10. The USA: War is Good for Business

Somebody once said to Lenin war is terrible, to which he replied: “yes, terribly profitable”. The European war suited the American industrialists rather well. Capitalism in the USA had developed with whirlwind speed in the last decades of the nineteenth century. At the beginning of the war in Europe, America was already a powerful young nation with a mighty industrial base. In this war it played the role of chief usurer and quartermaster to the European belligerents.

For most of the war the United States remained formally neutral and, even when it eventually intervened, the costs it had to bear were insignificant when measured against its huge resources and the colossal profits it derived. America’s main competitors in the world market, Britain, Germany and France, were too busy slaughtering each other to present an alternative to the Transatlantic Colossus.

A Europe that was tearing itself apart now presented itself as a huge market of millions of consumers prepared to buy anything and everything the USA had to sell, and was willing to pay any price the American government and big business saw fit to charge. As a result, US exports soared to two-and-a-half times greater than the highest pre-war level. Moreover, most of these exports were no longer agricultural produce as in the past, but manufactured goods.

Yes, war was definitely good for business. American companies that had been facing ruin in the economic crisis that preceded the outbreak of war were now working flat out supplying the belligerents with the shells, bombs and bullets they required to blow themselves to bits. This fact reveals a new relationship between the Old World and the New. In effect, the United States was placing Europe on rations.

A country that, just over a hundred years earlier, had been a European colony now emerged as a new and powerful imperialist nation. In the words of Hegel, things become transformed into their opposite. While the sclerotic and already somewhat senile European bourgeoisie was wasting its precious resources in a cannibalistic war between the pygmy states of that continent, the productive forces of America, with its vast spaces and almost limitless human and material resources, were booming. Between 1914 and 1917, American industrial production increased thirty-two per cent and GNP increased by almost twenty per cent.

Bethlehem Steel, which had suffered from the economic recession before the war, was now making handsome profits pouring out the steel that Europe needed to build tanks, guns and artillery shells. By the end of the war, Bethlehem Steel had produced 65,000 pounds of forged military products and 70 million pounds of armour plate, 1.1 billion pounds of steel for shells, and 20.1 million rounds of artillery ammunition for Britain and France.

The entry of the USA into the war in 1917 gave Bethlehem Steel an additional boost. It was now producing sixty per cent of the weapons used by the US army and forty per cent of the artillery shells used in the war. Even after President Wilson imposed price controls and a lower profit margin on manufactured goods, the profits Bethlehem Steel made from its wartime sales continued to soar, turning it into the third-largest manufacturing company in the country.

US exports to belligerent nations rose rapidly during the years of the war from $824.8 million in 1913 to $2.25 billion in 1917. All this was aided by generous grants to business by the US government. The link between big business and government, the fusion of the big banks and monopolies with the bourgeois state, one of the most prominent features of imperialism, was already very firmly established.

What was true of industry was even truer for finance capital, the real heart of imperialism. Loans from American financial institutions to the Allied nations in Europe experienced a sharp increase during the war. The House of Morgan provided the necessary funds for the wartime financing of Britain and France. From 1914 onwards the House of Morgan’s bank in New York was designated as the primary financial agent to the British government, and later played a similar role in regard to France. But as the war raged on with no end in sight, relations between the House of Morgan and the French government became strained as the falling value of the Franc gave rise to doubts as to its ability to pay. When all is said and done, democracy is democracy, but profits are profits.

Woodrow Wilson

All these facts show that, from the very beginning, America was a major participant in the war through its economic and financial might. Yet, formally speaking, it remained a neutral state until 1917. The reasons for this ‘pacifism’ are not difficult to see. It was dictated by the same cynical calculations that motivated the foreign policy of British imperialism before the summer of 1914.

The British imperialists thought that they could remain aloof from the European conflict, confining themselves to providing just enough aid to Russia and France to halt the triumphal march of Germany. Later, when the belligerents had bled themselves to the point of exhaustion, Great Britain could step in as the almighty arbiter and obtain total domination. This is the real explanation for the apparent ‘pacifism’ and supine inactivity of men like Sir Edward Grey up to and even beyond the assassination in Sarajevo.

But the calculations of the British Foreign Office proved to be mistaken. The colossal power of German militarism soon proved itself on the battlefields of Belgium and France, and Britain was compelled to come off the fence and intervene in the war to prevent Germany from achieving complete victory. In the end, it was the United States that inherited the role that Great Britain had hoped to play. Its ‘pacifism’ was dictated, not by morality or humanitarianism, but by naked self-interest.

That does not necessarily mean that the opponents of America’s entry into the war were not personally convinced that they were motivated by the highest ideals. In every historical period, the needs of different classes are expressed with greater or lesser coherence by individual men and women. These ‘great individuals’ seem to anticipate and dominate events, but more often than not, they are dominated by them. They do not themselves understand the real content and significance of the idea they are advocating. But a given idea can correspond closely to the interests of certain classes or groups in society. This is what explains their success at a given moment, and also their failure at a later stage when conditions have changed and new ideas are needed.

Onto the stage of history strides Thomas Woodrow Wilson. He was known to his contemporaries as a ‘schoolmaster in politics’, which was a very apt description. With his acidic facial expression, tightly pursed lips and pince-nez perched on a long and aquiline nose, he resembled a hybrid between a retired headmaster and the vicar of a sleepy rural parish. The history books depict him as a high-minded idealist, whose ideals were shattered against the pitiless rock of a cruel world. The truth, as usual, is more complex.

A devoted Presbyterian, Wilson gave up a promising academic career that took him to the presidency of the prestigious Princeton University to enter the rough and tumble of American and international politics. Determined to become a statesman, he studied law for a year and then became a candidate for the Democratic Party. The change did not really suit him.

It is one thing to deliver lectures on morality and good behaviour to a lecture hall full of bright-eyed and obedient students. It is quite another to deliver the same lectures to hard-headed politicians engaged in the single-minded pursuit of power. And when these same politicians and statesmen are engaged in the serious business of war, lectures on peace, morality and justice are received with as much enthusiasm as a speech on the virtues of vegetarianism at a cannibals’ dinner party.

In 1910, Wilson accepted the Democratic nomination for governor of New Jersey. He stood on a progressive agenda, based on the idea of protecting the public from exploitation by rapacious trusts and won a landslide victory. This earned him national recognition, and in 1912 he won the Democratic nomination for President. Wilson’s ‘New Freedom’ platform, based on the need to revitalise the American economy, then in a deep recession, won him the Presidency.

From his desk in the White House, President Wilson continued his Holy Crusade against corrupt trusts. But the outbreak of War in 1914 changed everything. From the very beginning there was pressure from all sides for the USA to enter the war, but the peace-loving Woodrow Wilson firmly maintained American neutrality. In the 1916 election Wilson campaigned on the slogan ‘He kept us out of war!’ He warned that a Republican victory would mean war with both Mexico and Germany. He won again.

Public opinion in the USA was divided on the question of the war. The sizable German-speaking population was obviously pro-German and many other Americans were against entering the war. There were also pronounced regional differences, with the South firmly opposed. There were sharp divisions within the American ruling class as to whether the USA should participate in a ‘European war’.

Three broadly distinct groups can be discerned. There were the ‘pacifists’, who wanted to keep America out of the war at all costs. They included Secretary of State, William Jennings Bryan; the Republican, Senator Robert M. La Follette, Sr.; and Henry Ford, who was a Democrat. Then there were those who wanted to forge an alliance with Britain, led by former President Theodore (Teddy) Roosevelt. Finally, there was the group represented by President Woodrow Wilson and former president William Howard Taft.

However, behind the façade of ‘pacifism’ were concealed the real material interests of American capitalism. Wilsonian pacifism lasted only as long as it served those interests, and the moment it ceased to do so, the smiling mask of pacifism was cast off to reveal the ferocious physiognomy of bellicose imperialism. One year after fighting an election on a ‘no war’ platform, Wilson draped himself in the Stars and Stripes and led the USA into the war on the side of the Allies.

‘Preparedness’

Behind the smokescreen of ‘pacifism’, step by step, American public opinion was being prepared for war. A major step towards this end was the launching of the so-called Preparedness movement, which emerged in 1915. It argued that the United States needed to immediately build up strong naval and land forces ‘for defensive purposes’. The unspoken assumption was that the US would have to enter the war sooner or later. In addition to Roosevelt, many of the nation’s most prominent bankers, industrialists, lawyers and scions of prominent families backed the movement.

Anti-preparedness protest 1916The Preparedness movement had no time for the kind of woolly idealism favoured by the President. Causes like democracy and national self-determination for small nations and similar idealistic baloney were not for them. These hard-headed men and women advocated a far-more realistic philosophy of world affairs. As true-blue American patriots, they firmly believed that economic strength and military muscle were vastly preferable to sentimental speechifying. And they were determined to put this philosophy into practice. They were looking for a new world role for America when the war had ended, and nothing would be allowed to stand in the way.

Again and again, they complained about the weak state of national defences. They protested that America’s 100,000-man Army (even if one included the 112,000 National Guard) was outnumbered twenty to one by the German Army, although Germany had a smaller population. They demanded universal military training, or UMT. They advocated the establishment of a national service programme in which every male citizen who reached the age of eighteen would be required to spend six months in military training, and afterwards be assigned to reserve units. The small regular army would serve mainly for training purposes. Woodrow Wilson firmly opposed it – after all, he was a pacifist and a man of high principles. Later, however, he changed his principles and embraced the very same programme that had previously earned his most severe moralistic condemnation.

Anti-militarists and pacifists protested and opposed the plan, which they said would turn the USA into a militaristic society like Germany. The Socialist Party, which initially held an anti-war position, correctly branded the European conflict as an imperialist war. Eugene V. Debs, the leading figure in the US socialist and labour movement, explained that the war was a result of capitalism: “A bayonet”, he said, “was a weapon with a worker at each end”. But just as in Europe, so in the United States, the labour movement soon divided into right-wing pro-war and left-wing internationalist wings.

In 1914, Samuel Gompers, the extreme opportunist leader of the AFL unions, at first denounced the war as “unnatural, unjustified, and unholy”. That was safe enough to do, since it was in line with the official position of American Big Business and the President. But already by 1916, Wilson was edging away from that line. In the 1916 election, the US union leaders supported Wilson for President and kept very quiet about the war question, sensing that a change was in the air. Soon after, Gompers became a supporter of the Preparedness programme, despite the protests of the radical union rank and file.

When Wilson changed his mind and led America into the War, the AFL leaders predictably hastened to fall into line with the bourgeoisie, becoming the most rabid pro-war ‘patriots’. However, old Debs remained an implacable opponent of the War and conducted a sharp struggle against the opportunist wing of the SP and the unions. The anti-war socialists were viciously persecuted under the Anti-Espionage Act 1917 and many, including Debs, were arrested for their alleged treason. In 1920, Debs received almost a million votes while he was locked up in a prison cell.

The sinking of the Lusitania

The reason for America’s entry into the war was exactly the same as the one that compelled Britain to intervene in 1914: to prevent Germany from winning the war and uniting the entire European continent under its domination. This would be a serious threat to the interests of US imperialism and it had to be stopped at all costs, as Trotsky explained:

In relation to Europe as a whole the United States assumed the role which England had taken in previous wars and which she tried to take in the last war in relation to the continent, namely: weakening one camp by playing it against another, intervening in military operations only to such an extent as to guarantee her all the advantages of the situation. According to American standards of gambling, Wilson’s stake was not very high, but it was the final stake, and consequently assured his winning the prize. (Trotsky, L., The First Five Years of the Communist International, Vol. 1, p. 20.)

However, by 1917 there seemed to be a serious possibility that Germany would win the war and achieve total domination of Europe. This represented a serious threat to the interests of the American bourgeoisie. They now decided that the time was ripe to throw all the material and military might of the United States onto the side of the Entente. But there was a problem. In 1916, the majority of Americans were still opposed to entering the war.

However, the ruling class has a thousand ways of conditioning people’s thinking and moulding what is known as ‘public opinion’ in its own interests. At the beginning of every war a pretext is needed – some kind of act of aggression by the other side – that can justify the call to arms. The key turning point in changing the mood of American public opinion was provided by the sinking of the Lusitania in 1915.

For some time, the Atlantic had been as much a battleground in the war as the fields of Flanders and the Somme. In order to starve Germany into submission, the British navy implemented a blockade, halting and boarding merchant ships to prevent the shipment of war supplies and food to Germany. This included stopping and searching the ships of neutral nations, including American ones. But the British naval blockade of the Atlantic was a minor irritation for the American bourgeois who, in any case, were deriving fat profits from the European slaughter. In private, Washington sent signals to London and Paris that America too was on the side of ‘democracy’, while publicly maintaining a stance of hypocritical neutrality.

Unable to challenge the powerful British navy in an open conflict, Admiral Alfred von Tirpitz launched the submarine war in the Atlantic. Since Britain depended on imports of food, raw materials, and manufactured goods by sea, this was a way of defeating it by slow strangulation. “England wants to starve us”, he said. “We can play the same game. We can bottle her up and destroy every ship that endeavours to break the blockade”. German submarines carried out their campaign with ruthless efficiency and total disregard for human life. Merchant ships were torpedoed without warning, and sailors and passengers drowned. Berlin argued that it was too dangerous for submarines to surface to rescue survivors as most merchant ships carried guns that could sink a submarine.

In February 1915, the United States warned Germany about the activities of its submarines. On 7 May, 1915, a German submarine sank the British passenger liner RMS Lusitania with the loss of 1,198 civilian lives, including 128 Americans. The sinking of a large, unarmed passenger ship, combined with the previous atrocity stories from Belgium, shocked Americans and was used to stir up hostility towards Germany, although not yet sufficiently to unleash a US military intervention. Wilson issued a warning to Germany that it would face “strict accountability” if it sank any more neutral US passenger ships. This was a big step in preparing the road to America’s entry into the war.

The prospect of US intervention caused alarm in Germany. The men in Berlin cursed under their breath and ordered their submarines to avoid passenger ships. But the damage had been done. On the basis of a massive propaganda campaign, the US government was already beginning to mobilise for war. In 1917, determined to win the war of attrition against the Allies, Germany announced the resumption of unrestricted warfare in war-zone waters.

On top of this, there was the revelation of the Zimmermann Telegram, in which Germany offered Mexico its support for winning back the states of Texas, New Mexico and Arizona from the US if it became a German ally. It was a clear attempt to divert America’s attention from the War in Europe by provoking war between the United States and Mexico. The United States broke diplomatic relations with Germany, but Wilson continued to plead for peace: “We are the sincere friends of the German people and earnestly desire to remain at peace with them,” he said. “We shall not believe they are hostile to us unless or until we are obliged to believe it”.

But the men in Berlin were no longer listening. Convinced that the USA was preparing to declare war, in March the Germans sank several more American ships. Teddy Roosevelt raged against Wilson’s inactivity: “If he does not go to war, I shall skin him alive”. Fortunately, he was soon relieved of that disagreeable necessity. On 20 March, Wilson called a cabinet meeting, which voted unanimously for war. On 2 April, the President appeared before Congress calling for a declaration of war against Germany. Four days later, his request was granted.

On 26 June, the first 14,000 US infantry troops landed in France. Significantly, the US did not sign a formal alliance with Britain or France but operated as an ‘associated power’. That is to say, the US imperialists wanted to keep their hands free and not become entangled in formal alliances. It was in their interests to prevent a German victory, but it was not at all their intention to subordinate themselves to the British and the French, whom they were aiming to displace as masters of the world once Germany had been disposed of.

America’s imperialist ambitions

The First World War was a war to decide which of the Great Powers would achieve world domination. The old imperial powers of Europe had already succeeded in carving the world up into colonies, protected markets and spheres of influence. Germany, which had arrived late on the scene, was determined to bring about a radical redistribution of the world. But while Britain, France and Germany were engaged in a bloody and prolonged slogging match, the new and powerful rival across the Atlantic was flexing its muscles.

The imperialist ambitions of the American ruling class had already been tested in the war with Spain in 1898, which led to the de facto annexation of Cuba by the USA. Long before that the Monroe Doctrine proclaimed to the world the determination of the US to dominate the whole of Latin America, to the exclusion of all other powers. This claim was reinforced by the forcible annexation of huge swathes of Mexican territory in Texas and California. The USA continually interfered in Mexico’s internal affairs and intervened militarily during the Mexican Revolution, during which it occupied Vera Cruz and even staged an invasion of Mexican territory in a failed attempt to capture Pancho Villa in 1916.

But US imperialism had its eyes fixed on targets far from the shores of the New World. It had far more ambitious aims in mind in Asia and the Pacific. This was shown by its seizure of the Philippines after a cruel war that lasted three years and resulted in the death of over 20,000 Filipino combatants. The US Marines distinguished themselves by the extreme barbarity with which they slaughtered thousands of Filipinos like animals. As many as 200,000 Filipino civilians died from violence, famine, and disease in this vicious conflict by which America first staked its claim to the colonial domination of Asia.

In 1915, while the world’s attention was focused on the battlefields of Europe, the USA set out to conquer yet another small and defenceless country. The United States was increasingly concerned about growing German activity and influence in Haiti. At the beginning of the twentieth century, the German presence in the country increased as German merchants began establishing trading branches there, quickly dominating commercial business in the area. Using the assassination of the Haitian president Jean Vilbrun Guillaume Sam as an excuse, the pacifist President Wilson sent the US Marines to Haiti, claiming the invasion was an attempt to prevent anarchy. In reality, the Wilson administration was protecting the assets of US business in the area and forestalling a possible German invasion.

The truth is that the United States government had been interested in Haiti for decades prior to its occupation. As a potential naval base for the United States and other imperialist powers, Haiti was of great interest to Washington. As early as 1868, President Andrew Johnson suggested the annexation of the island of Hispaniola, made up of Haiti and the Dominican Republic, to secure a US defensive and economic stake in the West Indies. From 1889 to 1891, Secretary of State James Blaine unsuccessfully sought a lease of Mole-Saint Nicolas, a city on Haiti’s northern coast strategically located for a naval base. In 1910, President William Howard Taft granted Haiti a large loan in order to tie that country firmly to Washington and Wall Street.

Occupation of HaitiThe invasion ended with the Haitian-American Treaty of 1915. The articles of this agreement created a Haitian gendarmerie, which was essentially a military force made up of Americans and Haitians under the effective control of the US Marines. The United States gained complete control over Haitian finances, and the right to intervene in Haiti whenever the government in Washington deemed it necessary. Overnight, to all intents and purposes, the existence of Haiti as an independent nation was abolished.

The US government then consolidated its control by forcing the election of a new President, Philippe Sudré Dartiguenave, an American stooge, by the Haitian legislature. The ‘election’ under the bayonets of the US army of a President who did not represent the choice of the Haitian people led to increased unrest in Haiti. The gendarmerie’s brutality and unpopular policies – including racial segregation, press censorship and forced labour – led to a peasant rebellion from 1919 to 1920. In 1929, a series of strikes and uprisings forced the United States to begin withdrawal from Haiti, and the occupation was ended in 1934. But, even after that, Washington maintained its influence over the country, together with the former imperial power France, which ruled through the agency of brutal and corrupt dictators. These actions tell us quite a lot about the true nature of President Wilson’s pacifist beliefs, his policy of ‘non-interventionism’ and his respect for the cause of self-determination of small nations.

‘The whole world for America’

After three years of bloody stalemate on the western front, the entry of America’s well-equipped forces into the conflict marked a major turning point in the war and helped the Allies to win a decisive victory. When the war finally ended, on 11 November, 1918, more than 2 million American soldiers had served on the battlefields of Western Europe, and some 50,000 of them had lost their lives. These losses, however, were small when compared with those suffered by Germany, Austria, France, Britain and Russia. The Great Powers of Europe emerged from the fighting with ruined economies and enormous debts.

In the space of seven years there was a complete reversal in the sphere of world division of labour. The United States had grown at the expense of Britain far more than Britain had benefited from the defeat of Germany. The United States was challenging Britain’s domination of the seas. Before the war, Great Britain possessed more than half of the world tonnage, and the United States only five per cent, but by the end of World War One that relationship had been transformed. Britain now accounted for no more than thirty-five per cent, while the United States possessed thirty per cent of the world shipping tonnage. Similarly, the United States attained domination of the coal market, which Britain once had.

The World War compelled the United States to abandon the old continental conservatism that goes under the name of isolationism. As Trotsky put it: “The programme of an ascending national capitalism – ‘America for the Americans’ (the Monroe Doctrine) – has been supplanted by the programme of imperialism: ‘The Whole World for the Americans’.” By waiting until the last moment before throwing its sword onto the scales, US imperialism gained tremendously at the expense of Europe, thus preparing the path for America’s future world domination. As Trotsky later explained:

For four-odd years Europe became converted into a sheet of fire fed, not only by Europe’s income, but also by her basic capital, while the American bourgeoisie warmed its hands at the flames. America’s productive capacity has grown extraordinarily but her market has vanished because Europe is impoverished and can no longer buy American goods. It is as if Europe had first done everything in her power to help America climb to the topmost rung and then pulled the ladder out. (Trotsky, L., ‘Manifesto to the Third World Congress’, The First Five Years of the Communist International, Vol. 1, pp. 193-196.)

Before the war, French finance capital was dominant. The whole world was in debt to France, including America. By the end of the war, however, Europe’s combined debts to the United States amounted to 18 billion gold dollars and these debts were constantly increasing. Almost one-half of the world’s gold reserves were now in the hands of the United States. Europe’s accumulated debts to America amounted to $18 billion.

After draining the blood from its European rivals and turning them into its supplicants and debtors, America’s intervention in the war tipped the scales decisively in favour of the Entente, bringing about Germany’s defeat. All this meant that the USA became the arbiter of Europe’s destiny and a major factor in world politics.

One of the central planks of Wilson’s ‘Fourteen Points’ was, of course, the right of self-determination. This right, long before proclaimed by Lenin, was achieved in Soviet Russia through revolution. But one and the same slogan can have very different contents according to who says it, under what concrete circumstances, and in whose interests. On the lips of Woodrow Wilson, the demand for self-determination was intended, not to give small nations power over their destinies, but rather, to break up the old European Empires and bring about the Balkanisation of Europe, thus increasing the power of US imperialism.

The imperialists always play with small nations as if they were just so much small change in their pockets. In the hands of the imperialists, far from playing a progressive role, the slogan of self-determination merely leads to new conflicts, wars and insoluble contradictions. During the war, all the Great Powers proclaimed the liberation of the colonies – of their enemies. After the war, the victorious imperialists of the Entente carved out isolated, small national states from the territories of their defeated enemies. And they did so while quoting from that part of Wilson’s ‘Fourteen Points’ that suited them: the ‘right to self-determination’.

Actually, there was not even a semblance here of the democratic principle of self-determination. In order to obtain points of support, imperialism created a chain of small and weak vassal states. The old empires were split up to create Hungary, Poland, Yugoslavia, Bohemia, Finland, Estonia, Latvia, Lithuania, Armenia, Georgia etc. While creating the impression of independence, France and Britain dominated them through the banks and monopolies, creating the conditions for endless friction and bloody wars.

The League of Nations, Wilson’s brain child, served as a convenient cover to disguise its drive for world domination. For a while, Woodrow Wilson became a hero for many people in Europe, who saw him (and the Almighty Dollar that he held in his hands) as a saviour who would mend all of Europe’s ills. As Trotsky put it:

The President of the United States, the great prophet of platitudes, has descended from Mount Sinai in order to conquer Europe, 14 Points in hand. Stockbrokers, cabinet members and businessmen never deceived themselves for a moment about the meaning of this new revelation. But by way of compensation the European ‘Socialists,’ with doses of Kautskyan brew, have attained a condition of religious ecstasy and accompanied Wilson’s sacred ark, dancing like King David.

When the time came to pass to practical questions, it became clear to the American prophet that, despite the dollar’s excellent foreign exchange rate, the first place on all sea lanes, which connect and divide the nations, continued as heretofore to belong to Great Britain, for she possesses a more powerful navy, longer transoceanic cables and a far older experience in world pillage. Moreover, on his travels, Wilson encountered the Soviet Republic and Communism. The offended American Messiah renounced the League of Nations, which England had converted into one of her diplomatic chancelleries, and turned his back upon Europe. (Trotsky, L., The First Five Years of the Communist International, Vol. 1, pp. 103-5.)

President Wilson was bitterly disappointed when confronted with the ugly reality that was born out of the ruin of his Fourteen Points. Returning to his country a broken man, he faced hostility from a new mood of isolationism. He suffered a stroke and died a few years later. But in reality, the age of American isolation had ended forever. The road to world domination by the United States was laid during the First World War. The Second World War turned it into reality. But that is another story.