Most Americans are still in the dark about the basic causes for this country's increasing world-wide involvement. During the late forties and the fifties, liberals pleaded with isolationist-minded Americans to back overseas arms and assistance program as the best defense against Communism. With the New Frontier, the Vietnam fiasco and the balance of payments crisis, liberal rhetoric shifted to warnings about the "arrogance of power" and "over commitment." Liberals, however, while fascinated by the effects of any phenomenon, remain blind to the causes; they have failed to offer a coherent, empirically-grounded explanation for our increasing world-wide, counter-revolutionary entanglement. For most radicals (i.e., people seeking root causes), any explanation of U.S. expansion begins with an analysis of our economy.
Since World War II, the dependence of the U.S. economy on overseas investments has steadily increased. Direct investments (outright U.S. holdings in plant and equipment) have skyrocketed from $5 billion to $55 billion between 1945 and the present. Between 1960 and 1965 alone, nearly 2,200 companies engaged in about 6,000 separate foreign activities-primarily construction of new plants and the expansion of existing operations.
Statistics for foreign sales by U.S. firms provide another indicator of increasing U.S. dependence on overseas operations. For example, in 1950, foreign sales totaled approximately $37 billion (13 percent of GNP). Domestically produced exports accounted for one-third of these sales; goods produced by U.S. subsidiaries abroad accounted for the other two-thirds. By 1964, foreign sales had climbed to $110 billion (18 percent of GNP), with only one-fifth supplied through exports. Twenty-two percent of total profits are presently derived from foreign sales-as compared with 10 percent in 1950. The larger corporations in several key industries are especially dependent on overseas markets and profits. Several leading U.S. firms (including Standard Oil of N.J., Colgate-Palmolive, Singer, National Cash Register, Texaco and Burroughs) are deriving more than half of their profits from foreign sales, much of it produced overseas; a long list of other giants (e.g., Eastman Kodak, Pfizer, Caterpillar Tractor, Corn Products, St. Joseph Lead, Minnesota Mining and Manufacturing, Goodyear and Coca-Cola) derive between 30 and 50 percent from these sales.
Not only the extent but the nature of U.S. foreign investment has changed in the last two decades. Prior to World War II, U.S. foreign investment focused mainly on raw material production for export to the United States. Since that time, there has been a shift in emphasis to investment in manufacturing. Thus, U.S. firms, instead of importing raw materials and then exporting the finished product, now produce and sell the finished goods abroad. Although U.S. investment in manufacturing is most concentrated in Canada and Western Europe, it is increasing at a rapid rate in the underdeveloped world.
The two major crises which plague the U.S. economy--the balance of payments deficit and urban deterioration-are in part direct consequences of this situation. U.S. overseas production has significantly contributed to balance of payments difficulties by reducing our net trade surplus and generating large-scale foreign military expenditures for investment protection. At the same time, domestic employment has narrowed and urban development has lagged while foreign "economic development" is prodded with heavy outlays of U.S. capital.
Furthermore, the expanding geographic scope makes foreign-oriented corporations multinational in character and thus immune to anti-trust legislation. These firms are still American in ownership and control and they identify their interests and objectives with those of our society and government. The initial contacts which laid the base for their current powerful influence over U.S. policy and administration were made during the Depression when they secured public works contracts and wartime subsidy programs that culminated in Cold War "defense" contracting.
Thus at the heart of U.S. foreign involvement lies private corporate expansion. Increasing reliance on foreign markets served by U.S. goods produced abroad, combined with the traditional need for strategic minerals and cheap agricultural products, is the central thrust behind our foreign (and domestic) policies-private and public. Whatever inhibits control over markets must be eliminated, peacefully at first, militarily if necessary. Since World War II, this policy has defined our national priorities, given rise to and justification for anti-communist (i.e., counter-revolutionary) programs, organized the function and structure of our institutions and dominated our political life. By not coming to grips with the nature and direction of U.S. corporate expansion, the liberal dooms this country to many Vietnams.
The industrial complex created by the famous late entrepreneur, Henry J. Kaiser, serves as an excellent example of how U.S. corporate development naturally leads to foreign expansion. The present extent of Kaiser operations, which started out as a very small West Coast road-building firm, is graphically illustrated in the accompanying map (page 3). This industrial empire now produces 300 products from 180 plants and projects in 32 states and 40 foreign countries (current assets: $2.7 billion). The firm got its first big break in the late twenties with a large road and bridge building project in Cuba. Kaiser then put together a consortium of six companies to build the federally-financed Hoover Dam in 1931. During the Depression, Kaiser went on to construct 1,000 projects totaling $383 million, including Bonneville and Grand Coulee Dems and the San Francisco Bay Bridge.
Upon the outbreak of World War II, many of these same companies went into shipbuilding; Kaiser's yards produced nearly one-third (1,490 vessels) of the entire merchant shipping fleet as well as 50 small aircraft carriers. To supply the needed steel, Mr. Kaiser proceeded to build the Pacific Coast's first completely integrated iron and steel plant--with a $112 million loan from the government.
All of this feverish federally-subsidized activity was predicated on political connections within the Democratic Party and close financial ties to the West Coast's all- powerful Bank of America (largest U.S. commercial bank). Both Kaiser and the Bank of America's head, A.P. Giannini, were instrumental in delivering the West Coast into FDR's hands. With the war's end, Kaiser pulled out of ship building and obtained control of government-built aluminum plants (in Louisiana and Washington) and a bomber plant (in Willow Run, Michigan). He converted the latter into an auto manufacturing outfit (Kaiser-Frazer) in 1946, but found it extremely difficult to compete with the Big Three without defense contracts. When the Democrats were defeated in 1952 and Kaiser's political connections dried up, he lost the military contracts and was forced to sell the auto plant to General Motors. By buying up Willys-Overland Motors, the leading manufacturer of jeeps with established South American operations and military contracts, Kaiser entered a non-competitive domestic market and transported the unused auto production machinery to new plants in Brazil and Argentina. Both of these were sold recently to Ford and Renault when these two giants moved into the South American market. With $145 million in military contracts (in 1967), the U.S. jeep plants are thereby preserved and Kaiser assembles autos in 34 foreign nations where competition is slack.
Things went better in the aluminum industry. As private and government demand increased, Kaiser naturally wanted to expand production. Lacking a large bauxite deposit, a primary requirement for profitable manufacture of finished aluminum, Kaiser purchased a large property in Jamaica in the late forties. He was thus able to create an integrated operation capable of competing domestically with the other large aluminum companies (ALCOA, Reynolds and Harvey). Currently, foreign aluminum operations are underway in 18 countries, including Argentina, rail, Ghana, South Africa, Spain and Thailand (see accompanying map).
In the engineering and construction field, Kaiser went the same overseas route as all the other firms in that industry which grew up on federal contracting during the Depression (e.g., Brown and Root, Morrison-Knudsen, Utah Mining and Construction and Bechtel Corporation). Kaiser's post-war activities including construction of military bases ($132 million's worth in 1967), building of U.S. corporate facilities overseas (i.e., electric stations, steel plants and oil refineries) and erection of its own cement plants in Guam, Okinawa and India. Kaiser also built the huge Volta River Dam in Ghana (getting mixed up in that country's internal politics in the process) and is now cooking up a deal to build "low-cost" homes (under $4,000 apiece) in Mexico.
Kaiser's steel operations have entered the international market on a grand scale with lucrative returns. By the early sixties, low-priced Japanese imports were flooding the Western market and Kaiser was unable to secure import restrictions from Washington. To get in on the action, Kaiser joined with England's Rio Tinto Zinc Corporation, Ltd., to develop the huge, newly discovered iron-ore deposits in the Hamersley range of Western Australia. The expanding Japanese steel industry needs ore and the Hemersley range will supply 150 million tons of iron ore and pellets, worth almost $1.3 billion, by 1980. In addition, Kaiser will soon start exporting more than 45 million tons of high-grade coking coal (a key ingredient in steel production) to Japan from a new coal mine in British Columbia.
At present, Kaiser derives over 30 percent of its earnings from foreign sales, but operations remain within tight control of the Kaiser family and related interests (see accompanying chart, page 5). The Kaiser family remains active through Henry's sons; most of the other directors are inside-company officers. The outside directors represent the Bank of America (because of its financial position in the firm and because of its national political power), the large San Francisco law firm of Thelen, Marrin, Johnson and Bridges (legal counsel for Kaiser interests-as well as another large international construction firm, Bechtel Corporation-and a source of political power on the local and national scene) and Rockefeller-Mellon financial interests (represented by George D. Woods of First Boston Corporation and formerly president of the World Bank, who was the crucial link to the Eisenhower administration for contracts and to the East Coast banking community for capital). During the Kennedy administration, Hickman Price, Jr., who was in the top management of Kaiser's auto operations from 194 5 to 1959 (head of their Brazilian subsidiary, 1956-59), was the Assistant Secretary for Domestic Affairs in the Department of Commerce, a convenient position for government influence on behalf of Kaiser.
In a recent interview (Forbes, April 15, 1968), the current president of Kaiser Industries, Eugene Trefethen, made it clear that "The main reason we became a global company was that the businesses Mr. Kaiser got us into were, by their very nature, global businesses."
U.S. corporate structure is increasingly worldwide in scope and this, more than any other single factor, accounts for U.S. counter-revolutionary involvement throughout the world. For U.S. corporate and financial interests and the government they control, revolution and independent national development are equated with exclusion of U.S. interests from the marketplace. Such exclusion is, for them, a threat to their very survival.
Reprinted by permission of FORBES Magazine Most of the documentation for this article was taken from the following sources: "Kaiser's Global Empire," Forbes, April 15, 1968, pp. 29-37.
Magdoff, Harry, "Economic Aspects of U.S. Imperialism," Monthly Review, November 1966, pp. 10-43.
Barber, Richard, "Big, Bigger, Biggest: American Business Goes Global," The New Republic, April 30, 1966, pp. 14-18.
