Keracher looks at the difference between the commodities of ‘merchant capitalism’ and that of oil, in the era of imperialism, as THE capitalist commodity.

‘Oil is King’ by John Keracher from The Proletarian. Vol. 3 No. 3. December, 1920.

During the development of capitalism, certain groups of capitalists have dominated and certain commodities have assumed dominant importance. In the early days of the system it was the Merchant Capitalists that led their class. When machinery was invented and the modern industrial form of production developed, then the Industrial Capitalist held sway.

With further expansion, the need for access to large sums of ready money to swing enterprises speedily, gives the bankers great importance. Powerful banking institutions have made their appearance, controlled by the modern group of capitalists, the Finance Capitalists.

This latter group, because of the nature of their operations, and the vast amount of money-capital at their disposal, acquires a viewpoint that is not limited by national boundaries. Their “internationalism” has for its aim the exploitation of workers in any part of the world. The race, color, creed or nationality of the workers they exploit makes no difference to them as long as profits come pouring in.

In the old days of the Merchant Capitalist, their wealth was realized through the carrying trade. The products of the West were exchanged for those of the East. A continuous flow of trade went on between Europe and Asia. While this is still to a great extent the case, the chief source of their wealth today is the direct exploitation of labor in all parts of the world through the control of natural resources. Tea plantations in China and Ceylon, rubber plantations in Africa, gold and diamond fields, coal, iron, copper, and other minerals necessary to modern methods of social production, all contribute their share of profits to the modern capitalist-imperialist.

At different stages in the development of the capitalist system, certain individual commodities assume great importance. In the early days of this country, corn was the chief commodity, but with the extension of the cotton growing plantations, due to the many uses to which cotton could be put together with the invention of the cotton gin, then cotton became king.

The days of “king cotton” were the days of chattel slavery and the rule of the southern plantation aristocracy. The production of cotton, tobacco, sugar, and other commodities, through the exploitation of vast armies of chattel slaves, was then the chief mode of wealth production in the United States. The rise of the North just prior to the civil war, was the rise of the modern industrial form of production, which was given a great impetus by the invention of machinery. It was then that the products of the soil, no matter how important, had to give way before the great mineral products from the bowels of the earth, such as coal, iron, copper, etc.

The combination of coal for smelting and iron for the manufacture of steel brought on another important epoch in the development of capitalism, the period in which we are now living. From the close of the Civil War down to our time, steel has been the king of commodities. It has entered into the rails that girdle the earth with a network of railroads. It has furnished the chief building material for the modern battleship and the ocean liner, the framework of the modern skyscraper, bridges and mighty engineering undertakings of all descriptions, as well as that highly complex monster, the modern machinery of production. But to give life and action to this modern monster of steel, fuel must be fed into it in abundance. Coal has, until recently, been the only practical fuel, and in fact still forms the bulk of the fuel used in the capitalist world. A new mineral with properties that coal does not possess is rapidly forging to the front. A mineral that, the possession or non-possession of which in sufficient quantities, will decide the fate of nations, and perhaps of empires. This new fuel is oil.

The United States has the greatest oil resources, and it has been American capitalism that has introduced its uses into all parts of the world. The highly combustive properties of oil, discovered through improvements in refining, make it the speed-fuel par excellence. The automobile, aeroplane, and submarine, the fastest appliances in peace and war, are all oil-driven. The modern battleships are being converted into oil-burners, and it is only a matter of time until all ships, and perhaps railroad trains, will be driven by this wonderful product of the earth.

The future of this commodity, more than even its present extensive and important uses, is compelling the capitalist class of the world to struggle for its possession. The supremacy of the great powers is so dependent upon oil, that it is playing an important part at this time in the readjustment of world affairs.

The French and British, in dividing the spoils of the Great War, had to take oil resources into consideration. In their partition of Turkish territory they show conclusively that the control of oil is their chief consideration, if not the actual reason for being there in the first place. The British are trying to amalgamate into a subject state, three districts, Basra, Bagdad and Mosul. This latter district, the most important because of its oil resources, was at first conceded to the French, but by a later agreement it was turned over to Britain on condition that the French would get 25% of all oil in Mesopotamia.

That the British Government has long been aware of the importance of getting control of oil territories, is demonstrated by the manner in which they protect and dominate the oil combine of Great Britain. This combine is known as the Royal Dutch-Shell Combine, and has holdings in many parts of the world, such as at Sarawak (British India). Rumania, Egypt, United States, Venezuela, Trinidad, and Mexico. By bringing the different concerns together under one head it puts the British oil interests in a strong position. In the early part of 1914 the British government bought for the sum of £2,200,000 the controlling interest in the Anglo-Persian Oil Co. It appears that a Hollander named Deterding is the official head of this combine. The original business was carried on from The Hague, Holland, but was transferred to London. Deterding is now a British subject. The Royal Dutch-Shell Combine is the result of the amalgamation of the Shell Transport and Trading Co., of London, the Royal Dutch (formerly of Holland), the Anglo-Persian, and the Mexican Eagle Oil Co. (S. Pearson & Son of London).

It will be observed from the data already given that the British control is mostly in the nature of concessions outside of the Empire. In fact the British Empire has only two per cent of the world’s oil supply within its borders. The United States has nearly two-thirds under its control, sixty per cent being within the United States itself. The struggle is not confined to competition between these rival oil groups over the markets, but equally for development and extension of new fields.

In “The Independent” for September 25th, 1920, there is an article entitled “Planning for Tomorrow.” by Otis Smith, director of the United States Geological Survey, in which he shows that this country is no longer “independent.” “The great expansion of American industry today,” he says, “brings us face to face with an insatiable demand for raw materials that may exceed the domestic supply, for even the United States, most favored of nations in the abundance and variety of minerals, is not independent of other continents. The Federal Geologist in his investigation of raw material requirements of a war program was led far beyond our national boundaries and so it happens that as a by-product of its war work the Geological Survey has now in press a ‘World Atlas of Commercial Geology. This production in its original form was prepared for the Peace Conference and now planned for the desk of the business man as well as of the college student, will exhibit graphically the distribution of mineral wealth over the entire surface of the earth.

“No longer is it sufficient to know America only; the world view of the raw material situation is necessary if we are to build safe our industrial structure. Industrial strategy that plans future campaigns must provide at the front adequate supplies of both materials and energy. But to determine what will be adequate tomorrow is itself a major problem in statecraft. In a nation whose industrial progress is by leaps and bounds the look ahead must be a long one. Just now the American problem is both a fuel and a power problem–demand continues to increase faster than the supply.”

These opinions and remarks of the director of the United States Geological Survey are very significant. It amounts to an admission that this country has definitely abandoned its policy of “splendid isolation.”

The Geological Survey is part of the Department of the Interior. The name of that department, even, is now out of keeping with its functions as it appears to be a department that is confined no longer to the interior conditions of the United States.

Capitalism has long since gone into its imperial stage and the leading countries of the world are now dominated by its policy. Capitalist imperialism does not always have to conquer with armies. Money bribes and other means are used to control foreign resources and markets.

America’s international financiers of the Morgan type enter every field where there are prospects of profits. Friendly governments are supported, and unfriendly ones reached and won over by one means or another.

All in all, oil is playing a most important role. Mexico is supposed to have unlimited resources not yet tapped. Many of the political troubles there are the result of foreign capital reaching out for further control.

The Carranza government on January 31st, 1917, adopted a constitution, the main provisions of which called for heavy taxes on foreign companies and the development of the nation by the Mexican government itself. At that time “The Association of Oil Producers in Mexico” was formed, also the “Association for the Protection of American Rights in Mexico.” This latter title is almost humorous–American Rights in Mexico? J.P. Morgan was chairman of that “American Rights” bunch!

Well, Carranza is dead and a successor is in his place, friendly to foreign interests, and oil production will likely be uninterrupted for some time to come in Mexico.

More oil and still more oil will be the call and quest of capitalist powers from now on. The struggles, open and hidden, that are now going on for control of this combustive commodity may lead to an explosion that will put the World War in the shade. The complete control of all natural resources and means of production by society as a whole is the only solution.

The monthly organ of the Proletarian Party of America, The Proletarian originally served a left wing faction in the Socialist Party of Michigan led by John Keracher, and was printed in Detroit and Chicago from May, 1918 until July, 1931. The Proletarian Party then published Proletarian News, from 1932 until 1960. Part of the early Communist movement, the Proletarian University and the Proletarian refused to join with others in going underground after the Palmer Raids, though it eschewed electoral politics. The Proletarian Party attempted to gain admittance to the Third International to no avail. The Party eventually took over the left wing publishing house Charles H. Kerr & Co.

PDF of full issue: https://www.marxists.org/history/usa/parties/ppa/1920/1200-proletarian-v03n03-opt.pdf