Monday, April 15, 2024

Editorial: Foreign Loans and Investments (1948)

Editorial from the April 1948 issue of the Socialist Standard 

The Communist Party's present propaganda line is that, through borrowing heavily from U.S.A., Britain is becoming a dependency of that country ; but when Russia lends to Poland for armaments and transfers “gold from her reserves to aid vital Polish economic needs" (News Chronicle, May 28th, 1946), or when Russia holds fifty per cent. of the capital of the Bank of Outer Mongolia ("Statesman’s Year Book,” 1946, p. 798), the Communists do not draw the same conclusion.

Actually the relationship of borrower and lender is not so simple and in some respects it is the lender whose freedom of action is thereby most affected as was shown between the wars when U.S.A. and Britain started the never-ending process of lending to Germany. In order to prevent the first loan being a dead loss succeeding loans have to be made. The following is a report of a speech by Mr. Lewis Douglas, U.S. Ambassador to Britain: —
"Defending the £1,100 million American loan to Britain in 1946, Mr. Douglas said that it not only upheld Britain’s standard of living, but saved the United States from 'very great and adverse effects.' If the loan had not been granted, Britain’s curtailed expenditure would have had direct effect upon America’s economy." (Manchester Guardian, January 12th, 1948.)
Naturally, American farmers, tobacco growers and film exporters do not want their British market closed or curtailed.

Lenin in his "Imperialism" (1916) quotes with apparent agreement a statement made about Britain’s development into a lending country to the effect that “ The creditor is more permanently attached to the debtor than the seller is to the buyer.” (Lenin, Selected Works, Lawrence & Wishart Edition, p. 93.)

British capitalism is now of course in the position of owing abroad far more than the greatly reduced investments abroad.

Another interesting aspect of this is the Communist argument that the workers in a country with foreign investments share, along with their masters, in the proceeds of the exploitation of the foreign workers. In the agreement forced on the Government of Iran for the grant of oil concessions to Russia (an agreement which the Iranian Government repudiated when Russian troops left), a clause provided that Russia should own a controlling interest in the joint company, i.e., 51 per cent. of the shares, should provide capital in the form of equipment and the wages of specialists and workers, and should share in the profits—"The profits made by the company will be divided in accordance with the ratio of the shares of each side.” "Soviet News," published by the Russian Embassy, September 13th. 1947.) According to the Communist argument the Russian workers would then have been participating in the exploitation of the Iranian workers.

No comments: