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From New Militant, Vol. I No. 47, 16 November 1935, p. 3.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
Nothing illustrates so well the fact that capitalist production and consumption rest not on national but on world foundations than does the world-wide battle of currencies. The world is divided into well-defined areas politically and economically under the control of one or the other of the great capitalist powers. The signposts over these areas denoting such control are the pound, the dollar and the franc respectively. The Japanese would like to establish the yen in a similar manner as a token of world dominion, it is this battle of the currencies, each symptom of the gigantic struggle underneath for outright colonial control, that is being witnessed at the moment in China. Control of Chinese currency and Chinese foreign exchange would go a long ways in aiding one or the other of the imperialists to control a larger share of Chinese foreign trade. One of the infamous twenty-one demands made on China by Japan was that the Japanese be given control over the chaotic Chinese currency, and that Japan be allowed to set up a gold backing for Chinese currency in the Bank of Japan at Tokyo. Leith-Ross, agent of British imperialism, is now engaged in the effort to tie the Chinese silver currency to the pound sterling. He would do this partly through the aid of an “international loan” to Chiang Kai-Shek. Japan has already signified her intransigent opposition to this scheme. The United States has played no small part in bringing about the present situation.
The policy of increasing the price of, silver pursued by the Roosevelt administration had, among other things, the aim of counteracting the gains made by Japan in Chinese trade due to depreciation of the yen. Japanese goods became cheaper for China as for the rest of the world, since Japanese prices did not rise much and other currencies could therefore secure more in goods in Japan. American gold policy – depreciating the dollar in terms of gold – did not affect the Far East greatly because there silver rather than gold was the basis of currency and money. Hence Roosevelt hoped to secure a greater share of Chinese trade by depreciating the dollar in terms of silver. Since the silver would pour out of the Chinese hoards to secure the profit offered in terms of the American dollar it was hoped that the silver would be exchanged for American goods. This policy has been only partially successful in restoring American trade. Meantime silver has been smuggled out of China at a tremendous rate despite the attempt to prevent this by means of an equalization export duty. The rise in prices of Chinese goods has now reached the point where inflation threatens. The result of American policy has been to lower the standard of living of the Chinese masses even beyond the starvation level already existing, something that does not concern in the least American capitalism in its mad search for profits.
Now the Chinese government has finally taken the step, under the advice and encouragement of English imperialism, of going off the silver standard. This step is in line with the policies of capitalist nations all over the world of establishing managed (manipulated) currencies to protect the interests of the home bourgeoisie. It is not taken, needless to say, to restore a stable currency that would be for the benefit of the Chinese masses. They do not enter into consideration at all. Besides being concerned over their share of trade, the British are also looking out for their vast investments that are threatened by the instability of Chinese money and the strong possibilities of inflation. China is now the battleground of the nations and the battle is for the moment confined to money. But the fight for control of Chinese money is only part of the conflict to seize and subjugate China as a colony. At any moment the diplomatic and economic conflict threatens to turn to other means, the use of bullets instead of coin. The intervention of America and England in the monetary sphere is only notice given to Japan that her seizure of Chinese territory will sooner or later have to meet the test of force on the international arena. The big powers, England in particular, are giving notice to Japan that not all their attention is devoted to the Ethiopian situation, that they are giving close attention to events in the Far East as well.
That the Japanese will nevertheless apply pressure on the corrupt Chinese government to prevent China becoming a sterling area goes without saying. The Japanese army will intervene, first by threats, then by further action to strangle China. How far they will go depends also on the international “balance of power,” on the combinations among the imperialists. As one power moves to gain more control at the expense of the others, the latter combine against the immediate menace, only to fall apart again the moment a new situation arises. The basic law of capitalism at all times, but particularly in the period of decay, is the law of its instability.
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Last updated: 4 February 2018