Empires Apart

by Brian Landers

  Nor was there any chance that the US would repeat the Polar Bear episode. Despite much ideological posturing the country had no real desire to intervene in Russian affairs, just as Russia had no ability to intervene in America. The two imperial giants turned inwards: Stalin to deal with imagined threats and America to deal with mass unemployment. Russian imperial dreams were put on hold and American imperial ambitions were manifest only in the growing internationalisation of corporate power. American industry recognised sooner than American governments not only that the Bolsheviks were here to stay but that they presented opportunities for profit. The Russian oil industry, for example, had been devastated during the civil war (by 1922 most of the wells were either completely idle or operating at much reduced levels), and Stalin turned to American business for help. Enormous quantities of equipment employing new rotary drilling methods were imported, allowing production to become far more efficient than in tsarist times. The Bolsheviks also granted foreign companies concessions to develop oilfields. Of nineteen large oil refineries constructed in Russia between 1917 and 1930 eighteen used imported plant.

  Stalin liked to boast of how in 1902 he had been arrested after organising strikes in the oil town of Batum in Georgia. At that time the Baku oilfield produced more than a half of the total world output of crude oil, and Stalin depicted himself as the leader of strikes across the region that crippled the plants of foreign capitalists like the Rothschilds (in reality he had played only a minor role). Twenty-five years later the situation had changed dramatically, and Stalin invited Standard Oil of New York to build a kerosene factory at Batum. The American corporation jumped at the opportunity and was soon exporting to Standard Oil subsidiaries outside the Russian empire. Stalin was then able to generate funds to make enormous industrial purchases from companies like the US giant General Electric.

  According to Averell Harriman, American ambassador to the Soviet Union during the Second World War, Stalin had told him that around two-thirds of all the large industrial enterprises in the Soviet Union had been built with United States help or technical assistance.

  Lenin himself had been a wholehearted advocate of some aspects of capitalism, especially what was called Taylorism, a supposedly scientific American theory of industrial organisation based on detailed time and motion studies, which the Bolsheviks imposed with no regard for anarchist or socialist principles of workplace democracy.

  Whatever the economic links between Russia and America, the world had divided into the two ideological camps that would battle each other for the rest of the century – capitalist democracy to the west, communist dictatorship to the east. Some saw Bolshevism as a beacon of light illuminating the path to a promised land of equality and social justice for all; others perceived it as a godless monster threatening to destroy the very fundamentals of Christian civilisation. Political tracts of the 1920s and ’30s seemed to be describing two different nations called Russia: in one a satanic despot sat plotting world domination, unleashing agents of the dreaded Comintern to foment discord across the globe; in the other a kindly Uncle Joe swept away the trappings of privilege to bring the benefits of modern life to peasants and workers alike. What is startling with hindsight is how little resemblance either picture had to reality. The right was correct to paint a terrifying picture of what was happening within Russia, but to extrapolate this into a global conspiracy in which lurking communists were about to overturn western democracy was nonsense. Even more absurd was the belief on the left that Stalin’s Russia had anything in common with their own visions of socialist utopia.

  The Socialist party in America fractured, with two groups spinning off to sing the praises of Bolshevism; both called themselves communists, and illustrated vividly the fault lines in American society: immigrants formed the Communist party of America and a native-born group became the Communist Labor party. On Moscow’s orders the two eventually merged to form CPUSA, but a congressional committee investigating communist activities estimated that there were only 12,000 paying members across the whole of America in 1930. (The CPUSA itself fractured after the Second World War, and its leader Earl Browder was expelled on Stalin’s orders for declaring that communism and capitalism could co-exist. In a sign of the times, after the collapse of the Soviet empire Browder’s grandson became a multimillionaire by setting up a hedge fund that became the largest foreign investor in Russian equities.)

  The presence of vociferous if ineffectual communists in America allowed the advocates of corporatism to use the Bolshevik menace as a way of advancing their own cause. Disputes between labour and capital in America became a life-or-death struggle between ‘Americanism’ and ‘Bolshevism’, whereas the reality was that such conflicts existed long before anyone in America had even imagined that Lenin might seize power on the other side of the world. Measures taken after the Russian Revolution to combat ‘communism’ merely continued earlier attempts by the political establishment to suppress dissent. In March 1917, months before the October Revolution, the Idaho and Minnesota legislatures had already passed the first criminal syndicalism laws used to prosecute left-wing troublemakers. Such laws were one reason why the right succeeded so comprehensively in destroying the American left after the First World War. Just eight years after the abortive Seattle soviet the local branch of the American Civil Liberties Union reported that ‘The reason for the decrease in repression is that there is little to repress. Militancy in the labor movement has declined; the radical movements do not arouse fear. Insurgence of any sort is at a minimum.… No new repressive laws have been passed, probably for the simple reason that it would be difficult to suggest any.’

  At least those on the American right were consistent in their opposition to the communist regime in Moscow. The story on the left was much less clear cut, partly because the facts themselves were not clear cut. Stalin’s supporters in the west could point to real achievements. The collapse of the old order in Russia had, as with so much else in Russian history, been on a cataclysmic scale unparalleled in the west. Between 1914 and 1926 around 14 million civilians had died from unnatural causes, including 5 million in the 1921–22 famine. Those who survived were in a pitiful state; 7 million orphans were left largely to fend for themselves as law and order collapsed in large parts of the Russian empire. And yet fifteen years later, while the west was slumped in the Great Depression, Russia’s industry was leaping forward, every Russian was in work and new infrastructural projects were being completed almost daily. Superficially it might seem that communism was working and capitalism collapsing.

  There were those, like Emma Goldman, who soon came to understand the reality of Bolshevik autocracy and the terror that followed, but many others accepted Stalin’s lies with no apparent hesitation. Such credulity reflected not the sophistication of Stalin’s propaganda machine or the nefarious actions of his agents in the west but the wishful thinking of thousands of men and women there who needed to believe that the inhumanities, inequalities and exploitation that they saw in their own societies could be abolished. When Stalin pointed to the triumphs of socialism they wanted to believe that those triumphs were real, and that they justified the price being paid in human lives.

  It seems incredible now that anyone could have believed that men and women who had dedicated themselves to the cause of revolution really could become the agents of western capitalists, as Stalin claimed at the great show trials – but at the time there were those in the west who believed precisely that. In their determination to see no evil they wrapped themselves in ever more fanciful contortions. In 1935, when Stalin reduced the minimum age at which those found guilty of crimes against the state could be sentenced to death to twelve, some western communists actually argued publicly that this was perfectly sensible as children matured earlier under Bolshevism.

  Some people continued to believe in a communist revolution in America long after the ascendance of corporatism had made such a prospect totally unrealistic. Trotsky, back in American exile once again in the mid
-1930s, foresaw the revolutionary tradition that had given America its independence continuing to its natural conclusion as American workers, ravaged by the Depression, joined with sections of the middle classes to throw off what he called ‘the corporal’s guard of billionaires and multimillionaires’. He even envisaged a communist American empire as the rest of the Americas followed the example of the United States. ‘I am ready to bet’, he wrote, ‘that the first anniversary of the American soviets would find the Western Hemisphere transformed into the Soviet United States of North, Central and South America, with its capital at Panama.’

  The Invisibilisation of Empire

  In fact it was capitalist America that expanded its empire, but in almost entirely new ways. Overt colonisation and annexation ceased to be central features of American imperialism in the twentieth century. There were only minor exceptions; for example, in 1916 the US approached Denmark with an offer it could not refuse: $25m for the Danish West Indies. Although Denmark remained neutral throughout the First World War the US was worried that German submarines might use the islands, and Denmark was worried that if the US entered the war it would seize the islands anyway. (Not such an unlikely risk: Woodrow Wilson used the German ‘threat’ to justify invading the Dominican Republic and Haiti, although the real reason for invading Haiti and dissolving the National Assembly was Haitians’ refusal to endorse an American-designed constitution that gave US corporations additional rights.) On 31 March 1917 the US took over the Danish colonies and renamed them the US Virgin Islands. Ten years later the inhabitants were made US citizens, in a sign that any possibility of independence had gone for ever.

  Stalin set up Comintern to work with idealistic socialists abroad to foment revolutions and thereby expand his empire. American influence overseas required nothing as deliberate. The natural forces of corporate economics pushed domestic corporations into international expansion. Occasionally they ran into opposition and military force was needed. Augusto Sandino tried to organise a revolution in Nicaragua against what he labelled ‘Yankee Imperialism’, and, as if to prove his point, US marines invaded the country in 1926 and stayed until 1933, when Sandino was executed and the more compliant Anastacio Somoza installed in power. In 1927 just the threat of American intervention was enough to persuade Mexico to end its attempt to nationalise American-owned oil reserves.

  During the eighteenth and nineteenth centuries America and Russia had grown in almost identical ways – pushing to the Pacific and mopping up neighbouring states along the way. It would be perverse to describe one as ‘imperial’ and not the other, but does continuing to talk about American imperialism in the twentieth century make any sense? There was no more territorial aggrandisement (except for a few Caribbean islands), no more conquered colonies, no more annexations of Mexican territory. When at the end of the twentieth century advocates of American imperialism spoke up once again, the empire they trumpeted appeared to be a new phenomenon arising as the world moved from the cold war to the ‘war on terror’.

  It is true that American corporations in some parts of the world – the United Fruit Company in Central America, oil corporations in the Middle East – exercised effective political power on a quasi-colonial basis, but these were exceptions. They continued the filibuster tradition, but they lacked the ultimate filibuster objective of annexing territory.

  American corporations became the vectors for spreading US economic power around the globe, but of itself this no more constituted imperialism than the presence of European and Asian corporations in America demonstrates that the US has become the victim of imperialism. There is no doubt that American corporations were acting within the law and the business ethics of the time; however there are a number of factors that make the term ‘corporate imperialism’ a useful way of describing events in the twentieth century. First is the sheer scale of American corporate activity. From the moment they woke up and reached for the breakfast cereal supplied by Kellogg’s of Battle Creek, Michigan, the daily lives of millions of people around the world were enacted under the shadow of the American business empire. By the end of the century this corporate omnipresence was resulting in massive, unparalleled capital flows back to the mother country – flows that in any other century would be labelled ‘tributes’. American business culture became omnipresent, from McDonalds on the Champs Elysée to Coca-Cola cans littering shanty towns across the world. From the carrots of McDonalds (a somewhat unlikely image) to the sticks of the marines America’s presence was felt across the globe.

  If the period between the two world wars is examined in isolation, talking about an American ‘empire’ might seem odd, but the use of such an emotive word emphasises the essential continuity of American historical development, just as its use in the Russian context emphasises the continuity between tsar and commissar. The underlying ideology of American imperialism did not go away at the end of the Spanish American War. Democracy, corporatism and imperialism simmered gently together to produce what the mayor of Seattle had called ‘Americanism’: essentially the old Puritan belief that American society was nearer to perfection than any other, and the rest of the world would one day follow suit. The vision was the mirror image of the global pretensions of Marx and Lenin.

  Corporations came to play an increasing role in fulfilling America’s imperial dreams, but the value that has remained at the core of the American soul since the War of Independence is not capitalism but nationalism, just as nationalism not communism remained the core value in Russia. Even as corporations acquired ever-increasing power the forces of the free market have always taken second place to the national well-being of the United States. The factors that helped the United States achieve its initial industrial dominance had less to do with free markets than with protective tariffs and state subsidies. When necessary the market was simply swept away. During the First World War the railways were temporarily nationalised and the War Industries Board, headed by Bernard Baruch, was given massive power to regulate business life. The board’s quasi-communist central planning led to dramatic increases in production.

  In peacetime American corporations used ‘market forces’ to achieve the scale that allowed them to compete in foreign markets, but they had no intention of allowing foreigners to do the same in their market. The 1922 Fordney-McCumber tariffs were the highest since Independence, but even these rates were exceeded in 1930 when the Smoot-Hawley tariff originally intended to protect farmers became subject to massive corporate lobbying and ended up as a tariff on almost everything. (The curious names attached to many pieces of American legislation derive from their congressional sponsors – in this case Representative Willis Hawley and the improbably named Mormon apostle and US senator Reed Smoot.) In 1932, while the world was wallowing in depression, import duties incredibly reached almost 60 per cent of the value of imports.

  US corporations were driven on to the world stage not just by their lust for scale and the impersonal forces of global economics but also by the spirit that had pushed earlier generations to settle beyond America’s frontiers in Florida, Texas or California. In expanding abroad American business embodied the aspirations of the American people. Corporations did not need to manipulate US government policy to suit their own ends – it was simply accepted that overseas, as well as at home, what was good for General Motors was good for America. Nowhere was this clearer than in the nexus between the giant oil companies and the guardians of American foreign policy. Charles Hughes, the US secretary of state from 1921 to 1925, was known as the secretary for oil. The state department threatened to prohibit foreign companies from owning oil assets in the US or to designate the existing British- and Dutch-owned oilfields as ‘naval reserves’, thus stopping their exploitation. Britain reluctantly granted oil concessions it controlled in Iraq to Standard Oil of New Jersey and Standard Oil of New York, and the Netherlands granted concessions in the Dutch East Indies to Standard Oil of New Jersey. The United States supported a particularly vicious dictator in Venezuela, then the wor
ld’s largest oil exporter, in return for his barring British access to Venezuelan oil. American oil corporations led by Gulf Oil, owned by the family of Treasury Secretary Andrew Mellon, negotiated hugely favourable deals with the rulers of Kuwait, Bahrain and Saudi Arabia with the encouragement of the state department. (As an odd footnote, the man who was instrumental in ensuring that American rather than British oil companies won the oil rights in Saudi Arabia was an upper-class but fiercely anti-establishment British expatriate named Philby, whose son would provide even greater services to the Russian empire as a KGB spy.)

  Closer to home the changing nature of the US empire could be seen most clearly in the Dominican Republic, which, with Haiti, occupies Columbus’s island of Hispaniola. Agriculturally the country was one of the best endowed in the Caribbean. It had been a prime target for the filibusters before the civil war, and just after that war a proposal to annexe it had been narrowly defeated. Instead the United States relied on its economic muscle, and only intervened directly when the local oligarchy seemed to be losing control or failing to act in America’s best interests. The US dollar was adopted as the standard of value in 1897, and towards the end of the nineteenth century an American company was responsible for collecting customs duties and taxes (although in 1899 the company was thrown out when it defaulted on its interest obligations). Military occupations in 1903–05, 1916–24 and 1965–66 were supplemented from 1905 to 1941 by a period as a US protectorate, an arrangement ‘negotiated’ by Theodore Roosevelt that gave the US control over such key financial levers as the level of foreign debt and the collection of customs duties. In this way the US was able to control events without needing to invest directly in transport infrastructure, education and health services on the Hawaiian model; more importantly such indirect imperial control avoided the necessity to grant the local population the rights expected by US citizens, such as the right to be represented in the imperial governmental institutions in Washington.