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From The Militant, Vol. VI No. 19, 18 March 1933, pp. 1 & 2.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
The banking crisis has within it the further consolidation of the financial capitalists over American economy. It was a condition that could not be avoided in the process of reorganizing the American structure for a more favorable position in the intensified competition for world markets. More than one factor entered into the process that threw the country into the banking crisis. But the quick and decisive action of the imperialists, against the other sections of the exploiters and the working class, enabled them to turn an unfavorable situation into a successful battle.
The rural middle class had its “Farmers Holiday” movement in order to fight against the falling world price level that was increasing their debts, reducing their sales and causing ruin. The bankers came along and by declaring a “Bankers Holiday” turned an unfavorable situation into a lever for further consolidation over the other sections.
There is no question that the American imperialists are “handicapped” on the world market by the most antiquated and cumbersome banking apparatus in the world of imperialist nations. The Federal Reserve System and the moves toward the further development of branch banking are steps forward for the American imperialists in this respect. But if the American imperialists are to take their “rightful” place under the sun of world exploitation they are entirely inadequate. The banking crisis in this sense represents a crisis in the stage of reorganization rather than a stage immediately following the period of overproduction and liquidation. Roosevelt’s “New Deal” was started off with a bang in the interests of the American imperialists. This was facilitate by the fact that the immediate surface interests of a large section of the middle class run parallel with the interest of the big bankers, thereby enabling Roosevelt to serve the “people”.
The middle class wants inflation to eliminate the debtors’ burden with “cheap money”, Roosevelt first got their support by letting them think he would open the gates for unlimited local scrip. Then he closed the gates to local scrip by concentrating the issuing of two billions in currency through “rigid” control from above – where they hope to control the process of inflation, thereby eliminating the lower sections of the exploiters from the benefits. In addition, the leading financiers will come out much stronger by the process of squeezing out the small banks and consolidating the banking structure and its capital in the hands of a smaller group at the top.
One thing is certain. American imperialism must liquidate the bulk to win in the international struggle for the dominating position and of its heavy internal debt if it is [to] make the Dollar the basic international medium of exchange. The capitalists had to find some form of juggling the contradiction between the gold standard internationally and the need of liquidation of the internal debt nationally. The present move of the bankers is an attempt to reconcile this ever-pressing contradiction.
With this, goes the problem of attempts to drive in an indirect wage cut by inflation and rising commodity prices. The liquidation of the internal debt helps certain sections of the other exploiters besides the imperialists who are in the final analysis responsible for the tightening up of the American productive force to enable them to compete more effectively on the world market and reduced costs at home, and to squeeze out the excess baggage of the lesser exploiters and “debt” upon the American Industrial structure.
While they are busy with the internal end of this problem they have been forced off the gold standard, even though they deny it as Japan denies it has a war on China. This enabled England to take a blow of the American imperialists that was very effective for the Pound. But the war-time powers of the President and the measures which followed, the embargo on gold and the return of gold to the central banks and the process of consolidations – all this is enabling America to prepare a stronger internal base – not only for further onslaughts against the American workers but also against the other imperialists, especially England and France.
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Last updated: 4 September 2015