AND 1973

In September 1928, well - known American economist Roger W. Babson said of the forthcoming presidential race: 'The election of Hoover and a Republican Congress should result in continued prosperity for 1929?

During the same month, Secretary of the Treasury and member of the Federal Reserve Board, Andrew W. Mellon, the most responsible financial spokesman the whole United States, said:

'There is no cause for worry. The high tide of prosperity will continue.' In December 1928, the outgoing President Coolidge said in his last State of the Union message:

'No Congress has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquillity and contentment and the highest record of years of prosperity' Coolidge told the legislators they could regard the present with satisfaction and anticipate the future with optimism'.

Commenting on these remarks in his book 'The Great Crash 1929, John Galbraith wrote 30 years later:

•Mellon was participating in a ritual which in our society is thought to be of great value for influencing the course of the business cycle.

By affirming solemnly that prosperity will continue, it is believed one can help ensure that prosperity will in fact continue.

'Especially among businessmen, the faith in the of such incantation is very great.' Inflation continued unchecked throughout 1928 and early 1929; interest rates rose; and speculative gains on the stock market in property were all the rage.

There was considerable talk among financial circles about bringing the boom to an end for fear of its instability, but the majority of business and political opinion wanted the boom to continue. The largest commercial bank, First National City, went out of its way to prevent the boom collapsing when share prices wavered in March 1929.

The inflationary supply of funds which financed the speculation continued unabated.

In September 1929, the great crash. came. The economist Babson, just 12 months after his 'continued prosperity' speech, said:

'Sooner or • later a crash is coming, and it may be terrific •.. factories will shut down ... men will be thrown out of work ... the vicious circle will get in full swing and the result will be a serious business depression.' Even though the collapse had already begun, there were still angry voices raised against the dangers of this 'pessimistic' talk. But the stock market crash of that month in fact came three months after the recession had set in.

As late as the middle of October, after weeks of steady slide, the 'Wall Street Journal' said that Mellon's decision to stay in the cabinet 'did more to restore confidence than anything else ... optimism again prevails'.

Banking chief Charles Mitchell of First National said in the same month:

Ine markets generally are now in a healthy condition . • values have a sound basis in the general prosperity of our country' Economics professor Irving Fisher commented:

I expect to see the stock market a good deal higher than it is today within a few months.' Thursday October 24 was the first day of a mad selling scramble. Millions were slashed off share values. Eleven well-known speculators had already committed suicide.

There was a recovery late Thursday, Friday and Saturday and banker Mitchell declared the trouble 'purely technical'. Eugene M. Stevens, president of the Continental Illinois Bank, said: "There is nothing in the business situation to justify any nervousness.' Despite all the incantations and massive Press propaganda saying all was well, on Monday share values took another disastrous plunge, this time without any recovery.

Tuesday October 29, 1929, the dam broke. It was the most devastating day in the whole history of stock exchange operations.

Millions of stocks were offloaded and prices dropped like a stone. The market fell relentlessly throughout the first half of November. Since September, there had been an overall drop of 60 per cent in the value of all shares. Thousands of investors were wiped out.

Many businesses crashed and a series of spectacular embezzlement frauds were discovered.

The slump really got under way over the next three years and unemployment reached staggering proportions in every capitalist country. The New York stock exchange index, which had plummeted from 542 down to 224 during the great crash of 1929, went all the way down to 58 by July 1932.

By 1933, American economic output was down by 33 per cent from its 1929 level. Nearly 13 million workers were unemployed.

On the surface, the great depression appeared as the result of the 1929 stock market crash which followed the uncontrolled share speculation and inflation of previous years.

But behind these activities the deeper crisis of capitalism in the imperialist epoch which involves the periodic over production of capital relative to the surplus value extractable from the international working class.

Ever-sharpening class struggle leading to revolution and trade war leading to world war are the inevitable consequences of this insoluble crisis.

In 1973, the capitalist system is fast approaching the most enormous crisis in its whole history. The scale of it will dwarf the events of the 1920s and 1930s. For in an unprecedented manner, the capitalist countries have for years been deliberately stoking up the most artificial boom conditions.

From 1945 to 1971, this was based on the Bretton Woods system of planned inflation. When this dollar-imperialism agreement eventually sank under its own weight of useless paper money on August 15, 1971, and fixed parities had to be abandoned, the capitalist powers could do nothing trom then on but shout loudly that all was well ... and wait for the crash to come.

All attempts at international monetary agreement, such as the two Smithsonian conferences, are doomed to failure as individual capitalist corporations and nations step up the fight for survival. Trade and aid treaties are collapsing all around. Major financial bankruptcies, and, echoing 1929, embezzlement scandals are on the increase.

But through all the chaos and anarchy, the representatives of capital and their faithful servants in the labour and trade union bureaucracies repeat the old incantations that 'all is well'.

'There is no crisis, Victor continue, ago. 'The boom will Feather stated categorically a Michael Clapham, CBI president, assured. 'Britain is booming; economic growth is well founded, every government minister has declared.

A capitalist newspaper comment on one the more widely-reported 'boom' stories, British-Leyland's expansion, reveals •a lot. "The Observer' wrote:

'Lord Stokes spoke last week about a five-year plan that would be "the biggest expansion programme in history". But he was careful not to put forward a firm figure for the total cost.

'All he did was point out that the largest sum spent in a single year so far was f67m. "We see no reason why this annual rate should not be comfortably exceeded," he said.

'This was taken to mean that British-Leyland had suddenly decided to invest between £400m and £500m by 1978. The popular newspapers dutifully rolled out the cliches about boosts for Britain and massive acts of faith.

'Such euphoric interpretations must be very welcome to the government but are seriously misleading-not least because 20 per cent the

Everyone Phat Britain booming and the enomy well founded Above American speculare one all Street the tapes up pror to the crash in 192. money will be spent overseas.

'As long ago as last January, Lord Stokes made it clear that British-Leyland would invest about £70m this year, rising to around £80m in 1974. The clear implication was that this rate would be at least maintained in subsequent years.

'There has been no change of plan or stepping up of the investment programme since then. "All this excitement about a £500m boost is a big PR stunt really," says one industry insider.

'Spending at the rate of, say, £100m a year should certainly be impressive in relation to British-Leyland's net capital employed of £450m and stock market value of only £200m. But by most other yardsticks, it is still too little.

• "A company that size needs to spend £60m a year just to stand still," says a motor industry economist.

'Fiat and Renault spend about £140m_ a year, while Volkswagen, Leyland's other main European competitor, has reluctantly had to cut back its programme from £400m to £250m.' Two other facts can be added. The value of any millions of pounds Leyland's spend each year is rapidly getting less due to uncontrollable inflation. If there was a real expansion programme going on, many more hundreds of millions of pounds would have to be involved.

Secondly, the evidence, if anything, shows that BritishLeyland is still in a deep financial crisis and the 'boom' talk is either a prelude to another attempted shares flotation, or even to prepare the most favourable conditions for a continental merger.

Last year's £50m rights issue was an all-time flop. About 15 plants were sold off to raise cash. Last week, British-Leyland sold off part of its South African capital interests, But company shares still languish at a record low of 33p.

But the boom talk is not only a danger to the working class in concealing the grave facts of the crisis from them, thus preventing them preparing for its consequences.

It is doubly dangerous in that the Tories and trade union bureaucrats are using it as a cover for the corporatist deals being cooked up at the Chequers and Downing Street talks, both secret and formal.

They reason that in the phoney boom atmosphere, workers won't care too much about who is talking to whom over certain economic matters.

The Conservative 'Yorkshire Post' wrote on the subject of deflating the boom which even many bourgeois economists now say is necessary:

•But the government, now entering the second half of its term of office, is unwilling to do this. It wants to avoid entering the forthcoming talks with the trade unions on Phase Three of its anti-inflation programme in a period of restraint.

•.. Similarly it finds the prospect of increased unemployment politically hard to Press, Saturday PAGE Heath who isured 1929. swallow-as would the electorate.' But following French insistence in Paris at the HeathPompidou talks, the deflation has had to start regardless, with £600m public spending cuts.

Despite the economic facts, however, the boom talk goes on. Yet all the evidence points increasingly to the greatest crisis in man's history.

The working class must now begin decisive preparations for the mighty class struggles Its first• task must be to force the trade union leaders to end the treacherous talks at Downing Street and mobilize a campaign instead to force the Tories to resign from office.

Since Mav-Iune 1968. the Soviet Stalinists have been haunted by the spectre of revolution in western Europe and the growth of Trotskyism in the advanced countries in the west. Fearful of losing their parasitic privileges at home and their control of the labour movement abroad, the Soviet bureaucracy has begun a campaign to once again discredit and distort the principles and history of Trotsky's struggle for the regeneration of the USSR and the world-wide revolution of the working class. The Institute of Marxism-Leninism of the Central Committee of the Communist Party of the Soviet Union in 1972 published 'Against Trotskyism', a compendium of documents, articles, extracts, speeches and resolutions aimed at discrediting Trotskyism and distorting completely the truth about the relations between Lenin and Trotsky. In this series of articles MICHAEL BANDA replies to this book.

Saturday Because of his closer proximity to the masses in Petrograd Trotsky was sometimes more correct than Lenin who was in exile-and later—in hiding in the Vyborg district of Petrograd.

Lenin, according to a footnote by Trotsky to the AppenRussian Revolution' quoted yesterday, admitted during the Third Congress of the Communist International that he himself had made 'ultra-left' mistakes, especially while an emigré, including one during his last : "emigration" in Finland in 1917, when he defended a less expedient plan of insurrection than the one actually carried out' This is obviously an oblique reference to Lenin's proposal to Smilga ('Lenin'. By David organize Pelican, insurrectionary Shub. Pelican, p. 267) to headquarters in Finland as well as his later advice to the Bolsheviks to time the insurrection for opening of Northern Congress of Soviets in September.

In the end, although he disagreed initially with the postponement of the insurrection by three weeks, Lenin in fact, worked out the plan which enabled the Bolsheviks to execute the insurrection on the eve of the Second Congress of Soviets.

So the charge of 'constitutionalism' by the authors of 'Against Trotskyism', who claim Trotsky wanted to delay the insurrection to coincide with the Second Congress of the Soviets, sounds extremely hollow when levelled against the man whom Lenin praised for leading the walk-out from the 'Democratic Pre-Parliament' a few weeks before the October seizure of power. "Council of the Republic The 'Pre-Parliament' or • was established by the Democratic Conference - an assembly of bourgeois and social-democratic reactionaries which was convened during the period of the struggle against General Kornilov's attempt throw Kerensky.

The purpose of the 'PreParliament' was to circumvent the convocation of a Constituent Assembly and, at the same time, distract attention from the Soviets as instruments of power.

The right wing of the Bolsheviks — Zinoviev, Kamenev, Nogin and others-wanted continue sitting in this bogus parliament in the same way as they had supported the Democratic Conference in spite of Lenin's insistence that they quit it.

Only a minority of Bolshevik leaders—principally Lenin and Trotsky — were in favour of boycotting the 'Pre-Parliament' as a conclusive demonstration of their break with bourgeois constitutionalism and of their determination to seize power and overthrow Kerensky's regime.

When Trotsky proposed boycott of the Democratic Conference he was voted down— but he was warmly supported by Lenin.

As a result of their joint efforts, the vote was reversed at a later meeting of the Bolshevik faction.

On October 23 Trotsky led the walk-out from the 'PreParliament'. Six days later the Petrograd Soviet under Trotsky's chairmanship created the Military Revolutionary Committee, the organization which led the insurrection of November 7, 1917.

Lenin's praise of Trotsky is the most convincing and irrefutable answer to those who lyingly accuse Trotsky of 'constitutionalism' "Trotsky was for the boycott. Bravo, Comrade Trotsky! Boycottism was beaten in the Bolshevik faction attending the Democratic Conference. Long live the boycott!' ('Proletarskaya Revolutsia', No 3, 1924. See "The Stalin School of Falsification' p. 12.)

The Stalinists will find it impossible to cite a single quotation from. Lenin giving praise of this order to Stalin!

As a matter of curiosity it is worth pointing out that the only quotation from Lenin used in 'Against Trotskyism' to sustain the charge of 'constitutionalism' does not mention Trotsky anywhere!

Lenin wrote it obviously as a warning to Zinoviev and Kamenev who were opposed to the seizure of power and wanted to postpone it indefinitely and let the Mensheviks convene the Congress of Soviets at their convenience.

This is the only construction that can be laid on Lenin's terse sentence: '. • if the Bolsheviks allowed themselves to be caught in the trap of constitutional illusions, "faith" in the Congress of Soviets and in the convocation of the Constituent Assembly, "waiting" for the Congress of Soviets, and so forth-these Bolsheviks would most certainly be miserable traitors to the proletarian cause.' ('Against Trotskyism', p. 124. Our emphasis.)

Stalin's role in this very crucial turning point of Bolshevism has for years been obscured by his own official propagandists. But from the publications of the Institute of Marxism-Leninism itself we Above right: Kerensky (left) leader of Provisional government which set up the 'PreParliament.' Trotsky (above left), supported by Lenin, led the boycott of the Pre-Parliament. can reveal exactly where he stood.

After quoting Lenin's outright condemnation of Zinoviev and Kamenev, the book 'V. I. Lenin-A Biography' goes on: 'This was Lenin's uncompromising attitude. But his attitude to these strike-breakers was not supported by everyone.

"Stalin, for instance, without consulting the Central Committee and other members of the "Rabochy Put" ['Workers Path'l editorial board, pubIshed a letter from Zinoviev in the October 20 issue of the paper containing a completely unsupported denial of Lenin's charges against him.

'Stalin published an editorial note asserting that with Zinoviev's statement [in 'Rabochy Put'] and Kamenev's [in the Petrograd Soviet] "the question may be regarded as settled. The harsh tone of Comrade Lenin's article does not alter the fact that basically we still share the same views"!

And the writers of this biography add: 'Stalin thus exhibited a conciliatory attitude to the strike-breakers of the October Revolution.' His action, taken tour days before the insurrection, was seen as an act of political solidarity with Zinovier and Kamenev and, fearful of the anger of his fellow Bolsheviks, Stalin tendered his resignation from the editorial board of the paper. The CC, however, rejected his resignation.

CONTINUED ON MONDAY

Saturday