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From The Militant, Vol. 12 No. 22, 31 May 1948, p. 1.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
Some naive people and many others not quite so innocent believe that there are no strings attached to the European “Aid” Program, recently rebaptized as the ECA (“Economic Cooperation Act”). To be sure the Act, as passed by Congress, contains no explicit clauses providing for Wall Street’s intervention in the economic and political life of countries which are the recipients of such “aid;” For example, there is no provision, as Congress originally contemplated, to use the ECA against the nationalization programs in Britain and other European countries. But this absence of direct provisions is more than compensated for by a whole series of indirect regulations which guarantee precisely such use.
First and foremost are the sweeping powers invested in the Administrator of the ECA. This individual is a virtual economic Czar. He has the final say in “screening” all requests for aid, allocating specific sums of money, “supervising” the manner in which these funds are spent, and so on. He may cancel allocations at anytime and for any reason. He even has the final say on the disposition of those funds which each recipient government must set aside as an equivalent in local currency for any “grants-in-aid” it may obtain.
This by no means exhausts the list of the ECA Administrator’s powers, but it does suffice to show that he has the widest powers for intervening in the domestic policies of the recipient countries and of attaching all sorts of conditions before extending loans or grants under the ECA.
These powers have already been used to promote Wall Street’s anti-nationalization and denationalization policies in Western Europe. ECA Administrator Hoffman began his tenure in office by telling the Senate Appropriations Committee on May 12 that he was opposed to any aid to Britain (and therefore to any other country) that would help develop any “newly” nationalized industry.
Over and above this, the European governments have also been “warned” not to set up any government purchasing agencies. Except in cases of grants-in-aid, the ECA will deal almost exclusively with private capitalist enterprises both here and abroad. This effectively bars nationalized industries, whose purchases are made through government agencies, from obtaining raw materials or equipment under the ECA.
Furthermore, the ECA is being used as a battering ram to open up Western Europe to American capital and secure its domination. This is assured by many provisions in the ECA which have not been publicized. In the first place, grants are virtually limited to such items as food, fuel and fertilizer. Industrial raw materials and equipment, on the other hand, must not only flow through private channels but are subject to repayments.
By law, these loans must be private and cannot fall below 20%. That is to say, for every dollar each country may receive in grants, it must accept not less than 20 cents in loans. The initial allocations made by ECA Administrator Hoffman run well above this minimum, amounting to one dollar in loans for every three dollars in grants, or 25%. The plan is to boost this proportion to at least 40% of the total. The main channel for these private investments in European industry is the Import-Export Bank, which is authorized under the Act to extend up to one billion dollars in loans.
In addition, the ECA also underwrites other private investments in Europe to the amount of half a billion dollars. Such private loans, if approved by the ECA Administrator, are secured for a term of 14 years. American bankers and private investors run no risk whatever in these “foreign investments” since for every dollar advanced in such loans, a dollar is set aside from the funds allotted by Congress under the ECA. In this case, the ECA is simply another huge grab-bag for the American financiers and monopolists.
Still another little known aspect of the ECA is its role as a club to secure Wall Street’s position as the world’s banker. The sole remaining competitor in this field is Great Britain. Driven from her former financial supremacy, Britain still retains a key role within her empire, her “Sterling Bloc.” To reduce Britsh banks to further dependence on Wall Street, it is necessary to strip English currency of its last vestiges of stability, and subject it completely to the sway of the dollar. This can be accomplished by forcing the devaluation of the pound on terms dictated by Wall Street.
This bitter behind-the-scenes struggle, which has been going on for some time, is now heading for a show-down. In this struggle the ECA plays the role of a vise that is being squeezed tighter and tighter.
Toward the end of April, the International Monetary Fund suspended all sales of dollars to nations which participate in the Marshall Aid Program. They must get their dollar supply from the ECA instead. Britain has been the chief purchaser of dollars from the International Monetary Fund. With this source shut off, with her previous dollar loan completely exhausted, Britain has now no recourse, except to come crawling on her hands and and knees to the ECA.
But the ECA is prepared to dole out dollars to Britain only on condition that she agrees to devaluate the pound. This is the meaning of Hoffman’s incessant demands that “European currencies” must be devaluated. This is the meaning of the reiteration of this demand last week by the U.S. National Advisory Council, the all-powerful economic body of which ECA Administrator Hoffman is an official member.
As the foregoing facts help illustrate, the ECA is nothing but an agency of Wall Street’s imperialist policy. Any one who maintains the contrary is either a dupe or a conscious agent of American imperialism.
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