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' “The idee becomes power when it pene- { trates ‘the masses.” ' E —Karf Marx. SPECIAL MAGAZINE SUPPLEMENT HE DAILY WORKER. SATURDAY, JULY 11, 1925. a +90 SECOND SECTION This magazine supple- ment will appear every Saturday in The Daily Worker. World Capitalism and the Boviet Union ee By KARL RADEK N the course of the past year the following two main phenomena could be observed in the economic de- Welopment of the capitalist states: the first is the restoration of the sys- tem of international credit, the second is the commencement of the restora- tion of the shattered, or entirely col- lapsed, monetary system of the cap- italist powers. <tr pac ner ammaermemnatanter eRe ten i oa THE RESTORATION OF THE CREDIT SYSTEM. { In the year 1924 the United States of America exported 1,200,000,000 dol- lars abroad, to Asaitic and European countries. This sum exceeds the to- tal of all the capital exported from America during the last few years and —apart from the war years—consti- tutes a record figure as regards the export of capital from the country. The United States of America, dur- ing the war and postwar period— from 1914 to 1923—earned no less than 20 milliard dollars by exports to the belligerent country and tc Central Europe. Of this sum the debts of the European powers to Ame. rica alone amount, in round figures to 10. milliards. From whence did the United States of America obtain this immense ac of capital which led tc “‘Thé Correct answer to this question brings with it the answer to a no less essential question; whether we have to deal here with a temporary and accidental or with a permanent phe- nomena connected with the entire economic life of the country. To what extent has the national wealth of America increased during this peri- od: According to the calculations of the American census, in the year 1922 the national wealth of America was 50 per cent greater than before the war. (In this calculation allowance is made for the, depreciation of the dollar consequent on the increase of prices). As result of this accumula- tion of capital, there followed an enor- }: mous development of industry. The accumulation of half of the gold re- serves of the entire world in the cel- lars of the American banks led, how- ever, to the reduction of the rate of interest. An American bank which lends money receives two to two and a half per cent interest, whilst Europe “(not to.mention such countries as Germany, where in the past year in the provinces, 75 per cent was a usual rate of interest) ispaying back eight per cent for the loans received from America. Under such conditions con- . tradictions naturally arose between the interests of industrial capital and the interests of finance capital. Whilst finance capital was interested in fore- ing up the rate of interest, industrial capital was interested in obtaining credits at a low rate of interest. The policy of the United States, however, was determined by industrial capital, whose representatives. comprise the leading cadres of the republican party. was only the agrarian crisis, the crisis which arose as a result of the shrinkage of the market and thru other complicated causes, and which forced the masses of the farmers into move- 1, Which led to the victory of fin- |: ance capital. Finatice capital opened wide prospects to the peasant masses of enriching themselves at the cost of Burope, which is compelled to build up its economy with the help of Am- erican credits and thereby to increase its purchasing power as regards the products of American agriculture. In this manner an alliance was conclud- ed between finance capital and the masses of the farmers, which led to a change in American politics. The United States of America decided to take an active part in the restoration of capitalist Europe. This policy is expressed before all by America seiz- ing the initiative and carrying out the expert’s report, and by the fact that America really ‘conducted the London conference in the year 1924, the aim of which was to remove the’ Franco- German antagonism and - to -Pacity Europe in order that capitalism might be put into working order again. In addition to this diplomatic act, Austria, Hungary, Poland—all these countries found themselves in such a position that their monetary systems had completely collapsed. This was the result of two calises: on the one hand, after the. war, ‘all the above- mentioned countries were compelled to import more from abroad than they exported, they consumed. more than they produced. As a result, they were compelled to export. gold, to sell gold abroad in order to be able to obtain the most nécessary industrial and ag- ricultural -products, in the first place corn, cotton, etc. On the other hand, the possessing They Are Trying to Scare Him The capitalist governments of Europe are trying to seare Soviet Russia with military conferences, the “Security pact”, etc. But Russia can afford to smile at these scares. The Red Army is always ready to meet unwelcome guests. America also participated in the finan- cing of European commerce and in- dustry. The 800 million gol€ marks which the Anglo-American money market lent to Germany, the 100 million dol- lars Morgan placed at the disposal of the French government for the support of the franc, the various pri- vate credits—Germany for example received in the past year, besides the above-mentioned 300 million ‘gold marks, private credits to the amount of one milliard—all this ts character- istic of the commencement of the res- toration of the system of internation- al credit. If it is asked whether this implies a fandamental organic change, one is compelled to reply: yes, the heaping up of wealth in America un- doubtedly forces America to become the credit power of the capitalist world. This factor will. continue to exercise its effects, — a second factor, as to which I have already spoken, is the res- toration of the monetary system. There was a time when the German mark sank even lower than our ruble. ‘ classes after the war actually paid no taxes, the existing system of taxation did not suffice to maintain the valuta. Taxes which were collected one day had no value on the next, owing to the depreciation of the currency. In order to maintain the officials, the army, ete, with the sinking valuta, the state was compelléd every year, every month, every week, and later on every day and even every hour to issue more and more paper money, whilst the’ stream of money into the state treasury became less and less. This led to the fall and collapse of the monetary system: of central Eu- rope. ; HE year 1923 marked the lowest point im this process, but the end of the same year brought about the commencement of a change. Thus Germany introduced the Rentenmark and Austria stabilized its valuta with the help of @ league of nations loan. { Poland, by taxing the bourgeoisie, ob- ,tained the means for the introduction of a gold currency. We must ex amine here whether Austria, Poland and Germany—these countries whose economy was shaken the most and ‘who stand nearest to the revolution— have stabilized their valuta to a suf- ficient extent and in what manner they have done so. The next question is whether the present salvage of their monetary system can be regarded as permanent. The restoration of these valuta is to be attributed in part to the restora- tion of the system of international credit, The stream of gold from Eng- land and America—in the first place from America—provided the means for covering the. new valuta. ECONDLY, the bouregoisie, who «Stood. on the edge of a precipice, was obliged to resort to an increase of the pressure of taxation and there- by self-taxation, which it had happily avoided up to now. Thus the German bourgeoisie, which in October, 1923, passed thru the sharpest political and economic. crisis, made a _ sudden change in its policy and in the course of the year 1924, with the help of ex- tra taxation, succeeded for the time being in balancing its budget. The third factor is of a psychologic- al character. Let us take Germany as an example. The mark had fallen at a continually increasing rate, the noose around the neck of the popula- tion had been drawn tighter and tigh- er, with the result that an insistent demand had arisen among the masses to stabilize the valuta at any price, even at the price of self-deception. The government took advantage of this and issued the Rentenmark, rep- resenting it to be a stable valuta, al- tho it depreciated just as much as the yaper money. 7 one compares the gold cover of the Rentenmark with that of the »viet. Tchervonetz, then, as regards * ability, out . Tche at right om the commen at 8 ‘com- tired with the -Ré cause was based upon a favorable trade alance. In the years 1922 and 1923 ‘e sold more than we purchased. The ‘“chervonetz was supported by cer- ain metal resources of the state bank. “he Rentenmark, however, was only ‘upported by its guarantee by the serman landowners. The land and he soil, hoWever, cannot be exported, and in the event of the collapse of the Rentenmark not a single American would have bought as much land in Germany as would have sufficed to bury a dog. As however it was neces- sary for the social salvation of the German bourgeoisie the Rentenmark was introduced and was maintained by means of taking advantage of the psychological condition of the masses, untjl the Americans furnished gold and the mark obtained a gold cover. What is the significance vf the res- toration of the system of internation- al credit and of the re-establishment of the money system? ; Extension of the Ind . e of this phenomenon ff one takes into consideration those facts which have hitherto received very little at- tention, i. e;, that during the war, and also in part after the war, the indus- trial basis of the capitalist countries had been etxended.. During the war, for the purpose of providing the army with weapons, munitions, ete., produc- tion, before all the metallurgical pro- duction, in all countries had to be ex- tended. America, England and, after the occupation of the northern dis- tricts, France also, had to set up a new metallurgical center. Italy and Japan also extended their metallurgic- al industries, .. | The armiés, howeyer,,had not only to be supplied with weapons, but also with other articles.“ And that led to the extension of a number of other branches of industry. If one reckons therefore the number of. lathes and spindles. and the amount of motor (Continued on page 8) 8 as can only jtidge the significance :