The Great Illusion
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Title: The Great Illusion
Author: Norman Angell
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The Great Illusion
The Great Illusion
A Study of the Relation of
Military Power
to
National Advantage
By
Norman Angell
_Fourth Revised and Enlarged Edition_
G.P. Putnam's Sons
New York and London
The Knickerbocker Press
COPYRIGHT, 1910, BY
G.P. PUTNAM'S SONS
COPYRIGHT, 1911, BY
G.P. PUTNAM'S SONS
COPYRIGHT, 1913, BY
G.P. PUTNAM'S SONS
FOREIGN EDITIONS OF THIS BOOK ARE NOW ON SALE IN THE FOLLOWING
COUNTRIES:
GREAT BRITAIN _William Heinemann_ _London_
_First published, November, 1909. Reprinted, April, 1910;
June, 1910_
_New Editions: November, 1910; January, 1911; April, 1911;
May, 1911; reprinted, May, 1911; July, 1911; November,
1911; January, 1912; April, 1912; September, 1912;
October, 1912; November, 1912_
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" (_Cheap Popular Edition_) _Nelson_ _Paris_
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The Knickerbocker Press, New York
PREFACE TO THE FOURTH AMERICAN EDITION
If this, the fourth American edition, is bulkier than its predecessors,
it is chiefly because the events of the last two years throw an
interesting light upon the bearing of the book's main thesis on actual
world problems. I have, therefore, added an appendix dealing with
certain criticisms based upon the nature of the first Balkan War, in the
course of which I attempt to show just how the principles elaborated
here have been working out in European politics.
That American interest in the problems here discussed is hardly less
vital than that of Europe I am even more persuaded than when the first
American edition of this book was issued in 1910. It is certain that
opinion in America will not be equipped for dealing with her own
problems arising out of her relations with the Spanish American states,
with Japan, with the Philippines, unless it has some fair understanding
of the principles with which this book deals. Its general interest even
goes farther than this: no great community like that of modern America
can remain indifferent to the drift of general opinion throughout the
world on matters wrapped up with issues so important as those of war and
peace.
That the tangible commercial and business interests of America are
involved in these European events is obvious from the very factors of
financial and commercial interdependence which form the basis of the
argument.
That the interests of Americans are inextricably, if indirectly, bound
up with those of Europe, has become increasingly clear as can be proved
by the barest investigation of the trend of political thought in this
country.
The thesis on its economic side is discussed in terms of the gravest
problem which now faces European statesmanship, but these terms are also
the living symbols of a principle of universal application, as true with
reference to American conditions as to European. If I have not
"localized" the discussion by using illustrations drawn from purely
American cases, it is because these problems have not at present, in the
United States, reached the acute stage that they have in Europe, and
illustrations drawn from the conditions of an actual and pressing
problem give to any discussion a reality which to some extent it might
lose if discussed on the basis of more supposititious cases.
It so happens, however, that in the more abstract section of the
discussion embraced in the second part, which I have termed the "Human
Nature of the Case," I have gone mainly to American authors for the
statement of cases based on those illusions with which the book deals.
For this edition I have thought it worth while thoroughly to revise the
whole of the book and to re-write the chapter on the payment of the
French Indemnity, in order to clear up a misunderstanding to which in
its first form it gave rise. Part III has also been re-written, in order
to meet the changed form of criticism which has resulted from the
discussion of this subject during the last year or two.
It is with very great regret that I have seen this book grow in bulk;
but as it constitutes the statement of a thesis still revolutionary, it
has to cover the whole ground of the discussion, sometimes in great
detail. I have, however, adopted an arrangement and method of
presentation by which, I trust, the increase in bulk will not render it
less clear. The general arrangement is as follows:
The Synopsis is a very brief indication of the scope of the whole
argument, which is not that war is impossible, but that it is
futile--useless, even when completely victorious, as a means of securing
those moral or material ends which represent the needs of modern
civilized peoples; and that on a general realization of this truth
depends the solution of the problem of armaments and warfare.
The general economic argument is summarized in Chapter III., Part I.
The moral, psychological, and biological argument is summarized in
Chapter II., Part II.
The practical outcome--what should be our policy with reference to
defence, why progress depends upon the improvement of public opinion and
the best general methods of securing that--is discussed in Part III.
This method of treatment has involved some small repetition of fact
and illustration, but the repetition is trifling in bulk--it does not
amount in all to the value of more than three or four pages--and I have
been more concerned to make the matter in hand clear to the reader than
to observe all the literary canons. I may add that, apart from this, the
process of condensation has been carried to its extreme limit for the
character of data dealt with, and that those who desire to understand
thoroughly the significance of the thesis with which the book deals--it
is worth understanding--had really better read every line of it!
One personal word may perhaps be excused as explaining certain
phraseology, which would seem to indicate that the author is of English
nationality. He happens to be of English birth, but to have passed his
youth and early manhood in the United States, having acquired American
citizenship there. This I hope entitles him to use the collective "we"
on both sides of the Atlantic. I may add that the last fifteen years
have been passed mainly in Europe studying at first hand the problems
here dealt with.
N.A.
LONDON, October, 1913.
PREFACE
The present volume is the outcome of a large pamphlet published in
Europe at the end of last year entitled _Europe's Optical Illusion_. The
interest that the pamphlet created and the character of the discussion
provoked throughout Europe persuaded me that its subject-matter was
worth fuller and more detailed treatment than then given it. Herewith
the result of that conviction. The thesis on its economic side is
discussed in the terms of the gravest problem which now faces European
statesmanship, but these terms are also the living symbols of a
principle of universal application, as true with reference to American
conditions as to European. If I have not "localized" the discussion by
using illustrations drawn from purely American cases, it is because
these problems have not at present in the United States reached the
acute stage that they have in Europe, and illustrations drawn from the
conditions of an actual and pressing problem give to any discussion a
reality which to some extent it might lose if discussed on the basis of
more suppositious cases.
It so happens, however, that in the more abstract section of the
discussion embraced in the second part, which I have termed the "Human
Nature of the Case," I have gone mainly to American authors for the
statement of cases based on those illusions with which the book deals.
N.A.
PARIS, August, 1910.
SYNOPSIS
What are the fundamental motives that explain the present rivalry of
armaments in Europe, notably the Anglo-German? Each nation pleads the
need for defence; but this implies that someone is likely to attack, and
has therefore a presumed interest in so doing. What are the motives
which each State thus fears its neighbors may obey?
They are based on the universal assumption that a nation, in order to
find outlets for expanding population and increasing industry, or simply
to ensure the best conditions possible for its people, is necessarily
pushed to territorial expansion and the exercise of political force
against others (German naval competition is assumed to be the expression
of the growing need of an expanding population for a larger place in the
world, a need which will find a realization in the conquest of English
Colonies or trade, unless these are defended); it is assumed, therefore,
that a nation's relative prosperity is broadly determined by its
political power; that nations being competing units, advantage, in the
last resort, goes to the possessor of preponderant military force, the
weaker going to the wall, as in the other forms of the struggle for
life.
The author challenges this whole doctrine. He attempts to show that it
belongs to a stage of development out of which we have passed; that the
commerce and industry of a people no longer depend upon the expansion of
its political frontiers; that a nation's political and economic
frontiers do not now necessarily coincide; that military power is
socially and economically futile, and can have no relation to the
prosperity of the people exercising it; that it is impossible for one
nation to seize by force the wealth or trade of another--to enrich
itself by subjugating, or imposing its will by force on another; that,
in short, war, even when victorious, can no longer achieve those aims
for which peoples strive.
He establishes this apparent paradox, in so far as the economic problem
is concerned, by showing that wealth in the economically civilized world
is founded upon credit and commercial contract (these being the
outgrowth of an economic interdependence due to the increasing division
of labor and greatly developed communication). If credit and commercial
contract are tampered with in an attempt at confiscation, the
credit-dependent wealth is undermined, and its collapse involves that of
the conqueror; so that if conquest is not to be self-injurious it must
respect the enemy's property, in which case it becomes economically
futile. Thus the wealth of conquered territory remains in the hands of
the population of such territory. When Germany annexed Alsatia, no
individual German secured a single mark's worth of Alsatian property as
the spoils of war. Conquest in the modern world is a process of
multiplying by _x_, and then obtaining the original figure by dividing
by _x_. For a modern nation to add to its territory no more adds to the
wealth of the people of such nation than it would add to the wealth of
Londoners if the City of London were to annex the county of Hertford.
The author also shows that international finance has become so
interdependent and so interwoven with trade and industry that the
intangibility of an enemy's property extends to his trade. It results
that political and military power can in reality do nothing for trade;
the individual merchants and manufacturers of small nations, exercising
no such power, compete successfully with those of the great. Swiss and
Belgian merchants drive English from the British Colonial market; Norway
has, relatively to population, a greater mercantile marine than Great
Britain; the public credit (as a rough-and-ready indication, among
others, of security and wealth) of small States possessing no political
power often stands higher than that of the Great Powers of Europe,
Belgian Three per Cents. standing at 96, and German at 82; Norwegian
Three and a Half per Cents. at 102, and Russian Three and a Half per
Cents. at 81.
The forces which have brought about the economic futility of military
power have also rendered it futile as a means of enforcing a nation's
moral ideals or imposing social institutions upon a conquered people.
Germany could not turn Canada or Australia into German colonies--_i.e._,
stamp out their language, law, literature, traditions, etc.--by
"capturing" them. The necessary security in their material possessions
enjoyed by the inhabitants of such conquered provinces, quick
inter-communication by a cheap press, widely-read literature, enable
even small communities to become articulate and effectively to defend
their special social or moral possessions, even when military conquest
has been complete. The fight for ideals can no longer take the form of
fight between nations, because the lines of division on moral questions
are within the nations themselves and intersect the political frontiers.
There is no modern State which is completely Catholic or Protestant, or
liberal or autocratic, or aristocratic or democratic, or socialist or
individualist; the moral and spiritual struggles of the modern world go
on between citizens of the same State in unconscious intellectual
co-operation with corresponding groups in other States, not between the
public powers of rival States.
This classification by strata involves necessarily a redirection of
human pugnacity, based rather on the rivalry of classes and interests
than on State divisions. War has no longer the justification that it
makes for the survival of the fittest; it involves the survival of the
less fit. The idea that the struggle between nations is a part of the
evolutionary law of man's advance involves a profound misreading of the
biological analogy.
The warlike nations do not inherit the earth; they represent the
decaying human element. The diminishing role of physical force in all
spheres of human activity carries with it profound psychological
modifications.
These tendencies, mainly the outcome of purely modern conditions (_e.g._
rapidity of communication), have rendered the problems of modern
international politics profoundly and essentially different from the
ancient; yet our ideas are still dominated by the principles and axioms,
images and terminology of the bygone days.
The author urges that these little-recognized facts may be utilized for
the solution of the armament difficulty on at present untried lines--by
such modification of opinion in Europe that much of the present motive
to aggression will cease to be operative, and by thus diminishing the
risk of attack, diminishing to the same extent the need for defence. He
shows how such a political reformation is within the scope of practical
politics, and the methods which should be employed to bring it about.
CONTENTS
PART I
THE ECONOMICS OF THE CASE
CHAPTER PAGE
I. STATEMENT OF THE ECONOMIC CASE FOR WAR 3
II. THE AXIOMS OF MODERN STATECRAFT 14
III. THE GREAT ILLUSION 28
IV. THE IMPOSSIBILITY OF CONFISCATION 50
V. FOREIGN TRADE AND MILITARY POWER 68
VI. THE INDEMNITY FUTILITY 88
VII. HOW COLONIES ARE OWNED 107
VIII. THE FIGHT FOR "THE PLACE IN THE SUN." 131
PART II
THE HUMAN NATURE AND MORALS OF THE CASE
I. THE PSYCHOLOGICAL CASE FOR WAR 155
II. THE PSYCHOLOGICAL CASE FOR PEACE 168
III. UNCHANGING HUMAN NATURE 198
IV. DO THE WARLIKE NATIONS INHERIT THE EARTH? 222
V. THE DIMINISHING FACTOR OF PHYSICAL FORCE:
PSYCHOLOGICAL RESULTS 261
VI. THE STATE AS A PERSON: A FALSE ANALOGY
AND ITS CONSEQUENCES 296
PART III
THE PRACTICAL OUTCOME
I. THE RELATION OF DEFENCE TO AGGRESSION 329
II. ARMAMENT, BUT NOT ALONE ARMAMENT 341
III. IS THE POLITICAL REFORMATION POSSIBLE? 353
IV. METHODS 368
APPENDIX ON RECENT EVENTS IN EUROPE 383
* * * * *
PART I
_THE ECONOMICS OF THE CASE_
CHAPTER I PAGES
STATEMENT OF THE ECONOMIC CASE FOR WAR
Where can the Anglo-German rivalry of armaments
end?--Why peace advocacy fails--Why it deserves
to fail--The attitude of the peace advocate--The
presumption that the prosperity of nations depends
upon their political power, and consequent
necessity of protection against aggression of
other nations who would diminish our power to
their advantage--These the universal axioms of
international politics 3-13
CHAPTER II
THE AXIOMS OF MODERN STATECRAFT
Are the foregoing axioms unchallengeable?--Some typical
statements of them--German dreams of conquest--Mr.
Frederic Harrison on results of defeat of British arms
and invasion of England--Forty millions starving 14-27
CHAPTER III
THE GREAT ILLUSION
These views founded on a gross and dangerous
misconception--What a German victory could and could not
accomplish--What an English victory could and could not
accomplish--The optical illusion of conquest--There can
be no transfer of wealth--The prosperity of the little
States in Europe--German Three per Cents. at 82 and
Belgian at 96--Russian Three and a Half per Cents. at
81, Norwegian at 102--What this really means--If Germany
annexed Holland, would any German benefit or any
Hollander?--The "cash value" of Alsace-Lorraine 28-49
CHAPTER IV
THE IMPOSSIBILITY OF CONFISCATION
Our present terminology of international politics an
historical survival--Wherein modern conditions differ
from ancient--The profound change effected by Division
of Labor--The delicate interdependence of international
finance--Attila and the Kaiser--What would happen if a
German invader looted the Bank of England--German trade
dependent upon English credit--Confiscation of an
enemy's property an economic impossibility under modern
conditions--Intangibility of a community's wealth 50-67
CHAPTER V
FOREIGN TRADE AND MILITARY POWER
Why trade cannot be destroyed or captured by a military
Power--What the processes of trade really are, and how a
navy affects them--_Dreadnoughts_ and business--While
_Dreadnoughts_ protect British trade from hypothetical
German warships, the real German merchant is carrying it
off, or the Swiss or the Belgian--The "commercial
aggression" of Switzerland--What lies at the bottom of
the futility of military conquest--Government brigandage
becomes as profitless as private brigandage--The real
basis of commercial honesty on the part of Government 68-87
CHAPTER VI
THE INDEMNITY FUTILITY
The real balance-sheet of the Franco-German War--Disregard
of Sir Robert Giffen's warning in interpreting the
figures--What really happened in France and Germany
during the decade following the war--Bismarck's
disillusionment--The necessary discount to be given an
indemnity--The bearing of the war and its result on
German prosperity and progress 88-106
CHAPTER VII
HOW COLONIES ARE OWNED
Why twentieth-century methods must differ from
eighteenth--The vagueness of our conceptions
of statecraft--How Colonies are "owned"--Some
little-recognized facts--Why foreigners could not
fight England for her self-governing Colonies--She
does not "own" them, since they are masters of their
own destiny--The paradox of conquest: England in a
worse position in regard to her own Colonies than in
regard to foreign nations--Her experience as the oldest
and most practised colonizer in history--Recent French
experience--Could Germany hope to do what England
cannot do 107-130
CHAPTER VIII
THE FIGHT FOR "THE PLACE IN THE SUN"
How Germany really expands--Where her real Colonies
are--How she exploits without conquest--What is the
difference between an army and a police force?--The
policing of the world--Germany's share of it in the
Near East 131-151
PART II
_THE HUMAN NATURE AND MORALS OF THE CASE_
CHAPTER I
THE PSYCHOLOGICAL CASE FOR WAR
The non-economic motives of war--Moral and
psychological--The importance of these pleas--English,
German, and American exponents--The biological plea 155-167
CHAPTER II
THE PSYCHOLOGICAL CASE FOR PEACE
The shifting ground of pro-war arguments--The narrowing
gulf between the material and moral ideals--The non-rational
causes of war--False biological analogies--The real law
of man's struggles: struggle with Nature, not with other
men--Outline sketch of man's advance and main operating
factor therein--The progress towards elimination of
physical force--Co-operation across frontiers and its
psychological result--Impossible to fix limits of
community--Such limits irresistibly expanding--Break-up
of State homogeneity--State limits no longer coinciding
with real conflicts between men 168-197
CHAPTER III
UNCHANGING HUMAN NATURE
The progress from cannibalism to Herbert Spencer--The
disappearance of religious oppression by
Government--Disappearance of the duel--The Crusaders
and the Holy Sepulchre--The wail of militarist writers
at man's drift away from militancy 198-221
CHAPTER IV
DO THE WARLIKE NATIONS INHERIT THE EARTH?
The confident dogmatism of militarist writers on this
subject--The facts--The lessons of Spanish America--How
conquest makes for the survival of the unfit--Spanish
method and English method in the New World--The virtues
of military training--The Dreyfus case--The threatened
Germanization of England--"The war which made Germany
great and Germans small" 222-260
CHAPTER V
THE DIMINISHING FACTOR OF PHYSICAL FORCE: PSYCHOLOGICAL RESULTS
Diminishing factor of physical force--Though diminishing,
physical force has always had an important role in human
affairs--What is underlying principle, determining
advantageous and disadvantageous use of physical
force?--Force that aids co-operation in accord with
law of man's advance: force that is exercised for
parasitism in conflict with such law and disadvantageous
for both parties--Historical process of the abandonment
of physical force--The Khan and the London
tradesman--Ancient Rome and modern Britain--The
sentimental defence of war as the purifier of human
life--The facts--The redirection of human pugnacity 261-295
CHAPTER VI
THE STATE AS A PERSON: A FALSE ANALOGY AND ITS CONSEQUENCES
Why aggression upon a State does not correspond to
aggression upon an individual--Our changing conception
of collective responsibility--Psychological progress in
this connection--Recent growth of factors breaking down
the homogeneous personality of States 296-325
PART III
_THE PRACTICAL OUTCOME_
CHAPTER I
THE RELATION OF DEFENCE TO AGGRESSION
Necessity for defence arises from the existence of a motive
for attack--Platitudes that everyone overlooks--To
attenuate the motive for aggression is to undertake a
work of defence 329-340
CHAPTER II
ARMAMENT, BUT NOT ALONE ARMAMENT
Not the facts, but men's belief about facts, shapes their
conduct--Solving a problem of two factors by ignoring
one--The fatal outcome of such a method--The German Navy
as a "luxury"--If both sides concentrate on armament
alone 341-352
CHAPTER III
IS THE POLITICAL REFORMATION POSSIBLE?
Men are little disposed to listen to reason, "therefore
we should not talk reason"--Are men's ideas immutable? 353-367
CHAPTER IV
METHODS
Relative failure of Hague Conferences and the cause--Public
opinion the necessary motive force of national action--That
opinion only stable if informed--"Friendship" between
nations and its limitations--America's role in the coming
"Political Reformation" 368-382
APPENDIX ON RECENT EVENTS IN EUROPE 383-406
INDEX 407-416
PART I
THE ECONOMICS OF THE CASE
CHAPTER I
STATEMENT OF THE ECONOMIC CASE FOR WAR
Where can the Anglo-German rivalry of armaments end?--Why peace
advocacy fails--Why it deserves to fail--The attitude of the peace
advocate--The presumption that the prosperity of nations depends
upon their political power, and consequent necessity of protection
against aggression of other nations who would diminish our power
to their advantage--These the universal axioms of international
politics.
It is generally admitted that the present rivalry in armaments in
Europe--notably such as that now in progress between England and
Germany--cannot go on in its present form indefinitely. The net result
of each side meeting the efforts of the other with similar efforts is
that at the end of a given period the relative position of each is what
it was originally, and the enormous sacrifices of both have gone for
nothing. If as between England and Germany it is claimed that England is
in a position to maintain the lead because she has the money, Germany
can retort that she is in a position to maintain the lead because she
has the population, which must, in the case of a highly organized
European nation, in the end mean money. Meanwhile, neither side can
yield to the other, as the one so doing would, it is felt, be placed at
the mercy of the other, a situation which neither will accept.
There are two current solutions which are offered as a means of egress
from this _impasse_. There is that of the smaller party, regarded in
both countries for the most part as one of dreamers and doctrinaires,
who hope to solve the problem by a resort to general disarmament, or, at
least, a limitation of armament by agreement. And there is that of the
larger, which is esteemed the more practical party, of those who are
persuaded that the present state of rivalry and recurrent irritation is
bound to culminate in an armed conflict, which, by definitely reducing
one or other of the parties to a position of manifest inferiority, will
settle the thing for at least some time, until after a longer or shorter
period a state of relative equilibrium is established, and the whole
process will be recommenced _da capo_.
This second solution is, on the whole, accepted as one of the laws of
life: one of the hard facts of existence which men of ordinary courage
take as all in the day's work. And in every country those favoring the
other solution are looked upon either as people who fail to realize the
hard facts of the world in which they live, or as people less concerned
with the security of their country than with upholding a somewhat
emasculate ideal; ready to weaken the defences of their own country on
no better assurance than that the prospective enemy will not be so
wicked as to attack them.
To this the virile man is apt to oppose the law of conflict. Most of
what the nineteenth century has taught us of the evolution of life on
the planet is pressed into the service of this struggle-for-life
philosophy. We are reminded of the survival of the fittest, that the
weakest go to the wall, and that all life, sentient and non-sentient, is
but a life of battle. The sacrifice involved in armament is the price
which nations pay for their safety and for their political power. The
power of England has been the main condition of her past industrial
success; her trade has been extensive and her merchants rich, because
she has been able to make her political and military force felt, and to
exercise her influence among all the nations of the world. If she has
dominated the commerce of the world, it is because her unconquered navy
has dominated, and continues to dominate, all the avenues of commerce.
This is the currently accepted argument.
The fact that Germany has of late come to the front as an industrial
nation, making giant strides in general prosperity and well-being, is
deemed also to be the result of _her_ military successes and the
increasing political power which she is coming to exercise in
Continental Europe. These things, alike in England and in Germany, are
accepted as the axioms of the problem, as the citations given in the
next chapter sufficiently prove. I am not aware that a single authority
of note, at least in the world of workaday politics, has ever challenged
or disputed them. Even those who have occupied prominent positions in
the propaganda of peace are at one with the veriest fire-eaters on this
point. Mr. W.T. Stead was one of the leaders of the big navy party in
England. Mr. Frederic Harrison, who all his life had been known as the
philosopher protagonist of peace, declared recently that, if England
allowed Germany to get ahead of her in the race for armaments, "famine,
social anarchy, incalculable chaos in the industrial and financial
world, would be the inevitable result. Britain may live on ... but
before she began to live freely again she would have to lose half her
population, which she could not feed, and all her overseas Empire, which
she could not defend.... How idle are fine words about retrenchment,
peace, and brotherhood, whilst we lie open to the risk of unutterable
ruin, to a deadly fight for national existence, to war in its most
destructive and cruel form." On the other side we have friendly critics
of England, like Professor von Schulze-Gaevernitz, writing: "We want our
[_i.e._ Germany's] navy in order to confine the commercial rivalry of
England within innocuous limits, and to deter the sober sense of the
English people from the extremely threatening thought of attack upon
us.... The German navy is a condition of our bare existence and
independence, like the daily bread on which we depend not only for
ourselves, but for our children."
Confronted by a situation of this sort, one is bound to feel that the
ordinary argument of the pacifist entirely breaks down; and it breaks
down for a very simple reason. He himself accepts the premise which has
just been indicated--viz., that the victorious party in the struggle for
political predominance gains some material advantage over the party
which is conquered. The proposition even to the pacifist seems so
self-evident that he makes no effort to combat it. He pleads his case
otherwise. "It cannot be denied, of course," says one peace advocate,
"that the thief _does_ secure some material advantage by his theft. What
we plead is that if the two parties were to devote to honest labor the
time and energy devoted to preying upon each other, the permanent gain
would more than offset the occasional booty."
Some pacifists go further, and take the ground that there is a conflict
between the natural law and the moral law, and that we must choose the
moral even to our hurt. Thus Mr. Edward Grubb writes:
Self-preservation is not the final law for nations any more
than for individuals.... The progress of humanity may demand
the extinction (in this world) of the individual, and it may
demand also the example and the inspiration of a martyr nation.
So long as the Divine providence has need of us, Christian
faith requires that we shall trust for our safety to the unseen
but real forces of right dealing, truthfulness, and love; but,
should the will of God demand it, we must be prepared, as
Jeremiah taught his nation long ago, to give up even our
national life for furthering those great ends "to which the
whole creation moves."
This may be "fanaticism," but, if so, it is the fanaticism of
Christ and of the prophets, and we are willing to take our
places along with them.[1]
The foregoing is really the keynote of much pacifist propaganda. In our
own day, Count Tolstoi has even expressed anger at the suggestion that
any reaction against militarism, on other than moral grounds, can be
efficacious.
The peace advocate pleads for "altruism" in international relationships,
and in so doing admits that successful war may be to the interest,
though the immoral interest, of the victorious party. That is why the
"inhumanity" of war bulks so largely in his propaganda, and why he
dwells so much upon its horrors and cruelties.
It thus results that the workaday world and those engaged in the rough
and tumble of practical politics have come to look upon the peace ideal
as a counsel of perfection, which may one day be attained when human
nature, as the common phrase is, has been improved out of existence, but
not while human nature remains what it is. While it remains possible to
seize a tangible advantage by a man's strong right arm the advantage
will be seized, and woe betide the man who cannot defend himself.
Nor is this philosophy of force either as conscienceless, as brutal, or
as ruthless as its common statement would make it appear. We know that
in the world as it exists to-day, in spheres other than those of
international rivalry, the race is to the strong, and the weak get
scant consideration. Industrialism and commercialism are as full of
cruelties as war itself--cruelties, indeed, that are longer drawn out,
more refined, though less apparent, and, it may be, appealing less to
the common imagination than those of war. With whatever reticence we may
put the philosophy into words, we all feel that conflict of interests in
this world is inevitable, and that what is an incident of our daily
lives should not be shirked as a condition of those occasional titanic
conflicts which mould the history of the world.
The virile man doubts whether he ought to be moved by the plea of the
"inhumanity" of war. The masculine mind accepts suffering, death itself,
as a risk which we are all prepared to run even in the most unheroic
forms of money-making; none of us refuses to use the railway train
because of the occasional smash, to travel because of the occasional
shipwreck, and so on. Indeed, peaceful industry demands a heavier toll
even in blood than does a war, fact which the casualty statistics in
railroading, fishing, mining and seamanship, eloquently attest; while
such peaceful industries as fishing and shipping are the cause of as
much brutality.[2] The peaceful administration of the tropics takes as
heavy a toll in the health and lives of good men, and much of it, as in
the West of Africa, involves, unhappily, a moral deterioration of human
character as great as that which can be put to the account of war.
Beside these peace sacrifices the "price of war" is trivial, and it is
felt that the trustees of a nation's interests ought not to shrink from
paying that price should the efficient protection of those interests
demand it. If the common man is prepared, as we know he is, to risk his
life in a dozen dangerous trades and professions for no object higher
than that of improving his position or increasing his income, why should
the statesman shrink from such sacrifices as the average war demands, if
thereby the great interests which have been confided to him can be
advanced? If it be true, as even the pacifist admits that it may be
true, that the tangible material interests of a nation can be advanced
by warfare; if, in other words, warfare can play some large part in the
protection of the interests of humanity, the rulers of a courageous
people are justified in disregarding the suffering and the sacrifice
that it may involve.
Of course, the pacifist falls back upon the moral plea: we have no
right to take by force. But here again the common sense of ordinary
humanity does not follow the peace advocate. If the individual
manufacturer is entitled to use all the advantages which great financial
and industrial resources may give him against a less powerful
competitor, if he is entitled, as under our present industrial scheme he
is entitled, to overcome competition by a costly and perfected
organization of manufacture, of advertisement, of salesmanship, in a
trade in which poorer men gain their livelihood, why should not the
nation be entitled to overcome the rivalry of other nations by utilizing
the force of its public services? It is a commonplace of industrial
competition that the "big man" takes advantage of _all_ the weaknesses
of the small man--his narrow means, his ill-health even--to undermine
and to undersell. If it were true that industrial competition were
always merciful, and national or political competition always cruel, the
plea of the peace man might be unanswerable; but we know, as a matter of
fact, that this is not the case, and, returning to our starting-point,
the common man feels that he is obliged to accept the world as he finds
it, that struggle and warfare, in one form or another, are among the
conditions of life, conditions which he did not make. Moreover he is not
at all sure that the warfare of arms is necessarily either the hardest
or the most cruel form of that struggle which exists throughout the
universe. In any case, he is willing to take the risks, because he feels
that military predominance gives him a real and tangible advantage, a
material advantage translatable into terms of general social well-being,
by enlarged commercial opportunities, wider markets, protection against
the aggression of commercial rivals, and so on. He faces the risk of war
in the same spirit as that in which a sailor or a fisherman faces the
risk of drowning, or a miner that of the choke damp, or a doctor that of
a fatal disease, because he would rather take the supreme risk than
accept for himself and his dependents a lower situation, a narrower and
meaner existence, with complete safety. He also asks whether the lower
path is altogether free from risks. If he knows much of life he knows
that in very many circumstances the bolder way is the safer way.
That is why it is that the peace propaganda has so signally failed, and
why the public opinion of the countries of Europe, far from restraining
the tendency of their Governments to increase armaments, is pushing them
into still greater expenditure. It is universally assumed that national
power means national wealth, national advantage; that expanding
territory means increased opportunity for industry; that the strong
nation can guarantee opportunities for its citizens that the weak nation
cannot. The Englishman, for instance, believes that his wealth is
largely the result of his political power, of his political domination,
mainly of his sea power; that Germany with her expanding population must
feel cramped; that she must fight for elbow-room; and that if he does
not defend himself he will illustrate that universal law which makes of
every stomach a graveyard. He has a natural preference for being the
diner rather than the dinner. As it is universally admitted that wealth
and prosperity and well-being go with strength and power and national
greatness, he intends, so long as he is able, to maintain that strength
and power and greatness, and not to yield it even in the name of
altruism. And he will not yield it, because should he do so it would be
simply to replace British power and greatness by the power and greatness
of some other nation, which he feels sure would do no more for the
well-being of civilization as a whole than he is prepared to do. He is
persuaded that he can no more yield in the competition of armaments,
than as a business man or as a manufacturer he could yield in commercial
competition to his rival; that he must fight out his salvation under
conditions as he finds them, since he did not make them, and since he
cannot change them.
Admitting his premises--and these premises are the universally accepted
axioms of international politics the world over--who shall say that he
is wrong?
CHAPTER II
THE AXIOMS OF MODERN STATECRAFT
Are the foregoing axioms unchallengeable?--Some typical statements
of them--German dreams of conquest--Mr. Frederic Harrison on
results of defeat of British arms and invasion of England--Forty
millions starving.
Are the axioms set out in the last chapter unchallengeable?
Is it true that the wealth, prosperity and well-being of a nation depend
upon its military power, or have necessarily anything whatever to do
therewith?
Can one civilized nation gain moral or material advantage by the
military conquest of another?
Does conquered territory add to the wealth of the conquering nation?
Is it possible for a nation to "own" the territory of another in the way
that a person or corporation would "own" an estate?
Could Germany "take" English trade and Colonies by military force?
Could she turn English Colonies into German ones, and win an overseas
empire by the sword, as England won hers in the past?
Does a modern nation need to expand its political boundaries in order
to provide for increasing population?
If England could conquer Germany to-morrow, completely conquer her,
reduce her nationality to so much dust, would the ordinary British
subject be the better for it?
If Germany could conquer England, would any ordinary German subject be
the better for it?
The fact that all these questions have to be answered in the negative,
and that a negative answer seems to outrage common sense, shows how much
our political axioms are in need of revision.
The literature on the subject leaves no doubt whatever that I have
correctly stated the premises of the matter in the foregoing chapter.
Those whose special vocation is the philosophy of statecraft in the
international field, from Aristotle and Plato, passing by Machiavelli
and Clausewitz down to Mr. Roosevelt and the German Emperor, have left
us in no doubt whatever on the point. The whole view has been admirably
summarized by two notable writers--Admiral Mahan, on the Anglo-Saxon
side, and Baron Karl von Stengel (second German delegate to the First
Hague Conference) on the German. Admiral Mahan says:
The old predatory instinct that he should take who has the
power survives ... and moral force is not sufficient to
determine issues unless supported by physical. Governments are
corporations, and corporations have no souls; governments,
moreover, are trustees, and as such must put first the lawful
interests of their wards--their own people.... More and more
Germany needs the assured importation of raw materials, and,
where possible, control of regions productive of such
materials. More and more she requires assured markets and
security as to the importation of food, since less and less
comparatively is produced within her own borders by her rapidly
increasing population. This all means security at sea.... Yet
the supremacy of Great Britain in European seas means a
perpetually latent control of German commerce.... The world has
long been accustomed to the idea of a predominant naval power,
coupling it with the name of Great Britain, and it has been
noted that such power, when achieved, is commonly often
associated with commercial and industrial predominance, the
struggle for which is now in progress between Great Britain and
Germany. Such predominance forces a nation to seek markets,
and, where possible, to control them to its own advantage by
preponderant force, the ultimate expression of which is
possession.... From this flow two results: the attempt to
possess and the organization of force by which to maintain
possession already achieved.... This statement is simply a
specific formulation of the general necessity stated; it is an
inevitable link in the chain of logical sequences--industrial
markets, control, navy bases....[3]
But in order to show that this is no special view, and that this
philosophy does indeed represent the general public opinion of Europe,
the opinion of the great mass which prompts the actions of Governments
and explains their respective policies, I take the following from the
current newspapers and reviews ready to my hand:
It is the prowess of our navy ... our dominant position
at sea ... which has built up the British Empire and its
commerce.--London _Times_ leading article.
Because her commerce is infinitely vulnerable, and because her
people are dependent upon that commerce for food and the wages
with which to buy it.... Britain wants a powerful fleet, a
perfect organization behind the fleet, and an army of defence.
Until they are provided this country will exist under perpetual
menace from the growing fleet of German _Dreadnoughts_, which
have made the North Sea their parade-ground. All security will
disappear, and British commerce and industry, when no man knows
what the morrow will bring forth, must rapidly decline, thus
accentuating British national degeneracy and decadence.--H.W.
Wilson in the _National Review_, May, 1909.
Sea-power is the last fact which stands between Germany and the
supreme position in international commerce. At present Germany
sends only some fifty million pounds worth, or about a seventh,
of her total domestic produce to the markets of the world
outside Europe and the United States.... Does any man who
understands the subject think there is any power in Germany,
or, indeed, any power in the world, which can prevent Germany,
she having thus accomplished the first stage of her work, from
now closing with Great Britain for her ultimate share of this
240 millions of overseas trade? Here it is that we unmask the
shadow which looms like a real presence behind all the moves of
present-day diplomacy, and behind all the colossal armaments
that indicate the present preparations for a new struggle for
sea-power.--Mr. Benjamin Kidd in the _Fortnightly Review_,
April 1, 1910.
It is idle to talk of "limitation of armaments" unless the
nations of the earth will unanimously consent to lay aside all
selfish ambitions.... Nations, like individuals, concern
themselves chiefly with their own interests, and when these
clash with those of others, quarrels are apt to follow. If the
aggrieved party is the weaker he usually goes to the wall,
though "right" be never so much on his side; and the stronger,
whether he be the aggressor or not, usually has his own way. In
international politics charity begins at home, and quite
properly; the duty of a statesman is to think first of the
interests of his own country.--_United Service Magazine_, May,
1909.
Why should Germany attack Britain? Because Germany and Britain
are commercial and political rivals; because Germany covets
the trade, the colonies, and the Empire which Britain now
possesses.--Robert Blatchford, "Germany and England," p. 4.
Great Britain, with her present population, exists by virtue of
her foreign trade and her control of the carrying trade of the
world; defeat in war would mean the transference of both to
other hands and consequent starvation for a large percentage of
the wage-earners.--T.G. Martin in the London _World_.
We offer an enormously rich prize if we are not able to defend
out shores; we may be perfectly certain that the prize which we
offer will go into the mouth of somebody powerful enough to
overcome our resistance and to swallow a considerable portion
of us up.--The Speaker of the House of Commons in a speech at
Greystoke, reported by the London _Times_.
What is good for the beehive is good for the bee. Whatever
brings rich lands, new ports, or wealthy industrial areas to a
State enriches its treasury, and therefore the nation at large,
and therefore the individual.--Mr. Douglas Owen in a letter to
the _Economist_, May 28, 1910.
Do not forget that in war there is no such thing as
international law, and that undefended wealth will be seized
wherever it is exposed, whether through the broken pane of a
jeweller's window or owing to the obsession of a humanitarian
Celt.--London _Referee_, November 14, 1909.
We appear to have forgotten the fundamental truth--confirmed by
all history--that the warlike races inherit the earth, and that
Nature decrees the survival of the fittest in the never-ending
struggle for existence.... Our yearning for disarmament, our
respect for the tender plant of Non-conformist conscience, and
the parrot-like repetition of the misleading formula that the
"greatest of all British interests is peace" ... must
inevitably give to any people who covet our wealth and our
possessions ... the ambition to strike a swift and deadly blow
at the heart of the Empire--undefended London.--_Blackwood's
Magazine_, May, 1909.
These are taken from English sources, but there is not a straw to choose
between them and other European opinion on the subject.
Admiral Mahan and the other Anglo-Saxons of his school have their
counterpart in every European country, but more especially in Germany.
Even so "Liberal" a statesman as Baron Karl von Stengel, the German
delegate to the First Hague Peace Conference, lays it down in his book
that--
Every great Power must employ its efforts towards exercising
the largest influence possible, not only in European but in
world politics, and this mainly because economic power depends
in the last resort on political power, and because the largest
participation possible in the trade of the world is a vital
question for every nation.
The writings of such classic authorities as Clausewitz give full
confirmation of this view, while it is the resounding note of most
popular German political literature that deals with "Weltpolitik." Grand
Admiral von Koster, President of the Navy League, writes:
The steady increase of our population compels us to devote
special attention to the growth of our overseas interests.
Nothing but the strong fulfilment of our naval programme can
create for us that importance upon the free-world-sea which it
is incumbent upon us to demand. The steady increase of our
population compels us to set ourselves new goals and to grow
from a Continental into a world power. Our mighty industry must
aspire to new overseas conquests. Our world trade--which has
more than doubled in twenty years, which has increased from
2500 million dollars to 4000 million dollars during the ten
years in which our naval programme was fixed, and 3000 million
dollars of which is sea-borne commerce--only can flourish if we
continue honorably to bear the burdens of our armaments on
land and sea alike. Unless our children are to accuse us of
short-sightedness, it is now our duty to secure our world power
and position among other nations. We can do that only under the
protection of a strong German fleet, a fleet which shall
guarantee us peace with honor for the distant future.
One popular German writer sees the possibility of "overthrowing the
British Empire" and "wiping it from the map of the world in less than
twenty-four hours." (I quote his actual words, and I have heard a
parallel utterance from the mouth of a serious English public man.) The
author in question, in order to show how the thing could come about,
deals with the matter prophetically. Writing from the standpoint of
1911,[4] he admits that--
At the beginning of the twentieth century Great Britain was a
free, a rich, and a happy country, in which every citizen, from
the Prime Minister to the dock-laborer, was proud to be a
member of the world-ruling nation. At the head of the State
were men possessing a general mandate to carry out their
programme of government, whose actions were subject to the
criticism of public opinion, represented by an independent
Press. Educated for centuries in self-government, a race had
grown up which seemed born to rule. The highest triumphs
attended England's skill in the art of government, in her
handling of subject peoples.... And this immense Empire, which
stretched from the Cape to Cairo, over the southern half of
Asia, over half of North America and the fifth continent, could
be wiped from the map of the world in less than twenty-four
hours! This apparently inexplicable fact will be intelligible
if we keep in sight the circumstances which rendered possible
the building up of England's colonial power. The true basis of
her world supremacy was not her own strength, but the maritime
weakness of all the other European nations. Their almost
complete lack of naval preparations had given the English a
position of monopoly which was used by them for the annexation
of all those dominions which seemed of value. Had it been in
England's power to keep the rest of the world as it was in the
nineteenth century, the British Empire might have continued for
an unlimited time. The awakening of the Continental States to
their national possibilities and to political independence
introduced quite new factors into Weltpolitik, and it was only
a question of time as to how long England could maintain her
position in the face of the changed circumstances.
And the writer tells how the trick was done, thanks to a fog, efficient
espionage, the bursting of the English war balloon, and the success of
the German one in dropping shells at the correct tactical moment on to
the British ships in the North Sea:
This war, which was decided by a naval battle lasting a single
hour, was of only three weeks' duration--hunger forced England
into peace. In her conditions Germany showed a wise moderation.
In addition to a war indemnity in accordance with the wealth of
the two conquered States, she contented herself with the
acquisition of the African Colonies, with the exception of the
southern States, which had proclaimed their independence, and
these possessions were divided with the other two powers of the
Triple Alliance. Nevertheless, this war was the end of England.
A lost battle had sufficed to manifest to the world at large
the feet of clay on which the dreaded Colossus had stood. In a
night the British Empire had crumbled altogether; the pillars
which English diplomacy had erected after years of labour had
failed at the first test.
A glance at any average Pan-Germanist organ will reveal immediately how
very nearly the foregoing corresponds to a somewhat prevalent type of
political aspiration in Germany. One Pan-Germanist writer says:
"The future of Germany demands the absorption of
Austria-Hungary, the Balkan States, and Turkey, with the North
Sea ports. Her realms will stretch towards the east from Berlin
to Bagdad, and to Antwerp on the west."
For the moment we are assured there is no immediate intention of seizing
the countries in question, nor is Germany's hand actually ready yet to
catch Belgium and Holland within the net of the Federated Empire.
"But," he says, "all these changes will happen within our epoch," and he
fixes the time when the map of Europe will thus be rearranged as from
twenty to thirty years hence.
Germany, according to the writer, means to fight while she has a penny
left and a man to carry arms, for she is, he says, "face to face with a
crisis which is more serious than even that of Jena."
And, recognizing the position, she is only waiting for the moment she
judges the right one to break in pieces those of her neighbors who work
against her.
France will be her first victim, and she will not wait to be attacked.
She is, indeed, preparing for the moment when the allied Powers attempt
to dictate to her.
Germany, it would seem, has already decided to annex the Grand Duchy of
Luxemburg, and Belgium, incidentally with, of course, Antwerp, and will
add all the northern provinces of France to her possessions, so as to
secure Boulogne and Calais.
All this is to come like a thunderbolt, and Russia, Spain, and the rest
of the Powers friendly to England will not dare to move a finger to aid
her. The possession of the coasts of France and Belgium will dispose of
England's supremacy for ever.
In a book on South Africa entitled "Reisen Erlebnisse und
Beobachtungen," by Dr. F. Bachmar, occurs the passage:
"My second object in writing this book is that it may happen to
our children's children to possess that beautiful and unhappy
land of whose final absorption (_gewinnung_) by our Anglo-Saxon
cousins I have not the least belief. It may be our lot to unite
this land with the German Fatherland, to be equally a blessing
to Germany and South Africa."
The necessity for armament is put in other than fictional form by so
serious a writer as Dr. Gaevernitz, Pro-Rector of the University of
Freiburg. Dr. Schulze-Gaevernitz is not unknown in England, nor is he
imbued with inimical feelings towards her. But he takes the view that
the commercial prosperity of Germany depends upon her political
domination.[5]
After having described in an impressive way the astonishing growth of
Germany's trade and commerce, and shown how dangerous a competitor
Germany has become for England, he returns to the old question, and asks
what might happen if England, unable to keep down the inconvenient
upstart by economic means, should, at the eleventh hour, try to knock
him down. Quotations from the _National Review_, the _Observer_, the
_Outlook_, the _Saturday Review_, etc., facilitate the professor's
thesis that this presumption is more than a mere abstract speculation.
Granted that they voice only the sentiments of a small minority, they
are, according to our author, dangerous for Germany in this--that they
point to a feasible and consequently enticing solution. The old peaceful
Free Trade, he says, shows signs of senility. A new and rising
Imperialism is everywhere inclined to throw the weapons of political
warfare into the arena of economic rivalry.
How deeply the danger is felt even by those who sincerely desire peace
and can in no sense be considered Jingoes may be judged by the following
from the pen of Mr. Frederic Harrison. I make no apology for giving the
quotations at some length. In a letter to the London _Times_ he says:
Whenever our Empire and maritime ascendancy are challenged it
will be by such an invasion in force as was once designed by
Philip and Parma, and again by Napoleon. It is this certainty
which compels me to modify the anti-militarist policy which I
have consistently maintained for forty years past.... To me now
it is no question of loss of prestige--no question of the
shrinkage of the Empire; it is our existence as a foremost
European Power, and even as a thriving nation.... If ever our
naval defence were broken through, our Navy overwhelmed or even
dispersed for a season, and a military occupation of our
arsenals, docks, and capital were effected, the ruin would be
such as modern history cannot parallel. It would not be the
Empire, but Britain, that would be destroyed.... The occupation
by a foreign invader of our arsenals, docks, cities, and
capital would be to the Empire what the bursting of the boilers
would be to a _Dreadnought_. Capital would disappear with the
destruction of credit.... A catastrophe so appalling cannot be
left to chance, even if the probabilities against its occurring
were 50 to 1. But the odds are not 50 to 1. No high authority
ventures to assert that a successful invasion of our country is
absolutely impossible if it were assisted by extraordinary
conditions. And a successful invasion would mean to us the
total collapse of our Empire, our trade, and, with trade, the
means of feeding forty millions in these islands. If it is
asked, "Why does invasion threaten more terrible consequences
to us than it does to our neighbors?" the answer is that the
British Empire is an anomalous structure, without any real
parallel in modern history, except in the history of Portugal,
Venice, and Holland, and in ancient history Athens and
Carthage. Our Empire presents special conditions both for
attack and for destruction. And its destruction by an enemy
seated on the Thames would have consequences so awful to
contemplate that it cannot be left to be safeguarded by one
sole line of defence, however good, and for the present hour
however adequate.... For more than forty years I have raised my
voice against every form of aggression, of Imperial expansion,
and Continental militarism. Few men have more earnestly
protested against postponing social reforms and the well-being
of the people to Imperial conquests and Asiatic and African
adventures. I do not go back on a word that I have uttered
thereon. But how hollow is all talk about industrial
reorganization until we have secured our country against a
catastrophe that would involve untold destitution and misery on
the people in the mass--which would paralyze industry and raise
food to famine prices, whilst closing our factories and our
yards!
CHAPTER III
THE GREAT ILLUSION
These views founded on a gross and dangerous misconception--What
a German victory could and could not accomplish--What an English
victory could and could not accomplish--The optical illusion of
conquest--There can be no transfer of wealth--The prosperity of the
little States in Europe--German Three per Cents. at 82 and Belgian
at 96--Russian Three and a Half per Cents. at 81, Norwegian at
102--What this really means--If Germany annexed Holland, would
any German benefit or any Hollander?--The "cash value" of
Alsace-Lorraine.
I think it will be admitted that there is not much chance of
misunderstanding the general idea embodied in the passage quoted at the
end of the last chapter. Mr. Harrison is especially definite. At the
risk of "damnable iteration" I would again recall the fact that he is
merely expressing one of the universally accepted axioms of European
politics, namely, that a nation's financial and industrial stability,
its security in commercial activity--in short, its prosperity and well
being depend, upon its being able to defend itself against the
aggression of other nations, who will, if they are able, be tempted to
commit such aggression because in so doing they will increase their
power, prosperity and well-being, at the cost of the weaker and
vanquished.
I have quoted, it is true, largely journalistic authorities because I
desired to indicate real public opinion, not merely scholarly opinion.
But Mr. Harrison has the support of other scholars of all sorts. Thus
Mr. Spenser Wilkinson, Chichele Professor of Military History at Oxford,
and a deservedly respected authority on the subject, confirms in almost
every point in his various writings the opinions that I have quoted, and
gives emphatic confirmation to all that Mr. Frederic Harrison has
expressed. In his book, "Britain at Bay," Professor Wilkinson says: "No
one thought when in 1888 the American observer, Captain Mahan, published
his volume on the influence of sea-power upon history, that other
nations beside the British read from that book the lesson that victory
at sea carried with it a prosperity and influence and a greatness
obtainable by no other means."
Well, it is the object of these pages to show that this all but
universal idea, of which Mr. Harrison's letter is a particularly vivid
expression, is a gross and desperately dangerous misconception,
partaking at times of the nature of an optical illusion, at times of the
nature of a superstition--a misconception not only gross and universal,
but so profoundly mischievous as to misdirect an immense part of the
energies of mankind, and to misdirect them to such degree that unless we
liberate ourselves from this superstition civilization itself will be
threatened.
And one of the most extraordinary features of this whole question is
that the absolute demonstration of the falsity of this idea, the
complete exposure of the illusion which gives it birth, is neither
abstruse nor difficult. This demonstration does not repose upon any
elaborately constructed theorem, but upon the simple exposition of the
political facts of Europe as they exist to-day. These facts, which are
incontrovertible, and which I shall elaborate presently, may be summed
up in a few simple propositions stated thus:
1. An extent of devastation, even approximating to that which Mr.
Harrison foreshadows as the result of the conquest of Great Britain,
could only be inflicted by an invader as a means of punishment costly to
himself, or as the result of an unselfish and expensive desire to
inflict misery for the mere joy of inflicting it. Since trade depends
upon the existence of natural wealth and a population capable of working
it, an invader cannot "utterly destroy it," except by destroying the
population, which is not practicable. If he could destroy the population
he would thereby destroy his own market, actual or potential, which
would be commercially suicidal.[6]
2. If an invasion of Great Britain by Germany did involve, as Mr.
Harrison and those who think with him say it would, the "total collapse
of the Empire, our trade, and the means of feeding forty millions in
these islands ... the disturbance of capital and destruction of
credit," German capital would also be disturbed, because of the
internationalization and delicate interdependence of our credit-built
finance and industry, and German credit would also collapse, and the
only means of restoring it would be for Germany to put an end to the
chaos in England by putting an end to the condition which had produced
it. Moreover, because of this delicate interdependence of our
credit-built finance, the confiscation by an invader of private
property, whether stocks, shares, ships, mines, or anything more
valuable than jewellery or furniture--anything, in short, which is bound
up with the economic life of the people--would so react upon the finance
of the invader's country as to make the damage to the invader resulting
from the confiscation exceed in value the property confiscated. So that
Germany's success in conquest would be a demonstration of the complete
economic futility of conquest.
3. For allied reasons, in our day the exaction of tribute from a
conquered people has become an economic impossibility; the exaction of a
large indemnity so costly directly and indirectly as to be an extremely
disadvantageous financial operation.
4. It is a physical and economic impossibility to capture the external
or carrying trade of another nation by military conquest. Large navies
are impotent to create trade for the nations owning them, and can do
nothing to "confine the commercial rivalry" of other nations. Nor can a
conqueror destroy the competition of a conquered nation by annexation;
his competitors would still compete with him--_i.e._, if Germany
conquered Holland, German merchants would still have to meet the
competition of Dutch merchants, and on keener terms than originally,
because the Dutch merchants would then be within the German's customs
lines; the notion that the trade competition of rivals can be disposed
of by conquering those rivals being one of the illustrations of the
curious optical illusion which lies behind the misconception dominating
this subject.
5. The wealth, prosperity, and well-being of a nation depend in no way
upon its political power; otherwise we should find the commercial
prosperity and social well-being of the smaller nations, which exercise
no political power, manifestly below that of the great nations which
control Europe, whereas this is not the case. The populations of States
like Switzerland, Holland, Belgium, Denmark, Sweden, are in every way as
prosperous as the citizens of States like Germany, Russia, Austria, and
France. The wealth _per capita_ of the small nations is in many cases in
excess of that of the great nations. Not only the question of the
security of small States, which, it might be urged, is due to treaties
of neutrality, is here involved, but the question of whether political
power can be turned in a positive sense to economic advantage.
6. No other nation could gain any advantage by the conquest of the
British Colonies, and Great Britain could not suffer material damage by
their loss, however much such loss would be regretted on sentimental
grounds, and as rendering less easy a certain useful social co-operation
between kindred peoples. The use, indeed, of the word "loss" is
misleading. Great Britain does not "own" her Colonies. They are, in
fact, independent nations in alliance with the Mother Country, to whom
they are no source of tribute or economic profit (except as foreign
nations are a source of profit), their economic relations being settled,
not by the Mother Country, but by the Colonies. Economically, England
would gain by their formal separation, since she would be relieved of
the cost of their defence. Their "loss" involving, therefore, no change
in economic fact (beyond saving the Mother Country the cost of their
defence), could not involve the ruin of the Empire, and the starvation
of the Mother Country, as those who commonly treat of such a contingency
are apt to aver. As England is not able to exact tribute or economic
advantage, it is inconceivable that any other country, necessarily less
experienced in colonial management, would be able to succeed where
England had failed, especially in view of the past history of the
Spanish, Portuguese, French, and British Colonial Empires. This history
also demonstrates that the position of British Crown Colonies, in the
respect which we are considering, is not sensibly different from that of
the self-governing ones. It is _not_ to be presumed, therefore, that any
European nation, realizing the facts, would attempt the desperately
expensive business of the conquest of England for the purpose of making
an experiment which all colonial history shows to be doomed to failure.
The foregoing propositions traverse sufficiently the ground covered in
the series of those typical statements of policy, both English and
German, from which I have quoted. The simple statement of these
propositions, based as they are upon the self-evident facts of
present-day European politics, sufficiently exposes the nature of those
political axioms which I have quoted. But as men even of the calibre of
Mr. Harrison normally disregard these self-evident facts, it is
necessary to elaborate them at somewhat greater length.
For the purpose of presenting a due parallel to the statement of policy
embodied in the quotations made from the London _Times_ and Mr. Harrison
and others, I have divided the propositions which I desire to
demonstrate into seven clauses, but such a division is quite arbitrary,
and made only in order to bring about the parallel in question. The
whole seven can be put into one, as follows: That as the only possible
policy in our day for a conqueror to pursue is to leave the wealth of a
territory in the complete possession of the individuals inhabiting that
territory, it is a logical fallacy and an optical illusion to regard a
nation as increasing its wealth when it increases its territory; because
when a province or State is annexed, the population, who are the real
and only owners of the wealth therein, are also annexed, and the
conqueror gets nothing. The facts of modern history abundantly
demonstrate this. When Germany annexed Schleswig-Holstein and Alsatia
not a single ordinary German citizen was one _pfennig_ the richer.
Although England "owns" Canada, the English merchant is driven out of
the Canadian markets by the merchant of Switzerland, who does not "own"
Canada. Even where territory is not formally annexed, the conqueror is
unable to take the wealth of a conquered territory, owing to the
delicate interdependence of the financial world (an outcome of our
credit and banking systems), which makes the financial and industrial
security of the victor dependent upon financial and industrial security
in all considerable civilized centres; so that widespread confiscation
or destruction of trade and commerce in a conquered territory would
react disastrously upon the conqueror. The conqueror is thus reduced to
economic impotence, which means that political and military power is
economically futile--that is to say, can do nothing for the trade and
well-being of the individuals exercising such power. Conversely, armies
and navies cannot destroy the trade of rivals, nor can they capture it.
The great nations of Europe do not destroy the trade of the small
nations for their own benefit, because they cannot; and the Dutch
citizen, whose Government possesses no military power, is just as well
off as the German citizen, whose Government possesses an army of two
million men, and a great deal better off than the Russian, whose
Government possesses an army of something like four million. Thus, as a
rough-and-ready though incomplete indication of the relative wealth and
security of the respective States, the Three per Cents. of powerless
Belgium are quoted at 96, and the Three per Cents. of powerful Germany
at 82; the Three and a Half per Cents. of the Russian Empire, with its
hundred and twenty million souls and its four million army, are quoted
at 81, while the Three and a Half per Cents. of Norway, which has not an
army at all (or any that need be considered in this discussion), are
quoted at 102. All of which carries with it the paradox that the more a
nation's wealth is militarily protected the less secure does it
become.[7]
The late Lord Salisbury, speaking to a delegation of business men, made
this notable observation: The conduct of men of affairs acting
individually in their business capacity differs radically in its
principles and application from the conduct of the same men when they
act collectively in political affairs. And one of the most astonishing
things in politics is the little trouble business men take to bring
their political creed into keeping with their daily behavior; how
little, indeed, they realize the political implication of their daily
work. It is a case, indeed, of the forest and the trees.
But for some such phenomenon we certainly should not see the
contradiction between the daily practice of the business world and the
prevailing political philosophy, which the security of property in, and
the high prosperity of, the smaller States involves. We are told by all
the political experts that great navies and great armies are necessary
to protect our wealth against the aggression of powerful neighbors,
whose cupidity and voracity can be controlled by force alone; that
treaties avail nothing, and that in international politics might makes
right, that military and commercial security are identical, that
armaments are justified by the necessity of commercial security; that
our navy is an "insurance," and that a country without military power
with which their diplomats can "bargain" in the Council of Europe is at
a hopeless disadvantage economically. Yet when the investor, studying
the question in its purely financial and material aspect, has to decide
between the great States, with all their imposing paraphernalia of
colossal armies and fabulously costly navies, and the little States,
possessing relatively no military power whatever, he plumps solidly, and
with what is in the circumstances a tremendous difference, in favor of
the small and helpless. For a difference of twenty points, which we find
as between Norwegian and Russian, and fourteen as between Belgian and
German securities, is the difference between a safe and a speculative
one--the difference between an American railroad bond in time of
profound security and in time of widespread panic. And what is true of
the Government funds is true, in an only slightly less degree, of the
industrial securities in the national comparison just drawn.
Is it a sort of altruism or quixotism which thus impels the capitalists
of Europe to conclude that the public funds and investments of powerless
Holland and Sweden (any day at the mercy of their big neighbors) are 10
to 20 per cent. safer than those of the greatest Power of Continental
Europe. The question is, of course, absurd. The only consideration of
the financier is profit and security, and he has decided that the funds
of the undefended nation are more secure than the funds of one defended
by colossal armaments. How does he arrive at this decision, unless it be
through his knowledge as a financier, which, of course, he exercises
without reference to the political implication of his decision, that
modern wealth requires no defence, because it cannot be confiscated?
If Mr. Harrison is right; if, as he implies, a nation's commerce, its
very industrial existence, would disappear if it allowed neighbors who
envied it that commerce to become its superiors in armaments, and to
exercise political weight in the world, how does he explain the fact
that the great Powers of the Continent are flanked by little nations far
weaker than themselves having nearly always a commercial development
equal to, and in most cases greater than theirs? If the common
doctrines be true, the financiers would not invest a dollar in the
territories of the undefended nations, and yet, far from that being the
case, they consider that a Swiss or a Dutch investment is more secure
than a German one; that industrial undertakings in a country like
Switzerland defended by an army of a few thousand men, are preferable in
point of security to enterprises backed by two millions of the most
perfectly trained soldiers in the world. The attitude of European
finance in this matter is the absolute condemnation of the view commonly
taken by the statesman. If a country's trade were really at the mercy of
the first successful invader; if armies and navies were really necessary
for the protection and promotion of trade, the small countries would be
in a hopelessly inferior position, and could only exist on the
sufferance of what we are told are unscrupulous aggressors. And yet
Norway has relatively to population a greater carrying trade than Great
Britain,[8] and Dutch, Swiss, and Belgian merchants compete in all the
markets of the world successfully with those of Germany and France.
The prosperity of the small States is thus a fact which proves a good
deal more than that wealth can be secure without armaments. We have seen
that the exponents of the orthodox statecraft--notably such authorities
as Admiral Mahan--plead that armaments are a necessary part of the
industrial struggle, that they are used as a means of exacting economic
advantage for a nation which would be impossible without them. "The
logical sequence," we are told, is "markets, control, navy, bases." The
nation without political and military power is, we are assured, at a
hopeless disadvantage economically and industrially.[9]
Well, the relative economic situation of the small States gives the lie
to this profound philosophy. It is seen to be just learned nonsense when
we realize that all the might of Russia or Germany cannot secure for the
individual citizen better general economic conditions than those
prevalent in the little States. The citizens of Switzerland, Belgium, or
Holland, countries without "control," or navy, or bases, or "weight in
the councils of Europe," or the "prestige of a great Power," are just as
well off as Germans, and a great deal better off than Austrians or
Russians.
Thus, even if it could be argued that the security of the small States
is due to the various treaties guaranteeing their neutrality, it cannot
be argued that those treaties give them the political power and
"control" and "weight in the councils of the nations" which Admiral
Mahan and the other exponents of the orthodox statecraft assure us are
such necessary factors in national prosperity.
I want, with all possible emphasis, to indicate the limits of the
argument that I am trying to enforce. That argument is not that the
facts just cited show armaments or the absence of them to be the sole
or even the determining factor in national wealth. It does show that
the security of wealth is due to other things than armaments; that
absence of political and military power is on the one hand no obstacle
to, and on the other hand no guarantee of, prosperity; that the mere
size of the administrative area has no relation to the wealth of those
inhabiting it.
Those who argue that the security of the small States is due to the
international treaties protecting their neutrality are precisely those
who argue that treaty rights are things that can never give security!
Thus one British military writer says:
The principle practically acted on by statesmen, though, of
course, not openly admitted, is that frankly enunciated by
Machiavelli: "A prudent ruler ought not to keep faith when by
so doing it would be against his interests, and when the
reasons which made him bind himself no longer exist." Prince
Bismarck said practically the same thing, only not quite so
nakedly. The European waste-paper basket is the place to which
all treaties eventually find their way, and a thing which can
any day be placed in a waste-paper basket is a poor thing on
which to hang our national safety. Yet there are plenty of
people in this country who quote treaties to us as if we could
depend on their never being torn up. Very plausible and very
dangerous people they are--idealists too good and innocent for
a hard, cruel world, where force is the chief law. Yet there
are some such innocent people in Parliament even at present. It
is to be hoped that we shall see none of them there in
future.[10]
Major Murray is right to this extent: the militarist view, the view of
those who "believe in war," and defend it even on moral grounds as a
thing without which men would be "sordid," supports this philosophy of
force, which flourishes in the atmosphere which the militarist regimen
engenders.
But the militarist view involves a serious dilemma. If the security of a
nation's wealth can only be assured by force, and treaty rights are mere
waste paper, how can we explain the evident security of the wealth of
States possessing relatively no force? By the mutual jealousies of those
guaranteeing their neutrality? Then that mutual jealousy could equally
well guarantee the security of any one of the larger States against the
rest. Another Englishman, Mr. Farrer, has put the case thus:
If that recent agreement between England, Germany, France,
Denmark, and Holland can so effectively relieve Denmark and
Holland from the fear of invasion that Denmark can seriously
consider the actual abolition of her army and navy, it seems
only one further step to go, for all the Powers collectively,
great and small, to guarantee the territorial independence of
each one of them severally.
In either case, the plea of the militarist stands condemned: national
safety can be secured by means other than military force.
But the real truth involves a distinction which is essential to the
right understanding of this phenomenon: the political security of the
small States is _not_ assured; no man would take heavy odds on Holland
being able to maintain complete political independence if Germany cared
seriously to threaten it. But Holland's economic security _is_ assured.
Every financier in Europe knows that if Germany conquered Holland or
Belgium to-morrow, she would have to leave their wealth untouched; there
could be no confiscation. And that is why the stocks of the lesser
States, not in reality threatened by confiscation, yet relieved in part
at least of the charge of armaments, stand fifteen to twenty points
higher than those of the military States. Belgium, politically, might
disappear to-morrow; her wealth would remain practically unchanged.
Yet, by one of those curious contradictions we are frequently meeting in
the development of ideas, while a fact like this is at least
subconsciously recognized by those whom it concerns, the necessary
corollary of it--the positive form of the merely negative truth that a
community's wealth cannot be stolen--is not recognized. We admit that a
people's wealth must remain unaffected by conquest, and yet we are quite
prepared to urge that we can enrich ourselves by conquering them! But if
we must leave their wealth alone, how can we take it?
I do not speak merely of "loot." It is evident, even on cursory
examination, that no real advantage of any kind is achieved for the mass
of one people by the conquest of another. Yet that end is set up in
European politics as desirable beyond all others. Here, for instance,
are the Pan-Germanists of Germany. This party has set before itself the
object of grouping into one great Power all the peoples of the Germanic
race or language in Europe. Were this aim achieved, Germany would become
the dominating Power of the Continent, and might become the dominating
Power of the world. And according to the commonly accepted view, such an
achievement would, from the point of view of Germany, be worth any
sacrifice that Germans could make. It would be an object so great, so
desirable, that German citizens should not hesitate for an instant to
give everything, life itself, in its accomplishment. Very good. Let us
assume that at the cost of great sacrifice, the greatest sacrifice which
it is possible to imagine a modern civilized nation making, this has
been accomplished, and that Belgium and Holland and Germany, Switzerland
and Austria, have all become part of the great German hegemony: _is
there one ordinary German citizen who would be able to say that his
well-being had been increased by such a change_? Germany would then
"own" Holland. _But would a single German citizen be the richer for the
ownership?_ The Hollander, from having been the citizen of a small and
insignificant State, would become the citizen of a very great one.
_Would the individual Hollander be any the richer or any the better?_ We
know that, as a matter of fact, neither the German nor the Hollander
would be one whit the better; and we know also, as a matter of fact,
that in all probability they would be a great deal the worse. We may,
indeed, say that the Hollander would be certainly the worse, in that he
would have exchanged the relatively light taxation and light military
service of Holland for the much heavier taxation and the much longer
military service of the "great" German Empire.
The following, which appeared in the London _Daily Mail_ in reply to an
article in that paper, throws some further light on the points
elaborated in this chapter. The _Daily Mail_ critic had placed
Alsace-Lorraine as an asset in the German conquest worth $330,000,000
"cash value," and added: "If Alsace-Lorraine had remained French, it
would have yielded, at the present rate of French taxation, a revenue of
$40,000,000 a year to the State. That revenue is lost to France, and is
placed at the disposal of Germany."
To which I replied:
Thus, if we take the interest of the "cash value" at the
present price of money in Germany, Alsace-Lorraine should be
worth to the Germans about $15,000,000 a year. If we take the
other figure, $40,000,000. Suppose we split the difference, and
take, say, 20. Now, if the Germans are enriched by 20 millions
a year--if Alsace-Lorraine is really worth that income to the
German people--how much should the English people draw from
their "possessions"? On the basis of population, somewhere in
the region of $5,000,000,000; on the basis of area, still
more--enough not only to pay all English taxes, wipe out the
National Debt, support the army and navy, but give every family
in the land a fat income into the bargain. There is evidently
something wrong.
Does not my critic really see that this whole notion of
national possessions benefiting the individual is founded on
mystification, upon an illusion? Germany conquered France and
annexed Alsace-Lorraine. The "Germans" consequently "own" it,
and enrich themselves with this newly acquired wealth. That is
my critic's view, as it is the view of most European statesmen;
and it is all false. Alsace-Lorraine is owned by its
inhabitants, and nobody else; and Germany, with all her
ruthlessness, has not been able to dispossess them, as is
proved by the fact that the matricular contribution
(_matrikularbeitrag_) of the newly acquired State to the
Imperial treasury (which incidentally is neither 15 millions
nor 40, but just over five) is fixed on exactly the same scale
as that of the other States of the Empire. Prussia, the
conqueror, pays _per capita_ just as much as and no less than
Alsace, the conquered, who, if she were not paying this
$5,600,000 to Germany, would be paying it--or, according to my
critic, a much larger sum--to France; and if Germany did not
"own" Alsace-Lorraine, she would be relieved of charges that
amount not to five but many more millions. The change of
"ownership" does not therefore of itself change the money
position (which is what we are now discussing) of either owner
or owned.
In examining, in the last article on this matter, my critic's
balance-sheet, I remarked that were his figures as complete as
they are absurdly incomplete and misleading, I should still
have been unimpressed. We all know that very marvellous results
are possible with figures; but one can generally find some
simple fact which puts them to the supreme test without undue
mathematics. I do not know whether it has ever happened to my
critic, as it has happened to me, while watching the gambling
in the casino of a Continental watering resort, to have a
financial genius present weird columns of figures, which
demonstrate conclusively, irrefragably, that by the system
which they embody one can break the bank and win a million. I
have never examined these figures, and never shall, for this
reason: the genius in question is prepared to sell his
wonderful secret for twenty francs. Now, in the face of that
fact I am not interested in his figures. If they were worth
examination they would not be for sale.
And so in this matter there are certain test facts which upset
the adroitest statistical legerdemain. Though, really, the
fallacy which regards an addition of territory as an addition
of wealth to the "owning" nation is a very much simpler matter
than the fallacies lying behind gambling systems, which are
bound up with the laws of chance and the law of averages and
much else that philosophers will quarrel about till the end of
time. It requires an exceptional mathematical brain to refute
those fallacies, whereas the one we are dealing with is due
simply to the difficulty experienced by most of us in carrying
in our heads two facts at the same time. It is so much easier
to seize on one fact and forget the other. Thus we realize that
when Germany has conquered Alsace-Lorraine she has "captured" a
province worth, "cash value," in my critic's phrase,
$330,000,000. What we overlook is that Germany has also
captured the people who own the property and who continue to
own it. We have multiplied by _x_, it is true, but we have
overlooked the fact that we have had to divide by _x_, and that
the result is consequently, so far as the individual is
concerned, exactly what it was before. My critic remembered the
multiplication all right, but he forgot the division. Let us
apply the test fact. If a great country benefits every time it
annexes a province, and her people are the richer for the
widened territory, the small nations ought to be immeasurably
poorer than the great, instead of which, by every test which
you like to apply--public credit, amounts in savings banks,
standard of living, social progress, general
well-being--citizens of small States are, other things being
equal, as well off as, or better off than, the citizens of
great States. The citizens of countries like Holland, Belgium,
Denmark, Sweden, Norway are, by every possible test, just as
well off as the citizens of countries like Germany, Austria, or
Russia. These are the facts which are so much more potent than
any theory. If it is true that a country benefits by the
acquisition of territory, and widened territory means general
well-being, why do the facts so eternally deny it? There is
something wrong with the theory.
In every civilized State, revenues which are drawn from a
territory are expended on that territory, and there is no
process known to modern government by which wealth may first be
drawn from a territory into the treasury and then be
redistributed with a profit to the individuals who have
contributed it, or to others. It would be just as reasonable to
say that the citizens of London are richer than the citizens of
Birmingham because London has a richer treasury; or that
Londoners would become richer if the London County Council were
to annex the county of Hertford; as to say that people's wealth
varies according to the size of the administrative area which
they inhabit. The whole thing is, as I have called it, an
optical illusion, due to the hypnotism of an obsolete
terminology. Just as poverty may be greater in the large city
than in the small one, and taxation heavier, so the citizens of
a great State may be poorer than the citizens of a small one,
as they very often are. Modern government is mainly, and tends
to become entirely, a matter of administration. A mere
jugglery with the administrative entities, the absorption of
small States into large ones, or the breaking up of large
States into small, is not of itself going to affect the matter
one way or the other.
CHAPTER IV
THE IMPOSSIBILITY OF CONFISCATION
Our present terminology of international politics an historical
survival--Wherein modern conditions differ from ancient--The
profound change effected by Division of Labor--The delicate
interdependence of international finance--Attila and the
Kaiser--What would happen if a German invader looted the Bank of
England--German trade dependent upon English credit--Confiscation
of an enemy's property an economic impossibility under modern
conditions--Intangibility of a community's wealth.
During the Victorian Jubilee procession an English beggar was heard to
say:
I own Australia, Canada, New Zealand, India, Burmah, and the
Islands of the Far Pacific; and I am starving for want of a
crust of bread. I am a citizen of the greatest Power of the
modern world, and all people should bow to my greatness. And
yesterday I cringed for alms to a negro savage, who repulsed me
with disgust.
What is the meaning of this?
The meaning is that, as very frequently happens in the history of ideas,
our terminology is a survival of conditions no longer existing, and our
mental conceptions follow at the tail of our vocabulary. International
politics are still dominated by terms applicable to conditions which the
processes of modern life have altogether abolished.
In the Roman times--indeed, in all the ancient world--it may have been
true that the conquest of a territory meant a tangible advantage to the
conqueror; it meant the exploitation of the conquered territory by the
conquering State itself, to the advantage of that State and its
citizens. It not infrequently meant the enslavement of the conquered
people and the acquisition of wealth in the form of slaves as a direct
result of the conquering war. In mediaeval times a war of conquest meant
at least immediate tangible booty in the shape of movable property,
actual gold and silver, land parcelled out among the chiefs of the
conquering nation, as it was at the Norman Conquest, and so forth.
At a later period conquest at least involved an advantage to the
reigning house of the conquering nation, and it was mainly the squabbles
of rival sovereigns for prestige and power which produced the wars of
many centuries.
At a still later period, civilization, as a whole--not necessarily the
conquering nation--gained (sometimes) by the conquest of savage peoples,
in that order was substituted for disorder. In the period of the
colonization of newly-discovered land, the preemption of territory by
one particular nation secured an advantage for the citizens of that
nation, in that its overflowing population found homes in conditions
preferable socially, or politically, to the conditions imposed by alien
nations. _But none of these considerations applies to the problem with
which we are dealing._ We are concerned with the case of fully civilized
rival nations in fully occupied territory or with civilizations so
firmly set that conquest could not sensibly modify their character, and
the fact of conquering such territory gives to the conqueror no material
advantage which he could not have had without conquest. And in these
conditions--the realities of the political world as we find it
to-day--"domination," or "predominance of armament," or the "command of
the sea," can do nothing for commerce and industry or general
well-being: England may build fifty _Dreadnoughts_ and not sell so much
as a penknife the more in consequence. She might conquer Germany
to-morrow, and she would find that she could not make a single
Englishman a shilling's worth the richer in consequence, the war
indemnity notwithstanding.
How have conditions so changed that terms which were applicable to the
ancient world--in one sense at least to the mediaeval world, and in
another sense still to the world of that political renaissance which
gave to Great Britain its Empire--are no longer applicable in _any_
sense to the conditions of the world as we find them to-day? How has it
become impossible for one nation to take by conquest the wealth of
another for the benefit of the people of the conqueror? How is it that
we are confronted by the absurdity (which the facts of the British
Empire go to prove) of the conquering people being able to exact from
conquered territory rather less than more advantage than it was able to
do before the conquest took place?
I am not at this stage going to pass in review all the factors that have
contributed to this change, because it will suffice for the
demonstration upon which I am now engaged to call attention to a
phenomenon which is the outcome of all those factors and which is
undeniable, and that is, the financial interdependence of the modern
world. But I will forecast here what belongs more properly to a later
stage of this work, and will give just a hint of the forces which are
the result mainly of one great fact--the division of labor intensified
by facility of communication.
When the division of labor was so little developed that every homestead
produced all that it needed, it mattered nothing if part of the
community was cut off from the world for weeks and months at a time. All
the neighbors of a village or homestead might be slain or harassed, and
no inconvenience resulted. But if to-day an English county is by a
general railroad strike cut off for so much as forty-eight hours from
the rest of the economic organism, we know that whole sections of its
population are threatened with famine. If in the time of the Danes,
England could by some magic have killed all foreigners, she would
presumably have been the better off. If she could do the same thing
to-day, half her population would starve to death. If on one side of the
frontier a community is, say, wheat-producing, and on the other
coal-producing, each is dependent for its very existence, on the fact of
the other being able to carry on its labor. The miner cannot in a week
set to and grow a crop of wheat; the farmer must wait for his wheat to
grow, and must meantime feed his family and dependents. The exchange
involved here must go on, and each party have fair expectation that he
will in due course be able to reap the fruits of his labor, or both must
starve; and that exchange, that expectation, is merely the expression in
its simplest form of commerce and credit; and the interdependence here
indicated has, by the countless developments of rapid communication,
reached such a condition of complexity that the interference with any
given operation affects not merely the parties directly involved, but
numberless others having at first sight no connection therewith.
The vital interdependence here indicated, cutting athwart frontiers, is
largely the work of the last forty years; and it has, during that time,
so developed as to have set up a financial interdependence of the
capitals of the world, so complex that disturbance in New York involves
financial and commercial disturbance in London, and, if sufficiently
grave, compels financiers of London to co-operate with those of New York
to put an end to the crisis, not as a matter of altruism, but as a
matter of commercial self-protection. The complexity of modern finance
makes New York dependent on London, London upon Paris, Paris upon
Berlin, to a greater degree than has ever yet been the case in history.
This interdependence is the result of the daily use of those
contrivances of civilization which date from yesterday--the rapid post,
the instantaneous dissemination of financial and commercial information
by means of telegraphy, and generally the incredible increase in the
rapidity of communication which has put the half-dozen chief capitals of
Christendom in closer contact financially, and has rendered them more
dependent the one upon the other than were the chief cities of Great
Britain less than a hundred years ago.
A well-known French authority, writing recently in a financial
publication, makes this reflection:
The very rapid development of industry has given rise to the
active intervention therein of finance, which has become its
_nervus rerum_, and has come to play a dominating role. Under
the influence of finance, industry is beginning to lose its
exclusively national character to take on a character more and
more international. The animosity of rival nationalities seems
to be in process of attenuation as the result of this
increasing international solidarity. This solidarity was
manifested in a striking fashion in the last industrial and
monetary crisis. This crisis, which appeared in its most
serious form in the United States and Germany, far from being
any profit to rival nations, has been injurious to them. The
nations competing with America and Germany, such as England and
France, have suffered only less than the countries directly
affected. It must not be forgotten that, quite apart from the
financial interests involved, directly or indirectly, in the
industry of other countries, every producing country is at one
and the same time, as well as being a competitor and a rival, a
client and a market. Financial and commercial solidarity is
increasing every day at the expense of commercial and
industrial competition. This was certainly one of the principal
causes which a year or two ago prevented the outbreak of war
between Germany and France _a propos_ of Morocco, and which led
to the understanding of Algeciras. There can be no doubt, for
those who have studied the question, that the influence of this
international economic solidarity is increasing despite
ourselves. It has not resulted from conscious action on the
part of any of us, and it certainly cannot be arrested by any
conscious action on our part.[11]
A fiery patriot sent to a London paper the following letter:
When the German army is looting the cellars of the Bank of
England, and carrying off the foundations of our whole national
fortune, perhaps the twaddlers who are now screaming about the
wastefulness of building four more _Dreadnoughts_ will
understand why sane men are regarding this opposition as
treasonable nonsense.
What would be the result of such an action on the part of a German army
in London? The first effect, of course, would be that, as the Bank of
England is the banker of all other banks, there would be a run on every
bank in England, and all would suspend payment. But London being the
clearing-house of the world, bills drawn thereon but held by foreigners
would not be met; they would be valueless; the loanable value of money
in other centres would be enormously raised, and instruments of credit
enormously depreciated; prices of all kinds of stocks would fall, and
holders would be threatened by ruin and insolvency. German finance would
represent a condition as chaotic as that of England. Whatever advantage
German credit might gain by holding England's gold it would certainly be
more than offset by the fact that it was the ruthless action of the
German Government that had produced the general catastrophe. A country
that could sack bank reserves would be a good one for foreign investors
to avoid: the essential of credit is confidence, and those who repudiate
it pay dearly for their action. The German Generalissimo in London might
be no more civilized than Attila himself, but he would soon find the
difference between himself and Attila. Attila, luckily for him, did not
have to worry about a bank rate and such-like complications; but the
German General, while trying to sack the Bank of England, would find
that his own balance in the Bank of Germany would have vanished into
thin air, and the value of even the best of his investments dwindled as
though by a miracle; and that for the sake of loot, amounting to a few
sovereigns apiece among his soldiery, he would have sacrificed the
greater part of his own personal fortune. It is as certain as anything
can be that, were the German army guilty of such economic vandalism,
there is no considerable institution in Germany that would escape grave
damage--a damage in credit and security so serious as to constitute a
loss immensely greater[12] than the value of the loot obtained. It is
not putting the case too strongly to say that for every pound taken from
the Bank of England German trade would pay many times over. The
influence of the whole finance of Germany would be brought to bear on
the German Government to put an end to a situation ruinous to German
trade, and German finance would only be saved from utter collapse by an
undertaking on the part of the German Government scrupulously to respect
private property, and especially bank reserves. It is true the German
Jingoes might wonder what they had made war for, and this elementary
lesson in international finance would do more than the greatness of the
British navy to cool their blood. For it is a fact in human nature that
men will fight more readily than they will pay, and that they will take
personal risks much more readily than they will disgorge money, or, for
that matter, earn it. "Man," in the language of Bacon, "loves danger
better than travail."
Events which are still fresh in the memory of business men show the
extraordinary interdependence of the modern financial world. A financial
crisis in New York sends up the English bank rate to 7 per cent., thus
involving the ruin of many English businesses which might otherwise have
weathered a difficult period. It thus happens that one section of the
financial world is, against its will, compelled to come to the rescue
of any other considerable section which may be in distress.
From a modern and delightfully lucid treatise on international
finance,[13] I take the following very suggestive passages:
Banking in all countries hangs together so closely that the
strength of the best may easily be that of the weakest if
scandal arises owing to the mistakes of the worst.... Just as a
man cycling down a crowded street depends for his life not only
on his skill, but more on the course of the traffic there....
Banks in Berlin were obliged, from motives of self-protection
(on the occasion of the Wall Street crisis), to let some of
their gold go to assuage the American craving for it.... If the
crisis became so severe that London had to restrict its
facilities in this respect, other centres, which habitually
keep balances in London which they regard as so much gold,
because a draft on London is as good as gold, would find
themselves very seriously inconvenienced; and it thus follows
that it is to the interest of all other centres which trade on
those facilities which London alone gives to take care that
London's task is not made too difficult. This is especially so
in the case of foreigners, who keep a balance in London which
is borrowed. In fact, London drew in the gold required for New
York from seventeen other countries....
Incidentally it may be mentioned in this connection that German commerce
is in a special sense interested in the maintenance of English credit.
The authority just quoted says:
It is even contended that the rapid expansion of German trade,
which pushed itself largely by its elasticity and adaptability
to the wishes of its customers, could never have been achieved
if it had not been assisted by the large credit furnished in
London.... No one can quarrel with the Germans for making use
of the credit we offered for the expansion of the German trade,
although their over-extension of credit facilities has had
results which fall on others besides themselves....
Let us hope that our German friends are duly grateful, and let
us avoid the mistake of supposing that we have done ourselves
any permanent harm by giving this assistance. It is to the
economic interests of humanity at large that production should
be stimulated, and the economic interest of humanity at large
is the interest of England, with its mighty world-wide trade.
Germany has quickened production with the help of English
credit, and so has every other economically civilized country
in the world. It is a fact that all of them, including our own
colonies, develop their resources with the help of British
capital and credit, and then do their utmost to keep out our
productions by means of tariffs, which make it appear to
superficial observers that England provides capital for the
destruction of its own business. But in practice the system
works quite otherwise, for all these countries that develop
their resources with our money aim at developing an export
trade and selling goods to us, and as they have not yet reached
the point of economic altruism at which they are prepared to
sell goods for nothing, the increase in their production means
an increasing demand for our commodities and our services. And
in the meantime the interest on our capital and credit, and the
profits of working the machinery of exchange, are a comfortable
addition to our national income.
But what is a further corollary of this situation? It is that Germany is
to-day in a larger sense than she ever was before England's debtor, and
that her industrial success is bound up with English financial security.
What would be the situation in Britain, therefore, on the morrow of a
conflict in which that country was successful?
I have seen mentioned the possibility of the conquest and annexation of
the free port of Hamburg by a victorious British fleet. Let us assume
that the British Government has done this, and is proceeding to turn the
annexed and confiscated property to account.
Now, the property was originally of two kinds: part was private
property, and part was German Government, or rather Hamburg Government,
property. The income of the latter was earmarked for the payment of
interest of certain Government stock, and the action of the British
Government, therefore, renders the stock all but valueless, and in the
case of the shares of the private companies entirely so. The paper
becomes unsaleable. But it is held in various forms--as collateral and
otherwise--by many important banking concerns, insurance companies, and
so on, and this sudden collapse of value shatters their solvency. Their
collapse not only involves many credit institutions in Germany, but, as
these in their turn are considerable debtors of London, English
institutions are also involved. London is also involved in another way.
As explained previously, many foreign concerns keep balances in London,
and the action of the British Government having precipitated a monetary
crisis in Germany, there is a run on London to withdraw all balances. In
a double sense London is feeling the pinch, and it would be a miracle if
already at this point the whole influence of British finance were not
thrown against the action of the British Government. Assume, however,
that the Government, making the best of a bad job, continues its
administration of the property, and proceeds to arrange for loans for
the purpose of putting it once more in good condition after the ravages
of war. The banks, however, finding that the original titles have
through the action of the British Government become waste paper, and
British financiers having already burned their fingers with that
particular class of property, withhold support, and money is only
procurable at extortionate rates of interest--so extortionate that it
becomes quite evident that as a Governmental enterprise the thing could
not be made to pay. An attempt is made to sell the property to British
and German concerns. But the same paralyzing sense of insecurity hangs
over the whole business. Neither German nor British financiers can
forget that the bonds and shares of this property have already been
turned into waste paper by the action of the British Government. The
British Government finds, in fact, that it can do nothing with the
financial world unless first it confirms the title of the original
owners to the property, and gives an assurance that titles to all
property throughout the conquered territory shall be respected. In other
words, confiscation has been a failure.
It would really be interesting to know how those who talk as though
confiscation were still an economic possibility would proceed to effect
it. As material property in the form of that booty which used to
constitute the spoils of victory in ancient times, the gold and silver
goblets, etc., would be quite inconsiderable, and as Britain cannot
carry away sections of Berlin and Hamburg, she could only annex the
paper tokens of wealth--the shares and bonds. But the value of those
tokens depends upon the reliance which can be placed upon the execution
of the contracts which they embody. The act of military confiscation
upsets all contracts, and the courts of the country from which contracts
derive their force would be paralyzed if judicial decisions were thrust
aside by the sword. The value of the stocks and shares would collapse,
and the credit of all those persons and institutions interested in such
property would also be shaken or shattered, and the whole credit system,
being thus at the mercy of alien governors only concerned to exact
tribute, would collapse like a house of cards. German finance and
industry would show a condition of panic and disorder beside which the
worst crises of Wall Street would pale into insignificance. Again, what
would be the inevitable result? The financial influence of London itself
would be thrown into the scale to prevent a panic in which London
financiers would be involved. In other words, British financiers would
exert their influence upon the British Government to stop the process of
confiscation.
But the intangibility of wealth can be shown in yet another fashion. I
once asked an English chartered accountant, very subject to attacks of
Germanophobia, how he supposed the Germans would profit by the invasion
of England, and he had a very simple programme. Admitting the
impossibility of sacking the Bank of England, they would reduce the
British population to practical slavery, and make them work for their
foreign taskmasters, as he put it, under the rifle and lash. He had it
all worked out in figures as to what the profit would be to the
conqueror. Very well, let us follow the process. The population of Great
Britain are not allowed to spend their income, or at least are only
allowed to spend a portion of it, on themselves. Their dietary is
reduced more or less to a slave dietary, and the bulk of what they earn
is to be taken by their "owners." But how is this income, which so
tempts the Germans, created--these dividends on the railroad shares, the
profits of the mills and mines and provision companies and amusement
concerns? The dividends are due to the fact that the population eat
heartily, clothe themselves well, travel on railroads, and go to
theatres and music-halls. If they are not allowed to do these things,
if, in other words, they cannot spend their money on these things, the
dividends disappear. If the German taskmasters are to take these
dividends, they must allow them to be earned. If they allow them to be
earned, they must let the population live as it lived before--spending
their income on themselves; but if they spend their income on
themselves, what is there, therefore, for the taskmasters? In other
words, consumption is a necessary factor of the whole thing. Cut out
consumption, and you cut out the profits. This glittering wealth, which
so tempted the invader, has disappeared. If this is not intangibility,
the word has no meaning. Speaking broadly and generally, the conqueror
in our day has before him two alternatives: to leave things alone, and
in order to do that he need not have left his shores; or to interfere by
confiscation in some form, in which case he dries up the source of the
profit which tempted him.
The economist may object that this does not cover the case of such
profit as "economic rent," and that dividends or profits being part of
exchange, a robber who obtains wealth without exchange can afford to
disregard them; or that the increased consumption of the dispossessed
English community would be made up by the increased consumption of the
"owning" Germans.
If the political control of economic operations were as simple a matter
as in our minds we generally make it, these objections would be sound.
As it is, none of them would in practice invalidate the general
proposition I have laid down. The division of labor in the modern world
is so complex--the simplest operation of foreign trade involving not two
nations merely, but many--that the mere military control of one party to
an operation where many are concerned could ensure neither shifting of
the consumption nor the monopolization of the profit within the limits
of the conquering group.
Here is a German manufacturer selling cinematograph machines to a
Glasgow suburb (which, incidentally, lives by selling tools to Argentine
ranchers, who live by selling wheat to Newcastle boiler-makers).
Assuming even that Germany could transfer the surplus spent in
cinematograph shows to Germany, what assurance has the German
manufacturer in question that the enriched Germans will want
cinematograph films? They may insist upon champagne and cigars, coffee
and Cognac, and the French, Cubans, and Brazilians, to whom this "loot"
eventually goes, may not buy their machinery from Germany at all, much
less from the particular German manufacturer, but in the United States
or Switzerland. The redistribution of the industrial roles might leave
German industry in the lurch, because at best the military power would
only be controlling one section of a complex operation, one party to it
out of many. When wealth was corn or cattle, the transference by
political or military force of the possessions of one community to
another may have been possible, although even then, or in a slightly
more developed period, we saw the Roman peasantry ruined by the slave
exploitation of foreign territory. How far this complexity of the
international division of labor tends to render futile the other
contrivances of conquest such as exclusive markets, tribute, money
indemnity, etc., succeeding chapters may help to show.
CHAPTER V
FOREIGN TRADE AND MILITARY POWER
Why trade cannot be destroyed or captured by a military Power--What
the processes of trade really are, and how a navy affects
them--_Dreadnoughts_ and business--While _Dreadnoughts_ protect
British trade from hypothetical German warships, the real German
merchant is carrying it off, or the Swiss or the Belgian--The
"commercial aggression" of Switzerland--What lies at the bottom of
the futility of military conquest--Government brigandage becomes as
profitless as private brigandage--The real basis of commercial
honesty on the part of Government.
Just as Mr. Harrison has declared that a "successful invasion would mean
to the English the total eclipse of their commerce and trade, and with
that trade the means of feeding forty millions in their islands," so I
have seen it stated in a leading English paper that "if Germany were
extinguished to-morrow, the day after to-morrow there is not an
Englishman in the world who would not be the richer. Nations have fought
for years over a city or right of succession. Must they not fight for
1250 million dollars of yearly commerce?"
What does the "extinction" of Germany mean? Does it mean that Britain
shall slay in cold blood sixty or seventy millions of men, women, and
children? Otherwise, even though the fleet and army were annihilated the
country's sixty millions of workers would still remain,--all the more
industrious, as they would have undergone great suffering and
privation--prepared to exploit their mines and workshops with as much
thoroughness and thrift and industry as ever, and consequently just as
much trade rivals as ever, army or no army, navy or no navy.
Even if the British could annihilate Germany, they would annihilate such
an important section of their debtors as to create hopeless panic in
London, and that panic would so react on their own trade that it would
be in no sort of condition to take the place which Germany had
previously occupied in neutral markets, leaving aside the question that
by the act of annihilation a market equal to that of Canada and South
Africa combined would be destroyed.
What does this sort of thing mean? Am I wrong in saying that the whole
subject is overlaid and dominated by a jargon which may have had some
relation to facts at one time, but from which in our day all meaning has
departed?
The English patriot may say that he does not mean permanent destruction,
but only temporary "annihilation." (And this, of course, on the other
side, would mean not permanent, but only temporary acquisition of that
1250 millions of trade.)
He might, like Mr. Harrison, put the case conversely--that if Germany
could get command of the sea she could cut England off from its
customers and intercept its trade for her benefit. This notion is as
absurd as the other. It has already been shown that the "utter
destruction of credit" and "incalculable chaos in the financial world,"
which Mr. Harrison foresees as the result of Germany's invasion, could
not possibly leave German finance unaffected. It is a very open question
whether her chaos would not be as great as the English. In any case, it
would be so great as thoroughly to disorganize her industry, and in that
disorganized condition it would be out of the question for her to secure
the markets left unsupplied by England's isolation. Moreover, those
markets would also be disorganized, because they depend upon England's
ability to buy, which Germany would be doing her best to destroy. From
the chaos which she herself had created, Germany could derive no
possible benefit, and she could only terminate financial disorder, fatal
to her own trade, by bringing to an end the condition which had produced
it--that is, by bringing to an end the isolation of Great Britain.
With reference to this section of the subject we can with absolute
certainty say two things: (1) That Germany can only destroy British
trade by destroying British population; and (2) that if she could
destroy that population, which she could not, she would destroy one of
her most valuable markets, as at the present time she sells to it more
than it sells to her. The whole point of view involves a fundamental
misconception of the real nature of commerce and industry.
Commerce is simply and purely the exchange of one product for another.
If the British manufacturer can make cloth, or cutlery, or machinery, or
pottery, or ships cheaper or better than his rivals, he will obtain the
trade; if he cannot, if his goods are inferior or dearer, or appeal less
to his customers, his rivals will secure the trade, and the possession
of _Dreadnoughts_ will make not a whit of difference. Switzerland,
without a single _Dreadnought_, will drive him out of the market even of
his own colonies, as, indeed, she is driving him out.[14] The factors
which really constitute prosperity have not the remotest connection with
military or naval power, all our political jargon notwithstanding. To
destroy the commerce of forty million people Germany would have to
destroy Britain's coal and iron mines, to destroy the energy, character,
and resourcefulness of its population; to destroy, in short, the
determination of forty million people to make their living by the work
of their hands. Were we not hypnotized by this extraordinary illusion,
we should accept as a matter of course that the prosperity of a people
depends upon such facts as the natural wealth of the country in which
they live, their social discipline and industrial character, the result
of years, of generations, of centuries, it may be, of tradition and
slow, elaborate, selective processes; and, in addition to all these
deep-seated elementary factors, upon countless commercial and financial
ramifications--a special technical capacity for such-and-such a
manufacture, a special aptitude for meeting the peculiarities of such
and-such a market, the efficient equipment of elaborately constructed
workshops, the existence of a population trained to given trades--a
training not infrequently involving years, and even generations, of
effort. All this, according to Mr. Harrison, is to go for nothing, and
Germany is to be able to replace it in the twinkling of an eye, and
forty million people are to sit down helplessly because Germany has been
victorious at sea. On the morrow of her marvellous victory Germany is by
some sort of miracle to find shipyards, foundries, cotton-mills, looms,
factories, coal and iron mines, and all their equipment, suddenly
created in order to take the trade that the most successful
manufacturers and traders in the world have been generations in building
up. Germany is to be able suddenly to produce three or four times what
her population has hitherto been able to produce; for she must either do
that or leave the markets which England has supplied heretofore still
available to English effort. What has really fed these forty millions,
who are to starve on the morrow of Germany's naval victory, is the fact
that the coal and iron exported by them have been sent in one form or
another to populations which need those products. Is that need suddenly
to cease, or are the forty millions suddenly to be struck with some sort
of paralysis, that all this vast industry is coming to an end? What has
the defeat of English ships at sea to do with the fact that the Canadian
farmer wants to buy English manufactures and pay for them with his
wheat? It may be true that Germany could stop the importation of that
wheat. But why should she want to do so? How would it benefit her people
to do so? By what sort of miracle is she suddenly to be able to supply
products which have kept forty million people busy? By what sort of
miracle is she suddenly to be able to double her industrial population?
And by what sort of miracle is she to be able to consume the wheat,
because if she cannot take the wheat the Canadian cannot buy her
products? I am aware that all this is elementary, that it is economics
in words of one syllable; but what are the economics of Mr. Harrison and
those who think like him when he talks in the strain of the passage that
I have just quoted?
There is just one other possible meaning that the English patriot may
have in his mind. He may plead that great military and naval
establishments do not exist for the purpose of the conquest of territory
or of destroying a rival's trade, but for "protecting" or indirectly
aiding trade and industry. We are allowed to infer that in some not
clearly defined way a great Power can aid the trade of its citizens by
the use of the prestige which a great navy and a great army bring, and
by exercising bargaining power, in the matter of tariffs, with other
nations. But again the condition of the small nations in Europe gives
the lie to this assumption.
It is evident that the neutral does not buy English products and refuse
Germany's because England has a larger navy. If one can imagine the
representatives of an English and a German firm meeting in the office
of a merchant in Argentina, or Brazil, or Bulgaria, or Finland, both of
them selling cutlery, the German is not going to secure the order
because he is able to show the Argentinian, or the Brazilian, or the
Bulgarian, or the Finn that Germany has twelve _Dreadnoughts_ and
England only eight. The German will take the order if, on the whole, he
can make a more advantageous offer to the prospective buyer, and for no
other reason whatsoever, and the buyer will go to the merchant of any
nation whatever, whether he be German, or Swiss, or Belgian, or British,
irrespective of the armies and navies which may lie behind the
nationality of the seller. Nor does it appear that armies and navies
weigh in the least when it comes to a question of a tariff bargain.
Switzerland wages a tariff war with Germany, and wins. The whole history
of the trade of the small nations shows that the political prestige of
the great ones gives them practically no commercial advantage.
We continually talk as though carrying trade were in some special sense
the result of the growth of a great navy, but Norway has a carrying
trade which, relatively to her population, is nearly three times as
great as Britain's, and the same reasons which would make it impossible
for another nation to confiscate the gold reserve of the Bank of England
would make it impossible for another nation to confiscate British
shipping on the morrow of a British naval defeat. In what way can her
carrying trade or any other trade be said to depend upon military
power?
As I write these lines there comes to my notice a series of articles in
the London _Daily Mail_, written by Mr. F.A. McKenzie, explaining how it
is that England is losing the trade of Canada. In one article he quotes
a number of Canadian merchants:
"We buy very little direct from England," said Mr. Harry McGee,
one of the vice-presidents of the company, in answer to my
questions. "We keep a staff in London of twenty, supervising
our European purchases, but the orders go mostly to France,
Germany, and Switzerland, and not to England."
And in a further article he notes that many orders are going to Belgium.
Now the question arises: What more can a navy do that it has not done
for England in Canada? And yet the trade goes to Switzerland and
Belgium. Is England going to protect herself against the commercial
"aggression" of Switzerland by building a dozen more _Dreadnoughts_?
Suppose she could conquer Switzerland and Belgium with her
_Dreadnoughts_, would not the trade of Switzerland and Belgium go on all
the same? Her arms have brought her Canada--but no monopoly of the
Canadian orders, which go, in part, to Switzerland.
If the traders of little nations can snap their fingers at the great war
lords, why do British traders need _Dreadnoughts_? If Swiss commercial
prosperity is secure from the aggression of a neighbor who outweighs
Switzerland in military power a hundred to one, how comes it that the
trade and industry, the very life-bread of her children, as Mr.
Harrison would have us believe, of the greatest nation in history is in
danger of imminent annihilation the moment she loses her military
predominance?
If the statesmen of Europe would tell us _how_ the military power of a
great nation is used to advance the commercial interest of its citizens,
would explain to us the _modus operandi_, and not refer us to large and
vague phrases about "exercising due weight in the councils of the
nations," we might accept their philosophy. But, until they do so, we
are surely justified in assuming that their political terminology is
simply a survival--an inheritance from a state of things which has, in
fact, passed away.
It is facts of the nature of those I have instanced which constitute the
real protection of the small State, and which are bound as they gain in
general recognition to constitute the real protection from outside
aggression of all States, great or small.
One financial authority from whom I have quoted noted that this
elaborate financial interdependence of the modern world has grown up in
spite of ourselves, "without our noticing it until we put it to some
rude test." Men are fundamentally just as disposed as they were at any
time to take wealth that does not belong to them, which they have not
earned. But their relative interest in the matter has changed. In very
primitive conditions robbery is a moderately profitable enterprise.
Where the rewards of labor, owing to the inefficiency of the means of
production, are small and uncertain, and where all wealth is portable,
raiding and theft offer the best reward for the enterprise of the
courageous; in such conditions the size of man's wealth depends a good
deal on the size of his club and the agility with which he wields it.
But to the man whose wealth so largely depends upon his credit and on
his paper being "good paper" at the bank, dishonesty has become as
precarious and profitless as honest toil was in more primitive times.
The instincts of the business man may, at bottom, be just as predatory
as those of the cattle-lifter or the robber baron, but taking property
by force has become one of the least profitable and the most speculative
forms of enterprise upon which he could engage. The force of commercial
events has rendered the thing impossible. I know that the defender of
arms will reply that it is the police who have rendered it impossible.
This is not true. There were as many armed men in Europe in the days
when the robber baron carried on his occupation as there are in our day.
To say that the policeman makes him impossible is to put the cart before
the horse. What created the police and made them possible, if it was not
the general recognition of the fact that disorder and aggression make
trade impossible?
Just note what is taking place in South America. States in which
repudiation was a commonplace of everyday politics have of recent years
become as stable and as respectable as the City of London, and have come
to discharge their obligations as regularly. These countries were during
hundreds of years a slough of disorder and a never-ending sanguinary
scramble for the spoils, and yet in a matter of fifteen or twenty years
the conditions have radically changed. Does this mean that the nature of
these populations has fundamentally altered in less than a generation?
In that case many a militarist claim must be rejected. There is a
simpler explanation.
These countries, like Brazil and the Argentine, have been drawn into the
circle of international trade, exchange, and finance. Their economic
relationships have become sufficiently extensive and complex to make
repudiation the least profitable form of theft. The financier will tell
you "they cannot afford to repudiate." If any attempt at repudiation
were made, all sorts of property, either directly or indirectly
connected with the orderly execution of Governmental functions, would
suffer, banks would become involved, great businesses would stagger, and
the whole financial community would protest. To attempt to escape the
payment of a single loan would involve the business world in losses
amounting to many times the value of the loan.
It is only where a community has nothing to lose, no banks, no personal
fortunes dependent upon public good faith, no great businesses, no
industries, that the Government can afford to repudiate its obligations
or to disregard the general code of economic morality. This was the case
with Argentina and Brazil a generation ago; it is still the case, to
some extent, with some Central American States to-day. _It is not
because the armies in these States have grown_ that the public credit
has improved. Their armies were greater a generation ago than they are
now. It is because they know that trade and finance are built upon
credit--that is, confidence in the fulfilment of obligations, upon
security of tenure in titles, upon the enforcement of contract according
to law--and that if credit is seriously shaken, there is not a section
of the elaborate fabric which is not affected.
The more our commercial system gains in complication, the more does the
common prosperity of all of us come to depend upon the reliance which
can be placed on the due performance of all contracts. This is the real
basis of "prestige," national and individual; circumstances stronger
than ourselves are pushing us, despite what the cynical critics of our
commercial civilization may say, towards the unvarying observance of
this simple ideal. When we drop back from it--and such relapses occur as
we should expect them to occur, especially in those societies which have
just emerged from a more or less primitive state--punishment is
generally swift and sure.
What was the real origin of the bank crisis of 1907 in the United
States, which had for American business men such disastrous
consequences? It was the loss by American financiers and American
bankers of the confidence of the American public. At bottom there was no
other reason. One talks of cash reserves and currency errors; but
London, which does the banking of the universe, works on the smallest
cash reserve in the world, because, as an American authority has put it,
English bankers work with a "psychological reserve."
I quote from Mr. Withers:
It is because they (English bankers) are so safe, so straight,
so sensible, from an American point of view so unenterprising,
that they are able to build up a bigger credit fabric on a
smaller gold basis, and even carry this building to a height
which they themselves have decided to be questionable. This
"psychological reserve" is the priceless possession that has
been handed down through generations of good bankers, and every
individual of every generation who receives it can do something
to maintain and improve it.
But it was not always thus, and it is merely the many ramifications of
the English commercial and financial world that have brought this about.
In the end the Americans will imitate it, or they will suffer from a
hopeless disadvantage in their financial competition with England.
Commercial development is broadly illustrating one profound truth: that
the real basis of social morality is self-interest. If English banks and
insurance companies have become absolutely honest in their
administration, it is because the dishonesty of any one of them
threatened the prosperity of all.
Must we assume that the Governments of the world, which, presumably, are
directed by men as far-sighted as bankers, are permanently to fall below
the banker in their conception of enlightened self-interest? Must we
assume that what is self-evident to the banker--namely, that the
repudiation of engagements, or any attempt at financial plunder, is
sheer stupidity and commercial suicide--is for ever to remain
unperceived by the ruler? Then, when he realizes this truth, shall we
not at least have made some progress towards laying the foundations for
a sane international polity?
* * * * *
The following correspondence, provoked by the first edition of this
book, may throw light on some of the points dealt with in this chapter.
A correspondent of London _Public Opinion_ criticized a part of the
thesis here dealt with as a "series of half-truths," questioning as
follows:
What is "natural wealth," and how can trade be carried on with
it unless there are markets for it when worked? Would the
writer maintain that markets cannot be permanently or seriously
affected by military conquests, especially if conquest be
followed by the imposition upon the vanquished of commercial
conditions framed in the interests of the victor?... Germany
has derived, and continues to derive, great advantages from the
most-favored-nation clause which she compelled France to insert
in the Treaty of Frankfurt.... Bismarck, it is true,
underestimated the financial resilience of France, and was
sorely disappointed when the French paid off the indemnity with
such astonishing rapidity, and thus liberated themselves from
the equally crushing burden of having to maintain the German
army of occupation. He regretted not having demanded an
indemnity twice as large. Germany would not repeat the mistake,
and any country having the misfortune to be vanquished by her
in future will be likely to find its commercial prosperity
compromised for decades.
To which I replied:
Will your correspondent forgive my saying that while he talks
of half-truths, the whole of this passage indicates the
domination of that particular half-truth which lies at the
bottom of the illusion with which my book deals?
What is a market? Your correspondent evidently conceives it as
a place where things are sold. That is only half the truth. It
is a place where things are bought and sold, and one operation
is impossible without the other, and the notion that one nation
can sell for ever and never buy is simply the theory of
perpetual motion applied to economics; and international trade
can no more be based upon perpetual motion than can
engineering. As between economically highly-organized nations a
customer must also be a competitor, a fact which bayonets
cannot alter. To the extent to which they destroy him as a
competitor, they destroy him, speaking generally, and largely,
as a customer.
The late Mr. Seddon conceived England as making her purchases
with "a stream of golden sovereigns" flowing from a stock all
the time getting smaller. That "practical" man, however, who so
despised "mere theories," was himself the victim of a pure
theory, and the picture which he conjured up from his inner
consciousness has no existence in fact. England has hardly
enough gold to pay one year's taxes, and if she paid for her
imports in gold she would exhaust her stock in three months;
and the process by which she really pays has been going on for
sixty years. She is a buyer just as long as she is a seller,
and if she is to afford a market to Germany she must procure
the money wherewith to pay for Germany's goods by selling goods
to Germany or elsewhere, and if that process of sale stops,
Germany loses a market, not only the English market, but also
those markets which depend in their turn upon England's
capacity to buy--that is to say, to sell, for, again, the one
operation is impossible without the other.
If your correspondent had had the whole process in his mind
instead of half of it, I do not think that he would have
written the passages I have quoted. In his endorsement of the
Bismarckian conception of political economy he evidently deems
that one nation's gain is the measure of another nation's loss,
and that nations live by robbing their neighbors in a lesser or
greater degree. This is economics in the style of Tamerlane and
the Red Indian, and, happily, has no relation to the real facts
of modern commercial intercourse.
The conception of one-half of the case only, dominates your
correspondent's letter throughout. He says, "Germany has
derived, and continues to derive, great advantage from the
most-favored-nation clause which she compelled France to insert
in the Treaty of Frankfurt," which is quite true, but leaves
out the other half of the truth, somewhat important to our
discussion--viz., that France has also greatly benefited, in
that the scope of fruitless tariff war has been by so much
restricted.
A further illustration: Why should Germany have been sorely
disappointed at France's rapid recovery? The German people are
not going to be the richer for having a poor neighbor--on the
contrary, they are going to be the poorer, and there is not an
economist with a reputation to lose, whatever his views of
fiscal policy, who would challenge this for a moment.
How would Germany impose upon a vanquished England commercial
arrangements which would impoverish the vanquished and enrich
the victor? By enforcing another Frankfurt treaty, by which
English ports should be kept open to German goods? But that is
precisely what English ports have been for sixty years, and
Germany has not been obliged to wage a costly war to effect it.
Would Germany close her own markets to our goods? But, again,
that is precisely what she has done--again without war, and by
a right which we never dream of challenging. How is war going
to affect the question one way or another? I have been asking
for a detailed answer to that question from European publicists
and statesmen for the last ten years, and I have never yet been
answered, save by much vagueness, much fine phrasing concerning
commercial supremacy, a spirited foreign policy, national
prestige, and much else, which no one seems able to define, but
a real policy, a _modus operandi_, a balance-sheet which one
can analyze, never. And until such is forthcoming I shall
continue to believe that the whole thing is based upon an
illusion.
The true test of fallacies of this kind is progression. Imagine
Germany (as our Jingoes seem to dream of her) absolute master
of Europe, and able to dictate any policy that she pleased. How
would she treat such a European empire? By impoverishing its
component parts? But that would be suicidal. Where would her
big industrial population find their markets?[15] If she set
out to develop and enrich the component parts, these would
become merely efficient competitors, and she need not have
undertaken the costliest war of history to arrive at that
result. This is the paradox, the futility of conquest--the
great illusion which the history of our own Empire so well
illustrates. We British "own" our Empire by allowing its
component parts to develop themselves in their own way, and in
view of their own ends, and all the empires which have pursued
any other policy have only ended by impoverishing their own
populations and falling to pieces.
Your correspondent asks: "Is Mr. Norman Angell prepared to
maintain that Japan has derived no political or commercial
advantages from her victories, and that Russia has suffered no
loss from defeat?"
What I am prepared to maintain, and what the experts know to be
the truth, is that the Japanese people are the poorer, not the
richer for their war, and that the Russian people will gain
more from defeat than they could possibly have gained by
victory, since defeat will constitute a check on the
economically sterile policy of military and territorial
aggrandizement and turn Russian energies to social and economic
development; and it is because of this fact that Russia is at
the present moment, despite her desperate internal troubles,
showing a capacity for economic regeneration as great as, if
not greater than, that of Japan. This latter country is
breaking all modern records, civilized or uncivilized, in the
burdensomeness of her taxation. On the average, the Japanese
people pay 30 per cent.--nearly one-third--of their net income
in taxation in one form or another, and so far have they been
compelled to push the progressive principle that a Japanese
lucky enough to possess an income of ten thousand a year has to
surrender over six thousand of it in taxation, a condition of
things which would, of course, create a revolution in any
European country in twenty-four hours. And this is quoted as a
result so brilliant that those who question it cannot be doing
so seriously![16] On the other side, for the first time in
twenty years the Russian Budget shows a surplus.
This recovery of the defeated nation after wars is not even
peculiar to our generation. Ten years after the Franco-Prussian
War France was in a better financial position than Germany, as
she is in a better financial position to-day, and though her
foreign trade does not show as great expansion as that of
Germany--because her population remains absolutely stationary,
while that of Germany increases by leaps and bounds--the French
people as a whole are more prosperous, more comfortable, more
economically secure, with a greater reserve of savings, and all
the moral and social advantages that go therewith, than are the
Germans. In the same way the social and industrial renaissance
of modern Spain dates from the day that she was defeated and
lost her colonies, and it is since her defeat that Spanish
securities have just doubled in value.[17] It is since England
added the "gold-fields of the world" to her "possessions" that
British Consols have dropped twenty points. Such is the outcome
in terms of social well-being of military success and political
prestige!
CHAPTER VI
THE INDEMNITY FUTILITY
The real balance-sheet of the Franco-German War--Disregard of Sir
Robert Giffen's warning in interpreting the figures--What really
happened in France and Germany during the decade following the
war--Bismarck's disillusionment--The necessary discount to be
given an indemnity--The bearing of the war and its result on
German prosperity and progress.
In politics it is unfortunately true that ten dollars which can be seen
bulk more largely in the public mind than a million which happen to be
out of sight but are none the less real. Thus, however clearly the
wastefulness of war and the impossibility of effecting by its means any
permanent economic or social advantage for the conqueror may be shown,
the fact that Germany was able to exact an indemnity of a billion
dollars from France at the close of the war of 1870-71 is taken as
conclusive evidence that a nation can "make money by war."
In 1872, Sir Robert (then Mr.) Giffen wrote a notable article
summarizing the results of the Franco-German War thus: it meant to
France a loss of 3500 million dollars, and to Germany a total net gain
of 870 millions, a money difference in favor of Germany exceeding in
value the whole amount of the British National Debt!
An arithmetical statement of this kind seems at first sight so
conclusive that those who have since discussed the financial outcome of
the war of 1870 have quite overlooked the fact that, if such a
balance-sheet as that indicated be sound, the whole financial history of
Germany and France during the forty years which have followed the war is
meaningless.
The truth is, of course, that such a balance-sheet is meaningless--a
verdict which does not reflect upon Sir Robert Giffen, because he drew
it up in ignorance of the sequel of the war. It does, however, reflect
on those who have adopted the result shown on such a balance-sheet.
Indeed, Sir Robert Giffen himself made the most important reservations.
He had at least an inkling of the practical difficulties of profiting by
an indemnity, and indicated plainly that the nominal figures had to be
very heavily discounted.
A critic[18] of an early edition of this book seems to have adopted most
of Sir Robert Giffen's figures, disregarding, however, certain of his
reservations, and to this critic I replied as follows:
In arriving at this balance my critic, like the
company-promoting genius who promises you 150 per cent. for
your money, leaves so much out of the account. There are a few
items not considered, _e.g._ the increase in the French army
which took place immediately after the war, and as the direct
result thereof, compelled Germany to increase her army by at
least one hundred thousand men, an increase which has been
maintained for forty years. The expenditure throughout this
time amounts to at least a billion dollars. We have already
wiped out the "profit," and I have only dealt with one item
yet--to this we must add,--loss of markets for Germany involved
in the destruction of so many French lives and so much French
wealth; loss from the general disturbance throughout Europe,
and still greater loss from the fact that the unproductive
expenditure on armaments throughout the greater part of Europe
which has followed the war, the diversion of energies which is
the result of it, has directly deprived Germany of large
markets and by a general check of development indirectly
deprived her of immense ones.
But it is absurd to bring figures to bear on such a system of
bookkeeping as that adopted by my critic. Germany had several
years' preparation for the war, and has had, as the direct
result thereof and as an integral part of the general war
system which her own policy supports, certain obligations
during forty years. All this is ignored. Just note how the same
principle would work if applied in ordinary commercial matters;
because, for instance, on an estate the actual harvest only
takes a fortnight, you disregard altogether the working
expenses for the remaining fifty weeks of the year, charge only
the actual cost of the harvest (and not all of that), deduct
this from the gross proceeds of the crops, and call the result
"profit"! Such "finance" is really luminous. Applied by the
ordinary business man, it would in an incredibly short time put
his business in the bankruptcy court and himself in gaol!
But were my critic's figures as complete as they are absurdly
incomplete and misleading, I should still be unimpressed,
because the facts which stare us in the face would not
corroborate his statistical performance. We are examining what
is from the money point of view the most successful war ever
recorded in history, and if the general proposition that such a
war is financially profitable were sound, and if the results of
the war were anything like as brilliant as they are
represented, money should be cheaper and more plentiful in
Germany than in France, and credit, public and private, should
be sounder. Well, it is the exact reverse which is the case. As
a net result of the whole thing Germany was, ten years after
the war, a good deal worse off, financially, than her
vanquished rival, and was at that date trying, as she is trying
to-day, to borrow money from her victim. Within twenty months
of the payment of the last of the indemnity, the bank rate was
higher in Berlin than in Paris, and we know that Bismarck's
later life was clouded by the spectacle of what he regarded as
an absurd miracle: the vanquished recovering more quickly than
the victor. We have the testimony of his own speeches to this
fact, and to the fact that France weathered the financial
storms of 1878-9 a great deal better than did Germany. And
to-day, when Germany is compelled to pay nearly 4 per cent. for
money, France can secure it for 3.... We are not for the moment
considering anything but the money view--the advantages and
disadvantages of a certain financial operation--and by any test
that you care to apply, France, the vanquished, is better off
than Germany, the victor. The French people are as a whole more
prosperous, more comfortable, more economically secure, with
greater reserve of savings and all the moral and social
advantages that go therewith, than are the Germans, a fact
expressed briefly by French Rentes standing at 98 and German
Consols at 83. There is something wrong with a financial
operation that gives these results.
The something wrong, of course, is that in order to arrive at any
financial profit at all essential facts have to be disregarded, those
facts being what necessarily precedes and what necessarily follows a war
of this kind. In the case of highly organized industrial nations like
England and Germany, dependent for the very livelihood of great masses
of their population upon the fact that neighboring nations furnish a
market for their goods, a general policy of "piracy," imposing upon
those neighbors an expenditure which limits their purchasing power,
creates a burden of which the nation responsible for that policy of
piracy pays its part. It is not France alone which has paid the greater
part of the real cost of the Franco-German War, it is Europe--and
particularly Germany--in the burdensome military system and the general
political situation which that war has created or intensified.
But there is a more special consideration connected with the exaction of
an indemnity, which demands notice, and that is the practical difficulty
with regard to the transfer of an immense sum of money outside the
ordinary operations of commerce.
The history of the German experience with the French indemnity suggests
the question whether in every case an enormous discount on the nominal
value of a large money indemnity must not be allowed owing to the
practical financial difficulties of its payment and receipt,
difficulties unavoidable in any circumstances which we need consider.
These difficulties were clearly foreseen by Sir Robert Giffen, though
his warnings, and the important reservations that he made on this point,
are generally overlooked by those who wish to make use of his
conclusions.
These warnings he summarized as follows:
As regards Germany, a doubt is expressed whether the Germans
will gain so much as France loses, the capital of the indemnity
being transferred from individuals to the German Government,
who cannot use it so profitably as individuals. It is doubted
whether the practice of lending out large sums, though a
preferable course to locking them up, will not in the end be
injurious.
The financial operations incidental to these great losses and
expenses seriously affect the money market. They have been a
fruitful cause, in the first place, of spasmodic disturbance.
The outbreak of war caused a monetary panic in July, 1870, by
the anxiety of people who had money engagements to meet to
provide against the chances of war, and there was another
monetary crash in September, 1871, owing to the sudden
withdrawal by the German Government of the money it had to
receive. The war thus illustrates the tendency of wars in
general to cause spasmodic disturbance in a market so
delicately organized as that of London now is.
And it is to be noted in this connection that the difficulties of 1872
were trifling compared to what they would necessarily be in our day. In
1872, Germany was self-sufficing, little dependent upon credit; to-day
undisturbed credit in Europe is the very life-blood of her industry; it
is, in fact, the very food of her people, as the events of 1911 have
sufficiently proved.
It is not generally realized how abundantly the whole history of the
German indemnity bears out Sir Robert Giffen's warning; how this flood
of gold turned indeed to dust and ashes as far as the German nation is
concerned.
First, anyone familiar with financial problems might have expected that
the receipt of so large a sum of money by Germany would cause prices to
rise and so handicap export trade in competition with France, where the
reverse process would cause prices to fall. This result was, in fact,
produced. M. Paul Beaulieu and M. Leon Say[19] have both shown that this
factor operated through the value of commercial bills of exchange,
giving to the French exporter a bonus and to the German a handicap which
affected trade most perceptibly. Captain Bernard Serrigny, who has
collected in his work a wealth of evidence bearing on this subject,
writes:
The rise in prices influenced seriously the cost of production,
and the German manufacturers fought, in consequence, at a
disadvantage with England and France. Finally the goods
produced at this high cost were thrown upon the home market at
the moment when the increase in the cost of living was
diminishing seriously the purchasing power of the bulk of
consumers. These goods had to compete, not only with home
over-production due to the failure to sell abroad, but with
foreign goods, which, despite the tariff, were by their lower
price able to push their way into the German market, where
relatively higher prices attracted them. In this competition
France was particularly prominent. In France the lack of
metallic money had engendered great financial caution, and had
considerably lowered prices all around, so that there was a
general financial and commercial condition very different from
that in Germany, where the payment of the indemnity had been
followed by reckless speculation. Moreover, owing to the heavy
foreign payments made by France, bills drawn on foreign centres
were at a premium, a premium which constituted a sensible
additional profit to French exporters, so considerable in
certain cases that it was worth while for French manufacturers
to sell their goods at an actual loss in order to realize the
profit on the bill of exchange. The German market was thus
being captured by the French at the very moment when the
Germans supposed they would, thanks to the indemnity, be
starting out to capture the world.
The German economist Max Wirth ("Geschichte der Handelskrisen")
expressed in 1874 his astonishment at France's financial and industrial
recovery: "The most striking example of the economic force of the
country is shown by the exports, which rose immediately after the
signature of peace, despite a war which swallowed a hundred thousand
lives and more than ten milliards (two billion dollars)." A similar
conclusion is drawn by Professor Biermer ("Fuerst Bismarck als
Volkswirt"), who indicates that the Protectionist movement in 1879 was
to a large extent due to the result of the payment of the indemnity.
This disturbance of the balance of trade, however, was only one factor
among several: the financial disorganization, a fictitious expansion of
expenditure creating a morbid speculation, precipitated the worst
financial crisis in Germany which she has known in modern times.
Monsieur Lavisse summarizes the experience thus:
Enormous sums of money were lost. If one takes the aggregate of
the securities quoted on the Berlin Bourse, railroad, mining
and industrial securities generally, it is by thousands of
millions of marks that one must estimate the value of such
securities in 1870 and 1871. But a large number of enterprises
were started in Germany of which the Berlin Bourse knew
nothing. Cologne, Hamburg, Frankfurt, Leipzig, Breslau,
Stuttgart, had all their local groups of speculative
securities; hundreds of millions must be added to the thousands
of millions. These differences did not represent merely a
transfer of wealth, for a great proportion of the capital sunk
was lost altogether, having been eaten up in ill-considered and
unattractive expenditure.... There can be no sort of doubt that
the money lost in these worthless enterprises constitutes an
absolute loss for Germany.
The decade from 1870-1880 was for France a great recuperative period,
although for several other nations in Europe it was one of great
depression, notably, after the "boom" of 1872, for Germany. No less an
authority than Bismarck himself testifies to the double fact. We know
that Bismarck was astonished and dismayed by seeing the regeneration of
France after the war taking place more rapidly and more completely than
the regeneration of Germany. This weighed so heavily upon his mind that
in introducing his Protectionist Bill in 1879 he declared that Germany
was "slowly bleeding to death," and that if the present process were
continued she would find herself ruined. Speaking in the Reichstag on
May 2, 1879, he said:
We see that France manages to support the present difficult
business situation of the civilized world better than we do;
that her Budget has increased since 1871 by a milliard and a
half, and that thanks not only to loans; we see that she has
more resources than Germany, and that, in short, over there
they complain less of bad times.
And in a speech two years later (November 29, 1881) he returned to the
same idea:
It was towards 1877 that I was first struck with the general
and growing distress in Germany as compared with France. I saw
furnaces banked, the standard of well-being reduced, and the
general position of workmen becoming worse and business as a
whole terribly bad.
In the book from which these extracts are taken[20] the author writes as
an introduction to Bismarck's speeches:
Trade and industry were in a miserable condition. Thousands of
workmen were without employment, and in the winter of 1876-77
unemployment took great proportions, and soup-kitchens and
State workshops had to be established.
Every author who deals with this period seems to tell broadly the same
tale, however much they may differ in detail. "If only we could get back
to the general position of things before the war," said M. Block in
1879. "But salaries diminish and prices go up."[21]
At the very time that the French millions were raining in upon Germany
(1873) she was suffering from a grave financial crisis, and so little
effect did the transfer of the money have upon trade and finance in
general, that twelve months after the payment of the last of the
indemnity we find the bank rate higher in Berlin than in Paris; and, as
was shown by the German economist Soetbeer, by the year 1878 far more
money was in circulation in France than in Germany.[22] Hans Blum,
indeed, directly ascribed the series of crises between the years 1873
and 1880 to the indemnity: "A burst of prosperity and then ruin for
thousands."[23] Throughout the year 1875 the bank rate in Paris was
uniformly 3 per cent. In Berlin (Preussische Bank, which preceded the
Reichs Bank) it varied from 4 to 6 per cent. A similar difference is
reflected by the fact that, between the years 1872 and 1877, the
deposits in the State savings banks in Germany actually fell by roughly
20 per cent., while in the same period the French deposits _increased_
about 20 per cent.
Two tendencies plainly show the condition of Germany during the decade
which followed the war: the enormous growth of Socialism--relatively
much greater than any which we have ever since seen--and the immense
stimulus given to emigration.
Perhaps no thesis is commoner with the defender of war than this: that,
though one may not be able in a narrow economic sense to justify an
enterprise like that of 1870, the moral stimulus which victory gave to
the German people is accepted as being of incalculable benefit to the
race and the nation. Its alleged effect in bringing about a national
solidarity, in stimulating patriotic sentiment and national pride, in
the wiping out of internal differences and Heaven knows what, are claims
I have dealt with at greater length elsewhere, and I wish only to note
here that all this high-falutin does not stand the test of facts. The
two phenomena just mentioned--the extraordinary progress of Socialism
and the enormous stimulus given to emigration during the years which
immediately followed the war--give the lie to all the claims in
question. In 1872-73, the very years in which the moral stimulus of
victory and the economic stimulus of the indemnity should have kept at
home every able-bodied German, emigration was, relatively to the
population, greater than it has ever been before or since, the figures
for 1872 being 154,000 and for 1873 134,000.[24] And at no period since
the fifties was the internal political struggle so bitter--it was a
period of repression, of prescription on the one side and class-hatred
on the other--"the golden age of the drill-sergeant," some German has
called it.
It will be replied that, after the first decade, Germany's trade has
shown an expansion which has not been shown by that of France. Those who
are hypnotized by this, quietly ignore altogether one great fact or
which has affected both France and Germany, not only since the war, but
during the whole of the nineteenth century, and that factor is that the
population of France, from causes in no way connected with the
Franco-Prussian War, since the tendency was a pronounced one for fifty
years before, is practically quite stationary; while the population of
Germany, also for reasons in no way connected with the war, since the
tendency was also pronounced half a century previously, has shown an
abounding expansion. Since 1875 the population of Germany has increased
by twenty million souls. That of France has not increased at all. Is it
astonishing that the labor of twenty million souls makes some stir in
the industrial world? Is it not evident that the necessity of earning a
livelihood for this increasing population gives to German industry an
expansion outside the limits of her territory which cannot be looked for
in the case of a nation whose social energies are not faced with any
such problem? There is this, moreover, to be borne in mind: Germany has
secured her foreign trade on what are, in the terms of the relative
comfort of her people, hard conditions. In other words, she has secured
that trade by cutting profits, in the way that a business fighting
desperately for life will cut profits, in order to secure orders, and by
making sacrifices that the comfortable business man will not make.
Notwithstanding the fact that France has made no sensational splash in
foreign trade since the war, the standard of comfort among her people
has been rising steadily, and is without doubt generally higher to-day
than is that of the German people. This higher standard of comfort is
reflected in her financial situation. It is Germany, the victor, which
is to-day in the position of a suppliant in regard to France, and it is
revealing no diplomatic secrets to say that, for many years now, Germany
has been employing all the wiles of her diplomacy to obtain the official
recognition of German securities on the French Bourses. France
financially has, in a very real sense, the whip hand.
That is not all. Those who point triumphantly to German industrial
expansion, as a proof of the benefits of war and conquest, ignore
certain facts which cannot be ignored if that argument is to have any
value, and they are these:
1. Such progress is not peculiar to Germany; it is shown in an equal or
greater degree (I am speaking now of the general wealth and social
progress of the average individual citizen) by States that have had no
victorious war--the Scandinavian States, the Netherlands, Switzerland.
2. Even if it were special to Germany, which it is not, we should be
entitled to ask whether certain developments of German political
evolution, which _preceded the war_, and which one may fairly claim have
a more direct and understandable bearing upon industrial progress, are
not a much more appreciable factor in that progress than the war
itself--I refer particularly, of course, to the immense change involved
in the fiscal union of the German States, which was completed before the
Franco-German War of 1870 had been declared; to say nothing of such
other factors as the invention of the Thomas-Gilchrist process which
enabled the phosphoric iron ores of Germany, previously useless, to be
utilized.
3. The very serious social difficulties (which have, of course, their
economic aspect) that _do_ confront the German people--the intense class
friction, the backwardness of parliamentary government, the survival of
reactionary political ideas, wrapped up with the domination of the
"Prussian ideal"--all difficulties which States whose political
development has been less marked by successful war (the lesser European
States just mentioned, for instance)--are not faced with in the same
degree. These difficulties, special, among the great European nations,
to Germany, are certainly in a large measure a legacy of the
Franco-German War, a part of the general system to which that war gave
rise, the general character of the political union which it provoked.
The general ascription of such real progress as Germany has made to the
effects of the war and nothing else--a conclusion which calmly ignores
factors which have evidently a more direct bearing--is one of those _a
priori_ judgments repeated, parrot fashion, without investigation or
care even by publicists of repute; it is characteristic of the
carelessness which dominates this whole subject. This more general
consideration, which does not properly belong to the special problem of
an indemnity, I have dealt with at greater length in the next section.
The evidence bearing on the particular question, as to whether in
practice the exaction of a large monetary indemnity from a conquered foe
can ever be economically profitable or of real advantage to the
conqueror, is of a simpler character. If we put the question in this
form, "Was the receipt of the indemnity, in the most characteristic and
successful case in history, of advantage to the conqueror?" the reply is
simple enough: all the evidence plainly and conclusively shows that it
was of no advantage; that the conqueror would probably have been better
without it.
Even if we draw from that evidence a contrary conclusion, even if we
conclude that the actual payment of the indemnity was as beneficial as
all the evidence would seem to show it was mischievous; even if we could
set aside completely the financial and commercial difficulties which its
payment seems to have involved; if we ascribe to other causes the great
financial crises which followed that payment; if we deduct no discount
from the nominal value of the indemnity, but assume that every mark and
thaler of it represented its full face value to Germany--even admitting
all this, it is still inevitable that _the direct cost of preparing for
a war and of guarding against a subsequent war of retribution must, from
the nature of the case, exceed the value of the indemnity which can be
exacted_. This is not merely a hypothetical statement, it is a
commercial fact, supported by evidence which is familiar to us all. In
order to avoid repaying, with interest, the indemnity drawn from France,
Germany has had to expend upon armaments a sum of money at least equal
to that indemnity. In order to exact a still larger indemnity from
Great Britain, Germany would have to spend a still larger sum in
preparations, and to guard against repayment would be led into
indefinite expenditure, which has only to go on long enough inevitably
to exceed the very definite indemnity. For, it must be remembered that
the amount of an indemnity extractable from a modern community, of the
credit era, has very definite limits: an insolvent community can pay
more. If the Statesmen of Europe could lay on one side, for a moment,
the irrelevant considerations which cloud their minds, they would see
that the direct cost of acquisition by force must in these circumstances
necessarily exceed in value the property acquired. When the _indirect_
costs are also considered, the balance of loss becomes incalculably
greater.
Those who urge that through an indemnity, war can be made to "pay" (and
it is for them that this chapter is written), have before them problems
and difficulties--difficulties of not merely a military, but of a
financial and social character--of the very deepest kind. It was
precisely in this section of the subject that German science failed in
1870. There is no evidence that much progress has been made in the study
of this phase of the problem by either side since the war--indeed, there
is plenty of evidence that it has been neglected. It is time that it was
scientifically and systematically attacked.
Those who wish well for Europe will encourage the study, for it can have
but one result: to show that less and less can war be made to pay; that
all those forces of our world which daily gain in strength make it, as
a commercial venture, more and more preposterous. The study of this
department of international polity will tend to the same result as the
study of any of its facets: the undermining of those beliefs which have
in the past so often led to, and are to-day so often claimed as the
motives likely to lead to, war between civilized peoples.
CHAPTER VII
HOW COLONIES ARE OWNED
Why twentieth-century methods must differ from eighteenth--The
vagueness of our conceptions of statecraft--How Colonies are
"owned"--Some little recognized facts--Why foreigners could not
fight England for her self-governing Colonies--She does not "own"
them, since they are masters of their own destiny--The paradox
of conquest: England in a worse position in regard to her own
Colonies than in regard to foreign nations--Her experience as the
oldest and most practised colonizer in history--Recent French
experience--Could Germany hope to do what England cannot do?
The foregoing chapters dispose of the first six of the seven
propositions outlined in Chapter III. There remains the seventh, dealing
with the notion that in some way England's security and prosperity would
be threatened by a foreign nation "taking our Colonies from us"--a thing
which we are assured her rivals are burning to do, as it would involve
the "breaking up of the British Empire" to their advantage.
Let us try to read some meaning into a phrase which, however childish it
may appear on analysis, is very commonly in the mouths of those who are
responsible for British political ideas.
In this connection it is necessary to point out--as, indeed, it is in
every phase of this problem of the relationship of States--that the
world has moved, that methods have changed. It is hardly possible to
discuss this matter of the necessary futility of military force in the
modern world for ten minutes without it being urged that as England has
acquired her Colonies by the sword, it is evident that the sword may do
a like service for modern States desiring Colonies. About as reasonably
could one say that, as certain tribes and nations in the past enriched
themselves by capturing slaves and women among neighboring tribes, the
desire to capture slaves and women will always be an operative motive in
warfare between nations, as though slavery had not been put economically
out of court by modern industrial methods, and as though the change in
social methods had not put the forcible capture of women out of court.
What was the problem confronting the merchant adventurer of the
sixteenth century? There were newly-discovered foreign lands containing,
as he believed, precious metals and stones and spices, and inhabited by
savages or semi-savages. If other traders got those stones, it was quite
evident that he could not. His colonial policy, therefore, had to be
directed to two ends: first, such effective political occupation of the
country that he could keep the savage or semi-savage population in
check, and could exploit the territory for its wealth; and, secondly,
such arrangements as would prevent other nations from searching for
this wealth in precious metals, spices, etc., since, if they obtained
it, he could not.
That is the story of the French and Dutch in India, and of the Spanish
in South America. But as soon as there grew up in those countries an
organized community living in the country itself, the whole problem
changed. The Colonies, in this later stage of development, have a value
to the Mother Country mainly as a market and a source of food and raw
material, and if their value in those respects is to be developed to the
full, they inevitably become self-governing communities in greater or
less degree, and the Mother Country exploits them exactly as she
exploits any other community with which she may be trading. Germany
might acquire Canada, but it could no longer be a question of her taking
Canada's wealth in precious metals, or in any other form, to the
exclusion of other nations. Could Germany "own" Canada, she would have
to "own" it in the same way that Britain does; the Germans would have to
pay for every sack of wheat and every pound of beef that they might buy,
just as though Canada "belonged" to England or to anybody else. Germany
could not have even the meagre satisfaction of Germanizing these great
communities, for one knows that they are far too firmly "set." Their
language, law, morals, would have to be, after German conquest, what
they are now. Germany would find that the German Canada was pretty much
the Canada that it is now--a country where Germans are free to go and
do go; a field for Germany's expanding population.
As a matter of fact, Germany feeds her expanding population from
territories like Canada and the United States and South America without
sending its citizens there. The era of emigration from Germany has
stopped, because the compound steam-engine has rendered emigration
largely unnecessary. And it is the developments which are the necessary
outcome of such forces, that have made the whole colonial problem of the
twentieth century radically different from that of the eighteenth or
seventeenth.
I have stated the case thus: No nation could gain any advantage by the
conquest of the British Colonies, and Great Britain could not suffer
material damage by their "loss," however much this would be regretted on
sentimental grounds, and as rendering less easy a certain useful social
co-operation between kindred peoples. For the British Colonies are, in
fact, independent nations in alliance with the Mother Country, to whom
they are no source of tribute or economic profit (except in the way that
foreign nations are), their economic relations being settled not by the
Mother Country, but by the Colonies. Economically, England would gain by
their formal separation, since she would be relieved of the cost of
their defence. Their loss, involving, therefore, no change in economic
fact (beyond saving the Mother Country the cost of their defence), could
not involve the ruin of the Empire and the starvation of the Mother
Country, as those who commonly treat of such a contingency are apt to
aver. As England is not able to exact tribute or economic advantage, it
is inconceivable that any other country, necessarily less experienced in
colonial management, would be able to succeed where England had failed,
especially in view of the past history of the Spanish, Portuguese,
French, and British Colonial Empires. This history also demonstrates
that the position of British Crown Colonies, in the respect which we are
considering, is not sensibly different from that of the self-governing
ones. It is not to be presumed, therefore, that any European nation
would attempt the desperately expensive business of the conquest of
England, for the purpose of making an experiment with her Colonies which
all colonial history shows to be doomed to failure.
What are the facts? Great Britain is the most successful colonizing
nation in the world, and the policy into which her experience has driven
her is that outlined by Sir C.P. Lucas, one of the greatest authorities
on colonial questions. He writes, speaking of the history of the British
Colonies on the American continent, thus:
It was seen--but it might not have been seen had the United
States not won their independence--that English colonists, like
Greek Colonies of old, go out on terms of being equal, not
subordinate, to those who are left behind; that when they have
effectively planted another and a distant land, they must,
within the widest limits, be left to rule themselves; that,
whether they are right, or whether they are wrong--more,
perhaps, when they are wrong than when they are right--they
cannot be made amenable by force; that mutual good feeling,
community of interest, and abstention from pressing rightful
claims to their logical conclusion, can alone hold together a
true Colonial Empire.
But what in the name of common sense is the advantage of conquering them
if the only policy is to let them do as they like, "whether they are
right, or whether they are wrong--more, perhaps, when they are wrong
than when they are right"? And what avails it to conquer them if they
cannot be made amenable to force? Surely this makes the whole thing a
_reductio ad absurdum_. Were a Power like Germany to use force to
conquer Colonies, she would find out that they were not amenable to
force, and that the only working policy was to let them do exactly as
they did before she conquered them, and to allow them, if they
chose--and many of the British Colonies do so choose--to treat the
Mother Country absolutely as a foreign country. There has recently been
going on in Canada a discussion as to the position which that Dominion
should hold with reference to the British in the event of war, and
that discussion has made Canada's position quite plain. It has been
summarized thus: "We must always be free to give or refuse support."[25]
Could a foreign nation say more? In what sense does England "own" Canada
when Canadians must always be free to give or refuse their military
support to England; and in what way does Canada differ from a foreign
nation while England may be at war when Canada can be at peace? Mr.
Asquith formally endorses this conception.[26]
This shows clearly that no Dominion is held to be bound by virtue of its
allegiance to the Sovereign of the British Empire to place its forces at
his disposition, no matter how real may be the emergency. If it should
not desire so to do, it is free to refuse so to do. This is to convert
the British Empire into a loose alliance of independent Sovereign
States, which are not even bound to help each other in case of war. The
military alliance between Austria and Germany is far more stringent than
the tie which unites, for purposes of war, the component parts of the
British Empire.
One critic, commenting on this, says:
Whatever language is used to describe this new movement of
Imperial defence, it is virtually one more step towards
complete national independence on the part of the Colonies. For
not only will the consciousness of the assumption of this task
of self-defence feed with new vigor the spirit of nationality,
it will entail the further power of full control over foreign
relations. This has already been virtually admitted in the case
of Canada, now entitled to a determinant voice in all treaties
or other engagements in which her interests are especially
involved. The extension of this right to the other colonial
nations may be taken as a matter of course. Home rule in
national defence thus established reduces the Imperial
connection to its thinnest terms.[27]
Still more significant, perhaps, is the following emphatic declaration
from Mr. Balfour himself. Speaking in London, on November 6, 1911, he
said:
We depend as an Empire upon the co-operation of absolutely
independent Parliaments. I am not talking as a lawyer; I am
talking as a politician. I believe from a legal point of view
that the British Parliament is supreme over the Parliament of
Canada or Australasia or the Cape or South Africa, but in fact
they are independent Parliaments, absolutely independent, and
it is our business to recognize that and to frame the British
Empire upon the co-operation of absolutely independent
Parliaments.[28]
Which means, of course, that England's position with regard to Canada
or Australia is just England's position with regard to any other
independent State; that she has no more "ownership" in Australia than
she has in Argentina. Indeed, facts of very recent English history have
established quite incontrovertibly this ridiculous paradox: England has
more influence--that is to say, a freer opportunity of enforcing her
point of view--with foreign nations than with her own Colonies. Indeed,
does not Sir C. P. Lucas's statement that "whether they are right or
wrong--still more, perhaps, when they are wrong," they must be left
alone, necessarily mean that her position with the Colonies is weaker
than her position with foreign nations? In the present state of
international feeling an English Statesman would never dream of
advocating that she should submit to foreign nations when they are
wrong. Recent history is illuminating on this point.
What were the larger motives that pushed England into war with the Dutch
Republics? To vindicate the supremacy of the British race in South
Africa, to enforce British ideals as against Boer ideals, to secure the
rights of British Indians and other British subjects, to protect the
native against Boer oppression, to take the government of the country
generally from a people whom, at that date, she was apt to describe as
"inherently incapable of civilization." What, however, is the outcome of
spending a billion and a quarter of dollars upon the accomplishment of
these objects? The present Government of the Transvaal is in the hands
of the Boer party.[29] England has achieved the union of South Africa in
which the Boer element is predominant. Britain has enforced against the
British Indian in the Transvaal and Natal the same Boer regulations
which were one of her grievances before the war, and the Houses of
Parliament have ratified an Act of Union in which the Boer attitude with
reference to the native is codified and made permanent. Sir Charles
Dilke, in the debate in the House of Commons on the South African Bill,
made this quite clear. He said: "The old British principle in South
Africa, as distinct from the Boer principle, in regard to the treatment
of natives, was equal rights for all civilized men. At the beginning of
the South African War the country was told that one of its main objects,
and certainly that the one predominant factor in any treaty of peace,
would be the assertion of the British principle as against the Boer
principle. Now the Boer principle dominates throughout the whole of
South Africa." Mr. Asquith, as representing the British Government,
admitted that this was the case, and that "the opinion of this country
is almost unanimous in objecting to the color bar in the Union
Parliament." He went on to say that "the opinion of the British
Government and the opinion of the British people must not be allowed to
lead to any interference with a self-governing Colony." So that, having
expended in the conquest of the Transvaal a greater sum than Germany
exacted from France at the close of the Franco-Prussian War, England has
not even the right to enforce her views on those whose contrary views
were the _casus belli_!
A year or two since there was in London a deputation from the British
Indians in the Transvaal pointing out that the regulations there deprive
them of the ordinary rights of British citizens. The British Government
informed them that the Transvaal being a self-governing Colony, the
Imperial Government could do nothing for them.[30] Now, it will not be
forgotten that, at a time when Britain was quarrelling with Paul Krueger,
one of the liveliest of her grievances was the treatment of British
Indians. Having conquered Krueger, and now "owning" his country, do the
British themselves act as they were trying to compel Paul Krueger as a
foreign ruler to act? They do not. They (or rather the responsible
Government of the Colony, with whom they dare not interfere, although
they were ready enough to make representations to Krueger) simply and
purely enforce his own regulations. Moreover, the Australian
Commonwealth and British Columbia have since taken the view with
reference to British Indians which President Krueger took, and which view
England made almost a _casus belli_. Yet in the case of her Colonies she
does absolutely nothing.
So the process is this: The Government of a foreign territory does
something which we ask it to cease doing. The refusal of the foreign
Government constitutes a _casus belli_. We fight, we conquer, and the
territory in question becomes one of our Colonies, and we allow the
Government of that Colony to continue doing the very thing which
constituted, in the case of a foreign nation, a _casus belli_.
Do we not, taking the English case as typical, arrive, therefore, at the
absurdity I have already indicated--_that we are in a worse position to
enforce our views in our own territory--that is to say, in our
Colonies--than in foreign territory_?
Would England submit tamely if a foreign Government should exercise
permanently gross oppression on an important section of her citizens?
Certainly she would not. But when the Government exercising that
oppression happens to be the Government of her own Colonies she does
nothing, and a great British authority lays it down that, even more
when the Colonial Government is wrong than when it is right, must she do
nothing, and that, though wrong, the Colonial Government cannot be
amenable to force. Nor can it be said that Crown Colonies differ
essentially in this matter from self-governing dominions. Not only is
there an irresistible tendency for Crown Colonies to acquire the
practical rights of self-governing dominions, but it has become a
practical impossibility to disregard their special interests. Experience
is conclusive on this point.
I am not here playing with words or attempting to make paradoxes. This
_reductio ad absurdum_--the fact that when she owns a territory she
renounces the privilege of using force to ensure observance of her
views--is becoming more and more a commonplace of British colonial
government.
As to the fiscal position of the Colonies, that is precisely what their
political relation is in all but name; they are foreign nations. T
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