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Sherman Stanley

British Empire Goes into Hock –
U.S. Is Pawnbroker

(December 1940)

From Labor Action, vol. 4 No. 38, 30 December 1940, pp. 1 & 4.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The British Empire is going into hock, and your Uncle Sam is the pawnbroker. That’s the meaning of the diabolically clever scheme cooked up by President Roosevelt and his advisers in the current “All Out for England” campaign.

Suppose you were driving along in your automobile and it suddenly went off the side of the road into a deep and muddy ditch. You tried hard, but couldn’t get it out by yourself. To make things worse, a bunch of tough kids came around and starting throwing heavy rocks through your windows. Then, in the nick of time someone came along in a car and offered to help you get out of the jam you were in. Naturally you would accept the offer – even if a couple of catches were attached to it.

You wouldn’t mind having to pay cash for the job, but if you were asked to give a mortgage on your car for borrowing this fellow’s tow chain it wouldn’t be so pleasant. But there would be nothing you could do about it, especially if the tough kids were getting tougher by the minute. By the time you got out of the ditch and back onto the road you’d find yourself on debt, your car mortgaged and the other fellow halfway into it, about to shove you out of the driver’s seat.

What U.S. Gets

This, in essence, is what the American imperialism is about to do the British Empire and its center, England. Shortly before he was murdered. Lean Trotsky remarked that the first act of American militarism would be to take firm possession of the mortally wounded, dying British Empire. This prediction is being verified before our eyes as the utter dependence of England upon its cold, hard-bargaining “ally” increases from day to day. Let us examine the facts.

Already, the United States has accomplished the following:

Supplied huge amounts of food and material to Britain at cash prices that have yielded substantial profits to American industrialists.
Through these cash transactions, Britain has been forced to liquidate (that is, in effect, to sell to American bankers and stock brokers) over 50% of its holdings and securities here. An Englishman, let us say, is forced to give, up his stock in an American railway company for an American made tank. the tank produces nothing and may be destroyed in battle – but Uncle Sam has made a profit on the tank and now has the profit-yielding stock. The balance of British holdings here will follow the same liquidation process in rapid order.
The British, hampered by the war and shipping losses, have lost valuable commercial customers – particularly in South America. America, on the other hand, is gaining control of the Argentine market and taking ever larger proportions of British trade in its vessels – even to such remote markets as South Africa, Malaya and India.
America has gained invaluable naval and military bases in the Atlantic – steps preparatory to full political and economic control over the British West Indies, Virgin Islands, Bermuda, Bahamas etc.
American supremacy over Canada has been established and recognized by conclusion of the American-Canadian military alliance.

A New Phase

This much has been accomplished Up to now. The proposed plan of Roosevelt, to be presented before Congress at its forthcoming January session, by which the American government will “loan” or “lease” material war supplies to the British, marks a new phase in the bloodless conquest of the British Empire.

The plan in essence is based upon a realization by American imperialism of its own vastly superior position, and of the terrible weakness of the British in the fields of finance, shipping and war production. As a result of this superiority, the American government is determined not to see a repetition of 1914–1918, where the British gained most from the war – and then proceeded to liquidate their debts! This time there will be one victor – and each loan will be heavily mortgaged!

The proposed plan of FDR gives U.S. big business the following advantages

Not one cent of American capital, invested in war industry producing the goods that are to be loaned, will leave the country. Thus, American capitalists will make all the profit on these additional investments and American war industry will be further expanded by these new pump-primings. In terms of profit, British industrialists will not even reap a plugged nickle.
The increased flow of material to Britain will fall into line with the real objectives of American imperialism – namely, that Britain takes the heaviest buffetings from the German war machine, steadily wearing it down, while the United States keeps its powder dry and feverishly organizes its own blitzkrieg machine. Britain is the buffer, absorbing the heaviest shocks. America will step in when both adversaries begin to show signs of exhaustion.

Payment Guaranteed

Return payment on these loans is guaranteed – one way or the other:

The loans may be repaid in kind. That is, the British will return an equivalent number of tanks, guns, ships, etc. But this possibility is exceedingly remote – or rather impossible. If the British were unable to repay their loans in World War I, is it conceivable that they could in World War II? England is vastly weaker and has suffered infinitely more material loss during one year of this war. The economic fabric of its Empire is tearing into shreds – witness the increased dependence of the Motherland upon imports from abroad. England won the last war – but did not pay; England is losing this war to Germany and America – again it will not pay.
Then what return payment will there be? It will take the form of gathering in Britain’s mortgaged property. FDR has told the British to go ahead and order $3,000,000,000 worth of war material in America. This sum represents just about the net balance of British securities and investments in America, which U.S. bankers shall now proceed to take over. “Go right ahead, take everything you need – the house is yours”, says FDR, reminding us of the money lender opening up his vaults to the unsuspecting victim. “We’ll talk over the terms later, no hurry”. And most certainly, FDR is in no hurry. For what alternative do the British have? Where else can they go? They know in advance that FDR will fix the terms – mortgages on the British West Indies, naval bases (and more) in the Pacific, etc.

But more than real estate will be mortgaged. Professor Harris of Harvard University sums it up as follows: “It is conceivable that the United States may demand a mortgage on these (British) assets in exchange for credits ... Private British investors would give up their foreign investments, obtaining in return sterling that they would have to exchange for British securities or to keep idle. British companies all over the world would fall into the possession of the United States Government. The United States would not only become a gigantic trading organization, in rubber, tin, gold, diamonds, etc., but would have taken the longest step toward worldwide imperialism and domination that has ever been taken by any country.”

From an imperialist viewpoint the most beautiful part of the entire scheme is that the British ruling class must take this, swallow their medicine and pretend to love it. They are caught, in a neat trap. They pretend to be fighting for freedom, idealism, etc. – in a word, for things into which no “sordid profits motive” can enter. Good. Here they are getting precisely what they have been crying for – guns, munitions, etc. How can they complain of the financial stranglehold Uncle Sam is putting on their necks? The British rulers must take it and like it – or face the only other alternative from their viewpoint: surrender to Hitler in the French style. Only the British working class is capable of breaking up not only their own rulers’ schemes, but those of Roosevelt in addition.

American imperialism is striking out for World Empire and will attempt to smash everything in its path. Roosevelt aims at reaching this objective in a series of stages – culminating in direct war intervention. An important step is the economic and financial subjugation of the British Empire as America’s number one imperialist victim. The clever “lease and loan” scheme of the President fits neatly into the broad and general pattern of this program for world domination.

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