking in Southern support for Wilson. The
structural connection with Atlantic liberalism resided mainly in the free-trade
aspect.
Gompers
and European
Reformism
The
role of the AFL in the Wilson offensive also prefigured its future participation
in American offensives in the period of Atlantic integration. The AFL had
associated itself closely with the pro-war drive of the Wilson administration,
and the reforms of 1916 included a lumber of gestures to organized labour. In
October, the AFL leader, Samuel Gompers, was appointed to the Advisory
Commission of the Council of National Defence, and in 1917, Wilson addressed the
national convention of the AFL, inviting its leaders to serve on the National
Labor Conference and later on the National War Labor Board. The war, with it
stimulus to full employment, 34
reinforced he
hold of imperialist ideology not just over the trade-union bureaucracy, but also
over much of the native skilled working class.35 Their contribution to the war
effort notwithstanding, however, workers' standards of living declined; only
after Armistice did wages begin to catch up with prices that by 1919 had doubled
over their 1915 level. By that time, a wave of strikes, involving one out of
five American workers, broke the truce with the labour leaders. 36
Although
Gompers failed to consolidate an effective Atlantic trade-union alliance
(despite a mission to England), Wilson's crusade against the Bolshevik
Revolution contributed much to the split in the European labour movement.
Discredited by their complicity in the imperialist war, the leaders of European
Social Democracy found inspiration in the radical democratic formulas of the
American president and by adopting them, sought to renew and invigorate their
own constituencies among the workers.
At
the International Labour and Socialist Conference in Berne, February 1919,
reformist socialists from 26 countries, several of them openly attacking the
Bolsheviks, concurred in the opinion that the United States would be
instrumental in establishing a stable world order. In
a memorandum to Wilson's confidant, Colonel House, an American
observer wrote that 'the entire conference showed an almost pathetic confidence
in President Wilson. Speaker after speaker praised the President and insisted
that the masses of Europe must stand behind him in his fight for the League of
Nations'.37 The positive attitude of European socialists towards an enlightened
capitalism holding out the promise of developing the productive forces would
prove to be a recurrent phenomenon of the era of Atlantic integration as well.
Meanwhile,
as wartime national unity in the United States began to crack up, the American
ruling class again sought to maintain its hold over society by making use of
ethnic divisions, reserving the carrot for the Anglo-Saxon, and the stick for
the immigrant, working class. While many leading native socialists, like William
English Walling, left the Socialist Party to support Wilson and the war (through
the short-lived Social Democratic Federation), militant immigrant workers
flocked to the Party's anti-war platform. At the same time, government
repression, invoking an 'alien- subversive' scare, mounted implacably.
Persecution radicalized the socialist foreign language federations towards
Bolshevism and broke
up the Socialist Party - a
split 'almost entirely along the lines of
national origin'. 38
In
the
climate of sharp class conflict and 'interiorized' Anglo- Saxon chauvinism,
capitalists purposely stimulated racism by using black strike-breakers against
organized white workers. Race riots erupted in St. Louis, Chicago and Tulsa,
while attempts by class- conscious blacks to appeal to the AFL were rebuffed by
the segregationist leadership. At a meeting of the AFL Executive Council in
1917, Gompers reprimanded a Negro delegation for 'somehow conveying the idea
that they are to be petted or coddled and given special consideration and
special privilege. Of course that can't be done'.
39
Confronted
by an upsurge of class struggle and reaction at home, the AFL's new-found
internationalism collapsed with even greater speed than Wilson's attempt to
create a new world order. Yet the Wilson
offensive, absorbing social pressures generated by near-full employment and
redirecting them (partly through an appeal to Anglo-Saxon chauvinism and partly
through reform) towards support for expansion into the European
sphere-of-influence, served as the paradigmatic precedent for the later
Roosevelt, Marshall and Kennedy offensives. Atlantic unity, whether positive
(for democracy) or negative (against socialism) in its explicit programme,
derived its basic structural characteristics from this episode.
2.
The Resurrection of Atlantic Capitalism?
Within
the American ruling class no unanimity existed as to the appropriateness of
American involvement along the lines of the Wilson policy. Republican
internationalists like Stimson thought the League of Nations a too legalistic
construction and disapproved of the binding clauses of the project.40 For many
of the investment bankers, to whom Stimson was closely related, private
reconstruction of the war-torn Atlantic circuit of money capital was preferable
to the burdens associated with subscribing to collective security arrangements,
which moreover were part of a costly social- imperialist consensus at home. The
financial stake in Europe in the meantime had become crucial for American bank
capital. Hence, when the United States rejected membership in the League of
Nations in the context of an apparent retreat into hemispheric isolation, 'it
fell to private bankers on Wall Street to exert financial leadership'.41
Intent
on rehabilitating an Atlantic circuit of money capital in which American capital
this time occupied the commanding heights, Wall Street bankers were able to gear
American policy to a short-sighted rentier concept calculating on
counter-revolution at the lowest possible cost and on whatever short-term
profits the international financial circuit might yield both of which implied a
revival of German imperialism. Having discarded the policy of compromise
inherent in social imperialism as well as the emphasis on the productive aspects
of international capitalism, the liberal- internationalist fraction associated
with Atlantic money capital unwittingly fostered the rise of a constellation of
interests which between 1929 and 1933 replaced the liberal order of Atlantic
capitalism by a system of protectionism and autarky, cartels and reactionary
nationalism.
The
most eloquent voice calling for the restoration of a liberal international
order was the International Chamber of Commerce (ICC) in Paris. The ICC,
reconstructed after the war to provide a forum of business opinion commensurate
with the newly established League of Nations, single-mindedly worked towards the
dismantling of wartime state intervention supported by national industry,
agriculture, and labour rather than accommodating these forces in the context of
a new compromise. Their opponents, notably the industrial capitalists dependent
on state support, on the contrary wanted political arrangements and cartels
rather than a return to the unfettered workings of the market mechanism in
international economic relations. In the crucial case of Germany reparations,
the two positions were sharply juxtaposed. Either German capital would be an
integral part of a liberal international economy, which supposed some form of
commercialization of the reparations burden (or even its cancellation); or it
would remain locked in a political custody imposed by the victorious powers and
serve as a reservoir of cheap raw materials and cash subsidies for the latter's
expansion.
'In
this sense', Ridgeway writes, 'the entire reparations controversy became merged
in the great post-war struggle in the economic field between the industrialists
and the international bankers: The one demanded economic nationalism, tariffs,
and so forth, the other international cooperation and the maintenance of the
gold standard. The one represented powerful interlocking groups within states,
the other more nearly represented an international interest'.42 As we shall see,
however, the opponents in this controversy cannot be defined in strictly
functional terms alone, as the bankers' position was supported by liberal
industrialists just as, at a later stage, industrial capital was joined by a
segment of bank capital subscribing to international strategies developed from
the productive-capital point of view.
Since
the different capital fractions were represented unevenly in each state, the
antagonism assumed the form of a struggle along national lines as well. In
France and Belgium, which had both lost enormous portfolios because of the
Russian Revolution, money capital perforce moved closer to the positions of
industry. We have already mentioned Schneider's comprehensive strategy for
replacing Germany's industrial primacy in Europe. Moreover, as French and
Belgian finances ran into rampant inflation, German reparations became the
hoped-for miracle solution to their problems. But no sooner had the final sum of
reparations been fixed, and the rights and privileges of the claimants been
secured (a French share of 52%, preference of reparation payments over other
debts, the right to occupy the Ruhr in case of German default), than the German
mark, too, exploded.
By
late 1919, bankers from the United States, Britain, the Netherlands, and Sweden
had started a petition movement to convene an international financial conference
with the aim of reducing the
reparation-burdens
of Germany and Austria to the limits of practicable taxation. The organizers of
the petition came from the front row of
pre-war liberal internationalism, including, on the American side, J.P. Morgan,
Paul Warburg and Herbert Hoover.44 Similar initiatives, for which the ICC
provided organizational backing, were the 'organization
of trade conferences, as well as the formation of an International Finance
Comittee to work out proposals to make Europe once again 'a paying concern'. The
Committee, which included Owen Young of GE as well as Pirelli and Olivetti from
Italy, favoured close cooperation between the United States and Europe, but it
was clear that such a goal would not by itself excite much enthusiasm in Belgium
and France, which had been outsiders in the pre-war Atlantic circuit and were
single-mindedly concentrated on German reparations. Yet in the period until
1922, liberal- internationalist capitalists from these countries tried to exert
a moderating influence on the reparations issue, championing European
cooperation rather than revenge pure and simple.
The
Dawes Plan
The
massive flow of American credit to Europe during the war had been accompanied by
a diversification of power-centres on Wall Street: of the thirteen most
prominent investment banks operating in the late 1920s, eight had been started
during World War One. They formed a cartel of their own, with Morgan at their
head, albeit no longer
as the undisputed leader.46
In the
Coolidge administration which
succeeded the brief interregnum of Harding, the interests of this cartel were
taken care of by Vice-President Charles Dawes, a banker himself, Secretary of
State Hughes, and Herbert Hoover, the Secretary of Commerce who championed a
concept of capital exports as a means to subsidize American farm exports. In
line with the prevailing rentier outlook sponsored by the bankers, all three of
them agreed on the need to refrain from active political involvement along
Wilsonian lines. In a speech on 19 December 1922, Hughes had proposed that the
reparations matter be delegated to 'men of the highest authority in finance'
rather than be left to the politicians. In such a body, Hughes estimated,
'distinguished Americans would be willing to serve'.47
One
month before, a German government of marked Atlantic outlook, with Cuno as Prime
Minister and another member of the German-American Economic Board, Becker, as
Minister of Economic Affairs, had taken power. Switching to a collision course
with France following the abortive attempt by Wirth and Rathenau to work out a
conciliatory, democratic arrangement, they expected that the United States and
Britain would help them to throw off the French yoke. However, as Gossweiler has
noted, the German liberals, who so far had resisted penetration of American
capital, did not realize that the Anglo-Saxon powers would try to extract
economic concessions before allowing Germany to get on its feet. Accordingly,
when the French rejected the Hughes proposal and joined by a few Belgian troops
and a handful of Italian engineers sent by Mussolini) marched into the Ruhr,
neither the Americans nor the British came to the aid of the Cuno government.48
This
did not mean, however, that American bankers had in general forsaken Germany.
Hoover, in particular, criticized the support Morgan and the State Department
gave to France and Belgium. By 1924, he openly declared that 'the time had come.
. . to take a "very strong stand" not only against France but against
Belgium and Italy as well', since the 'financing operations of these governments
were merely covert schemes of finding money for
unproductive purposes'. 49
For bankers
in the Morgan orbit, too, it
became increasingly clear that economic criteria should be decisive. At the
second congress of the ICC in Rome in 1923, F. Kent, of the Bankers' Trust,
candidly observed that 'the American interest (in
European economic reconstruction) was that of an investor'.50
From the
investors' perspective, cash returns in this situation had to have preference
over long-term stability.
The
work of the Rome ICC Conference bankers' committee was a major factor in paving
the way for the adoption of the eventual Dawes Plan. The immediate cause,
however, was the collapse of European finances and the position of strength from
which American investment bankers could intervene to their benefit. One after
another, the countries occupying the Ruhr were put under the tutelage of the
American bankers. When the crisis of the French franc entered a stage of
outright financial panic, the government turned to Morgan for help. The
deflationary policy, applied at Morgan's prescription and backed by his
prestige, contributed to a recovery of the French currency in the spring of
1924.51 On the French side, Lazard Freres was entrusted by the Bank of France to
handle the ensuing international payments. Lazard rose to prominence in this
period and would remain close to the state-monopoly tendency discussed in the
next chapter (as well as, incidentally, remaining a rival of Morgan).
With
their indiscriminate appetite for profits, American invest- ment banks
participated in the expansion of the French sphere-of- influence in Eastern
Europe. In one of these ventures, the French subsidiary of the Chicago
investment bank, Blair & Co., headed by Jean Monnet, undertook to
rehabilitate Polish finances in 1927. From New York, legal counsel to the
operation was given by J.F. Dulles. Accompanied by a young assistant named Rene
Pleven, Monnet went to Warsaw to inspect the books. The Polish loan floated by
Blair eventually reinforced French and American influence in Poland at the
expense of Great Britain.53
Belgium, too,
in 1924 sought American financial support. Prime Minister Theunis, a banker of
the Empain group and prominent member of the ICC, in that year appealed to the
Guaranty Trust, the established agent of Belgian finances in the United States,
and to Morgan.54
With France
and Belgium thus made dependent upon the goodwill of American bankers, they
moved to settle the German reparations question in a liberal sense. The German
bourgeoisie, still smarting from the humiliation of the Ruhr occupation,
likewise was at the mercy of the American banks and could not but accept the
recommendations of the experts' committee headed by General Dawes, which did
away with the right to enforce reparation and debt claims by Allied coercion.
Instead, the Dawes Report stressed the need to rebuild German industrial
capacity, placing it in the wider context of the reconstruction of Europe.
The
Dawes Plan, endorsed by the London Conference of June 1924, cleared the way for
a massive flow of American money capital into Germany. Although the amount of
reparations was not changed, the original priority of reparations payments over
service on other debt was reversed. Combined with the termination of penalties
and coercive means to enforce payment of reparations, this in fact replaced the
international antagonisms carried over from the war by the liberal
internationalism championed by the bankers. At a dinner with American bankers
and members of the German government, Hjalmar Schacht, who had been appointed a
director of the Oresdner Bank briefly after the agreement with Morgan and who
now as President of the Reichsbank was in charge of the policy of deflation
dictated by the Americans, characterized the Dawes Plan as the replacement of
the old methods of diplomacy and war by a new method of international and social
justice – in brief, by universalism. This judgement, however, mistook the
speculative inflow of American (as well as British and Dutch) money capital for
the direct investment capable of supporting a real transformation of the
European economy after the American mass-production model, something that would
have to wait for the period of Atlantic integration.
The
huge flow of capital involved in the American financial offensive, not unlike
the earlier waves of European investment in the US bond and railway markets, was
primarily speculative in character. Between 1924 and 1930, $1.239 billion worth
of German bonds were sold to American investors; German industry in the same
period floated bonds to an amount of $214.4 million of the American capital
market. The amount of capital sunk in German ventures in the first few months of
1925 alone made the American commercial attaché wonder how long American
bankers would keep fighting over ‘the privilege of floating doubtful municipal
loans’. In German heavy industry, financial injections were given irrespective
of technical level of market prospects ‘until’, to quote a contemporary
British observer, ‘it towered over Europe like a volcano which must one day
erupt and fling far and wide its rivers of molten metal.
Although
the drafting of the Dawes Report had been the work of Owen Young of GE, this
company’s affiliations with the Morgan group did not imply direct involvement
of the Morgan bank. Young had avoided direct consultation with Morgan
specifically because he did not want the report to be branded a Morgan report.
As late as the autumn of 1924, Morgan was still hesitant about extending loans
to Germany. ‘As wartime bankers for the allies, the partners did not relish
the notion of raising money for Germany’.
Eventually,
the single most important broker in the flow of American money capital to German
was Dillion, Read & Co., one the new Wall Street investment banks
challenging Morgan in the 1920s. In Germany, the two banks were rivals as well,
fighting over whole would become the American agent for reparations payments
created under the Dawes Plan. In his own approach, the candidate for Dillon,
Read, J.A. Logan, on this occasion showed that the newer investment banks were
far less scrupulous when the risk of financing German right-wing nationalism
became apparent, something that the Morgan men was still concerned about. After
World War Two, Dillon, Read men again would play a role in American policy
towards Germany which accommodated German ambitions beyond the point considered
acceptable by the liberal bankers.
Morgan's
qualms in regard to German revanchism hardly owed much to a democratic
conscience, but, rather, reflected long- standing geopolitical and Atlantic
ties, as brought out by the bank's willingness to finance Fascist Italy. In
1925, following the meeting of Morgan partner Thomas Lamont with Mussolini, the
bank floated n Italian loan of $l00,000,000, extending stabilization credits to
an amount of another $50 million. As in Germany, the stabilization loan paved
the way for a new influx of American money capital. In 926,
Morgan sold $10 million FIAT
debentures to American investors; a year later, a consortium organized by the
Guaranty Trust floated a like amount in Montecatini bonds in New York. 62
The
Paneuropa Union
If
the resurgence of liberal internationalism in the 1924-28 period promoted hopes
of a new prosperity in Europe, it was only because of the artificial injection
of American capital. Trotsky, writing in 1926, attributed 'the hope of
consolidation, of a relative economic equilibrium and in particular, the hope of
the stabilization of money and wages' entirely to the role of ' the master of
capitalist humanity, the United States'.63
Yet
as American involvement remained overwhelmingly concentrated in the financial
sphere, the political aloofness inherent in the money-capital concept, combined
with the absence of domestic labour and industrial export pressures, worked
against a formalization of American hegemony. In these circumstances, the
liberal- internationalist bourgeoisie in Europe attempted to create a regionally
defined ultra-imperialist order. The modalities of this attempt again are
relevant for the era of Atlantic integration, when European unity likewise
tended to progress notably during the stages of relative US aloofness between
Atlantic offensives.
The
Dawes Plan was soon followed by the Locarno Treaties of 1925, which included a
mutual guarantee of Germany's Western borders by Britain, France, Belgium and
Italy. (In regard to Germany's Eastern borders, the arrangements were
considerably less solid, consisting of arbitration agreements and a French pact
with Poland and Czechoslavakia meant to deter German aggression.) By any
standard Germany had again achieved a position of power, mainly at the expense
of France, and thanks to the benevolence of the Anglo-Saxon creditor states.
French
policy, heralding the strategy of European integration it would follow in the
1950s, consisted of enveloping German ambitions as much as possible in a legal
framework requiring constant consultation between the European powers, and
securing American support for it. Following the Locarno agreements, French
foreign minister Briand tried to draw the United States into the European
settlement through the Kellog-Briand pact, a 'gesture of moral and psychological
solidarity' as his chef de cabinet called it, and not more.64 A year before,
Briand had become Honorary President of the Paneuropa Union, the organization of
Count Coudenhove- Kalergi, and in 1929, he would make a belated proposal to
start discussions on the realization of a United States of Europe.
Coudenhove-Kalergi
was an exemplary case of a pre-war liberal converted with religious fervour to
Wilsonian Universalism. In his memoirs, Coudenhove recalled how the American
intervention in the war had made him aware of the fact that 'two prophets' were
engaged in a struggle over the 'soul of Europe': the American President and
Lenin. 65 After
the publication of his book Paneuropa in 1923, in which he proposed
European unity as a means to prevent war and raise the standard of living in
Europe by introducing American mass production and consumption, Coudenhove was
approached by Louis Rothschild and Max Warburg. Warburg offered him 60,000 gold
marks to start a movement, of which the Oresdner Bank and Rothschild's
Kreditanstalt of Vienna became the trustees. 66
The
organization's prominent supporters and officials were, for the greater part,
bankers and their friends except for France, where liberal leaders like Herriot
and cartel protagonists like Loucheur were both prominent. In the Belgian
national committee of the Paneuropa Union, Heinemanr of SOFINA was the
treasurer; in Germany, von Gwinner, of the Deutsche Bank, and subsequently, H.
Pitstenberg of the Berliner Handelsgesellschaft, a bank linked to AEG; Colijn
was the leading figure in the Netherlands; and in Luxemburg, A. Mayrisch, of the
ARBED steel trust was prominent. In Britain, finally, it was the Colonial
Secretary, L.S. Amery, linked to the Vickers group, who promoted Coudenhove and
eventually secured Churchill's support as well.
One
of Coudenhove's main concerns (shared by his banker supporters), however, was
American support. In 1925, Max Warburg arranged for his brothers in the United
States, Felix and Paul, to invite Coudenhove for an American tour. In America,
the count discussed European unity with Hoover, Kellogg, Young and Lippmann, but
also found out that American support for the unity of Europe rested on mutually
incompatible foundations: isolationists were in favour because it would diminish
the chances for American involvement in an eventual European war;
internationalists saw in European unity a favourable condition for US
participation in the League of Nations. 67
Massive
American loans and war debts involved the United States more closely than ever
before in European affairs, but its essential rentier position vis-â-vis Europe
put clear limits to this involvement, As Under-Secretary of State Grew noted at
the time, 'our policy is less and less of isolation and we are going as far as
we can in every matter without entering into European entanglements'. 68
Inevitably,
the liberal vision of European unity, despite American patronage, was to prove a
chimera. The free-trade offensive of1927, which had opened with the
Franco-German commercial treaty, subsided within a year, while Briand's belated
1929 proposal came to nothing (and according to Coudenhove, amounted to nothing
in the first place). As Schacht told Coudenhove, it was Hitler who would bring
unity to Europe; soon after his taking power, the Paneuropa Union was outlawed
in Germany and the Atlanticist industrialist, Robert Bosch, who had taken over
its finances (and deposited them in Zurich), was forced to step down.69
3. Germany and the Crisis of Liberal Internationalism
The
weakness of German capital in the international economy and the domestic
strength of the working class prevented a resolution of intra-bourgeois conflict
until the crisis of 1931-33 destroyed the basis of parliamentary politics
altogether and replaced it by Fascist dictatorship. The failure of the
bourgeoisie in the West to adopt a long-term approach of the Wilsonian type,
highlighted by the annexationist actions of the French and Belgian ruling
classes and the resurgence of a rentier concept in the United States, destroyed
whatever potential existed in Germany for the hegemony of an enlightened,
forward-looking configuration of the bourgeoisie.
As
indicated already, Walter Rathenau was the foremost representative of a
social-imperialist, universalist tendency in the German bourgeoisie,
anticipating the corporate-liberal synthesis between internationalism and state
intervention. His strategy aimed at simultaneously conciliating the working
class, the French, and, in order to recapture the initiative from socialism, the
Soviet Union too. In 1921-22, Rathenau, with the backing of AEG and the German
banks, had sponsored the idea of an international consortium of banks and
industry - the
'Europa Consortium' -
to develop
Russian resources and satisfy Western claimants' demands for compensation.
As
with the Franco-German discussions of the same juncture, however, the Rathenau
option was rejected by the nationalist industrialists led by Hugo Stinnes. The
latter, supported by Krupp and Otto Wolff, instead favoured direct negotiations
with the Russians -
a position
shared at this point by Gustave Stresemann in the German Reichstag. As support
from the Western creditor states for Rathenau, or the Europa Consortium for that
matter, failed to materialize at the 1922 Genoa conference on European economic
reconstruction, the Rapallo treaty between Germany and the USSR, drafted by
pro-Russian elements in the Ministry of Foreign Affairs, was concluded over the
hesitations of Rat hen au and President Ebert and
his majority socialists. 70
Rathenau's assassination in effect decapitated the corporate-liberal fraction and marked the defeat of the attempt to work out a progressive synthesis between the liberals and the nationalist industrialists. The 'unreconstructed' liberals and sphere-of-interest industrialists henceforward were reproduced as separate fractions (cf. Diagram 2 in Chapter 1), taking turns as the temporary dominant group without being able to consolidate stable power-bases in the face of working-class strength and the weight of landed interests.
In the 1922-24 period, industrial capital achieved a fragile superiority based on acquisitions made possible by rampant inflation. Giant industrial combines were built, and Stinnes gained his reputation in this period by combining his heavy-industry Rhein-Elbe trust with Siemens into a super-trust. Stinnes rejected Rathenau's joint Franco-German reconstruction proposals because of their projected trade-union dimension and instead secretly conferred with Marquis de Lubersac, the president of the French reconstruction companies. In 1922, they concluded an agreement to form a Franco- German heavy-industry trust that would have brought together the Ruhr's coal and the iron ore of Lorraine, and allow the Germans to take part 'again in the exploitation of territories lost in the war. 71
Although the Stinnes/Lubersac agreement came to nothing, the episode was a crucial formative experience for the state-monopoly tendency in the German bourgeoisie, and the resemblance with the Schuman Plan, almost thirty years later, was significant in the sense that the assumptions underlying both projects were typical of the ‘Euronational’ sphere-of-interest concept discussed in Chapter 1. Stinnes's desire for an agreement with France was motivated by fear f the revolutionary working class; and as long as the fate of capitalist Germany still hung in the balance, he supported the idea of a secession of the Catholic parts of Germany (Rhineland and Bavaria) in case of a socialist revolution. The main political protagonist of Rhineland separatism, whose background would predispose him to is eventual role in a separate Federal Germany, was Konrad Adenauer. The separatist plans, of which Louis Hagen of the Cologne Oppenheim Bank was a key architect, at one point even envisaged the creation of a separate Rhineland republic, for which Hagen secured a private American loan and of which Adenauer was) have been the president. 72
The
rehabilitation of German finances and the defeat of the Left in 924 diminished
the relevance of the separatist designs and reinforced the
liberal-internationalist fraction at the expense of the reactionary
sphere-of-interest bloc disintegrating under the impact of inflation. The
liberal leaders, Schacht and Stresemann, had attacked the plans for separatism
(while Britain had put pressure on France to :op supporting them), 73
but the
conditions of the restoration of German financial order prevented the liberal
fraction from regaining German economic sovereignty. The breakdown of the
financially self-supporting industrial combines, of which the Stinnes empire ad
been the most spectacular example, instead cleared the way for the influx of
foreign money-capital, degrading a segment of the liberal fraction to an
ancillary of foreign interests.
The
economic orbit of the liberal fraction regrouping under the impact of the influx
of American capital centered on the DANAT bank, the result of the 1922 merger
between the Darmstadter Bank and the Nationalbank. The DANAT bank according to
Gossweiler served as the German trust for American creditors. Its chairman,
Fritz Thyssen, was the owner of the biggest steel firm in the Vereigte
Stahlwerke, a giant-heavy industry combine into which, upon its formation in
1926, the Stinnes heritage, too, was reintegrated, but in which bank capital and
foreign interests (the latter owning 21.3% .1
1930) now held the reins.74
Stock in the
German and Luxemburg mining companies formerly in the Stinnes group had been
sold to J. Henry
Schroder bank in London and to Dillon, Bead by Albert Vogler, the trustee after
Stinnes's bankruptcy. Vogler now was made the general manager of the Vereinigte
Stahlwerke. Thyssen himself had obtained a big loan from Dillon, Read, and his
role reinforced the substantial American influence in the Vereinigte Stahlwerke.
(The DANAT bank had headed the bank consortium for the new steel combine.) In
the Dresdner Bank, meanwhile, several tendencies were present, with Zinsser,
related to Morgan, representing the' American' fraction of Schacht and Thyssen75
To the extent that this fraction merely performed the function of a commercial
intermediary for foreign capital, incapable of developing a hegemonic concept
beyond social reaction in the service of foreign owners, it fitted Mao's concept
of a comprador bourgeoisie.76 Its protagonists were Schacht, Thyssen, and the
DANAT bank.
As
capital accumulation in Germany resumed on the basis of the Dawes Plan, the
industrial bourgeoisie which was associated with the strongest German capitals
and had retained its independence reasserted itself. This fraction, regrouping
the remnant of Rathenau's backers in industry and some of tbe better-off Stinnes
allies, included Otto Wolff, Gutehoffnungshtte, Blohm & Voss shipyards, the
DEMAG and MAN heavy equipment firms, AEG and Siemens. Their strategy, of which
the Stresemann policy of the second half of the 1920s became the political
expression, sought to re-establish a German sphere-of-interest first by
economically sub- scribing to the Locarno strategy of compromise in the West and
expansion into the East and, eventually, by a 'Middle-European' policy of
pre-war vintage. After 1925, this group aimed to gain control of the natural
resources of the Soviet Union by developing trade in the context of the New
Economic Policy; from 1927-28, this strategy
was redirected towards South-Eastern Europe. 77
Although at
the level of banks and industry many overlaps existed, the different thrusts of
the strategies pursued by the comprador financiers, the reactionary nationalists
associated with the backward part of heavy industry like Emil Kirdorf, and the
dynamic industrial interest backing Stresemann's 'Ostpolitik', were
unmistakeable. Politically, however, they were only varieties of a pervasive
movement to the Right.
The
Balkan thrust was inserted into a positive program of Middle European unity when
in 1929, the Middle European Economic Conference
(MWT) was
organized anew. Rejecting the conciliatory implications of liberal European
unity, the MWT, headed by Krupp director Wilmowsky, struck a balance with German
nationalism and the geopolitical concept developed from the viewpoint of the
pre- capitalist critique of money capital. Projecting a union with Austria, to
be followed by extensions along the South-Eastern axis, the MWT was able to
enlist the support of the powerful IG Farben chemical trust and eventually came
to regroup the entire range of German industry, trade, and agriculture,
embittered after the Young Plan of 1929 reaffirmed the German obligation to pay
reparations.
The
Balkan strategy of the MWT inevitably brought it into conflict with French
imperialism, which at the close of World War One had explicitly selected Eastern
Europe and the Eastern Mediterranean as its privileged sphere-of-influence.
Hence, when in March 1931 Germany announced the establishment of a
German-Austrian customs union, 'the old chasm of Franco-German industrial hate opened
wide'. 79
The
French retaliated by withdrawing credit from Rothschild's Kreditanstalt in
Vienna, which promptly collapsed. Mocking the Briand proposal in retrospect, Max
Hahn, the general manager of the MWT, in October 1931 declared that France in
fact had stuck to a policy of parcellization and atomization of Europe all
along.8O The United States, however, did not want to subscribe to the French
position. In order to save the Austro-German bank system and the Atlantic
circuit of money capital from collapse, Hoover in June made public his proposal
to ask for a moratorium on all intergovernmental debt service. Within a month,
the moratorium was accepted by the creditor states, and Hoover's Secretary of
State, Stimson, declared, that if France was unwilling to cooperate in solving
the reparations problem, the problem would be solved without it.81
In
the prevailing circumstances, it was still left to bankers to execute this
threat, since French short-term credits abroad gave it a power to strike
anywhere as it had done in the case of the Kreditanstalt. Indeed after the
failure of the DANA T bank on 13 July, the entire German bank system seemed on
the brink of collapse. Following the London Conference which opened a week
later, and which because of French veto power did not get beyond verbal attacks
like Stimson's, a consortium composed of bankers from the two countries most
involved in loans to Germany, the United States (represented by Wiggin, of the
Chase National Bank), and the Netherlands (represented by Ter Meulen, of Hope
& Co.), worked out an agreement to keep Germany afloat financially for the
months ahead. 82
Atlantic
bank capital thus had become the saviour of German capitalism, a system
spiralling hopelessly toward the right. The leaders of this movement did not
fail to appreciate the momentous importance of the Hoover moratorium. Alfred
Hugenberg at a rally of his National People's Party (DNVP) complimented the
American bankers on their new-found realism, from which he singled out,
significantly, the House of Morgan , which was held responsible for the contents
of the Young Plan.83 Thus reinforced, the reactionary nationalists and the
comprador liberals stepped up their campaign against the attempts by the Bruning
government to combat the crisis by parliamentary means. In the autumn of the
year, assembled at Harzburg, they organized a common front too deal the death
blow to this policy. The interests supporting Bruning were essentially composed
of the Middle European fraction grouped around Siemens, AEG and the new chemical
combine, IG Farben; as well as from among heavy industry, the relative
outsiders—Otto Wolff, Silverberg and Krupp. In particular, they supported
Bruning's timid combination of liberalism and state intervention. However half-
hearted, it was this 'socialist' policy-mix which in the prevailing climate
fostered the rapprochement between the comprador financiers and nationalist
heavy industry, who each from their own vantage-point felt threatened by it. The
nationalist industrialists, supporting Hugenberg and Hitler, were harmed by the
deflationary policy of Bruning and feared his anti-cartel measures; the
comprador liberals who were dependent upon Atlantic money-capital were allergic
to the state-monopolistic measures, like the quasi-nationalization of the banks,
and the state participation in the Vereinigte Stahlwerke.84
The
severity of the crisis, and the failure of German capital to unify around a
common solution, increasingly pushed Hitler forward as the deus ex machina. The
dynamics of Nazi mobilization, and the class fractions involved, fall outside
the scope of our study, but the heavy industry/comprador bloc explicitly decided
to subordinate the Hitler movement to their objectives. The Keppler Circle, a
group of capitalists assembled by Schacht in order to influence Hitler's
economic programme, included such figures as Reusch of Gutehoffnungshittte;
Thyssen and Vogler of the Vereinigte Stahlwerke; Springorum of Hoesch, and Krupp,
too; Stauss of the Deutsche Bank; and banker Kurt von Schroder; as well as
representatives of merchant capital and landed interests. The electrical and
chemical industries, but also small capital, were notably absent and threw in
their weight only when other options had been foreclosed.8s
The
dynamics of the anti-semitic and 'anti-capitalist' campaign of the Nazi Party,
in fact, tended to correspond much more closely to the state-monopolistic
structures which emerged in the interwar years than to the requirements of the
reactionary liberals who expected Hitler to turn back the clock of history. The
cost of the termination of debt and interest payments to foreigners, which was
stopped by Schacht as soon as Hitler had taken power, could still be passed on
to small savers abroad; the big Atlantic banks were not hurt. Winthrop Aldrich,
of the Chase National Bank, and a representative of the National City Bank
visited Hitler in Berchtesgaden, expressing their confidence upon their return. 86
To
German liberals, on the other hand, the policy of the Nazi regime became
increasingly intolerable. In November, 1935, Carl Goerdeler, a doctrinaire
liberal and Mayor of Leipzig, a principal centre of international commerce,
protested against the inflationary, state-monopolistic course of the economy.87
In November 1937, Schacht resigned as Minister of Economic Affairs, and Goering
took over as head of the Four Year Plan. Although he remained President of the
Reichsbank and a minister to Hitler, this was a serious loss of competence
nonetheless.88 Since Goering's Four Year Plan pro- ceeded on the assumption of a
confrontation with Britain and France, the reactionary liberals' support for
Nazi foreign policy likewise declined. When the non-aggression pact with the
Soviet Union was concluded, Fritz Thyssen left Germany in protest. 89
The
most stubbornly reactionary among the liberal internationalists had tried to
prevent the tide of capitalist development from moving toward state monopolism,
but Hitler's march to power brought to light the limits of their power. Their
hope that the smashing of the labour movement would pave the way for a return to
economic liberalism proved illusory, while the course of events revealed the
structural nature of the crisis of liberal internationalism instead. The
concepts of control developed in its heyday likewise lost their effectiveness.
In
the decade of the world slump, militant nationalism and the breakdown of the
Atlantic circuit of money capital led to the hegemony of those industries most
closely attuned to the 'spirit of the times': to the need for state intervention
and some form of organic social unity to help capitalism survive the most
serious crisis it had experienced so far. All capitals, whatever their initial
preferences, were forced to reproduce themselves in this context. Thyssen could
leave, but the German steel industry remained in operation, and so did the
industries operated by the autonomous internationalist bourgeoisie, who had
preferred Bruning to Hitler, but who, apparently in spite of themselves,
subsequently became the decisive element in the Nazi economy because of the
objective development towards state monopolism.