The Coming of the American Behemoth

The Origins of Fascism in the United States, 1920 -1940

Michael Joseph Roberto

• Publisher: Monthly Review Press
• Year: 2018
• ISBN:
  9781583677339
• Topic: Politics & International Relations
• Subtopic: Political History & Theory
• Index: Politics & International Relations

Most people in the United States have been trained to recognize fascism in movements such as Germany’s Third Reich or Italy’s National Fascist Party, where charismatic demagogues manipulate incensed, vengeful masses. We rarely think of fascism as linked to the essence of monopoly-finance capitalism, operating under the guise of American free-enterprise. But, as Michael Joseph Roberto argues, this is exactly where fascism’s embryonic forms began gestating in the United States, during the so-called prosperous 1920s and the Great Depression of the following decade. Drawing from a range of authors who wrote during the 1930s and early 1940s, Roberto examines how the driving force of American fascism comes, not from reactionary movements below, but from the top, namely, Big Business and the power of finance capital. More subtle than its earlier European counterparts, writes Roberto, fascist America’s racist, top-down quashing of individual liberties masqueraded as “real democracy,” “upholding the Constitution,” and the pressure to be “100 Percent American.” The Coming of the American Behemoth is intended as a primer, to forge much-needed discourse on the nature of fascism, and its particular forms within the United States. The book focuses on the role of the capital-labor relationship during the period between the two World Wars, when the United States became the epicenter of the world-capitalist system. Concentrating on specific processes, which he characterizes as terrorist and non-terrorist alike, Roberto argues that the interwar period was a fertile time for the incubation of a protean, more salable form of tyranny – a fascist behemoth in the making, whose emergence has been ignored or dismissed by mainstream historians. This book is a necessity for anyone who fears America tipping ever closer, in this era of Trump, to full-blown fascism.

PART 1

The Germ of Fascism in the Prosperous 1920s

1—The Wonders of American Capitalism in the New Era

MILLIONS OF AMERICANS weary of conflict abroad and turmoil at home went to the polls in November 1920 and elected Warren Gamaliel Harding as their president. Harding received 60.2 percent of the vote, an unprecedented landslide that stood until Lyndon Baines Johnson achieved a greater victory in 1964.¹ Almost from the start of his campaign, Harding promised a return to “normalcy.” But what did that mean? What could be normal for a nation so utterly transformed by its role in a world war and now on its way to becoming the preeminent leader of the postwar global order?

The Great War, as it was then called, had catapulted the United States into a rising global hegemon. But this would not have surprised those who had observed its rise decades earlier, especially Karl Marx and Frederick Engels, the founders of scientific socialism. In Capital (1867), Marx wrote that the Civil War had established conditions that put the United States on a path toward world economic and political leadership. British investment had been central to construction of the Transcontinental Railroad, connecting east and west, between 1863 and 1873. Its completion spurred the growth of the mining and steel industries that became the basis of the modern American industrial economy, most of it financed by U.S., not British, capital. It was Marx who recognized the U.S. economy as “a new, dynamic model of capital accumulation.”² By the early 1880s, he and Engels had determined that America’s untapped natural resources and vast internal market would become the basis for its eventual leadership of the world capitalist economy. The combination of its “gigantic agricultural production” and simultaneous exploitation of “its tremendous industrial resources,” would soon bring an end to “the monopoly of Western Europe, and especially of England.” These were seminal developments not only for the United States but for the rest of the world. As small landowners lost ground to the “competition of giant farms,” Marx and Engels wrote, “a numerous proletariat and a fabulous concentration of capital” were “developing for the first time in the industrial regions.”³ Though economic expansion within “the protected home market” also carried the possibility of a crisis of overproduction, the latter would “serve to hasten the time when America becomes capable of exporting and of entering the world market as England’s most dangerous competitor.”⁴

The pace of these developments quickened dramatically in the 1880s and 1890s as the rise of industrial monopolies established a platform for the emergence of finance capital and U.S. imperialism. In 1936, the Marxist economist and historian Anna Rochester described how the foundation for finance capital in the 1890s had been established twenty years earlier when bankers took advantage of “the whole top-heavy structure of public debt” by financing government and municipal bonds. As the economy expanded in the 1880s, so did the need for a wider range of banking operations in both commerce and investment. While routine business operations relied increasingly on the need for short-term credit, corporations with large aggregations of capital turned to investment bankers to underwrite additional stock and issue bonds. The latter played major roles in the reproduction of capital by underwriting new securities. No one was more successful at this than J. P. Morgan, whose stealth in the art of the deal became evident when he decided to buy new stock for the New York Central Railroad in 1879. Establishing even greater control over much of the nation’s railroads following the crisis of 1893, Morgan had also turned to financing and organizing the great industrial trusts of the General Electric Company in 1892, the U.S. Steel Corporation in 1901, and the International Harvester Company in 1902.⁵

A year before he led the Bolsheviks to revolution in 1917, Lenin cited statistics to argue that the United States had become the world’s leader in the concentration of production and its ownership. By 1909, 3,060 industrial enterprises out of 268,491—1.1 percent of the total—employed 2 million of the 6.6 million workers who made up the total workforce and produced an output valued at $9 billion, almost half of the $20.7 billion in total output. Moreover, these giant enterprises covered 258 branches of industry. Industrial cartels and trusts were now determining the course of U.S. industry. By 1909, U.S. corporations constituted 25.9 percent of the total number of business enterprises but employed 75.6 percent of the total wage earners in America. These corporations generated enormous profits, much of it going to dividends for shareholders. Increasing monopolization led to mergers with banking, giving rise to the hegemonic power of finance capital in the hands of a small financial oligarchy. This in turn contributed to further concentration and hierarchical ownership in the form of holding companies. The latter, among other things, pioneered a corrupt system of balance-sheet jugglery between the mother company and its “daughter companies” that could have concealed “doubtful undertakings from the ordinary shareholder,” while enriching those who controlled the accounting. Lenin also noted that these fraudulent and corrupt methods bred a business ethics forged principally by American capitalists. He saw the pernicious reach of concentrated wealth and power. “A monopoly,” Lenin wrote, “once it is formed and controls the thousands of millions, inevitably penetrates into every sphere of public life, regardless of the form of government.”⁶

As Anna Rochester argued, the emergence of these great trusts marked the beginning of America’s industrial leadership in the world economy. Industrial production soared, displacing raw materials and agricultural products as America’s chief exports in 1894; four years later, the United States was exporting more of these goods than importing. The United States no longer depended on foreign investment for further growth. Flush from huge profits, U.S. capitalists sought new outlets for productive investment abroad while opening a market for the sale of foreign government bonds at home. Once again, J. P. Morgan led the way by funding Mexican debt in 1899 and financing Great Britain’s South African War in 1900–1901.

All told, these developments had put the country on the road to empire. With the closing of its own frontier and monopoly-finance capital in ascendance, American political leaders pursued the same expansionist policies as their European counterparts, and with greater might. As Rochester concluded, the United States looked to colonize non-capitalist areas and expand its general influence abroad. Victory over Spain in 1900 had delivered the Philippines to permanent U.S. occupation, cementing America’s imperial presence across the Pacific and strengthening its grip over the Caribbean and Central America. By then, the architects of a global empire with nascent powers in the Atlantic and Pacific were guided by a vision of unprecedented global power. To that end, the United States began building naval bases wherever it could and started work on the Panama Canal. The canal was finished in 1914, the year the First World War broke out in Europe.⁷

AMERICA IN THE GREAT WAR: ECONOMIC SUPREMACY AND POLITICAL REPRESSION

The European war had raged for three years before the United States finally joined the Allies (Great Britain, France, Italy, and Russia) as a combatant in April 1917, against the Central Powers (Germany, Austro-Hungary, and the Ottoman Empire). American troops were slow to arrive in Europe, and only half of the million men of the American Expeditionary Force actually fought on the Western Front. But their presence alone marked new challenges and responsibilities for the United States as soon as the Armistice was signed in November 1918. Though it had risen quickly on the world stage, U.S. leadership stumbled into the postwar world, now in shambles. The socialist revolution in Russia shocked and frightened the architects of the world capitalist order in Europe and the United States. American diplomacy under an ailing president, Woodrow Wilson, had reached a crossroads. Despite an immediate isolationist impulse to avoid future European entanglements, there was no avoiding the imperatives that came with being the world’s industrial leader and new banker. From the latter standpoint, America’s leading capitalists agreed that European recovery was vital to U.S. economic interests at home and abroad.

World war had catapulted the United States into the world’s mightiest economic powerhouse. Even before it entered the conflict, America’s support for the Allied war effort had accelerated the concentration of wealth and the supremacy of monopoly-finance capital over the U.S. economy. Indeed, the war had been good for America’s industrial giants and its biggest banks. Capital loaned to the Allies to buy U.S. goods had pumped at least $5 billion of purchasing power, a substantial part of the total national income, into the domestic economy.⁸ Returns on investment, especially in munitions, were stunning. Corporate profits soared. Wealthy owners and managers got richer. Better yet, there was enough to go around. Workers made more money and lived better. Farmers reaping the rewards of booming agricultural prices borrowed from local banks to buy new machinery and cultivate more land. The pace of these developments quickened when the United States entered the war. As American soldiers fell on the Western Front, a select few of their countrymen made big killings in the marketplace. By 1919, a year after the war ended, America’s corporations were producing 87 percent of all manufactured goods in the domestic economy.⁹ Eighteen of the largest two hundred corporations saw net earnings rise to $337 billion during the war. Profits in the steel and iron industries were three times more than original investments. Earnings in the electrical and appliance industries were even better, rising almost two hundred times above their initial investments. Meanwhile, more Americans were adding to their personal wealth. According to income tax returns, the number of millionaires had almost quadrupled.¹⁰

Then the war ended, and so did the prosperity. Wartime contracts worth billions were canceled immediately, sending industry and agriculture into an uncertain and threatening future. Quickly the boom turned into its opposite. Ruinous inflation, unemployment, and labor unrest shook the economic and political order. The cost of living skyrocketed, but wages and salaries failed to keep pace. Disgusted with their inability to gain any advantages with employers, more than four million workers in various states went out on strike or merely walked off their jobs in 1919. From a general strike in Seattle to striking steel workers in Pittsburgh and coal miners in West Virginia, America’s working class challenged the power of the bosses.

Government, in tandem with Big Business, responded decisively to the worker insurgency. As Bruce Minton and John Stuart wrote in The Fat Years and the Lean (1940), “The true role of the state became clear.” It had become “the weapon … of the industrialists, the financiers, the small minority in Wall Street,” who had taken “almost complete possession of the governing agencies.” The state became “the hired policeman of the employers.” On their behalf, government launched a crusade to rid the nation of all public enemies, especially the communists and anarchists who were blamed for infecting workers with radical ideas. Attorney General A. Mitchell Palmer set out to eradicate these “termites of revolution,” who, he claimed, were fed by Lenin and the “Red hordes.” Justice Department agents “careened through America, violating every principle of the Bill of Rights.” The most significant of the “Palmer Raids” occurred on January 2, 1920, and resulted in the arrest of more than 2,700 men and women, many of whom were jailed for months without being charged. According to Minton and Stuart, 556 were held for deportation, with many deported without proper hearings. The combined arrests included 1,400 members of the Industrial Workers of the World (IWW); 300 were convicted for violating laws against criminal syndicalism and anarchy.¹¹

Big Business stood squarely behind Palmer. “The recent action of the Government in the deportation of undesirables is to be commended,” wrote Stephen C. Mason, then president of the National Association of Manufacturers (NAM). “It is the only punishment that fits the crime of anarchy, sedition, or revolution by force, and the Government should comb the country with a fine-tooth comb and not let up until the last one of these pests is sent back to the country from which he came.”¹² Businessmen blamed the same public enemies but singled out immigrants for infecting American workers—old-stock, Anglo-Saxon—with alien thinking and uppity Negroes who forgot their place in white society. “There is only one way to treat this disease,” wrote U.S. Steel chairman Elbert H. Gary whose own workers had struck hard, “and that is to stamp it out, to meet it boldly wherever it can be found, to expose it and to give it no chance for development.”¹³ The NAM waged concerted economic and political warfare on labor organizations. In the midst of the 1919 strike wave, it established an Open Shop Department designated to promote another of its creations, the American Plan, which took aim at the union movement and the closed shop. Its premise was as political and ideological as it was economic by assuming that “all law abiding citizens have the right to work when they please, for whom they please, and whatever terms are mutually agreed on between employee and employer and without interference or discrimination upon the part of others.” Throughout the 1920s, the American Plan was used to promote company unions where workers were deprived of any bargaining powers. It pushed successfully for greater use of the “yellow-dog contract” that forced workers to agree not to join a union and, in some cases, to pledge not to strike. Meanwhile, it promoted the doctrine of “True Americanism” that aimed to define the difference between the old-stock citizens considered the backbone of the nation and alien forces that threatened them. Big Business and state power came together effectively in court-ordered injunctions that made it illegal for workers to strike or even engage in collective bargaining. Despite minor concessions to some workers, the combined power of the state and Big Business proved too much for the working class.¹⁴

As business and government joined hands, organized labor sought a seat at the table. During the Great War, prosperity had seeped downward to select parts of the working class. This was especially true for workers who were directly involved in wartime production, and earned higher wages and lived more comfortably. But even before peace came in 1918, organized labor struck a deal with Big Business that held up until the 1929 crash. The unions in the American Federation of Labor (AFL), long committed to a reformist and limited agenda in their dealings with employers, had argued that labor’s fulfillment of wartime production demands had earned it a rightful place in decision making with government and business. Samuel Gompers and other AFL leaders had demonstrated loyalty to American capitalism by their hard line against the IWW and other radicals who had tried to convince American workers not to support an imperialist war against their brethren in Europe. At the same time, the AFL kept rank-and-file workers in line by winning concessions for higher wages and better working conditions. But the ideological disposition of the AFL was far deeper than its routine activities. In its deliberate aim to reject any hint of socialism and promote what it considered a viabl...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Dedication
• Preface
• Introduction: Fascism as the Dictatorship of Capital
• Part 1. The Germ of Fascism in the Prosperous 1920s
• Part 2. The General Crisis and Embryonic Fascism in the 1930s
• Conclusion: Fascism and the Problem of American Exceptionalism
• Epilogue
• Notes
• Index