Year 1961 - Part 9: The July Socialist Decrees and the Nationalization of Banks and the Five-Man Company

Friday, 21 July 1961: The Socialist Revolution

The system the United Arab Republic chose was one of cooperative socialism,

fighting monopoly and exploitation,

and greedy capital,

drawing the social classes closer together, rather than erasing class distinctions altogether,

taking workers by the hand and improving their conditions,

establishing a humane cooperation between national capital and labor, for the benefit of society as a whole,

and preserving individual property, within the bounds of its own social function.

When we agreed to the Union, we knew, as did the whole Syrian people, of these socialist leanings.

They are, without doubt, the philosophy of the Arab Socialist Baath Party,

and, to a great extent, though not entirely, the very principles the People's Party itself championed as well.

Building a cohesive society, free of class strife, was thus the goal we ourselves wanted for Syria, even before the Union.

I recall giving a public lecture in Aleppo in 1955 titled "Constitutional Socialism." By this term, criticized by some extremists at the time, I meant that we would work to build a socialist society through legislation, within the framework of the constitution's own principles, without violence or class struggle, matters neither our own generous national principles nor the political reality of the time, with the country braced for Israeli attacks, colonial conspiracies, and assaults from alliances that were none of our own affair, would ever have allowed.

When the Union state finally moved to enact legislation so long awaited, it surprised no one at all, except those who heard but never truly understood, and those who had turned a deaf ear to the cries of the needy and the oppressed, toiling masses.

Who said: this is our own country, and the poor are mere intruders upon it.

We inherited it from our fathers, and will pass it on to our own sons.

I bear witness that the political and social situation, just before the Union came about, threatened them with real, sweeping disaster. Social tension had, in those years, after the politicized officers had bared their fangs and shown their claws, reached such a boiling point that a mere radio bulletin announcing that Syria had become a "scientific socialist state" would have been enough to put their very lives, not merely their estates and factories, at the mercy of fate, subject to the whims of the men who held the sword.

For the verse of the sword erases the verse of the pen.

When I spoke with President Abdel Nasser, after these socialist laws were issued, about the shock they had caused among the capitalists and feudal landlords, he answered me, and he was right to, that the Union had saved their very lives, and life is worth more than money. They should not forget the dangers of the past.

I would like to present the Republic's own policy, in the words of its own president, who speaks in its name and charts its domestic, social, and international policy.

He does this only within the bounds of the provisional constitution, which the President published on 5 March 1958, after the people approved it in a general referendum.

Article 3 of this constitution states:

"Social solidarity is the foundation of society."

Article 4 states:

"The national economy shall be organized according to planned schemes, observing the principles of social justice, aiming to develop production and raise the standard of living."

Article 5 states:

"Private property is inviolable, and the law shall regulate the performance of its own social function."

This "social function" was not an invention of the provisional constitution's drafter, but borrowed from the Syrian constitution of 1950, whose Article 21, Paragraph 3, provided that "private property is inviolable, and the law shall determine how it is held and disposed of, such that it performs its own social function."

It is well known that the 1950 constitution leaned toward a cooperative-socialist direction, neither capitalist nor communist, providing for the establishment of "just social relations among citizens" (Article 22), "setting an upper limit on land ownership" (Article 22, Paragraph B), the necessity of "imposing taxes on a fair, progressive basis achieving the principles of equality and social justice" (Article 21), and the necessity of "the state's protection of labor, and granting the worker a wage commensurate with the quantity and quality of his work" (Article 26).

It provided for "every citizen's right to have the state guarantee him and his family in cases of emergency, illness, disability, orphanhood, old age, and involuntary unemployment" (Article 27).

On this basis, it is fair to say that President Abdel Nasser was no innovator, but rather a follower, though credit belongs to him for moving these principles from the world of paper and matter into the realm of practice, giving concrete form to socialist ideas in actual practice.

Before anything else, I would like to establish that Abdel Nasser, both during the Union and before it, never believed in, nor called for, class struggle, despite his own poor, rural upbringing, raised as he was in the bosom of his own village, among his fellow peasant children.

For he is, as I came to know him, a believer in God, and views citizens through the lens of equal rights, partners in the nation's own bounty, cooperating in both hardship and ease alike.

But he never forgets that within his own society, as in every society, there exists a disparity between social strata, one that existed in ancient times, exists now, and will continue to exist so long as there is life on this earth. He set out his own view of this in an address given on 12 November 1964, saying:

"Human conflict is a natural, essential, and permanent phenomenon. It is natural, because it is part of human nature itself, arising with the very birth of the human race, from the moment one brother (Cain) killed his own brother (Abel) at the very dawn of creation.

And conflict is a permanent phenomenon, representing the struggle between good and evil."

This human conflict exists in politics as well, and politics, in his own view, is "a permanent war between factions and classes (within the homeland), and between exploiting nations and exploited nations, for control over power and the sources of life."

He made this clear in an address given on 5 December 1957.

This conflict exists too in the social revolution, which is likewise a war and a struggle against internal exploitative domination, an ongoing process that can never simply stop.

Speaking still more plainly and clearly, he addressed the existence of this conflict within society, among its own strata with clashing interests, before the National Congress's preparatory committee on 25 November 1961, saying:

"Class struggle exists everywhere. It exists between those who labor with their own muscles and feel their work is rewarded with only a limited wage. Should he rise up demanding his own right, he is engaging in class struggle. And this struggle exists between those who inherited money and silver spoons, and those who inherited ignorance, disease, and poverty."

This was a doctrine he expressed his belief in many times over during the Union. In an address given on 17 August 1961, he defined class struggle as:

"The class contradictions arising from the dominant class's exploitation of the working class. God, glory be to Him, created people equal, and thereafter each individual receives according to his own effort and his own work within this society."

I would like to draw attention to this principle, for it stands in fundamental contradiction to the communist slogan demanding "from each according to his ability, to each according to his need."

Yet even while acknowledging that class conflict is woven into human nature and the very fabric of life, he never accepted violence as a means in the struggle to bring the classes closer together, seeking instead other, non-violent, bloodless means.

In an address given on 26 July 1957, he said:

"Through work, we can achieve this goal, and eliminate the vast disparities we have inherited, disparities that divide the sons of a single homeland from one another.

Cooperation between society's own classes, within a shared vision of the common good, such that no one class destroys another, is the path to achieving our own goals. We can never build the society we want through hatred and enmity. The only path to building a society of prosperity and happiness is the path of love and mutual support."

His own social philosophy, at least in the Union's early years, rested on the view that class conflict fragments the unity of the classes, since it is a mere phenomenon, not a function. This is what he said in his address dated 9 July 1960:

"Within the framework of a conscious national unity, the classes can interact and grow closer together, avoiding the otherwise inevitable, bloody conflict, so long as the vast disparities between them persist.

The mere establishment of the National Union does not, by itself, resolve the contradictions within our own society, for it is simply a framework of national unity, allowing these contradictions to find their own balance, and allowing clashing interests and conflicting views to find a meeting point, under the protection of national unity.

Our own belief has been that, within the framework of national unity, the classes can interact in a way that draws them closer together, and that the contradiction between them can narrow through peaceful means, free of confiscation or bloodshed."

He repeated this same statement on 26 August 1961:

"Our own method is to resolve the raging class struggle through peaceful means, by narrowing the disparities between the classes, not through violence and force."

Naturally, Abdel Nasser believed in equality among citizens, for once equality is achieved, democracy is achieved along with it, as he said on 3 March 1959.

Equality, for him, meant socialism, which he defined as "a society of justice and sufficiency." He expressed his own belief in this principle in an address given on 28 July 1959.

By equality, he meant equal opportunity for all people alike.

And so, a citizen's political freedom remains an illusory freedom, mere empty words, unless his own economic freedom is likewise secured, so that he is not bound, in his own political choices, by the will of his employer, and the pressure of material need.

But once he sensed that the Union state had become the target of a broad coalition, bringing together the Baathists, the communists, the capitalists, and those coveting great posts they neither deserved nor could ever reach, except under the weak political system they themselves had grown accustomed to, he decided to confront these rivals by stripping them of the very weapons they used to fight the Union.

And so he completed the removal of communist and Baathist elements from positions of decision-making or influence, and turned to confront capitalism on the field of the economy, having already fought the feudal landlords with the two famous laws, the Social Relations Law and the Agrarian Reform Law.

The President issued the socialist decision-laws of July 1961, which we present below.

Wednesday, 19 July

Presidential Decision Law No. 112, dated 19 July 1961, was issued, providing for the distribution of profits of joint-stock, limited partnership, general partnership, and limited liability companies, as follows:

75 percent distributed to shareholders

25 percent set aside for workers and employees

The workers' and employees' own share is distributed according to general rules set by a decision of the President of the Republic.

And so the first just social step was achieved on the path toward socialism.

Thursday the 20th: The Nationalization of Certain Companies

A Presidential Decision Law, No. 117, was issued today, providing for the nationalization of certain companies and establishments, summarized here:

"All banks and insurance companies in both regions of the Republic are nationalized, and likewise the companies and establishments set out in the attached schedule, their ownership passing to the state" (Article 1).

This provision covers:

The nationalization of fifteen banks operating in the Northern Region, the largest and most important of them the French "Bank of Syria and Lebanon," which performs the functions of a central bank, while also carrying out ordinary banking business.

Some of its own directors were dismissed, while others were kept on in their own posts, as chairmen of boards of directors or general managers.

Among those kept on in their own posts was Dr. Nazim al-Qudsi, general manager and chairman of the board of the Arab World Bank.

The nationalization of all insurance companies operating in the Northern Region, fifty-two of them foreign companies, fourteen Arab companies, and one Syrian company.

The nationalization of three Syrian companies:

The United Commercial and Industrial Company.

Known as the Five-Man Company, headquartered in Damascus.

This company is known to engage in political activity, backing well-known candidates who represent its own interests, pushing them into the Chamber of Deputies and the ministries to look after its own interests.

The most prominent of these was Dr. Mamoun al-Kuzbari.

The Shahba Spinning and Weaving Mills Company, headquartered in Aleppo.

It was nationalized to save it from bankruptcy, and to spare its workers and staff from being cast out of work.

The Arab Wood Industries Company, headquartered in Latakia.

It was suffering enormous financial difficulties, and was nationalized to save it likewise from bankruptcy, and to spare its own workers and staff from unemployment.

On this same day, Presidential Decision Law No. 118 was also issued, providing for state participation in a number of companies and establishments.

Article 1 provided that the companies listed in the annex, twelve companies in all, become joint-stock companies, with the state holding at least half their own capital.

The value of this capital is determined based on the share price set by committees of three members, formed by the executive Minister of Economy (Article 3).

The state pays for its own shares in these companies in registered state bonds, bearing 4 percent annual interest, for a period of fifteen years.

On this same day, Presidential Decision Law No. 119 was also issued, providing that no natural or legal person may own more than one hundred thousand Syrian lira in the companies named in the decision, with ownership of any amount exceeding this sum passing to the state.

The state pays for the value it takes ownership of in registered bonds, negotiable over a period of fifteen years, bearing annual interest of 4 percent.

The number of these companies in the Northern Region came to 11.

The companies' own owners were stunned, even though they had expected these measures, and had taken their own precautions against them. It became clear that many of them had already smuggled their money abroad, and had taken to operating on loans from the banks instead, banks that were, in turn, operating on the deposits of individuals with little real experience in commercial markets. We had all expected this ourselves, though not at such speed.

I say "expected," since I had no part at all in drafting these measures. The "military" ministers had traveled to Cairo a week earlier, and we then heard the texts read out over the radio.

That very day, I had guests invited to the Family Club in al-Qassaa, and, on the way, the driver turned on the radio, and we heard the news of these nationalizations.

Mr. As'ad al-Kourani was with me in the car, and expressed his own surprise that I had played no part in drafting them. I told him: I am the Minister of the Treasury, and these are economic laws, falling within the remit of the Minister of Economy, the former officer Akram Deiri.