Networks of English and the rise of US capital, 1918–1945

The end of the war found Britain solvent but heavily indebted to the United States (Arrighi, 2010: 279). The most pressing issues for those nations that emerged as victors - Britain, the United States, France and Italy - were to place responsibility for the war on Germany and to exact retribution. This they did - particularly at the behest of France - in the form of swingeing reparations, a net reduction of Germany’s land mass in Europe, and the confiscation of all its overseas territories in Africa and the Pacific. A number of these, such as Tanganyika, Kamerun and Togoland, or parts of them, later emerged as British protectorates (Hobsbawm, 1995; Wallerstein, 2000 [1973]; Cain Si Hopkins, 2013; Darwin, 2009). In the aftermath of the war, despite being hugely indebted, Britain remained economically powerful owing to its continued dominance of world trade and sterling’s ongoing function as the international reserve currency. But, for the first time, it was joined in this by the US dollar (Arrighi, 2010: 279). The strength of both sterling and the dollar was built on gold, of which the greater part of the world’s reserves were stored in the vaults of the Bank of England and the relatively recently established US Federal Reserve, which had come into being following the US economic crash of 1907 (Panitch & Gindin, 2012: 42-43).

A chief concern on both the anglophone sides of the Atlantic was to reestablish the pre-war international monetary system, which from 1815 had been based on the gold standard, the British pound, and increasingly after 1850 - when the first international communication cables were laid - English. The gold standard had been placed in indeterminate suspension in 1914 following Britain’s entry into the war, which had led to a panicked run on sterling. Following the catastrophe of the war, the almost universal conviction emerged, backed by the newly established - and US-inspired -League of Nations, that only by re-establishing the pre-1914 system and its natural corollary free trade, ‘this time on solid foundations’, could future wars between the European powers be avoided and economic prosperity secured (Polanyi, 2001 [1944]: 23; Arrighi, 2010: 281). The US administration of Woodrow Wilson (1913-21) and of his successors to 1933, Harding, Coolidge and Hoover, viewed the restoration of the pre-war system as necessary to US interests on the basis that stable currencies would lead to stable trade and thereby secure the peace that was necessary for the United States to consolidate its rapidly expanding economic position in the world. It took time and a plethora of international conferences [in which English and French were usually the official languages], but in 1922, the Republican

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The gold standard posited an equal value and convertibility between a particular denomination of currency and a particular weight of gold. In this way, a dominant currency could ‘anchor’ the international monetary system so as to create a relative stability of exchange rates between different currencies. In the nineteenth century, the currency which served as this anchor was the British pound sterling.

The economy of global English, 1918-1979 107 administration of Warren G Harding (1921-3), felt able to restore gold convertibility with the dollar, and in 1925 - more in hope than expectation -Britain followed suit with sterling (Skidelsky, 2003: 355-356). A shaky economic recovery in Europe was made all the more fragile by the economic consequences of the Russian Revolution of 1917 and the ‘economic revenge’ which the European victors had meted out upon Germany at Versailles in 1919 (Cain & Hopkins, 2013: 451). In the absence of liquidity in Europe, which was not forthcoming from the main holder of it - the United States -countries turned increasingly inwards. Tariff barriers, import quotas and capital controls followed, as the continental European nations struggled to stabilize their currencies. As Polanyi notes, ‘While the intent was the freeing of trade, the effect was its strangulation’ (2001 [1944]: 28).

Despite the difficulties elsewhere, the 1920s was a boom period for the US economy as it imposed high tariffs against imports from Europe and the rest of the world, while insisting on their lowering elsewhere. The Smoot-Hawley Bill of 1930 raised tariffs on foreign imports still higher, by an eye-watering 23 per cent. In spite of these measures, or because of them, productivity in the United States outstripped that of the debtor nations in Europe, and US capital exports, often in the form of loans to Latin America, expanded rapidly (Panitch Sc Gindin, 2012: 49). Congress-orchestrated protectionism and the strength of the US domestic and export economy made it difficult for the debtor nations in Europe and elsewhere to compete and also to service their debts. In lieu of debt repayments, the US built up a large portfolio of foreign assets, totalling some $8 billion by the end of the 1920s, ‘with a rapidity .. . which ... is unparalleled in the experience of any major creditor in modern times’ (Dobb, 1963: 323, cited in Arrighi, 2010: 282). In anticipation of post-1945 IMF-backed structural adjustment programmes, US private ‘financial advisors’ were despatched to client states around the world to counsel [usually through English-speaking interpreters] on rhe conditionality requirements of US loans [hence M^E-M'^E], which included lowered tariffs for US exports, domestic budgetary management, and the extension of extraterritorial guarantees against the confiscation of US capital and property (cf. Hilferding, 1981 [1910]: 322). In the early twentieth century, this practice, which had been adopted for some of the US debtor nations in Latin America, was extended to include China, Columbia, Chile, Poland, Germany, South Africa, Ecuador, Bolivia, Turkey, the Dominican Republic, Peru and Iran (Panitch & Gindin, 2012: 51). US conditionality

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The Russian Revolution of 1917 may have been a Russian affair, but the United States and Britain took the lead in making it an international one by militarily intervening on the side of the anti-Bolshevik [and therefore anti-socialist] 'White Army’. The US alone contributed 13,000 troops to the effort. Meanwhile, on the home front, its newspapers indulged in an orgy of propaganda concerning the threat that Bolshevik Russia posed to American civilization, setting a tone which was to continue almost uninterruptedly until the final collapse of the Soviet Union in 1991 (see Blum, 2014).

loans in the 1920s marked the beginnings of a uniquely American model for the economic structuring of the global economy. The loans, supported by the outward projection of US technical, corporate, military, religious, cultural and linguistic might, in addition to the requirement of adoption of the gold standard, contributed to the establishment of US global capital and communication networks [M^E-C^E-M'^E; M^E-M'^E] which after 1945 were principally structured through American English (Cain Sc Hopkins, 2013; Harvey, 2003; Lemberg, 2018; Panitch & Gindin, 2012; Phillipson, 2008, 2017; Rosenberg, 1982). These built upon the networks which had already been established in the pre-1914 era by the British [e.g. in East Asia, the Middle East and Latin America], or they forged them anew.

Hoping to take advantage of low borrowing rates in the surging US economy, US banks and private investors began calling in foreign loans, which created domestic liquidity problems for the rest of the world, leading to rapidly rising unemployment and recession in Europe, Latin America and East Asia. The Federal Reserve, in an attempt to reduce excessive domestic borrowing, then compounded the problems of its debtors by increasing US interest rates (Arrighi, 2010: 282). When in October 1929 reports started to come in of some domestic-based US banks having overstretched their loans, a wave of panic selling started which wiped out the New York exchange. In Europe and elsewhere, faced with capital flight on a colossal scale, affected nations were forced to introduce exchange controls in order to protect their currencies. The high US interest rates put enormous pressure on sterling and eventually forced Britain to devalue the pound by coming off gold in 1931. In the words of Arrighi, ‘The suspension of the British pound in September 1931 led to the final destruction of the single web of world commercial and financial transactions on which the fortunes of the City of London were based’ (2010: 282-283). With the abandonment of stable currencies, ‘world capitalism retreated into the igloos of its nation-state economies and their associated empires’ (Hobsbawm, 1991: 132, cited in Arrighi, ibid: 283).

With the abandonment of the British commitment to gold in 1931, the United States was determined not to follow suit with the dollar. This was despite heightened market speculation that a devaluation was imminent. The response of the Federal Reserve was to ratchet up interest rates in order to protect the dollar, but this only made the recession worse, both at home and abroad. Finally, in 1933, in a bid to end the market speculation and boost the domestic economy, the US government severed the parity of the dollar with gold, so allowing its value to fall, and for the rest of the decade the US turned inwards towards Congress-directed international isolation and Franklin D Roosevelt’s New Deal. The retreat of capital globally, particularly of the US and British kind, and the return of protectionism and exchange-rate instability were undoubtedly contributory factors in the confluence of circumstances which led to World War IL The tensions which arose in Europe due to the contraction in global liquidity were exacerbated as well as exploited by the turn to Nazism in Germany, which was itself a product of the calculated

The economy of global English, 1918-1979 109 vindictiveness of the economic and political settlement of 1919. In contrast, from the perspective of the global spread of English, US isolationism and the retreat of US capital after 1933 was not matched by the erasure of the anglophone linguistic networks which the dissemination of British and US capital had up to then made possible. This is because, as capital retreated, it left its imprint on the capitalist world-system in the communications networks it left behind. It was by means of these networks that English - as a ‘network good’ (Reksulak et al., 2004: 273) - had been able to flow [M^E-C^E-M'^E; M^E-M'^E]. English, in mostly British and American normative standard formats, had accompanied capital via trade, investment, treaties, communications technologies, extraterritorial arrangements and clientelism, as well as through institutional and sociocultural transfer, in the form of banks, business corporations, proselytizing religious groups, conscripted soldiers, ex-patriot communities and the service sectors which provided for them (Rosenberg, 1982; Bickers, 1998, 2010a). Although capital retreated with the severing of the pound’s and then the dollar’s links to gold, the networks through which capital had flowed remained and were strongly marked by the presence of English. As the post-1945 world unfolded, these networks would take on a renewed importance as the United States finally displaced Britain at the centre of the world-system. In respect of language, culture, capital accumulation and the projection of military power, the impact of the US on the worldsystem would be even more profound than that of Britain in the previous century. If the 1918-45 era was the incubus period for the rise of US capital and the political economy of global English ‘American-style’, the period after 1945 was to be the era of their opening into world domination.