THE FRUITS OF VICTORY

“THE GREAT ILLUSION”
CONTROVERSY

‘Mr. Angell’s pamphlet was a work as unimposing in form as it was daring in expression. For a time nothing was heard of it in public, but many of us will remember the curious way in which ... “Norman Angellism” suddenly became one of the principal topics of discussion amongst politicians and journalists all over Europe. Naturally at first it was the apparently extravagant and paradoxical elements that were fastened upon most—that the whole theory of the commercial basis of war was wrong, that no modern war could make a profit for the victors, and that—most astonishing thing of all—a successful war might leave the conquerors who received the indemnity relatively worse off than the conquered who raid it. People who had been brought up in the acceptance of the idea that a war between nations was analogous to the struggle of two errand boys for an apple, and that victory inevitably meant economic gain, were amazed into curiosity. Men who had never examined a Pacifist argument before read Mr. Angell’s book. Perhaps they thought that his doctrines sounded so extraordinarily like nonsense that there really must be some sense in them or nobody would have dared to propound them.’—The New Stateman, October 11, 1913.

‘The fundamental proposition of the book is a mistake.... And the proposition that the extension of national territory—that is the bringing of a large amount of property under a single administration—is not to the financial advantage of a nation appears to me as illusory as to maintain that business on a small capital is as profitable as on a large.... The armaments of European States now are not so much for protection against conquest as to secure to themselves the utmost possible share of the unexploited or imperfectly exploited regions of the world.’—The late Admiral Mahan.

‘I have long ago described the policy of The Great Illusion ... not only as a childish absurdity but a mischievous and immoral sophism.’—Mr. Frederic Harrison.

‘Among the mass of printed books there are a few that may be counted as acts, not books. The Control Social was indisputably one; and I venture to suggest to you that The Great Illusion is another. The thesis of Galileo was not more diametrically opposed to current ideas than those of Norman Angell. Yet it had in the end a certain measure of success.’—Viscount Esher.

‘When all criticisms are spent, it remains to express a debt of gratitude to Mr. Angell. He belongs to the cause of internationalism—the greatest of all the causes to which a man can set his hands in these days. The cause will not triumph by economics. But it cannot reject any ally. And if the economic appeal is not final, it has its weight. “We shall perish of hunger,” it has been said, “in order to have success in murder.” To those who have ears for that saying, it cannot be said too often.’—Political Thought in England, from Herbert Spencer to the Present Day, by Ernest Barker.

‘A wealth of closely reasoned argument which makes the book one of the most damaging indictments that have yet appeared of the principles governing the relation of civilized nations to one another.’—The Quarterly Review.

‘Ranks its author with Cobden amongst the greatest of our pamphleteers, perhaps the greatest since Swift.’—The Nation.

‘No book has attracted wider attention or has done more to stimulate thought in the present century than The Great Illusion.’—The Daily Mail.

‘One of the most brilliant contributions to the literature of international relations which has appeared for a very long time.’—Journal of the Institute of Bankers.

‘After five and a half years in the wilderness, Mr. Norman Angell has come back.... His book provoked one of the great controversies of this generation.... To-day, Mr. Angell, whether he likes it or not, is a prophet whose prophesies have come true.... It is hardly possible to open a current newspaper without the eye lighting on some fresh vindication of the once despised and rejected doctrine of Norman Angellism.’—The Daily News, February 25, 1920.

THE
FRUITS OF VICTORY

A SEQUEL TO
“THE GREAT ILLUSION”
BY
NORMAN ANGELL

NEW YORK
THE CENTURY CO.
1921

• BY THE SAME AUTHOR
  • PATRIOTISM UNDER THREE FLAGS
  • THE GREAT ILLUSION
  • THE FOUNDATIONS OF INTERNATIONAL POLITY
  • WHY FREEDOM MATTERS
  • WAR AND THE WORKER
  • AMERICA AND THE WORLD STATE (AMERICA)
  • PRUSSIANISM AND ITS DESTRUCTION
  • THE WORLD’S HIGHWAY (AMERICA)
  • WAR AIMS
  • DANGERS OF HALF-PREPAREDNESS (AMERICA)
  • POLITICAL CONDITIONS OF ALLIED SUCCESS (AMERICA)
  • THE BRITISH REVOLUTION AND THE AMERICAN DEMOCRACY (AMERICA)
  • THE PEACE TREATY AND THE ECONOMIC CHAOS

Copyright, 1921, by
The Century Co.
Printed in the U. S. A.

To H. S.

INTRODUCTION TO THE AMERICAN EDITION

THE case which is argued in these pages includes the examination of certain concrete matters which very obviously and directly touch important American interests—American foreign trade and investments, the exchanges, immigration, armaments, taxation, industrial unrest and the effect of these on social and political organisation. Yet the greatest American interest here discussed is not any one of those particular issues, or even the sum of them, but certain underlying forces which more than anything else, perhaps, influence all of them. The American reader will have missed the main bearing of the argument elaborated in these pages unless that point can be made clear.

Let us take a few of the concrete issues just mentioned. The opening chapter deals with the motives which may push Great Britain still to struggle for the retention of predominant power at sea. The force of those motives is obviously destined to be an important factor in American politics, in determining, for instance, the amount of American taxation. It bears upon the decisions which American voters and American statesmen will be called upon to make in American elections within the next few years. Or take another aspect of the same question: the peculiar position of Great Britain in the matter of her dependence upon foreign food. This is shown to be typical of a condition common to very much of the population of Europe, and brings us to the problem of the pressure of population in the older civilisations upon the[Pg ] means of subsistence. That “biological pressure” is certain, in some circumstances, to raise for America questions of immigration, of relations generally with foreign countries, of defence, which American statesmanship will have to take into account in the form of definite legislation that will go on to American Statute books. Or, take the general problem of the economic reconstruction of Europe, with which the book is so largely occupied. That happens to bear, not merely on the expansion of American trade, the creation of new markets, that is, and on the recovery of American debts, but upon the preservation of markets for cotton, wheat, meat and other products, to which large American communities have in the past looked, and do still look, for their prosperity and even for their solvency. Again, dealing with the manner in which the War has affected the economic organisation of the European society, the writer has been led to describe the process by which preparation for modern war has come to mean, to an increasing degree, control by the government of the national resources as a whole, thus setting up strong tendencies towards a form of State Socialism. To America, herself facing a more far-reaching organisation of the national resources for military purposes than she has known in the past, the analysis of such a process is certainly of very direct concern. Not less so is the story of the relation of revolutionary forces in the industrial struggle—“Bolshevism”—-to the tendencies so initiated or stimulated.

One could go on expanding this theme indefinitely, and write a whole book about America’s concern in these things. But surely in these days it would be a book of platitudes, elaborately pointing out the obvious. Yet an American critic of these pages in their European form warns me that I must be careful to show their interest for American readers.

Their main interest for the American is not in the kind of relationship just indicated, very considerable and immediate as that happens to be. Their chief interest is in this: they[Pg ] attempt an analysis of the ultimate forces of policies in Western society; of the interrelation of fundamental economic needs and of predominant political ideas—public opinion, with its constituent elements of “human nature,” social—or anti-social—instinct, the tradition of Patriotism and Nationalism, the mechanism of the modern Press. It is suggested in these pages that some of the main factors of political action, the dominant motives of political conduct, are still grossly neglected by “practical statesmen”; and that the statesmen still treat as remote and irrelevant certain moral forces which recent events have shown to have very great and immediate practical importance. (A number of cases are discussed in which practical and realist European statesmen have seen their plans touching the stability of alliances, the creation of international credit, the issuing of international loans, indemnities, a “new world” generally, all this frustrated because in drawing them up they ignored the invisible but final factor of public feeling and temper, which the whole time they were modifying or creating, thus unconsciously undermining the edifices they were so painfully creating. Time and again in the last few years practical men of affairs in Europe have found themselves the helpless victims of a state of feeling or opinion which they so little understood that they had often themselves unknowingly created it.)

In such hard realities as the exaction of an indemnity, we see governments forced to policies which can only make their task more difficult, but which they are compelled to adopt in order to placate electoral opinion, or to repel an opposition which would exploit some prevailing prejudice or emotion.

To understand the nature of forces which must determine America’s main domestic and foreign policies—as they have determined those of Western Society in Europe during the last generation—is surely an “American interest”; though indeed, in neglecting the significance of those “hidden currents flowing continually beneath the surface of political history,” American students of politics would be following much European precedent. Although public opinion and feeling are the raw material with which statesmen deal, it is still considered irrelevant and academic to study the constituent elements of that raw material.

Americans are sufficiently detached from Europe to see that in the way of a better unification of that Continent for the purposes of its own economic and moral restoration stand disruptive forces of “Balkanisation,” a development of the spirit of Nationalism which the statesmen for years have encouraged and exploited. The American of to-day speaks of the Balkanisation of Europe just as the Englishman of two or three years ago spoke of the Balkanisation of the Continent, of the wrangles of Poles, Czecho-Slovaks, Hungarians, Rumanians, Italians, Jugo-Slavs. And the attitude of both Englishman and American are alike in this: to the Englishman, watching the squabbles of all the little new States and the breaking out of all the little new wars, there seemed at work in that spectacle forces so suicidal that they could never in any degree touch his own political problems; the American to-day, watching British policy in Ireland or French policy towards Germany, feels that in such conflict are moral forces that could never produce similar paralysis in American policy. “Why,” asks the confident American, “does England bring such unnecessary trouble upon herself by her military conduct in Ireland? Why does France keep three-fourths of a Continent still in ferment, making reparations more and more remote”? Americans have a very strong feeling that they could not be guilty of the Irish mess, or of prolonging the confusion which threatens to bring Europe’s civilisation to utter collapse. How comes it that the English people, so genuinely and so sincerely horrified at the thought of what a Bissing could do in Belgium, unable to understand how the German people could tolerate a government guilty of such things, somehow find that their own British Government is doing very similar things in Cork and Balbriggan; and finding it, simply acquiesce? To the American the indefensibility of British conduct is plain. “America could never be guilty of it.” To the Englishman just now, the indefensibility of French conduct is plain. The policy which France is following is seen to be suicidal from the point of view of French interests. The Englishman is sure that “English political sense” would never tolerate it in an English government.

The situation suggests this question: would Americans deny that England in the past has shown very great political genius, or that the French people are alert, open-minded, “realist,” intelligent? Recalling what England has done in the way of the establishment of great free communities, the flexibility and “practicalness” of her imperial policy, what France has contributed to democracy and European organisation, can we explain the present difficulties of Europe by the absence, on the part of Englishmen or Frenchmen, or other Europeans, of a political intelligence granted only so far in the world’s history to Americans? In other words, do Americans seriously argue that the moral forces which have wrought such havoc in the foreign policy of European States could never threaten the foreign policy of America? Does the American plead that the circumstances which warp an Englishman’s or Frenchman’s judgment could never warp an American’s? Or that he could never find himself in similar circumstances? As a matter of fact, of course, that is precisely what the American—like the Englishman or Frenchman or Italian in an analogous case—does plead. To have suggested five years ago to an Englishman that his own generals in India or Ireland would copy Bissing, would have been deemed too preposterous even for anger: but then equally, to Americans, supporting in their millions in 1916 the League to Enforce Peace, would the idea have seemed preposterous that a few years later America, having the power to take the lead in a Peace League, would refuse to do so, and would herself be demanding, as the result of participation in a war to end war, greater armament than ever—as protection against Great Britain.

I suggest that if an English government can be led to sanction and defend in Ireland the identical things which shocked the world when committed in Belgium by Germans, if France to-day threatens Europe with a military hegemony not less mischievous than that which America determined to destroy, the causes of those things must be sought, not in the special wickedness of this or that nation, but in forces which may operate among any people.

One peculiarity of the prevailing political mind stands out. It is evident that a sensible, humane and intelligent people, even with historical political sense, can quite often fail to realise how one step of policy, taken willingly, must lead to the taking of other steps which they detest. If Mr. Lloyd George is supporting France, if the French Government is proclaiming policies which it knows to be disastrous, but which any French Government must offer to its people or perish, it is because somewhere in the past there have been set in motion forces the outcome of which was not realised. And if the outcome was not realised, although, looking back, or looking at the situation from the distance of America from Europe, the inevitability of the result seems plain enough, I suggest that it is because judgment becomes warped as the result of certain feelings or predominant ideas; and that it will be impossible wisely to guide political conduct without some understanding of the nature of those feelings and ideas, and unless we realise with some humility and honesty that all nations alike are subject to these weaknesses.

We all of us clamantly and absolutely deny this plain fact when it is suggested that it also applies to our own people. What would have happened to the publicist who, during the War, should have urged: “Complete and overwhelming victory will be bad, because we shall misuse it?” Yet all the victories of history would have been ground for such a warning. Universal experience was not merely flouted by the uninstructed. One of the curiosities of war literature is the fashion in which the most brilliant minds, not alone in politics, but in literature and social science, simply disregard this obvious truth. We each knew “our” people—British, French, Italian, American—to be good people: kindly, idealistic, just. Give them the power to do the Right—to do justice, to respect the rights of others, to keep the peace—and it will be done. That is why we wanted “unconditional surrender” of the Germans, and indignantly rejected a negotiated peace. It was admitted, of course, that injustice at the settlement would fail to give us the world we fought for. It was preposterous to suppose that we, the defenders of freedom and democracy, arbitration, self-determination,—America, Britain, France, Japan, Russia, Italy, Rumania—should not do exact and complete justice. So convinced, indeed, were we of this that we may search in vain the works of all the Allied writers to whom any attention was paid, for any warning whatsoever of the one danger which, in fact, wrecked the settlement, threw the world back into its oldest difficulties, left it fundamentally just where it was, reduced the War to futility. The one condition of justice—that the aggrieved party should not be in the position of imposing his unrestrained will—, the one truth which, for the world’s welfare, it was most important to proclaim, was the one which it was black heresy and blasphemy to utter, and which, to do them justice, the moral and intellectual guides of the nations never did utter.

It is precisely the truth which Americans to-day are refusing to face. We all admit that, “human nature being what it is,” preponderance of power, irresponsible power, is something which no nation (but our own) can be trusted to use wisely or with justice. The backbone of American policy shall therefore be an effort to retain preponderance of power. If this be secured, little else matters. True, the American advocate of isolation to-day says: “We are not concerned with Europe. We ask only to be let alone. Our preponderance of power, naval or other, threatens no-one. It is purely defensive.” Yet the truth is that the demand for preponderance of armaments itself involves a denial of right. Let us see why.

No one denies that the desire to possess a definitely preponderant navy is related, at least in some degree, to such things as, shall we say, the dispute over the Panama tolls. A growing number feel and claim that that is a purely American dispute. To subject it to arbitral decision, in which necessarily Europeans would have a preponderance, would be to give away the American case beforehand. With unquestioned naval preponderance over any probable combination of rivals, America is in a position to enforce compliance with what she believes to be her just rights. At this moment a preponderant navy is being urged on precisely those grounds. In other words, the demand is that in a dispute to which she is a party she shall be judge, and able to impose her own judgement. That is to say, she demands from others the acceptance of a position which she would not herself accept. There is nothing at all unusual in the demand. It is the feeling which colours the whole attitude of combative nationalism. But it none the less means that “adequate defence” on this basis inevitably implies a moral aggression—a demand upon others which, if made by others upon ourselves, we should resist to the death.

It is not here merely or mainly the question of a right: American foreign policy has before it much the same alternatives with reference to the world as a whole, as were presented to Great Britain with reference to the Continent in the generation which preceded the War. Her “splendid isolation” was defended on grounds which very closely resemble those now put forward by America as the basis of the same policy. Isolation meant, of course, preponderance of power, and when she declared her intention to use that power only on behalf of even-handed justice, she not only meant it, but carried out the intention, at least to an extent that no other nation has done. She accorded a degree of equality in economic treatment which is without parallel. One thing only led her to depart from justice: that was the need of maintaining the supremacy. For this she allowed herself to become involved in certain exceedingly entangling Alliances. Indeed, Great Britain found that at no period of her history were her domestic politics so much dominated by the foreign situation as when she was proclaiming to the world her splendid isolation from foreign entanglements. It is as certain, of course, that American “isolation” would mean that the taxation of Gopher Prairie would be settled in Tokio; and that tens of thousands of American youth would be sentenced to death by unknown elderly gentlemen in a European Cabinet meeting. If the American retorts that his country is in a fundamentally different position, because Great Britain possesses an Empire and America does not, that only proves how very much current ideas in politics fail to take cognizance of the facts. The United States to-day has in the problem of the Philippines, their protection and their trade, and the bearing of those things upon Japanese policy; in Hayti and the West Indies, and their bearing upon America’s subject nationality problem of the negro; in Mexico, which is likely to provide America with its Irish problem; in the Panama Canal tolls question and its relation to the development of a mercantile marine and naval competition with Great Britain, in these things alone, to mention no others, subjects of conflict, involving defence of American interests, out of which will arise entanglements not differing greatly in kind from the foreign questions which dominated British domestic policy during the period of British isolation.

Now, what America will do about these things will not depend upon highly rationalised decisions, reached by a hundred million independent thinkers investigating the facts concerning the Panama Treaty, the respective merits of alternative alliance combinations, or the real nature of negro grievances. American policy will be determined by the same character of force as has determined British policy in Ireland or India, in Morocco or Egypt, French policy in Germany or in Poland, or Italian policy in the Adriatic. The “way of thinking” which is applied to the decisions of the American democracy has behind it the same kind of moral and intellectual force that we find in the society of Western Europe as a whole. Behind the American public mind lie practically the same economic system based on private property, the same kind of political democracy, the same character of scholastic training, the same conceptions of nationalism, roughly the same social and moral values. If we find certain sovereign ideas determining the course of British or French or Italian policy, giving us certain results, we may be sure that the same ideas will, in the case of America, give us very much the same results.

When Britain spoke of “splendid isolation,” she meant what America means by the term to-day, namely, a position by virtue of which, when it came to a conflict of policy between herself and others, she should possess preponderant power, so that she could impose her own view of her own rights, be judge and executioner in her own case. To have suggested to an Englishman twenty years ago that the real danger to the security of his country lay in the attitude of mind dominant among Englishmen themselves, that the fundamental defect of English policy was that it asked of others something which Englishmen would never accord if asked by others of them, and that such a policy was particularly inimical in the long run to Great Britain, in that her population lived by processes which dominant power could not, in the last resort, exact—such a line of argument would have been, and indeed was, regarded as too remote from practical affairs to be worth the attention of practical politicians. A discussion of the Japanese Alliance, the relations with Russia, the size of foreign fleets, the Bagdad railway, would have been regarded as entirely practical and relevant. These things were the “facts” of politics. It was not regarded as relevant to the practical issues to examine the role of certain general ideas and traditions which had grown up in England in determining the form of British policy. The growth of a crude philosophy of militarism, based on a social pseudo-Darwinism, the popularity of Kipling and Roberts, the jingoism of the Northcliffe Press—these things might be regarded as items in the study of social psychology; they were not regarded as matters for the practical statesman. “What would you have us do about them, anyway?”

It has happened to the present writer, in addressing American students, to lay stress upon the rôle of certain dominant ideas in determining policy (upon the idea, say, of the State as a person, upon the conception of States as necessarily rival entities), and afterwards to get questions in this wise: “Your lecture seems to imply an internationalist policy. What is your plan? What ought we to do? Should we make a naval alliance, with Great Britain, or form a new League of Nations, or denounce Article X, or ...?” I have replied: “The first thing to do is to change your ideas and moral values; or to get to know them better. That is the most practical and immediate platform, because all others depend on it. We all profess great love of peace and justice. What will you pay for it, in terms of national sovereignty? What degree of sovereignty will you surrender as your contribution to a new order? If your real feeling is for domination, then the only effect of writing constitutions of the League of Nations will be to render international organisation more remote than ever, by showing how utterly incompatible it is with prevailing moral values.”

But such a reply is usually regarded as hopelessly “unpractical.” There is no indication of something to be “done”—a platform to be defended or a law to be passed. To change fundamental opinions and redirect desires is not apparently to “do” anything at all. Yet until that invisible thing is done our Covenants and Leagues will be as futile as have been the numberless similar plans of the past, “concerning which,” as one seventeenth century critic wrote, “I know no single imperfection save this: That by no possibility would any Prince or people be brought to abide by them.” It was, I believe, regarded as a triumph of practical organisation to have obtained nation-wide support for the ‘League to Enforce Peace’ proposal, “without raising controversial matters at all”—leaving untouched, that is, the underlying ideas of patriotism, of national right and international obligation, the prevailing moral and political values, in fact. The subsequent history of America’s relation to the world’s effort to create a League of Nations is sufficient commentary as to whether it is “practical” to devise plans and constitutions without reference to a prevailing attitude of mind.

America has before her certain definite problems of foreign policy—Japanese immigration into the United States and the Philippines; concessions granted to foreigners in Mexico; the question of disorder in that country; the relations with Hayti (which will bear on the question of America’s subject nationality, the negro); the exemption of American ships from tolls in the Panama Canal; the exclusion of foreign shipping from “coastwise” trade with the Philippines. It would be possible to draw up plans of settlement with regard to each item which would be equitable. But the development of foreign policy (which, more than any other department of politics, will fix the quality of American society in the future) will not depend upon the more or less equitable settlement of those specific questions. The specific differences between England and Germany before the War were less serious than those between England and America—and were nearly all settled when war broke out. Whether an issue like Japanese immigration or the Panama tolls leads to war will not depend upon its intrinsic importance, or whether Britain or Japan or America make acceptable proposals on the subject. Mr ex-Secretary Daniels has just told us that the assertion of the right to establish a cable station on the Island of Yap is good ground for risking war. The specific issues about which nations fight are so little the real cause of the fight that they are generally completely forgotten when it comes to making the peace. The future of submarine warfare was not mentioned at Versailles. Given a certain state of mind, a difference about cables on the Island of Yap is quite sufficient to make war inevitable. We should probably regard it as a matter of national honour, concerning which there must be no argument. Another mood, and it would be impossible to get the faintest ripple of interest in the subject.

It was not British passion for Serbian nationality which brought Britain to the side of Russia in 1914. It was the fear of German power and what might be done with it, a fear wrought to frenzy pitch by a long indoctrination concerning German wickedness and aggression. Passion for the subjugation of Germany persisted long after there was any ground of fear of what German power might accomplish. If America fights Japan, it will not be over cables on Yap; it will be from fear of Japanese power, the previous stimulation of latent hatreds for the strange and foreign. And if the United States goes to war over Panama Canal tolls, it will not be because the millions who will get excited over that question have examined the matter, or possess ships or shares in ships that will profit by the exemption; it will be because all America has read of Irish atrocities which recall school-day histories of British atrocities in the American Colonies; because the “person,” Britain, has become a hateful and hostile person, and must be punished and coerced.

War either with Japan or Britain or both is, of course, quite within the region of possibility. It is merely an evasion of the trouble which facing reality always involves, to say that war between Britain and America is “unthinkable.” If any war, as we have known it these last ten years, is thinkable, war between nations that have already fought two wars is obviously not unthinkable. And those who can recall at all vividly the forces which marked the growth of the conflict between Britain and Germany will see just those forces beginning to colour the relations of Britain and America. Among those forces none is more notable than this: a disturbing tendency to stop short at the ultimate questions, a failure to face the basic causes of divergence. Among people of good will there is a tendency to say: “Don’t let’s talk about it. Be discreet. Let us assume we are good friends and we shall be. Let us exchange visits.” In just such a way, even within a few weeks of war, did people of good will in England and Germany decide not to talk of their differences, to be discreet, to exchange visits. But the men of ill will talked—talked of the wrong things—and sowed their deadly poison.

These pages suggest why neither side in the Anglo-German conflict came down to realities before the War. To have come to fundamentals would have revealed the fact to both parties that any real settlement would have asked things which neither would grant. Really to have secured Germany’s future economic security would have meant putting her access to the resources of India and Africa upon a basis of Treaty, of contract. That was for Britain the end of Empire, as Imperialists understood it. To have secured in exchange the end of “marching and drilling” would have been the end of military glory for Prussia. For both it would have meant the surrender of certain dominations, a recasting of patriotic ideals, a revolution of ideas.

Whether Britain and America are to fight may very well depend upon this: whether the blinder and more unconscious motives rooted in traditional patriotisms, and the impulse to the assertion of power, will work their evil before the development of ideas has brought home to us a clearer vision of the abyss into which we fall; before we have modified, in other words, our tradition of patriotism, our political moralities, our standard of values. Without that more fundamental change no scheme of settlement of specific differences, no platforms, Covenants, Constitution can avail, or have any chance of acceptance or success.

As a contribution to that change of ideas and of values these pages are offered.

SUMMARY OF ARGUMENT

THE central conclusion suggested by the following analysis of the events of the past few years is that, underlying the disruptive processes so evidently at work—especially in the international field—is the deep-rooted instinct to the assertion of domination, preponderant power. This impulse sanctioned and strengthened by prevailing traditions of ‘mystic’ patriotism, has been unguided and unchecked by any adequate realisation either of its anti-social quality, the destructiveness inseparable from its operation, or its ineffectiveness to ends indispensable to civilisation.

The psychological roots of the impulse are so deep that we shall continue to yield to it until we realise more fully its danger and inadequacy to certain vital ends like sustenance for our people, and come to see that if civilisation is to be carried on we must turn to other motives. We may then develop a new political tradition, which will ‘discipline’ instinct, as the tradition of toleration disciplined religious fanaticism when that passion threatened to shatter European society.

Herein lies the importance of demonstrating the economic futility of military power. While it may be true that conscious economic motives enter very little into the struggle of nations, and are a very small part of the passions of patriotism and nationalism, it is by a realisation of the economic truth regarding the indispensable condition of adequate life, that those passions will be checked, or redirected and civilised.

This does not mean that economic considerations should dominate life, but rather the contrary—that those considerations will dominate it if the economic truth is neglected. A people that starves is a people thinking only of material things—food. The way to dispose of economic pre-occupations is to solve the economic problem.

The bearing of this argument is that developed by the present writer in a previous book, The Great Illusion, and the extent to which it has been vindicated by events, is shown in the Addendum.

CONTENTS

SYNOPSIS

CHAPTER I (pp. 3-60)
OUR DAILY BREAD

AN examination of the present conditions in Europe shows that much of its dense population (particularly that of these islands) cannot live at a standard necessary for civilisation (leisure, social peace, individual freedom) except by certain co-operative processes which must be carried on largely across frontiers. (The prosperity of Britain depends on the production by foreigners of a surplus of food and raw material above their own needs.) The present distress is not mainly the result of the physical destruction of war (famine or shortage is worst, as in the Austrian and German and Russian areas, where there has been no destruction). The Continent as a whole has the same soil and natural resources and technical knowledge as when it fed its populations. The causes of its present failure at self-support are moral: economic paralysis following political disintegration, ‘Balkanisation’; that, in its turn, due to certain passions and prepossessions.

A corresponding phenomenon is revealed within each national society: a decline of production due to certain moral disorders, mainly in the political field; to ‘unrest,’ a greater cleavage between groups, rendering the indispensable co-operation less effective.

The necessary co-operation, whether as between nations or groups within each nation, cannot be compelled by physical coercion, though disruptive forces inseparable from the use of coercion can paralyse co-operation. Allied preponderance of power over Germany does not suffice to obtain indemnities, or even coal in the quantities demanded by the Treaty. The output of the workers in Great Britain would not necessarily be improved by adding to the army or police force. As interdependence increases, the limits of coercion are narrowed. Enemies that are to pay large indemnities must be permitted actively to develop their economic life and power; they are then so potentially strong that enforcement of the demands becomes correspondingly expensive and uncertain. Knowledge and organisation acquired by workers for the purposes of their labour can be used to resist oppression. Railwaymen or miners driven to work by force would still find means of resistance. A proletarian dictatorship cannot coerce the production of food by an unwilling peasantry. The processes by which wealth is produced have, by increasing complexity, become of a kind which can only be maintained if there be present a large measure of voluntary acquiescence, which means, in its turn, confidence. The need for that is only made the more imperative by the conditions which have followed the virtual suspension of the gold standard in all the belligerent States of Europe, the collapse of the exchanges and other manifestations of instability of the currencies.

European statesmanship, as revealed in the Treaty of Versailles, and in the conduct of international affairs since the Armistice, has recognised neither the fact of interdependence—the need for the economic unity of Europe—nor the futility of attempted coercion. Certain political ideas and passions give us an unworkable Europe. What is their nature? How have they arisen? How can they be corrected? These questions are part of the problem of sustenance; which is the first indispensable of civilisation.

CHAPTER II (pp. 61-80)
THE OLD ECONOMY AND THE POST-WAR STATE

THE trans-national processes which enabled Europe to support itself before the War were based mainly on private exchanges prompted by the expectation of individual advantage. They were not dependent upon political power. (The fifteen millions for whom German soil could not provide lived by trade with countries over which Germany had no political control, as a similar number of British live by similar non-political means.)

The old individualist economy has been largely destroyed by the State Socialism introduced for war purposes: the nation, taking over individual enterprise, became trader and manufacturer in increasing degree. The economic clauses of the Treaty, if enforced, must prolong this tendency, rendering a large measure of such Socialism permanent.

The change may be desirable. But if co-operation must in future be less as between individuals for private advantage, and much more as between nations, governments acting in an economic capacity, the political emotions of nationalisation will play a much larger role in the economic processes of Europe. If to Nationalist hostilities as we have known them in the past is to be added the commercial rivalry of nations now converted into traders and capitalists, we are likely to have not a less but a more quarrelsome world, unless the fact of interdependence is much more vividly realised than in the past.

CHAPTER III (pp. 81-111)
NATIONALITY, ECONOMICS, AND THE ASSERTION OF RIGHT

THE change noted in the preceding chapter raises a profound question of Right—Have we the right to use our power to deny to others the means of life? By our political power we can create a Europe which, while not assuring advantage to the victor, deprives the vanquished of means of existence. The loss of both ore and coal by the Central Powers might well make it impossible for their future populations to find food. What are they to do? Starve? To disclaim responsibility is to claim that we are entitled to use our power to deny them life.

This ‘right’ to starve foreigners can only be invoked by invoking the conception of nationalism—‘Our nation first.’ But the policy of placing life itself upon a foundation of preponderant force, instead of mutually advantageous co-operation, compels statesmen perpetually to betray the principle of nationality; not only directly, (as in the case of the annexation of territory, economically necessary, but containing peoples of alien nationality,) but indirectly; for the resistance which our policy (of denying means of subsistence to others) provokes, makes preponderance of power the condition of survival. All else must give way to that need.

Might cannot be pledged to Right in these conditions. If our power is pledged to Allies for the purpose of the Balance (which means, in fact, preponderance), it cannot be used against them to enforce respect for (say) nationality. To turn against Allies would break the Balance. To maintain the Balance of Power we are compelled to disregard the moral merits of an Ally’s policy (as in the case of the promise to the Czar’s government not to demand the independence of Poland). The maintenance of a Balance (i.e. preponderance) is incompatible with the maintenance of Right. There is a conflict of obligation.

CHAPTER IV (pp. 112-141)
MILITARY PREDOMINANCE—AND INSECURITY

THE moral questions raised in the preceding chapter have a direct bearing on the effectiveness of military power based on the National unit, or a group of National units, such as an Alliance. Military preponderance of the smaller Western National units over large and potentially powerful groups, like the German or the Russian, must necessitate stable and prolonged co-operation. But, as the present condition of the Alliance which fought the War shows, the rivalries inseparable from the fears and resentments of ‘instinctive’ nationalism, make that prolonged co-operation impossible. The qualities of Nationalism which stand in the way of Internationalism stand also in the way of stable alliances (which are a form of Internationalism) and make them extremely unstable foundations of power.

The difficulties encountered by the Allies in taking combined action in Russia show that to this fundamental instability due to the moral nature of Nationalism, must be added, as causes of military paralysis, the economic disruption which reduces the available material resources, and the social unrest (largely the result of the economic difficulties) which undermines the cohesion even of the national unit.

These forces render military predominance based on the temporary co-operation of units still preserving the Nationalist outlook extremely precarious and unreliable.

CHAPTER V (pp. 142-168)
PATRIOTISM AND POWER IN WAR AND PEACE: THE SOCIAL OUTCOME

THE greatest and most obvious present need of Europe, for the salvation of its civilisation, is unity and co-operation. Yet the predominant forces of its politics push to conflict and disunity. If it is the calculating selfishness of ‘realist’ statesmen that thus produces impoverishment and bankruptcy, the calculation would seem to be defective. The Balkanisation of Europe obviously springs, however, from sources belonging to our patriotisms, which are mainly uncalculating and instinctive, ‘mystic’ impulses and passions. Can we safely give these instinctive pugnacities full play?

One side of patriotism—gregariousness, ‘herd instinct’—has a socially protective origin, and is probably in some form indispensable. But coupled with uncontrolled pugnacity, tribal gregariousness grows into violent partisanship as against other groups, and greatly strengthens the instinct to coercion, the desire to impose our power.

In war-time, pugnacity, partisanship, coerciveness can find full satisfaction in the fight against the enemy. But when the war is over, these instincts, which have become so highly developed, still seek satisfaction. They may find it in two ways: in conflict between Allies, or in strife between groups within the nation.

We may here find an explanation of what seems otherwise a moral enigma: that just after a war, universally lauded as a means of national unity, ‘bringing all classes together,’ the country is distraught by bitter social chaos, amounting to revolutionary menace; and that after the war which was to wipe out at last all the old differences which divided the Allies, their relations are worse than before the War (as in the case of Britain and America and Britain and France).

Why should the fashionable lady, capable of sincere self-sacrifice (scrubbing hospital floors and tending canteens) for her countrymen when they are soldiers, become completely indifferent to the same countrymen when they have returned to civil life (often dangerous and hard, as in mining and fishing)? In the latter case there is no common enmity uniting duchess and miner.

Another enigma may be solved in the same way: why military terrorism, unprovoked war, secret diplomacy, autocratic tyranny, violation of nationality, which genuinely appal us when committed by the enemy, leave us unmoved when political necessity’ provokes very similar conduct on our part; why the ideals for which we went to war become matters of indifference to us when we have achieved victory. Gregariousness, which has become intense partisanship, makes right that which our side does or desires; wrong that which the other side does.

This is fatal, not merely to justice, but to sincerity, to intellectual rectitude, to the capacity to see the truth objectively. It explains why we can, at the end of a war, excuse or espouse the very policies which the war was waged to make impossible.

CHAPTER VI (pp. 169-198)
THE ALTERNATIVE RISKS OF STATUS AND CONTRACT

INSTINCT, being co-terminous with all animal life, is a motive of conduct immeasurably older and more deeply rooted than reasoning based on experience. So long as the instinctive, ‘natural’ action succeeds, or appears to succeed in its object, we do not trouble to examine the results of instinct or to reason. Only failure causes us to do that.

We have seen that the pugnacities, gregariousness, group partisanship embodied in patriotism, give a strong emotional push to domination, the assertion of our power over others as a means of settling our relations with them. Physical coercion marks all the early methods in politics (as in autocracy and feudalism), in economics (as in slavery), and even in the relations of the sexes.

But we try other methods (and manage to restrain our impulse sufficiently) when we really discover that force won’t work. When we find we cannot coerce a man but still need his service, we offer him inducements, bargain with him, enter a contract. This is the result of realising that we really need him, and cannot compel him. That is the history of the development from status to contract.

Stable international co-operation cannot come in any other way. Not until we realise the failure of national coercive power for indispensable ends (like the food of our people) shall we cease to idealise power and to put our intensest political emotions, like those of patriotism, behind it.

The alternative to preponderance is partnership of power. Both may imply the employment of force (as in policing), but the latter makes force the instrument of a conscious social purpose, offering to the rival that challenges the force (as in the case of the individual criminal within the nation) the same rights as those claimed by the users of force. Force as employed by competitive nationalism does not do this. It says ‘You or me,’ not ‘You and me.’ The method of social co-operation may fail temporarily; but it has the perpetual opportunity of success. It succeeds the moment that the two parties both accept it. But the other method is bound to fail; the two parties cannot both accept it. Both cannot be masters. Both can be partners.

The failure of preponderant power on a nationalist basis for indispensable ends would be self-evident but for the push of the instincts which warp our judgment.

Yet faith in the social method is the condition of its success. It is a choice of risks. We distrust and arm. Others, then, are entitled also to distrust; their arming is our justification for distrusting them. The policy of suspicion justifies itself. To allay suspicion we must accept the risk of trust. That, too, will justify itself.

Man’s future depends on making the better choice, for either the distrust or the faith will justify itself. His judgment will not be fit to make that choice if it is warped by the passions of pugnacity and hate that we have cultivated as part of the apparatus of war.

CHAPTER VII (pp. 199-251)
THE SPIRITUAL ROOTS OF THE SETTLEMENT

IF our instinctive pugnacities and hates are uncontrollable, and they dictate conduct, no more is to be said. We are the helpless victims of outside forces, and may as well surrender. But many who urge this most insistently in the case of our patriotic pugnacities obviously do not believe it: their demands for the suppression of ‘defeatist’ propaganda during the War, their support of war-time propaganda for the maintenance of morale, their present fears of the ‘deadly infection’ of Bolshevist ideas, indicate, on the contrary, a very real belief that feelings can be subject to an extremely rapid modification or redirection. In human society mere instinct has always been modified or directed in some measure by taboos, traditions, conventions, constituting a social discipline. The character of that discipline is largely determined by some sense of social need, developed as the result of the suggestion of transmitted ideas, discussions, intellectual ferment.

The feeling which made the Treaty inevitable was the result of a partly unconscious but also partly conscious propaganda of war half-truths, built up on a sub-structure of deeply rooted nationalist conceptions. The systematic exploitation of German atrocities, and the systematic suppression of similar Allied offences, the systematic suppression of every good deed done by our enemy, constituted a monstrous half-truth. It had the effect of fortifying the conception of the enemy people as a single person; its complete collective responsibility. Any one of them—child, woman, invalid—could properly be punished (by famine, say) for any other’s guilt. Peace became a problem of repressing or destroying this entirely bad person by a combination of nations entirely good.

This falsified the nature of the problem, gave free rein to natural and instinctive retaliations, obscured the simplest human realities, and rendered possible ferocious cruelty on the part of the Allies. There would have been in any case a strong tendency to ignore even the facts which in Allied interest should have been considered. In the best circumstances it would have been extremely difficult to put through a Wilsonian (type 1918) policy, involving restraint of the sacred egoisms, the impulsive retaliations, the desire for dominion inherent in ‘intense’ nationalisms. The efficiency of the machinery by which the Governments for the purpose of war formed the mind of the nation, made it out of the question.

If ever the passions which gather around the patriotisms disrupting and Balkanising Europe are to be disciplined or directed by a better social tradition, we must face without pretence or self-deception the results which show the real nature of the older political moralities. We must tell truths that disturb strong prejudices.

THE FRUITS OF VICTORY

CHAPTER I
OUR DAILY BREAD

I
The relation of certain economic facts to Britain’s independence and Social Peace

POLITICAL instinct in England, particularly in the shaping of naval policy, has always recognised the intimate relation which must exist between an uninterrupted flow of food to these shores and the preservation of national independence. An enemy in a position to stop that flow would enjoy not merely an economic but a political power over us—the power to starve us into ignominious submission to his will.

The fact has, of course, for generations been the main argument for Britain’s right to maintain unquestioned command of the sea. In the discussions before the War concerning the German challenge to our naval power, it was again and again pointed out that Britain’s position was very special: what is a matter of life and death for her had no equivalent importance for other powers. And it was when the Kaiser announced that Germany’s future was upon the sea that British fear became acute! The instinct of self-preservation became aroused by the thought of the possible possession in hostile hands of an instrument that could sever vital arteries.

The fact shows how impossible it is to divide off into watertight compartments the ‘economic’ from the political or moral. To preserve the capacity to feed our people, to see that our children shall have milk, is certainly an economic affair—a commercial one even. But it is an indispensable condition also of the defence of our country, of the preservation of our national freedom. The ultimate end behind the determination to preserve a preponderant navy may be purely nationalist or moral; the means is the maintenance of a certain economic situation.

Indeed the task of ensuring the daily bread of the people touches moral and social issues nearer and more intimate even than the preservation of our national independence. The inexorable rise in the cost of living, the unemployment and loss and insecurity which accompany a rapid fall in prices, are probably the predominating factors in a social unrest which may end in transforming the whole texture of Western society. The worker finds his increased wage continually nullified by increase of price. Out of this situation arises an exasperation which, naturally enough, with peoples habituated by five years of war to violence and emotional mass-judgments, finds expression, not necessarily in organised revolution—that implies, after all, a plan of programme, a hope of a new order—but rather in sullen resentment; declining production, the menace of general chaos. However restricted the resources of a country may have become, there will always be some people under a régime of private capital and individual enterprise who will have more than a mere sufficiency, whose means will reach to luxury and even ostentation. They may be few in number; the amount of waste their luxury represents may in comparison with the total resources be unimportant. But their existence will suffice to give colour to the charge of profiteering and exploitation and to render still more acute the sullen discontent, and finally perhaps the tendency to violence.

It is in such a situation that the price of a few prime necessaries—bread, coal, milk, sugar, clothing—becomes a social, political, and moral fact of the first importance. A two-shilling loaf may well be a social and political portent.

In the week preceding the writing of these lines five cabinets have fallen in Europe. The least common denominator in the cause is the grinding poverty which is common to the peoples they ruled. In two cases the governments fell avowedly over the question of bread, maintained by subsidy at a fraction of its commercial cost. Everywhere the social atmosphere, the temper of the workers, responds to stimulus of that kind.

When we reach the stage at which mothers are forced to see their children slowly die for lack of milk and bread, or the decencies of life are lost in a sordid scramble for sheer physical existence, then the economic problem becomes the gravest moral problem. The two are merged.

The obvious truth that, if economic preoccupations are not to dominate the minds and absorb the energies of men to the exclusion of less material things, then the fundamental economic needs must be satisfied; the fact, that though the foundations are certainly not the whole building, civilisation does rest upon foundations of food, shelter, fuel, and that if it is to be stable they must be sound—these things have been rendered commonplace by events since the Armistice. But before the War they were not commonplaces. The suggestion that the economic results of war were worth considering was quite commonly rejected as ‘offensive,’ implying that men went to war for ‘profit.’ Nations in going to war, we were told, were lifted beyond the region of ‘economics.’ The conception that the neglect of the economics of war might mean—as it has meant—the slow torture of tens of millions of children and the disintegration of whole civilisations, and that if those who professed to be the trustees of their fellows were not considering these things they ought to be—this was, very curiously as it now seems to us at this date, regarded as sordid and material. We now see that the things of the spirit depend upon the solution of these material problems.

The one fact which stood out clear above all others after the Armistice was the actual shortage of goods at a time when millions were literally dying of hunger. The decline of productivity was obvious. It was due in part to diversion of energies to the task of war, to the destruction of materials, failure in many cases to maintain plant (factories, railways, roads, housing); to a varying degree of industrial and commercial demoralisation arising out of the War and, later, out of the struggle for political rearrangements both within States and as between States; to the shortening of the hours of labour; to the dislocation, first of mobilisation, and then of demobilisation; to relaxation of effort as reaction from the special strain of war; to the demoralisation of credit owing to war-time financial shifts. We had all these factors of reduced productivity on the one side, and on the other a generally increased habit and standard of expenditure, due in part to a stimulation of spending power owing to the inflation of the currency and in part to the recklessness which usually follows war; and above all an increasingly insistent demand on the part of the worker everywhere in Europe for a higher general standard of living, that is to say, not only a larger share of the diminished product of his labour, but a larger absolute amount drawn from a diminished total.

This created an economic impasse—the familiar ‘vicious circle.’ The decline in the purchasing power of money and the rise in the rate of interest set up demands for compensating increases both of wages and of profits, which increases in turn added to the cost of production, to prices. And so on da capo. As the first and last remedy for this condition one thing was urged, to the exclusion of almost all else—increased production. The King, the Cabinet, economists, Trades Union leaders, the newspapers, the Churches, all agreed upon that one solution. Until well into the autumn of 1920 all were enjoining upon the workers their duty of an ever-increasing output.

By the end of that year, workers, who had on numberless occasions been told that their one salvation was to increase their output, and who had been upbraided in no mild terms because of their tendency to diminish output, were being discharged in their hundreds of thousands because there was a paralysing over-production and glut! Half a world was famished and unclothed, but vast stores of British goods were rotting and multitudes of workers unemployed. America revealed the same phenomena. After stories of the fabulous wealth which had come to her as the result of the War and the destruction of her commercial competitors, we find, in the winter of 1920-21 that over great areas in the South and West her farmers are near to bankruptcy because their cotton and wheat are unsaleable at prices that are remunerative, and her industrial unemployment problem as acute as it has been in a generation. So bad is it, indeed, that the Labour Unions are unable to resist the Open Shop campaign forced upon them by the employers, a campaign menacing the gains in labour organisation that it has taken more than a generation to make. America’s commercial competitors being now satisfactorily disposed of by the War, and ‘the economic conquest of the world’ being now open to that country, we find the agricultural interests (particularly cotton and wheat) demanding government aid for the purpose of putting these aforesaid competitors once more on their feet (by loan) in order that they may buy American products. But the loans can only be repaid and the products paid for in goods. This, of course, constitutes, in terms of nationalist economics, a ‘menace.’ So the same Congress which receives demands for government credits to European countries, also receives demands for the enactment of Protectionist legislation, which will effectually prevent the European creditors from repaying the loans or paying for the purchases. The spectacle is a measure of the chaos in our thinking on international economics.[1]

But the fact we are for the moment mainly concerned with is this: on the one side millions perishing for lack of corn or cotton; on the other corn and cotton in such abundance that they are burned, and their producers face bankruptcy.

Obviously therefore it is not merely a question of production, but of production adjusted to consumption, and vice versa; of proper distribution of purchasing power, and a network of processes which must be in increasing degree consciously controlled. We should never have supposed that mere production would suffice, if there did not perpetually slip from our minds the very elementary truth that in a world where division of labour exists wealth is not a material but a material plus a process—a process of exchange. Our minds are still dominated by the mediæval aspect of wealth as a ‘possession’ of static material such as land, not as part of a flow. It is that oversight which probably produced the War; it certainly produced certain clauses of the Treaty. The wealth of England is not coal, because if we could not exchange it (or the manufactures and services based on it) for other things—mainly food—it certainly would not even feed our population. And the process by which coal becomes bread is only possible by virtue of certain adjustments, which can only be made if there be present such things as a measure of political security, stability of conditions enabling us to know that crops can be gathered, transported and sold for money of stable value; if there be in other words the indispensable element of contract, confidence, rendering possible the indispensable device of credit. And as the self-sufficing economic unit—quite obviously in the case of England, less obviously but hardly less certainly in other notable cases—cannot be the national unit, the field of the contract—the necessary stability of credit, that is—must be, if not international, then trans-national. All of which is extremely elementary; and almost entirely overlooked by our statesmanship, as reflected in the Settlement and in the conduct of policy since the Armistice.

2

Britain’s dependence on the production by foreigners of a surplus of food and raw materials beyond their own needs

The matter may be clarified if we summarise what precedes, and much of what follows, in this proposition:—

The present conditions in Europe show that much of its dense population (notably the population of these islands) can only live at a standard necessary for civilisation (leisure, social peace, individual freedom) by means of certain co-operative processes, which must be carried on largely across frontiers. The mere physical existence of much of the population of Britain is dependent upon the production by foreigners of a surplus of food and raw materials beyond their own needs.

The processes of production have become of the complex kind which cannot be compelled by preponderant power, exacted by physical coercion.

But the attempt at such coercion, the inevitable results of a policy aimed at securing predominant power, provoking resistance and friction, can and does paralyse the necessary processes, and by so doing is undermining the economic foundations of British life.

What are the facts supporting the foregoing proposition?

Many whose instincts of national protection would become immediately alert at the possibility of a naval blockade of these islands, remain indifferent to the possibility of a blockade arising in another but every bit as effective a fashion.

That is through the failure of the food and raw material, upon which our populations and our industries depend, to be produced at all owing to the progressive social disintegration which seems to be going on over the greater part of the world. To the degree to which it is true to say that Britain’s life is dependent upon her fleet, it is true to say that it is dependent upon the production by foreigners of a surplus above their own needs of food and raw material. This is the most fundamental fact in the economic situation of Britain: a large portion of her population are fed by the exchange of coal, or services and manufactures based on coal, for the surplus production, mainly food and raw material, of peoples living overseas.[2] Whether the failure of food to reach us were due to the sinking of our ships at sea or the failure of those ships to obtain cargoes at the port of embarkation the result in the end would be the same. Indeed, the latter method, if complete, would be the more serious as an armistice or surrender would not bring relief.

The hypothesis has been put in an extreme form in order to depict the situation as vividly as possible. But such a condition as the complete failure of the foreigner’s surplus does not seem to-day so preposterous as it might have done five years ago. For that surplus has shrunk enormously and great areas that once contributed to feeding us can do so no longer. Those areas already include Russia, Siberia, the Balkans, and a large part of the Near and Far East. What we are practically concerned with, of course, is not the immediate disappearance of that surplus on which our industries depend, but the degree to which its reduction increases for us the cost of food, and so intensifies all the social problems that arise out of an increasing cost of living. Let the standard alike of consumption and production of our overseas white customers decline to the standard of India and China, and our foreign trade would correspondingly decrease; the decline in the world’s production of food would mean that much less for us; it would reduce the volume of our trade, or in terms of our own products, cost that much more; this in turn would increase the cost of our manufactures, create an economic situation which one could describe with infinite technical complexity, but which, however technical and complex that description were made, would finally come to this—that our own toil would become less productive.

That is a relatively new situation. In the youth of men now living, these islands with their twenty-five or thirty million population were, so far as vital needs are concerned, self-sufficing. What will be the situation when the children now growing up in our homes become members of a British population which may number fifty, sixty, or seventy millions? (Germany’s population, which, at the outbreak of war, was nearly seventy millions, was in 1870 a good deal less than the present population of Great Britain.)

Moreover, the problem is affected by what is perhaps the most important economic change in the world since the industrial revolution, namely the alteration in the ratio of the exchange value of manufactures and food—the shift over of advantage in exchange from the side of the industrialist and manufacturer to the side of the producer of food.

Until the last years of the nineteenth century the world was a place in which it was relatively easy to produce food, and nearly the whole of its population was doing it. In North and South America, in Russia, Siberia, China, India, the universal occupation was agriculture, carried on largely (save in the case of China and India) upon new soil, its first fertility as yet unexhausted. A tiny minority of the world’s population only was engaged in industry in the modern sense: in producing things in factories by machinery, in making iron and steel. Only in Great Britain, in Northern Germany, in a few districts in the United States, had large-scale industry been systematically developed. It is easy to see, therefore, what immense advantage in exchange the industrialist had. What he had for sale was relatively scarce; what the agriculturist had for sale was produced the world over and was, in terms of manufactures, extremely cheap. It was the economic paradox of the time that in countries like America, South and North, the farmer—the producer of food—was naturally visualised as a poverty-stricken individual—a ‘hayseed’ dressed in cotton jeans, without the conveniences and amenities of civilisation, while it was in the few industrial centres that the vast wealth was being piled up. But as the new land in North America and Argentina and Siberia became occupied and its first fertility exhausted, as the migration from the land to the towns set in, it became possible with the spread of technical training throughout the world, with the wider distribution of mechanical power and the development of transport, for every country in some measure to engage in manufacture, and the older industrial centres lost some of their monopoly advantage in dealing with the food producer. In Cobden’s day it was almost true to say that England spun cotton for the world. To-day cotton is spun where cotton is grown; in India, in the Southern States of America, in China.

This is a condition which (as the pages which follow reveal in greater detail) the intensification of nationalism and its hostility to international arrangement will render very much more acute. The patriotism of the future China or Argentina—or India and Australia, for that matter—may demand the home production of goods now bought in (say) England. It may not in economic terms benefit the populations who thus insist upon a complete national economy. But ‘defence is more than opulence.’ The very insecurity which the absence of a definitely organised international order involves will be invoked as justifying the attempt at economic self-sufficiency. Nationalism creates the situation to which it points as justification for its policy: it makes the very real dangers that it fears. And as Nationalism thus breaks up the efficient transnational division of labour and diminishes total productivity, the resultant pressure of population or diminished means of subsistence will push to keener rivalry for the conquest of territory. The circle can become exceedingly vicious—so vicious, indeed, that we may finally go back to the self-sufficing village community; a Europe sparsely populated if the resultant clerical influence is unable to check prudence in the matter of the birth-rate, densely populated to a Chinese or Indian degree if the birth-rate is uncontrolled.

The economic chaos and social disintegration which have stricken so much of the world have brought a sharp reminder of the primary, the elemental place of food in the catalogue of man’s needs, and the relative ease and rapidity with which most else can be jettisoned in our complex civilisation, provided only that the stomach can be filled.

Before the War the towns of Europe were the luxurious and opulent centres; the rural districts were comparatively poor. To-day it is the cities of the Continent that are half-starved or famine-stricken, while the farms are well-fed and relatively opulent. In Russia, Poland, Hungary, Germany, Austria, the cities perish, but the peasants for the most part have a sufficiency. The cities are finding that with the breakdown of the old stability—of the transport and credit systems particularly—they cannot obtain food from the farmers. This process which we now see at work on the Continent is in fact the reversal of our historical development.

As money acquired a stable value and transport and communication became easy and cheap, the manor ceased to be self-contained, to weave its own clothes and make its own implements. But the Russian peasants are proving to-day that if the railroads break down, and the paper money loses its value, the farm can become once more self-sufficing. Better to thresh the wheat with a flail, to weave clothes from the wool, than to exchange wheat and wool for a money that will buy neither cloth nor threshing machinery. But a country-side that weaves its own cloth and threshes its grain by hand is one that has little surplus of food for great cities—as Vienna, Buda-Pest, Moscow, and Petrograd have already discovered.

If England is destined in truth to remain the workshop of that world which produces the food and raw material, then she has indeed a very direct interest in the maintenance of all those processes upon which the pre-war exchange between farm and factory, city and country, depended.[3]

The ‘farm’ upon which the ‘factory’ of Great Britain depends is the food-producing world as a whole. It does not suffice that the overseas world should merely support itself as it did, say, in the tenth century, but it must be induced by hope of advantage to exchange a surplus for those things which we can deliver to it more economically than it can make them for itself. Because the necessary social and political stability, with its material super-structure of transport and credit, operating trans-nationally, has broken down, much of Europe is returning to its earlier simple life of unco-ordinated production, and its total fertility is being very greatly reduced. The consequent reaction of a diminished food supply for ourselves is already being felt.

3
The ‘Prosperity’ of Paper Money

It will be said: Does not the unquestioned rise in the standard of wages, despite all the talk of debt, expenditure, unbalanced budgets, public bankruptcy, disprove any theory of a vital connection between a stable Europe and our own prosperity? Indeed, has not the experience of the War discredited much of the theory of the interdependence of nations?

The first few years of the War did, indeed, seem to discredit it, to show that this interdependence was not so vital as had been supposed. Germany seemed for a long time really to be self-supporting, to manage without contact with other peoples. It seemed possible to re-direct the channels of trade with relative ease. It really appeared for a time that the powers of the Governments could modify fundamentally the normal process of credit almost at will, which would have been about equivalent to the discovery of perpetual motion! Not only was private credit maintained by governmental assistance, but exchanges were successfully ‘pegged’; collapse could be prevented apparently with ease. Industry itself showed a similar elasticity. In this country it seemed possible to withdraw five or six million men from actual production, and so organise the remainder as to enable them to produce enough not only to maintain themselves, but the country at large and the army, in food, clothing and other necessaries. And this was accomplished at a standard of living above rather than below that which obtained when the country was at peace, and when the six or seven or eight millions engaged in war or its maintenance were engaged in the production of consumable wealth. It seemed an economic miracle that with these millions withdrawn from production, though remaining consumers, the total industrial output should be very little less than it was before the War.

But we are beginning to see how this miracle was performed, and also what is the truth as to the self-sufficiency of the great nations. As late as the early summer of 1918, when, even after four years of the exhausting drain of war, well-fed German armies were still advancing and gaining victories, and German guns were bombarding Paris (for the first time in the War), the edifice of German self-sufficiency seemed to be sound. But this apparently stalwart economic structure crumbled in a few months into utter ruins and the German population was starving and freezing, without adequate food, fuel, clothing. England has in large measure escaped this result just because her contacts with the rest of the world have been maintained while Germany’s have not. These latter were not even re-established at the Armistice; in many respects her economic isolation was more complete after the War than during it. Moreover, because our contacts with the rest of the world are maintained by shipping, a very great flexibility is given to our extra-national economic relationships. Our lines of communication can be switched from one side of the world to the other instantly, whereas a country whose approaches are by railroads may find its communications embarrassed for a generation if new frontiers render the old lines inapplicable to the new political conditions.

In the first year or so following the Armistice there was a curious contradiction in the prevailing attitude towards the economic situation at home. The newspapers were full of headlines about the Road to Ruin and National Bankruptcy; the Government plainly was unable to make both ends meet; the financial world was immensely relieved when America postponed the payments of debts to her; we were pathetically appealing to her to come and save us; the British sovereign, which for generations has been a standard of value for the world and the symbol of security, dropped to a discount of 20 per cent, in terms of the dollar; our Continental creditors were even worse off; the French could only pay us in a depreciated paper currency, the value of which in terms of the dollar varied between a third and a fourth of what it was before the War; the lira was cheaper still. Yet side by side with this we had stories of a trade boom (especially in textiles and cotton), so great that merchants and manufacturers refused to go to their offices, in order to dodge the flood of orders so vastly in excess of what they could fulfil. Side by side with depreciated paper currency, with public debts so crippling that the Government could only balance its budget by loans which were not successful when floated, the amusement trades flourished as never before. Theatre, music hall, and cinematograph receipts beat all records. There was a greater demand for motor-cars than the trade could supply. The Riviera was fuller than it had ever been before. The working class itself was competing with others for the purchase of luxuries which in the past that class never knew. And while the financial situation made it impossible, apparently, to find capital for building houses to live in, ample capital was forthcoming wherewith to build cinema palaces. We heard and read of famine almost at our doors, and saw great prosperity around us; read daily of impending bankruptcy—and of high profits and lavish spending; of world-wide unrest and revolution—and higher wages than the workers had ever known.

Complex and contradictory as the facts seemed, the difficulty of a true estimate was rendered greater by the position in which European Governments found themselves placed. These Governments were faced by the necessity of maintaining credit and confidence at almost any cost. They must not, therefore, throw too great an emphasis upon the dark features. Yet the need for economy and production was declared to be as great as it was during the war. To create a mood of seriousness and sober resolution adequate to the situation would involve stressing facts which, in their efforts to obtain loans, internal or external, and to maintain credit, governments were compelled to minimise.

Then, of course, the facts were obscured mainly by the purchasing power created by the manufacture of credit and paper money. Some light is thrown upon this ambiguous situation by a fact which is now so manifest—that this juxtaposition of growing indebtedness and lavish spending, high wages, high profits, active trade, and a rising standard of living, were all things that marked the condition of Germany in the first few years of the War. Industrial concerns showed profits such as they had never shown before; wages steadily rose; and money was plentiful. But the profits were made and the wages were paid in a money that continually declined in value—as ours is declining. The higher consumption drew upon sources that were steadily being depleted—as ours are being depleted. The production was in certain cases maintained by very uneconomic methods: as by working only the best seams in the coal mines, by devoting no effort to the proper upkeep of plant (locomotives on the railway which ordinarily would go into the repair shop every six weeks were kept running somehow during the whole course of the War). In this sense the people were ‘living upon capital’—devoting, that is, to the needs of current consumption energy which should have been devoted to ensuring future production. In another way, they were converting into income what is normally a source of capital. An increase in profits or wages, which ordinarily would have provided a margin, over and above current expenditure, out of which capital for new plant, etc., could have been drawn, was rapidly nullified by a corresponding increase in prices. Loans for the purpose even of capital expenditure involved an inflation of currency which still further increased prices, thus diminishing the value of the capital so provided, necessitating the issue of further loans which had the same effect. And so the vicious circle was narrowed. Even after four years of this kind of thing the edifice had in many respects the outward appearances of prosperity. As late as April, 1918, the German organisation, as we have noted, was still capable of maintaining a military machine which could not only hold its own but compel the retirement of the combined forces of France, Britain, America, and minor Allies. But once the underlying process of disintegration became apparent, the whole structure went to pieces.

It is that unnoticed process of disintegration, preceding the final collapse, which should interest us. For the general method employed by Germany for meeting the consumption of war and disguising the growing scarcity is in many respects the method her neighbours adopted for meeting the consumption of a new standard of life on the basis of less total wealth—a standard which, on the part of the workers, means both shorter hours and a larger share of their produce, and on the part of other classes a larger share of the more expensive luxuries. Like the Germans of 1914-18, we are drawing for current consumption upon the fund which, in a more healthy situation, would go to provide for renewal of plant and provision of new capital. To ‘eat the seed corn’ may give an appearance of present plenty at the cost of starvation later.

It is extremely unlikely that there will ever be in England the sudden catastrophic economic collapse which we have witnessed in Russia, Germany, Austria, and Central Europe generally. But we shall none the less be concerned. As the increased wages gained by strikes lose with increasing rapidity their value in purchasing power, thus wiping out the effect of the industrial ‘victory,’ irritation among the workers will grow. On minds so prepared the Continental experiments in social reconstruction—prompted by conditions immeasurably more acute—will act with the force of hypnotic suggestion. Our Government may attempt to cope with these movements by repression or political devices. Tempers will be too bad and patience too short to give the sound solutions a real chance. And an economic situation, not in itself inherently desperate, may get steadily worse because of the loss of social discipline and of political insight, the failure to realise past expectations, the continuance of military burdens created by external political chaos.

4
The European disintegration: Britain’s concern.

What has actually happened in so much of Europe around us ought certainly to prevent any too complacent sense of security. In the midst of this old civilisation are (in Mr. Hoover’s calculation) some hundred million folk, who before the War managed to support themselves in fair comfort but are now unable to be truly self-supporting. Yet they live upon the same soil and in the presence of the same natural resources as before the War. Their inability to use that soil and those materials is not due to the mere physical destruction of war, for the famine is worst where there has been no physical destruction at all. It is not a lack of labour, for millions are unemployed, seeking work. Nor is it lack of technical or scientific knowledge, upon which (very erroneously) we are apt to look as the one sufficient factor of civilisation; for our technical knowledge in the management of matter is greater even than before the War.

What then is the reason why these millions starve in the midst of potential plenty? It is that they have lost, from certain moral causes examined later in these pages, the capacity to co-ordinate their labour sufficiently to carry on the processes by which alone labour and knowledge can be applied to an exploitation of nature sufficiently complete to support our dense modern populations.

The fact that wealth is not to-day a material which can be taken, but a process which can only be maintained by virtue of certain moral factors, marks a change in human relationship, the significance of which still seems to escape us.

The manor, or even the eighteenth century village, was roughly a self-sufficing unit. It mattered little to that unit what became of the outside world. The manor or village was independent; its people could be cut off from the outside world, could ravage the near parts of it and remain unaffected. But when the development of communication and the discovery of steam turns the agricultural community into coal miners, these are no longer indifferent to the condition of the outside world. Cut them off from the agriculturalists who take their coal or manufactures, or let these latter be unable to carry on their calling, and the miner starves. He cannot eat his coal. He is no longed independent. His life hangs upon certain activities of others. Where his forebears could have raided and ravaged with no particular hurt to themselves, the miner cannot. He is dependent upon those others and has given them hostages. He is no longer ‘independent,’ however clamorously in his Nationalist oratory he may use that word. He has been forced into a relation of partnership. And how very small is the effectiveness of any physical coercion he can apply, in order to exact the services by which he lives, we shall see presently.

This situation of interdependence is of course felt much more acutely by some countries than others—much more by England, for instance, than by France. France in the matter of essential foodstuffs can be nearly self-supporting, England cannot. For England, an outside world of fairly high production is a matter of life and death; the economic consideration must in this sense take precedence of others. In the case of France considerations of political security are apt to take precedence of economic considerations. France can weaken her neighbours vitally without being brought to starvation. She can purchase security at the cost of mere loss of profits on foreign trade by the economic destruction of, say, Central Europe. The same policy would for Britain in the long run spell starvation. And it is this fundamental difference of economic situation which is at the bottom of much of the divergence of policy between Britain and France which has recently become so acute.

This is the more evident when we examine recent changes of detail in this general situation special to England. Before the War a very large proportion of our food and raw material was supplied by the United States. But our economic relationship with that country has been changed as the result of the War. Previous to 1914 we were the creditor and America the debtor nation. She was obliged to transmit to us large sums in interest on investments of British capital. These annual payments were in fact made in the form of food and raw materials, for which, in a national sense, we did not have to give goods or services in return. We are now less in the position of creditor, more in that of debtor. America does not have to transmit to us. Whereas, originally, we did an immense proportion of America’s carrying trade, because she had no ocean-going mercantile marine, she has begun to do her own carrying. Further, the pressure of her population upon her food resources is rapidly growing. The law diminishing returns is in some instances beginning to apply to the production of food, which in the past has been plentiful without fertilisers and under a very wasteful and simple system. And in America, as elsewhere, the standard of consumption, owing to a great increase of the wage standard, has grown, while the standard of production has not always correspondingly increased.

The practical effect of this is to throw England into greater dependence upon certain new sources of food—or trade, which in the end is the same thing. The position becomes clearer if we reflect that our dependence becomes more acute with every increase of our population. Our children now at school may be faced by the problem of finding food for a population of sixty or seventy millions on these islands. A high agricultural productivity on the part of countries like Russia and Siberia and the Balkans might well be then a life and death matter.

Now the European famine has taught us a good deal about the necessary conditions of high agricultural productivity. The co-operation of manufactures—of railways for taking crops out and fertilisers in, of machinery, tools, wagons, clothing—is one of them. That manufacturing itself must be done by division of labour is another: the country or area that is fitted to supply textiles or cream separators is not necessarily fitted to supply steel rails: yet until the latter are supplied the former cannot be obtained. Often productivity is paralysed simply because transport has broken down owing to lack of rolling stock, or coal, or lubricants, or spare parts for locomotives; or because a debased currency makes it impossible to secure food from peasants, who will not surrender it in return for paper that has no value—the manufactures which might ultimately give it value being paralysed. The lack of confidence in the maintenance of the value of paper money, for instance, is rapidly diminishing the food productivity of the soil; peasants will not toil to produce food which they cannot exchange, through the medium of money, for the things which they need—clothing, implements, and so on. This diminishing productivity is further aggravated by the impossibility of obtaining fertilisers (some of which are industrial products, and all of which require transport), machines, tools, etc. The food producing capacity of Europe cannot be maintained without the full co-operation of the non-agricultural industries—transport, manufactures, coal mining, sound banking—and the maintenance of political order. Nothing but the restoration of all the economic processes of Europe as a whole can prevent a declining productivity that must intensify social and political disorder, of which we may merely have seen the beginning.

But if this interdependence of factory and farm in the production of food is indisputable, though generally ignored, it involves a further fact just as indisputable, and even more completely ignored. And the further fact is that the manufacturing and the farming, neither of which can go on without the other, may well be situated in different States. Vienna starves largely because the coal needed for its factories is now situated in a foreign State—Czecho-Slovakia—which, partly from political motives perhaps, fails to deliver it. Great food producing areas in the Balkans and Russia are dependent for their tools and machinery, for the stability of the money without which the food will not be produced, upon the industries of Germany. Those industries are destroyed, the markets have disappeared, and with them the incentive to production. The railroads of what ought to be food producing States are disorganized from lack of rolling stock, due to the same paralysis of German industry; and so the food production is diminished. Tens of millions of acres outside Germany, whose food the world sorely needs, have been rendered barren by the industrial paralysis of the Central Empires which the economic terms of the Treaty render inevitable.

Speaking of the need of Russian agriculture for German industry, Mr. Maynard Keynes, who has worked out the statistics revealing the relative position of Germany to the rest of Europe, writes:—

‘It is impossible geographically and for many other reasons for Englishmen, Frenchmen, or Americans to undertake it—we have neither the incentive nor the means for doing the work on a sufficient scale. Germany, on the other hand, has the experience, the incentive, and to a large extent, the materials for furnishing the Russian peasant with the goods of which he has been starved for the past five years, for reorganising the business of transport and collection, and so for bringing into the world’s pool, for the common advantage, the supplies from which we are now disastrously cut off.... If we oppose in detail every means by which Germany or Russia can recover their material well-being, because we feel a national, racial, or political hatred for their populations or their governments, we must be prepared to face the consequences of such feelings. Even if there is no moral solidarity between the newly-related races of Europe, there is an economic solidarity which we cannot disregard. Even now, the world markets are one. If we do not allow Germany to exchange products with Russia and so feed herself, she must inevitably compete with us for the produce of the New World. The more successful we are in snapping economic relations between Germany and Russia, the more we shall depress the level of our own economic standards and increase the gravity of our own domestic problems.’[4]

It is not merely the productivity of Russia which is involved. Round Germany as a central support the rest of the European economic system grouped itself, and upon the prosperity and enterprise of Germany the prosperity of the rest of the Continent mainly depended. Germany was the best customer of Russia, Norway, Poland, Belgium, Switzerland, Italy, and Austria-Hungary; she was the second best customer of Great Britain, Sweden, and Denmark; and the third best customer of France. She was the largest source of supply to Russia, Norway, Sweden, Denmark, Poland, Switzerland, Italy, Austria-Hungary, Rumania, and Bulgaria; and the second largest source of supply to Great Britain, Belgium, and France. Britain sent more experts to Germany than to any other country in the world except India, and bought more from her than any other country in the world except the United States. There was no European country except those west of Germany which did not do more than a quarter of their total trade with her; and in the case of Russia, Austria-Hungary, and Poland, the proportion was far greater. To retard or prevent the economic restoration of Germany means retarding the economic reconstruction of Europe.

This gives us a hint of the deep causes underlying the present divergence of French and British policy with reference to the economic reconstruction of Russia and Central Europe. A Britain of sixty or seventy millions faced by the situation with reference to America that has just been touched upon, might well find that the development of the resources of Russia, Siberia, and the Near East—even at the cost of dividing the profits thereof in terms of industrial development with Germany, each supplying that for which it was best suited—was the essential condition of food and social peace. France has no such pre-occupation. Her concern is political: the maintenance of a military predominance on which she believes her political security to depend, an object that might well be facilitated by the political disintegration of Europe even though it involved its economic disintegration.

That brings us to the political factor in the decline in productivity. From it we may learn something of the moral factor, which is the ultimate condition of any co-operation whatsoever.

The relationship of the political to the economic situation is illustrated most vividly, perhaps, in the case of Austria. Mr. Hoover, in testimony given to a United States Senate Committee, has declared bluntly that it is no use talking of loans to Austria which imply future security, if the present political status is to be maintained, because that status has rendered the old economic activities impossible. Speaking before the Committee, he said:—

‘The political situation in Austria I hesitate to discuss, but it is the cause of the trouble. Austria has now no hope of being anything more than a perpetual poorhouse, because all her lands that produce food have been taken from her. This, I will say, was done without American inspiration. If this political situation continues, and Austria is made a perpetual mendicant, the United States should not provide the charity. We should make the loan suggested with full notice that those who undertake to continue Austria’s present status must pay the bill. Present Austria faces three alternatives—death, migration, or a complete industrial diversion and re-organization. Her economic rehabilitation seems impossible after the way she was broken up at the Peace Conference. Her present territory will produce only enough food for three months, and she has now no factories which might produce products to be exchanged for food.’[5]

To realise what can really be accomplished by statesmanship that has a soul above such trifles as food and fuel, when it sets its hand to map-drawing, one should attempt to visualise the state of Vienna to-day. Mr A. G. Gardiner, the English journalist, has sketched it thus:—

‘To conceive its situation one must imagine London suddenly cut off from all the sources of its life, no access to the sea, frontiers of hostile Powers all round it, every coalfield of Yorkshire or South Wales or Scotland in foreign hands, no citizen able to travel to Birmingham or Manchester without a passport, the mills it had financed in Lancashire taken from it, no coal to burn, no food to eat, and—with its shilling down in value to a farthing—no money to buy raw materials for its labour, industry at a standstill, hundreds of thousands living (or dying) on charity, nothing prospering except the vile exploiters of misery, the traffickers in food, the traffickers in vice. That is the Vienna which the peace criminals have made.

‘Vienna was the financial and administrative centre of fifty million of people. It financed textile factories, paper manufacturing, machine works, beet growing, and scores of other industries in German Bohemia. It owned coal mines at Teschen. It drew its food from Hungary. From every quarter of the Empire there came to Vienna the half-manufactured products of the provinces for the finishing processes, tailoring, dyeing, glass-working, in which a vast population found employment.

‘Suddenly all this elaborate structure of economic life was swept away. Vienna, instead of being the vital centre of fifty millions of people, finds itself a derelict city with a province of six millions. It is cut off from its coal supplies, from its food supplies, from its factories, from everything that means existence. It is enveloped by tariff walls.’

The writer goes on to explain that the evils are not limited to Austria. In this unhappy Balkanised Society that the peace has created at the heart of Europe, every State is at issue with its neighbours: the Czechs with the Poles, the Hungarians with the Czechs, the Rumanians with the Hungarians, and all with Austria. The whole Empire is parcelled out into quarrelling factions, with their rival tariffs, their passports and their animosities. All free intercourse has stopped, all free interchange of commodities has ceased. Each starves the other and is starved by the other. ‘I met a banker travelling from Buda-Pest to Berlin by Vienna and Bavaria. I asked him why he went so far out of his way to get to his goal, and he replied that it was easier to do that than to get through the barbed-wire entanglements of Czecho-Slovakia. There is great hunger in Bohemia, and it is due largely to the same all-embracing cause. Formerly the Czech peasants used to go to Hungary to gather the harvest and returned with corn as part payment. Now intercourse has stopped, the Hungarian cornfields are without the necessary labour, and the Czech peasant starves at home, or is fed by the American Relief Fund. “One year of peace,” said Herr Renner, the Chancellor, to me, “has wrought more ruin than five years of war.”’

Mr Gardiner’s final verdict[6] does not in essence differ from that of Mr Hoover:—

‘It is the levity of mind which has plunged this great city into ruin that is inexplicable. The political dismemberment of Austria might be forgiven. That was repeatedly declared by the Allies not to be an object of the War; but the policy of the French, backed by the industrious propaganda of a mischievous newspaper group in this country, triumphed and the promise was dishonoured. Austria-Hungary was broken into political fragments. That might be defended as a political necessity. But the economic dismemberment was as gratuitous as it was deadly. It could have been provided against if ordinary foresight had been employed. Austria-Hungary was an economic unit, a single texture of the commercial, industrial, and financial interests.’[7]

We have talked readily enough in the past of this or that being a ‘menace to civilisation.’ The phrase has been applied indifferently to a host of things from Prussian Militarism to the tango. No particular meaning was attached to the phrase, and we did not believe that the material security of our civilisation—the delivery of the letters and the milk in the morning, and the regular running of the ‘Tubes’—would ever be endangered in our times.

But this is what has happened in a few months. We have seen one of the greatest and most brilliant capitals of Europe, a city completely untouched by the physical devastation of war, endowed beyond most with the equipment of modern technical learning and industry, with some of the greatest factories, medical schools and hospitals of our times, unable to save its children from death by simple starvation—unable, with all that equipment, to provide them each with a little milk and a few ounces of flour every day.

5
The Limits of Political Control

It is sometimes suggested that as political factors (particularly the drawing of frontiers) entered to some extent at least into the present distribution of population, political forces can re-distribute that population. But re-distribution would mean in fact killing.

So to re-direct the vast currents of European industry as to involve a great re-distribution of the population would demand a period of time so great that during the necessary stoppage of the economic process most of the population concerned would be dead—even if we could imagine sufficient stability to permit of these vast changes taking place according to the naïve and what we now know to be fantastic, programme of our Treaties. And since the political forces—as we shall see—are extremely unstable, the new distribution would presumably again one day undergo a similarly murderous modification.

That brings us to the question suggested in the proposition set out some pages back, how far preponderant political power can ensure or compel those processes by which a population in the position of that of these islands lives.

For, as against much of the foregoing, it is sometimes urged that Britain’s concern in the Continental chaos is not really vital, because while the British Isles cannot be self-sufficing, the British Empire can be.

During the War a very bold attempt was made to devise a scheme by which political power should be used to force the economic development of the world into certain national channels, a scheme whereby the military power of the dominant group should be so used as to ensure it a permanent preponderance of economic resources. The plan is supposed to have emanated from Mr Hughes, the Prime Minister of Australia, and the Allies (during Mr Asquith’s Premiership incidentally) met in Paris for its consideration. Mr Hughes’s idea seems to have been to organise the world into economic categories: the British Empire first in order of mutual preference, the Allies next, the neutrals next, and the enemy States last of all. Russia was, of course, included among the Allies, America among the neutrals, the States then Austria-Hungary among the enemies.

One has only to imagine some such scheme having been voted and put into operation, and the modifications which political changes would to-day compel, to get an idea of merely the first of the difficulties of using political and military power, with a basis of separate and competing nationalisms, for economic purposes. The very nature of military nationalism makes surrender of competition in favour of long continued co-operation for common purposes, a moral impossibility. The foundations of the power are unstable, the wills which determine its use contradictory.

Yet military power must rest upon Alliance. Even the British Empire found that its defence needed Allies. And if the British Empire is to be self-sufficing, its trade canalised into channels drawn along certain political lines, the preferences and prohibitions will create many animosities. Are we to sacrifice our self-sufficiency for the sake of American and French friendship, or risk losing the friendship by preferences designed to ensure self-sufficiency? Yet to the extent that our trade is with countries like North and South America we cannot exercise on its behalf even the shadow of military coercion.

But that is only the beginning of the difficulty.

A suggestive fact is that ever since the population of these islands became dependent upon overseas trade, that trade has been not mainly with the Empire but with foreigners. It is to-day.[8] And if one reflects for a moment upon the present political relationship of the Imperial Government to Ireland, Egypt, India, South Africa, and the tariff and immigration legislation that has marked the economic history of Australia and Canada during the last twenty years, one will get some idea of the difficulty which surrounds the employment of political power for the shaping of an economic policy to subserve any large and long-continued political end.

The difficulties of an imperial policy in this respect do not differ much in character from the difficulties encountered in Paris. The British Empire, too, has its problems of ‘Balkanisation,’ problems that have arisen also from the anti-social element of ‘absolute’ nationalism. The present Nationalist fermentation within the Empire reveals very practical limits to the use of political power. We cannot compel the purchase of British goods by Egyptian, Indian, or Irish Nationalists. Moreover, an Indian or Egyptian boycott or Irish agitation, may well deprive political domination of any possibility of economic advantage. The readiness with which British opinion has accepted very large steps towards the independence and evacuation of Egypt after having fiercely resisted such a policy for a generation, would seem to suggest that some part of the truth in this matter is receiving general recognition. It is hardly less noteworthy that popular newspapers—that one could not have imagined taking such a view at the time, say, of the Boer war—now strenuously oppose further commitments in Mesopotamia and Persia—and do so on financial grounds. And even where the relations of the Imperial Government with States like Canada or Australia are of the most cordial kind, the impotence of political power for exacting economic advantage has become an axiom of imperial statecraft. The day that the Government in London proposed to set in motion its army or navy for the purpose of compelling Canada or Australia to cease the manufacture of cotton or steel in order to give England a market, would be the day, as we are all aware, of another Declaration of Independence. Any preference would be the result of consent, agreement, debate, contract: not of coercion.

But the most striking demonstration yet afforded in history of the limits placed by modern industrial conditions upon the economic effectiveness of political power is afforded by the story of the attempt to secure reparations, indemnity, and even coal from Germany, and the attempt of the victors, like France, to repair the disastrous financial situation which has followed war by the military seizure of the wealth of a beaten enemy. That story is instructive both by reason of the light which it throws upon the facts as to the economic value of military power, and upon the attitude of public and statesmen towards these facts.

When, some fifteen years ago, it was suggested that, given the conditions of modern trade and industry, a victor would not in practice be able to turn his military preponderance to economic account even in such a relatively simple matter as the payment of an indemnity, the suggestion was met with all but universal derision. European economists of international reputation implied that an author who could make a suggestion of that kind was just playing with paradox for the purpose of notoriety. And as for newspaper criticism—it revealed the fact that in the minds of the critics it was as simple a matter for an army to ‘take’ a nation’s wealth once military victory had been achieved, as it would be for a big schoolboy to take an apple from a little one.

Incidentally, the history of the indemnity negotiations illuminates extraordinarily the truth upon which the present writer happens so often to have insisted, namely, that in dealing with the economics of nationalism, one cannot dissociate from the problem the moral facts which make the nationalism—without which there would be no nationalisms, and therefore no ‘international’ economics.

A book by the present author published some fifteen years ago has a chapter entitled ‘The Indemnity Futility.’ In the first edition the main emphasis of the chapter was thrown on this suggestion: on the morrow of a great war the victor would be in no temper to see the foreign trade of his beaten enemy expand by leaps and bounds, yet by no other means than by an immense foreign trade could a nation pay an indemnity commensurate with the vast expenditure of modern war. The idea that it would be paid in ‘money,’ which by some economic witchcraft should not involve the export of goods, was declared to be a gross and ignorant fallacy. The traders of the victorious nation would have to face a greatly sharpened competition from the beaten nation; or the victor would have to go without any very considerable indemnity. The chapter takes the ground that an indemnity is not in terms of theoretical economics an impossibility: it merely indicates the indispensable condition of securing it—the revival of the enemy’s economic strength—and suggests that this would present for the victorious nation, not only a practical difficulty of internal politics (the pressure of Protectionist groups) but a grave political difficulty arising out of the theory upon which defence by preponderant isolated national power is based. A country possessing the economic strength to pay a vast indemnity is of potential military strength. And this is a risk your nationalists will not accept.

Even friendly Free Trade critics shook their heads at this and implied that the argument was a reversion to Protectionist illusions for the purpose of making a case. That misunderstanding (for the argument does not involve acceptance of Protectionist premises) seemed so general that in subsequent editions of the book this particular passage was deleted.[9]

It is not necessary now to labour the point, in view of all that has happened in Paris. The dilemma suggested fifteen years ago is precisely the dilemma which confronted the makers of the Peace Treaty; it is, indeed, precisely the dilemma which confronts us to-day.

It applies not only to the Indemnity, Reparations, but to our entire policy, to larger aspects of our relations with the enemy. Hence the paralysis which results from the two mutually exclusive aims of the Treaty of Versailles: the desire on the one hand to reduce the enemy’s strength by checking his economic vitality—and on the other to restore the general productivity of Europe, to which the economic life of the enemy is indispensable.

France found herself, at the end of the War, in a desperate financial position and in dire need of all the help which could come from the enemy towards the restoration of her devastated districts. She presented demands for reparation running to vast, unprecedented sums. So be it. Germany then was to be permitted to return to active and productive work, to be permitted to have the iron and the other raw materials necessary for the production of the agricultural machinery, the building material and other sorts of goods France needed. Not the least in the world! Germany was to produce this great mass of wealth, but her factories were to remain closed, her rolling stock was to be taken from her, she was to have neither food nor raw materials. This is not some malicious travesty of the attitude which prevailed at the time that the Treaty was made. It was, and to a large extent still is, the position taken by many French publicists as well as by some in England. Mr. Vanderlip, the American banker, describes in his book[10] the attitude which he found in Paris during the Conference in these words: ‘The French burn to milk the cow but insist first that its throat must be cut.’

Despite the lessons of the year which followed the signing of the Treaty, one may doubt whether even now the nature of wealth and ‘money’ has come home to the Chauvinists of the Entente countries. The demand that we should at one and the same time forbid Germany to sell so much as a pen-knife in the markets of the world and yet compel her to pay us a tribute which could only be paid by virtue of a foreign trade greater than any which she has been able to maintain in the past—these mutually exclusive demands are still made in our own Parliament and Press.

How powerfully the Nationalist fears operate to obscure the plain alternatives is revealed in a letter of M. André Tardieu, written more than eighteen months after the Armistice.

M. Tardieu, who was M. Clemenceau’s political lieutenant in the framing of the Treaty, and one of the principal inspirers of the French policy, writing in July, 1920, long after the condition of Europe and the Continent’s economic dependence on Germany had become visible, ‘warns’ us of the ‘danger’ that Germany may recover unless the Treaty is applied in all its rigour! He says:—

‘Remember your own history and remember what the rat de terre de cousin which Great Britain regarded with such disdain after the Treaty of Frankfurt became in less than forty years. We shall see Germany recover economically, profiting by the ruins she has made in other countries, with a rapidity which will astonish the world. When that day arrives, if we have given way at Spa to the madness of letting her off part of the debt that was born of her crime, no courses will be too strong for the Governments which allowed themselves to be duped. M. Clemenceau always said to British and American statesmen: “We of France understand Germany better than you.” M. Clemenceau was right, and in bringing his colleagues round to his point of view he did good work for the welfare of humanity. If the work of last year is to be undone, the world will be delivered up to the economic hegemony of Germany before twenty-five years have passed. There could be no better proof than the recent despatches of The Times correspondent in Germany, which bear witness to the fever of production which consumes Herr Stinnes and his like. Such evidence is stronger than the biased statistics of Mr Keynes. Those who refuse to take it into account will be the criminals in the eyes of their respective countries.’[11]

Note M. Tardieu’s argument. He fears the restoration of Germany industry, unless we make her pay the whole indemnity. That is to say, in other words, if we compel Germany to produce during the next twenty-five years something like ten thousand millions worth of wealth over and above her own needs, involving as it must a far greater output from her factories, mines, shipyards, laboratories, a far greater development of her railways, ports, canals, a far greater efficiency and capacity in her workers than has ever been known in the past, if that takes place as it must if we are to get an indemnity on the French scale, why, in that case, there will be no risk of Germany’s making too great an economic recovery!

The English Press is not much better. It was in December, 1918, that Professor Starling presented to the British Government his report showing that unless Germany had more food she would be utterly unable to pay any large indemnity to aid in reparations to France. Fully eighteen months later we find the Daily Mail (June 18, 1920) rampaging and shouting itself hoarse at the monstrous discovery that the Government have permitted Germans to purchase wheat! Yet the Mail has been foremost in insisting upon France’s dire need for a German indemnity in order to restore devastated districts. If the Mail is really representative of John Bull, then that person is at present in the position of a farmer who at seed-time is made violently angry at the suggestion that grain should be taken for the purpose of sowing the land, and shouts that it is a wicked proposal to take food from the mouths of his children. Although the Northcliffe Press has itself published page advertisements (from the Save the Children Fund) describing the incredible and appalling conditions in Europe, the Daily Mail shouts in its leading article: ‘Is British Food to go to the Boches?’ The thing is in the best war style. ‘Is there any reason why the Briton should be starved to feed the German?’ asks the Mail. And there follows, of course, the usual invective about the submarines, war criminals, the sinking of hospital ships, and the approval by the whole German people of all these crimes.

We get here, as at every turn and twist of our policy, not any recognition of interdependence, but a complete repudiation of that idea, and an assumption, instead, of a conflict of interest. If the children of Vienna or Berlin are to be fed, then it is assumed that it must be at the expense of the children of Paris and London. The wealth of the world is conceived as a fixed quantity, unaffected by any process of co-operation between the peoples sharing the world. The idea is, of course, an utter fallacy. French or Belgian children will have more, not less, if we take measures to avoid European conditions in which the children of Vienna are left to die. If, during the winter of 1919-1920, French children died from sickness due to lack of fuel, it was because the German coal was not delivered, and the German coal was not delivered because, among other things, of general disorganization of transport, of lack of rolling stock, of underfeeding of the miners, of collapse of the currency, political unrest, uncertainty of the future.

It is one of the contradictions of the whole situation that France herself gives intermittent recognition to the fact of this interdependence. When, at Spa, it became evident that coal simply could not be delivered in the quantities demanded unless Germany had some means of buying imported food, France consented to what was in fact a loan to Germany (to the immense mystification of certain journalistic critics in Paris). One is prompted to ask what those who, before the War so scornfully treated the present writer for throwing doubts upon the feasibility of a post-war indemnity, would have said had he predicted that on the morrow of victory, the victor, instead of collecting a vast indemnity would from the simplest motives of self-protection, out of his own direly depleted store of capital, be advancing money to the vanquished.[12]

The same inconsistency runs through much of our post-war behaviour. The famine in Central Europe has become so appalling that very great sums are collected in Britain and America for its relief. Yet the reduced productivity out of which the famine has arisen was quite obviously deliberately designed, and most elaborately planned by the economic provisions of the Treaty and by the blockades prolonged after the Armistice, for months in the case of Germany and years in the case of Russia. And at the very time that advertisements were appearing in the Daily Mail for ‘Help to Starving Europe,’ and only a few weeks before France consented to advance money for the purpose of feeding Germany, that paper was working up ‘anti-Hun stunts’ for the purpose of using our power to prevent any food whatsoever going to Boches. It is also a duplication of the American phenomenon already touched upon: One Bill before Congress for the loaning of American money to Europe in order that cotton and wheat may find a market: another Bill before the same Congress designed, by a stiffly increased tariff, to keep out European goods so that the loans can never be repaid.[13]

The experience of France in the attempt to exact coal by the use of military pressure throws a good deal of light upon what is really annexed when a victor takes over territory containing, say, coal; as also upon the question of getting the coal when it has been annexed. ‘If we need coal,’ wrote a Paris journalist plaintively during the Spa Conference, ‘why in heaven’s name don’t we go and take it.’ The implication being that it could be ‘taken’ without payment, for nothing. But even if France were to occupy the Ruhr and to administer the mines, the plant would have to be put in order, rolling stock provided, railroads restored, and, as France has already learned, miners fed and clothed and housed. But that costs money—to be paid as part of the cost of the coal. If Germany is compelled to provide those things—mining machinery, rolling stock, rails, miners’ houses and clothing and food—we are confronted with pretty much the same dilemma as we encounter in compelling the payment of an indemnity. A Germany that can buy foreign food is a Germany of restored credit; a Germany that can furnish rolling stock, rails, mining machinery, clothing and housing for miners, is a Germany restored to general economic health—and potentially powerful. That Germany France fears to create. And even though we resort to a military occupation, using forced labour militarily controlled, we are faced by the need of all the things that must still enter in the getting of the coal, from miners’ food and houses to plant and steel rails. Their cost must be charged against the coal obtained. And the amount of coal obtained in return for a given outlay will depend very largely, as we know in England to our cost, upon the willingness of the miner himself. Even the measure of resistance provoked in British miners by disputes about workers’ control and Nationalisation, has meant a great falling off in output. But at least they are working for their own countrymen. What would be their output if they felt they were working for an enemy, and that every ton they mined might merely result in increasing the ultimate demands which that enemy would make upon their country? Should we get even eighty per cent, of the pre-war output or anything like it?[14] Yet that diminished output would have to stand the cost of all the permanent charges aforesaid. Would the cost of the coal to France, under some scheme of forced labour, be in the end less than if she were to buy it in the ordinary commercial way from German mines, as she did before the War? This latter method would almost certainly be in economic terms more advantageous. Where is the economic advantage of the military method? This, of course, is only the re-discovery of the old truth that forced or slave labour is more costly than paid labour.

The ultimate explanation of the higher cost of slave labour is the ultimate explanation of the difficulty of using political power for economic ends, of basing our economic security upon military predominance. Here is France, with her old enemy helpless and prostrate. She needs his work for reparations, for indemnities, for coal. To perform that work the prostrate enemy must get upon his feet. If he does, France fears that he will knock her down. From that fear arise contradictory policies, self-stultifying courses. If she overcomes her fear sufficiently to allow the enemy to produce a certain amount of wealth for her, it is extremely likely that more than the amount of that wealth will have to be spent in protecting herself against the danger of the enemy’s recovered vitality. Even when wars were less expensive than they are, indemnities were soon absorbed in the increase of armament necessitated by the Treaties which exacted the indemnities.

Again, this is a very ancient story. The victor on the Egyptian vase has his captured enemy on the end of a rope. We say that one is free, the other bond. But as Spencer has shown us, both are bond. The victor is tied to the vanquished: if he should let go the prisoner would escape. The victor spends his time seeing that the prisoner does not escape; the prisoner his time and energy trying to escape. The combined efforts in consequence are not turned to the production of wealth; they are ‘cancelled out’ by being turned one against another. Both may come near to starvation in that condition if much labour is needed to produce food. Only if they strike a bargain and co-operate will they be in the position each to turn his energy to the best economic account.

But though the story is ancient, men have not yet read it. These pages are an attempt to show why it has not been read.

Let us summarise the conclusions so far reached, namely:—

That predominant political and military power is important to exact wealth is shown by the inability of the Allies to turn their power to really profitable account; notably by the failure of France to alleviate her financial distress by adequate reparations—even adequate quantities of coal—from Germany; and by the failure of the Allied statesmen as a whole, wielding a concentration of power greater perhaps than any known in history to arrest an economic disintegration, which is not only the cause of famine and vast suffering, but is a menace to Allied interest, particularly to the economic security of Britain.

The causes of this impotence are both mechanical and moral. If another is to render active service in the production of wealth for us—particularly services of any technical complexity in industry, finance, commerce—he must have strength for that activity, knowledge, and the instruments. But all those things can be turned against us as means of resistance to our coercion. To the degree to which we make him strong for our service we make him strong for resistance to our will. As resistance increases we are compelled to use an increasing proportion of what we obtain from him in protecting ourselves against him. Energies cancel each other, indemnities must be used in preparation for the next war. Only voluntary co-operation can save this waste and create an effective combination for the production of wealth that can be utilised for the preservation of life.

6
The Ultimate Moral Factor

The problem is not merely one of foreign politics or international relationship. The passions which obscure the real nature of the process by which men live are present in the industrial struggle also, and—especially in the case of communities situated as is the British—make of the national and international order one problem.

It is here suggested that:—

Into the processes which maintain life within the nation an increasing measure of consent and acquiescence by all parties must enter: physical coercion becomes increasingly impotent to ensure them. The problem of declining production by (inter alios) miners, cannot be solved by increasing the army or police. The dictatorship of the proletariat fails before the problem of exacting big crops by the coercion of the peasant or countryman. It would fail still more disastrously before the problem of obtaining food or raw materials from foreigners (without which the British could not live) in the absence of a money of stable value.

One of the most suggestive facts of the post-war situation is that European civilization almost breaks down before one of the simplest of its mechanical problems: that of ‘moving some stones from where they are not needed to the places where they are needed,’ in other words before the problem of mining and distributing coal. Millions of children have died in agony in France during this last year or two because there was no coal to transport the food, to warm the buildings. Coal is the first need of our massed populations. Its absence means collapse of everything—of transport, of the getting of food to the towns, of furnishing the machinery and fertilisers by which food can be produced in sufficient quantity. It is warmth, it is clothing, it is light, it is the daily newspaper, it is water, it is communication. All our elaboration of knowledge and science fails in the presence of this problem of ‘taking some stones from one heap and putting them on another.’ The coal famine is a microcosm of the world’s present failure.

But if all those things—and spiritual things also are involved because the absence of material well-being means widespread moral evils—depend upon coal, the getting of the coal itself is dependent upon them. We have touched upon the importance of the one element of sheer goodwill on the part of the miners as a factor in the production of coal; upon the hopelessness of making good its absence by physical coercion. But we have also seen that just as the attempted use of coercion in the international field, though ineffective to exact necessary service or exchange, can and does produce paralysis of the indispensable processes, so the ‘power’ which the position of the miner gives him is a power of paralysis only.

A later chapter shows that the instinct of industrial groups to solve their difficulties by simple coercion, the sheer assertion of power, is very closely related to the psychology of nationalism, so disruptive in the international field. Bolshevism, in the sense of belief in the effectiveness of coercion, represents the transfer of jingoism to the industrial struggle. It involves the same fallacies. A mining strike can bring the industrial machine to a full stop; to set that machine to work for the feeding of the population—which involves the co-ordination of a vast number of industries, the purchase of food and raw material from foreigners, who will only surrender it in return for promises to pay which they believe will be fulfilled—means not only technical knowledge, it means also the presence of a certain predisposition to co-operation. This Balkanised Europe which cannot feed itself has all the technical knowledge that it ever had. But its natural units are dominated by a certain temper which make impossible the co-operations by which alone the knowledge can be applied to the available natural resources.

It is also suggestive that the virtual abandonment of the gold standard is playing much the same rôle (rendering visible the inefficiency of coercion) in the struggle between the industrial that it is between the national groups. A union strikes for higher wages and is successful. The increase is granted—and is paid in paper money.

When wages were paid in gold an advance in wages, gained as the result of strike or agitation, represented, temporarily at least, a real victory for the workers. Prices might ultimately rise and wipe out the advantage, but with a gold currency price movements have nothing like the rapidity and range which is the case when unlimited paper money can be printed. An advance in wages paid in paper may mean nothing more than a mere readjustment of symbols. The advance, in other words, can be cancelled by ‘a morning’s work of the inflationist’ as a currency expert has put it. The workers in these conditions can never know whether that which they are granted with the right hand of increased wages will not be taken away by the left hand of inflation.

In order to be certain that they are not simply tricked, the workers must be in a position to control the conditions which determine the value of currency. But again, that means the co-ordination of the most complex economic processes, processes which can only be ensured by bargaining with other groups and with foreign countries.

This problem would still present itself as acutely on the morrow of the establishment of a British Soviet Republic as it presents itself to-day. If the British Soviets could not buy food and raw materials in twenty different centres throughout the world they could not feed the people. We should be blockaded, not by ships, but by the worthlessness of our money. Russia, which needs only an infinitesimal proportion relatively of foreign imports has gold and the thing of absolutely universal need, food. We have no gold—only things which a world fast disintegrating into isolated peasantries is learning somehow to do without.

Before blaming the lack of ‘social sense’ on the part of striking miners or railwaymen let us recall the fact that the temper and attitude to life and the social difficulties which lie at the bottom of the Syndicalist philosophy have been deliberately cultivated by Government, Press, and Church, during five years for the purposes of war; and that the selected ruling order have shown the same limitation of vision in not one whit less degree.

Think what Versailles actually did and what it might have done.

Here when the Conference met, was a Europe on the edge of famine—some of it over the edge. Every country in the world, including the wealthiest and most powerful, like America, was faced with social maladjustment in one form or another. In America it was an inconvenience, but in the cities of a whole continent—in Russia, Poland, Germany, Austria—it was shortly to mean ill-health, hunger, misery, and agony to millions of children and their mothers. Terms of the study like ‘the interruption of economic processes’ were to be translated into such human terms as infantile cholera, tuberculosis, typhus, hunger-œdema. These, as events proved, were to undermine the social sanity of half a world.

The acutest statesmen that Europe can produce, endowed with the most autocratic power, proceed to grapple with the situation. In what way do they apply that power to the problem of production and distribution, of adding to the world’s total stock of goods, which nearly every government in the world was in a few weeks to be proclaiming as humanity’s first need, the first condition of reconstruction and regeneration?

The Treaty and the policy pursued since the Armistice towards Russia tell us plainly enough. Not only do the political arrangements of the Treaty, as we have seen, ignore the needs of maintaining the machinery of production in Europe[15] but they positively discourage and in many cases are obviously framed to prevent, production over very large areas.

The Treaty, as some one has said, deprived Germany of both the means and the motive of production. No adequate provision was made for enabling the import of food and raw materials, without which Germany could not get to work on the scale demanded by the indemnity claims; and the motive for industry was undermined by leaving the indemnity claims indeterminate.

The victor’s passion, as we have seen, blinded him to the indispensable condition of the very demands which he was making. Europe was unable temperamentally to reconcile itself to the conditions of that increased productivity, by which alone it was to be saved. It is this element in the situation—its domination, that is, by an uncalculating popular passion poured out lavishly in support of self-destructive policies—which prompts one to doubt whether these disruptive forces find their roots merely in the capitalist organization of society: still less whether they are due to the conscious machinations of a small group of capitalists. No considerable section of capitalism any where has any interest in the degree of paralysis that has been produced. Capitalism may have overreached itself by stimulating nationalist hostilities until they have got beyond control. Even so, it is the unseeing popular passion that furnishes the capitalist with his arm, and is the factor of greatest danger.

Examine for a moment the economic manifestation of international hostilities. There has just begun in the United States a clamorous campaign for the denunciation of the Panama Treaty which places British ships on an equality with American. American ships must be exempt from the tolls. ‘Don’t we own the Canal?’ ask the leaders of this campaign. There is widespread response to it. But of the millions of Americans who will become perhaps passionately angry over that matter and extremely anti-British, how many have any shares in any ships that can possibly benefit by the denunciation of the Treaty? Not one in a thousand. It is not an economic motive operating at all.

Capitalism—the management of modern industry by a small economic autocracy of owners of private capital—has certainly a part in the conflicts that produce war. But that part does not arise from the direct interest that the capitalists of one nation as a whole have in the destruction of the trade or industry of another. Such a conclusion ignores the most elementary facts in the modern organisation of industry. And it is certainly not true to say that British capitalists, as a distinct group, were more disposed than the public as a whole to insist upon the Carthaginian features of the Treaty. Everything points rather to the exact contrary. Public opinion as reflected, for instance, by the December, 1918, election, was more ferociously anti-German than capitalists are likely to have been. It is certainly not too much to say that if the Treaty had been made by a group of British—or French—bankers, merchants, shipowners, insurance men, and industrialists, liberated from all fear of popular resentment, the economic life of Central Europe would not have been crushed as it has been.

Assuredly, such a gathering of capitalists would have included groups having direct interest in the destruction of German competition. But it would also have included others having an interest in the restoration of the German market and German credit, and one influence would in some measure have cancelled the other.

As a simple fact we know that not all British capitalists, still less British financiers, are interested in the destruction of German prosperity. Central Europe was one of the very greatest markets available for British industry, and the recovery of that market may constitute for a very large number of manufacturers, merchants, shippers, insurance companies, and bankers, a source of immense potential profit. It is a perfectly arguable proposition, to put it at the very lowest, that British ‘capitalism’ has, as a whole, more to gain from a productive and stable Europe than from a starving and unstable one. There is no reason whatever to doubt the genuineness of the internationalism that we associate with the Manchester School of Capitalist Economics.

But in political nationalism as a force there are no such cross currents cancelling out the hostility of one nation to another. Economically, Britain is not one entity and Germany another. But as a sentimental concept, each may perfectly well be an entity; and in the imagination of John Citizen, in his political capacity, voting on the eve of the Peace Conference, Britain is a triumphant and heroic ‘person,’ while Germany is an evil and cruel ‘person,’ who must be punished, and whose pockets must be searched. John has neither the time nor has he felt the need, for a scientific attitude in politics. But when it is no longer a question of giving his vote, but of earning his income, of succeeding as a merchant or shipowner in an uncertain future, he will be thoroughly scientific. When it comes to carrying cargoes or selling cotton goods, he can face facts. And, in the past at least, he knows that he has not sold those materials to a wicked person called ‘Germany,’ but to a quite decent and human trader called Schmidt.

What I am suggesting here is that for an explanation of the passions which have given us the Treaty of Versailles we must look much more to rival nationalisms than to rival capitalisms; not to hatreds that are the outgrowth of a real conflict of interests, but to certain nationalist conceptions, ‘myths,’ as Sorel has it. To these conceptions economic hostilities may assuredly attach themselves. At the height of the war-hatred of things German, a shopkeeper who had the temerity to expose German post cards or prints for sale would have risked the sacking of his shop. The sackers would not have been persons engaged in the post card producing trade. Their motive would have been patriotic. If their feelings lasted over the war, they would vote against the admission of German post cards. They would not be moved by economic, still less by capitalistic motives. These motives do enter, as we shall see presently, into the problems raised by the present condition of Europe. But it is important to see at what point and in what way. The point for the moment—and it has immense practical importance—is that the Treaty of Versailles and its economic consequences should be attributed less to capitalism (bad as that has come to be in its total results) than to the pressure of a public opinion that had crystallised round nationalist conceptions.[16]

Here, at the end of 1920, is the British Press still clamouring for the exclusion of German toys. Such an agitation presumably pleases the millions of readers. They are certainly not toymakers or sellers; they have no commercial interest in the matter save that ‘their toys will cost them more’ if the agitation succeeds. They are actuated by nationalist hostility.

If Germany is not to be allowed to sell even toys, there will be very few things indeed that she can sell. We are to go on with the policy of throttling Europe in order that a nation whose industrial activity is indispensable to Europe shall not become strong. We do not see, it is true, the relation between the economic revival of Europe and the industrial recuperation of Germany; we do not see it because we can be made to feel anger at the idea of German toys for British children so much more readily than we can be made to see the causes which deprive French children of warmth in their schoolrooms. European society seems to be in the position of an ill-disciplined child that cannot bring itself to swallow the medicine that would relieve it of its pain. The passions which have been cultivated in five years of war must be indulged, whatever the ultimate cost to ourselves. The judgment of such a society is swamped in those passions.

The restoration of much of Europe will involve many vast and complex problems of reconstruction. But here, in the alternatives presented by the payment of a German indemnity, for instance, is a very simple issue: if Germany is to pay, she must produce goods, that is, she must be economically restored; if we fear her economic restoration, then we cannot obtain the execution of the reparation clauses of the Treaty. But that simple issue one of the greatest figures of the Conference cannot face. He has not, eighteen months after the Treaty, emerged from the most elementary confusion concerning it. If the psychology of Nationalism renders so simple a problem insoluble, what will be its effect upon the problem of Europe as a whole?

Again, it may be that shipowners are behind the American agitation and toy manufacturers behind the British. A Coffin Trust might intrigue against measures to prevent a repetition of the influenza epidemic. But what should we say of the fitness for self-government of a people that should lend itself by millions to such an intrigue of Coffin-makers, showing as the result of its propaganda a fierce hostility to sanitation? We should conclude that it deserved to die. If Europe went to war as the result of the intrigues of a dozen capitalists, its civilisation is not worth saving; it cannot be saved, for as soon as the capitalists were removed, its inherent helplessness would place it at the mercy of some other form of exploitation.

Its only hope lies in a capacity for self-management, self-rule, which means self-control. But a few financial intriguers, we are told, have only to pronounce certain words, ‘fatherland above all,’ ‘national honour,’ put about a few stories of atrocities, clamour for revenge, for the millions to lose all self-control, to become completely blind as to where they are going, what they are doing, to lose all sense of the ultimate consequences of their acts.

The gravest fact in the history of the last ten years is not the fact of war; it is the temper of mind, the blindness of conduct on the part of the millions, which alone, ultimately, explains our policies. The suffering and cost of war may well be the best choice of evils, like the suffering and cost of surgery, or the burdens we assume for a clearly conceived moral end. But what we have seen in recent history is not a deliberate choice of ends with a consciousness of moral and material cost. We see a whole nation demanding fiercely in one breath certain things, and in the next just as angrily demanding other things which make compliance with the first impossible; a whole nation or a whole continent given over to an orgy of hate, retaliation, the indulgence of self-destructive passions. And this collapse of the human mind does but become the more appalling if we accept the explanation that ‘wars are caused by capitalism’ or ‘Junkerthum’; if we believe that six Jew financiers sitting in a room can thus turn millions into something resembling madmen. No indictment of human reason could be more severe.

To assume that millions will, without any real knowledge of why they do it or of the purpose behind the behests they obey, not only take the lives of others and give their own, but turn first in one direction and then in another the flood of their deepest passions of hate and vengeance, just as a little group of mean little men, manipulating mean little interests, may direct, is to argue a moral helplessness and shameful docility on the part of those millions which would deprive the future of all hope of self-government. And to assume that they are not unknowing as to the alleged cause—that would bring us to moral phantasmagoria.

We shall get nearer to the heart of our problem if, instead of asking perpetually ‘Who caused the War?’ and indicting ‘Capitalists’ or ‘Junkers,’ we ask the question: ‘What is the cause of that state of mind and temper in the millions which made them on the one side welcome war (as we allege of the German millions), or on the other side makes them acclaim, or impose, blockades, famines,’ ‘punitive’ ‘Treaties of Peace?’

Obviously ‘selfishness’ is not operating so far as the mass is concerned, except of course in the sense that a yielding to the passion of hate is self-indulgence. Selfishness, in the sense of care for social security and well-being, might save the structure of European society. It would bring the famine to an end. But we have what a French writer has called a ‘holy and unselfish hate.’ Balkan peasants prefer to burn their wheat rather than send it to the famished city across the river. Popular English newspapers agitate against a German trade which is the only hope of necessitous Allies obtaining any considerable reparation from Germany. A society in which each member is more desirous of hurting his neighbour than of promoting his own welfare, is one in which the aggregate will to destruction is more powerful than the will to preservation.

The history of these last years shows with painful clarity that as between groups of men hostilities and hates are aroused very much more easily than any emotion of comradeship. And the hate is a hungrier and more persistent emotion than the comradeship. The much proclaimed fellowship of the Allies, ‘cemented by the blood shed on the field,’ vanished rapidly. But hate remained and found expression in the social struggle, in fierce repressions, in bickerings, fears, and rancours between those who yesterday fought side by side. Yet the price of survival is, as we have seen, an ever closer cohesion and social co-operation.

And while it is undoubtedly true that the ‘hunger of hate’—the actual desire to have something to hate—may so warp our judgment as to make us see a conflict of interest where none exists, it is also true that a sense of conflict of vital interest is a great feeder of hate. And that sense of conflict may well become keener as the problem of man’s struggle for sustenance on the earth becomes more acute, as his numbers increase and the pressure upon that sustenance becomes greater.

Once more, as millions of children are born at our very doors into a world that cannot feed them, condemned, if they live at all, to form a race that will be defective, stunted, unhealthy, abnormal, this question which Malthus very rightly taught our grandfathers to regard as the final and ultimate question of their Political Economy, comes dramatically into the foreground. How can the earth, which is limited, find food for an increase of population which is unlimited?

The haunting anxieties which lie behind the failure to find a conclusive answer to that question, probably affect political decisions and deepen hostilities and animosities even where the reason is ill-formulated or unconscious. Some of us, perhaps, fear to face the question lest we be confronted with morally terrifying alternatives. Let posterity decide its own problems. But such fears, and the motives prompted by them, do not disappear by our refusal to face them. Though hidden, they still live, and under various moral disguises influence our conduct.

Certainly the fears inspired by the Malthusian theory and the facts upon which it is based, have affected our attitude to war; affected the feeling of very many for whom war is not avowedly, as it is openly and avowedly to some of its students, ‘the Struggle for Bread.’[17]

The Great Illusion was an attempt frankly to face this ultimate question of the bearing of war upon man’s struggle for survival. It took the ground that the victory of one nation over another, however complete, does not solve the problem; it makes it worse in that the conditions and instincts which war accentuates express themselves in nationalist and racial rivalries, create divisions that embarrass and sometimes make impossible the widespread co-operation by which alone man can effectively exploit nature.

That demonstration as a whole belongs to the pages that follow. But bearing upon the narrower question of war in relation to the world’s good, this much is certain:—

If the object of the combatants in the War was to make sure of their food, then indeed is the result in striking contrast with that intention, for food is assuredly more insecure than ever alike for victor and vanquished. They differ only in the degree of insecurity. The War, the passions which it has nurtured, the political arrangements which those passions have dictated, have given us a Europe immeasurably less able to meet its sustenance problem than it was before. So much less able that millions, who before the War could well support themselves by their own labour, are now unable so to do and have to be fed by drawing upon the slender stocks of their conquerors—stocks very much less than when some at least of those conquerors were in the position of defeated peoples.

This is not the effect of the material destruction of war, of the mere battering down of houses and bridges and factories by the soldier.

The physical devastation, heart-breaking as the spectacle of it is, is not the difficult part of the problem, nor quantitatively the most important.[18] It is not the devastated districts that are suffering from famine, nor their losses which appreciably diminish the world supply of food. It is in cities in which not a house has been destroyed, in which, indeed, every wheel in every factory is still intact, that the population dies of hunger, and the children have to be fed by our charity. It is the fields over which not a single soldier has tramped that are condemned to sterility because those factories are idle, while the factories are condemned to idleness because the fields are sterile.

The real ‘economic argument’ against war does not consist in the presentation of a balance sheet showing so much cost and destruction and so much gain. The real argument consists in the fact that war, and still more the ideas out of which it arises, produce ultimately an unworkable society. The physical destruction and perhaps the cost are greatly exaggerated. It is perhaps true that in the material foundations of wealth Britain is as well off to-day as before the War. It is not from lack of technical knowledge that the economic machine works with such friction: that has been considerably increased by the War. It is not from lack of idealism and unselfishness. There has been during the last five years such an outpouring of devoted unselfishness—the very hates have been unselfish—as history cannot equal. Millions have given their lives for the contrary ideals in which they believed. It is sometimes the ideals for which men die that make impossible their life and work together.

The real ‘economic argument,’ supported by the experience of our victory, is that the ideas which produce war—the fears out of which it grows and the passions which it feeds—produce a state of mind that ultimately renders impossible the co-operation by which alone wealth can be produced and life maintained. The use of our power or our knowledge for the purpose of subduing Nature to our service depends upon the prevalence of certain ideas, ideas which underlie the ‘art of living together.’ They are something apart from mere technical knowledge which war, as in Germany, may increase, but which can never be a substitute for this ‘art of living together.’ (The arms, indeed, may be the instruments of anarchy, as in so much of Europe to-day).

The War has left us a defective or perverted social sense, with a group of instincts and moralities that are disintegrating Western society, and will, unless checked, destroy it.

These forces, like the ‘ultimate art’ which they have so nearly destroyed, are part of the problem of economics. For they render a production of wealth adequate to welfare impossible. How have they arisen? How can they be corrected? These questions will form an integral part of the problems here dealt with.

CHAPTER II
THE OLD ECONOMY AND THE POST-WAR STATE

THIS chapter suggests the following:—

The trans-national processes which enabled Europe to support itself before the War, were based mainly on private exchanges prompted by the expectation of individual advantage. They were not dependent upon political power. (The fifteen millions for whom German soil could not provide, lived by trade with countries over which Germany had no political control, as a similar number of British live by similar non-political means.)

The old individualist economy has been largely destroyed by the State Socialism introduced for war purposes; the Nation, taking over individual enterprise, became trader and manufacturer in increasing degree. The economic clauses of the Treaty, if enforced, must prolong this tendency, rendering a large measure of such Socialism permanent.

The change may be desirable. But if co-operation must in future be less as between individuals for private advantage, and much more as between nations, Governments acting in an economic capacity, the political emotions of nationalism will play a much larger rôle in the economic processes of Europe. If to Nationalist hostilities as we have known them in the past, is to be added the commercial rivalry of nations now converted into traders and capitalists, we are likely to have not a less but more quarrelsome world, unless the fact of interdependence is much more vividly realised than in the past.

The facts of the preceding chapter touching the economic chaos in Europe, the famine, the debauchery of the currencies, the collapse of credit, the failure to secure indemnities, and particularly the remedies of an international kind to which we are now being forced, all confirm what had indeed become pretty evident before the War, namely, that much of Europe lives by virtue of an international, or, more correctly, a transnational economy. That is to say, there are large populations that cannot live at much above a coolie standard unless there is a considerable measure of economic co-operation across frontiers. The industrial countries, like Britain and Germany, can support their populations only by exchanging their special products and services—particularly coal, iron, manufactures, ocean carriage—for food and raw materials; while more agricultural countries like Italy and even Russia, can maintain their full food-producing capacity only by an apparatus of railways, agricultural machinery, imported coal and fertilisers, to which the industry of the manufacturing area is indispensable.

That necessary international co-operation had, as a matter of fact, been largely developed before the War. The cheapening of transport, the improvement of communication, had pushed the international division of labour very far indeed. The material in a single bale of clothes would travel half round the world several times, and receive the labour of half a dozen nationalities, before finally reaching its consumer. But there was this very significant fact about the whole process; Governments had very little to do with it, and the process did not rest upon any clearly defined body of commercial right, defined in a regular code or law. One of the greatest of all British industries, cotton spinning, depended upon access to raw material under the complete control of a foreign State, America. (The blockade of the South in the War of Secession proved how absolute was the dependence of a main British industry upon the political decisions of a foreign Government). The mass of contradictory uncertainties relating to rights of neutral trade in war-time, known as International Law, furnished no basis of security at all. It did not even pretend to touch the source—the right of access to the material itself.

That right, and the international economy that had become so indispensable to the maintenance of so much of the population of Western Europe, rested upon the expectation that the private owner of raw materials—the grower of wheat or cotton, or the owner of iron ore or coal-mines—would continue to desire to sell those things, would always, indeed, be compelled so to do, in order to turn them to account. The main aim of the Industrial Era was markets—to sell things. One heard of ‘economic invasions’ before the War. This did not mean that the invader took things, but that he brought them—for sale. The modern industrial nation did not fear the loss of commodities. What it feared was their receipt. And the aid of Governments was mainly invoked, not for the purpose of preventing things leaving the country, but for the purpose of putting obstacles in the way of foreigners bringing commodities into the country. Nearly every country had ‘Protection’ against foreign goods. Very rarely did we find countries fearing to lose their goods and putting on export duties. Incidentally such duties are forbidden by the American Constitution.

Before the War it would have seemed a work of supererogation to frame international regulations to protect the right to buy: all were searching for buyers. In an economic world which revolved on the expectation of individual profit, the competition for profit kept open the resources of the world.

Under that system it did not matter much, economically, what political administration—provided always that it was an orderly one—covered the area in which raw materials were found, or even controlled ports and access to the sea. It was in no way indispensable to British industry that its most necessary raw material—cotton, say—should be under its own control. That industry had developed while the sources of the material were in a foreign State. Lancashire did not need to ‘own’ Louisiana. If England had ‘owned’ Louisiana, British cotton-spinners would still have had to pay for the cotton as before. When a writer declared before the War that Germany dreamed of the conquest of Canada because she needed its wheat wherewith to feed her people, he certainly overlooked the fact that Germany could have had the wheat of Canada on the same conditions as the British who ‘owned’ the country—and who certainly could not get it without paying for it.

It was true before the War to write:—

‘Co-operation between nations has become essential for the very life of their peoples. But that co-operation does not take place as between States at all. A trading corporation called “Britain” does not buy cotton from another corporation called “America.” A manufacturer in Manchester strikes a bargain with a merchant in Louisiana in order to keep a bargain with a dyer in Germany, and three, or a much larger number of parties, enter into virtual, or perhaps actual, contract, and form a mutually dependent economic community (numbering, it may be, with the work-people in the group of industries involved, some millions of individuals)—an economic entity so far as one can exist which does not include all organised society. The special interests of such a community may become hostile to those of another community, but it will almost certainly not be a “national” one, but one of a like nature, say a shipping ring or groups of international bankers or Stock Exchange speculators. The frontiers of such communities do not coincide with the areas in which operate the functions of the State. How could a State, say Britain, act on behalf of an economic entity such as that just indicated? By pressure against America or Germany? But the community against which the British manufacturer in this case wants pressure exercised is not “America” or “Germany”—both want it exercised against the shipping ring or the speculators or the bankers who in part are British. If Britain injures America or Germany as a whole, she injures necessarily the economic entity which it was her object to protect.’[19]

This line of reasoning is no longer valid, for it was based upon a system of economic individualism, upon a distinction between the functions proper to the State and those proper to the citizen. This individualist system has been profoundly transformed in the direction of national control by the measures adopted everywhere for the purposes of war; a transformation that the confiscatory clauses of the Treaty and the arrangements for the payment of the indemnity help to render permanent. While the old understanding or convention has been destroyed—or its disappearance very greatly accelerated—by the Allies, no new one has so far been established to take its place. To that fact we must ascribe much of the economic paralysis that has come upon the world.

I am aware, of course, that the passage I have quoted did not tell the whole story; that already before the War the power of the political State was being more and more used by ‘big business’; that in China, Mexico, Central America, the Near East, Morocco, Persia, Mesopotamia, wherever there was undeveloped and disorderly territory, private enterprise was exercising pressure upon the State to use its power to ensure sources of raw material or areas for the investment of capital. That phase of the question is dealt with at greater length elsewhere.[20] But the actual (whatever the potential) economic importance of the territory about which the nations quarrelled was as yet, in 1914, small; the part taken by Governments in the control and direction of international trade was negligible. Europe lived by processes that went on without serious obstacle across frontiers. Little States, for instance, without Colonies (Scandinavia, Switzerland) not only maintained a standard of living for their people quite as high as that in the great States, but maintained it moreover by virtue of a foreign trade relatively as considerable. And the forces which preserved the international understanding by which that trade was carried on were obviously great.

It was not true, before the War, to say that Germany had to expand her frontiers to feed her population. It is true that with her, as with us, her soil did not produce the food needed for the populations living on it; as with us, about fifteen millions were being fed by means of trade with territories which politically she did not ‘own,’ and did not need to ‘own’—with Russia, with South America, with Asia, with our own Colonies. Like us Germany was turning her coal and iron into bread. The process could have gone on almost indefinitely, so long as the coal and iron lasted, as the tendency to territorial division of labour was being intensified by the development of transport and invention. (The pressure of the population on the food resources of these islands was possibly greater under the Heptarchy than at present, when they support forty-five millions.) Under the old economic order conquest meant, not a transfer of wealth from one set of persons to another—for the soil of Alsace, for instance, remained in the hands of those who had owned it under France—but a change of administration. The change may have been as unwarrantable and oppressive as you will, but it did not involve economic strangulation of the conquered peoples or any very fundamental economic change at all. French economic life did not wither as the result of the changes of frontier in 1872, and French factories were not shut off from raw material, French cities were not stricken with starvation as the result of France’s defeat. Her economic and financial recovery was extraordinarily rapid; her financial position a year or two after the War was sounder than that of Germany. It seemed, therefore, that if Germany, of all nations, and Bismarck, of all statesmen, could thus respect the convention which after war secured the immunity of private trade and property, it must indeed be deeply rooted in international comity.

Indeed, the ‘trans-national’ economic activities of individuals, which had ensued so widespread an international economy, and the principle of the immunity of private property from seizure after conquest, had become so firmly rooted in international relationship as to survive all the changes of war and conquest. They were based on a principle that had received recognition in English Treaties dating back to the time of Magna Carta, and that had gradually become a convention of international relationship.

At Versailles the Germans pointed out that their country was certainly not left with resources to feed its population. The Allies replied to that, not by denying the fact—to which their own advisers, like Mr Hoover, have indeed pointedly called attention—but as follows:—

‘It would appear to be a fundamental fallacy that the political control of a country is essential in order to procure a reasonable share of its products. Such a proposal finds no foundation in economic law or history.’[21]

In making their reply the Allies seemed momentarily to have overlooked one fact—their own handiwork in the Treaty.

Before the War it would have been a true reply. But the Allies have transformed what were, before the War, dangerous fallacies into monstrous truths.

President Wilson has described the position of Germany under the Treaty in these terms:—

‘The Treaty of Peace sets up a great Commission, known as the Reparations Commission.... That Reparation Commission can determine the currents of trade, the conditions of credit, of international credit; it can determine how much Germany is going to buy, where it is going to buy, and how it is going to pay for it.’[22]

In other words, it is no longer open to Germany, as the result of guarantees of free movement accorded to individual traders, to carry on that process by which before the War she supported herself. Individual Germans cannot now, as heretofore, get raw materials by dealing with foreign individuals, without reference to their nationality. Germans are now, in fact, placed in the position of having to deal through their State, which in turn deals with other States. To buy wheat or iron, they cannot as heretofore go to individuals, to the grower or mine-owner, and offer a price; the thing has to be done through Governments. We have come much nearer to a condition in which the States do indeed ‘own’ (they certainly control) their raw material.

The most striking instance is that of access to the Lorraine iron, which before the War furnished three-fourths of the raw material of Germany’s basic industry. Under the individualist system, in which ‘the buyer is king’ in which efforts were mainly directed to finding markets, no obstacle was placed on the export of iron (except, indeed, the obstacle to the acquisition by French citizens of Lorraine iron set up by the French Government in the imposition of tariffs). But under the new order, with the French State assuming such enormously increased economic functions, the destination of the iron will be determined by political considerations. And ‘political considerations,’ in an order of international society in which the security of the nation depends, not upon the collective strength of the whole society, but upon its relative strength as against rival units, mean the deliberate weakening of rivals. Thus, no longer will the desire of private owners to find a market for their wares be a guarantee of the free access of citizens in other States to those materials. In place of a play of factors which did, however clumsily, ensure in practice general access to raw materials, we have a new order of motives; the deliberate desire of States, competing in power, owning great sources of raw material, to deprive rival States of the use of them.

That the refusal of access will not add to the welfare of the people of the State that so owns these materials, that, indeed, it will inevitably lower the standard of living in all States alike, is certainly true. But so long as there is no real international society organised on the basis of collective strength and co-operation, the motive of security will override considerations of welfare. The condition of international anarchy makes true what otherwise need not be true, that the vital interests of nations are conflicting.

Parenthetically, it is necessary to say this: the time may have come for the destruction of the older order. If the individualist order was that which gave us Armageddon, and still more, the type of mind which Armageddon and the succeeding ‘peace’ revealed, then the present writer, for one, sheds no tears over its destruction. In any case, a discussion of the intrinsic merits, social and moral, of socialism and individualism respectively, would to-day be quite academic. For those who profess to stand for individualism are the most active agents of its destruction. The Conservative Nationalists, who oppose the socialisation of wealth and yet advocate the conscription of life; oppose Nationalisation, yet demand the utmost military preparedness in an age when effective preparation for war means the mobilisation particularly of the nation’s industrial resources; resent the growing authority of the State, yet insist that the power of the National State shall be such as to give it everywhere domination; do, indeed, demand omelets without eggs, and bricks not only without straw but without clay.

A Europe of competing military nationalisms means a Europe in which the individual and all his activities must more and more be merged in his State for the purpose of that competition. The process is necessarily one of progressively intense socialisation; and the war measures carried it to very great lengths indeed. Moreover, the point to which our attention just now should be directed, is the difference which distinguishes the process of change within the State from that which marks the change in the international field. Within the State the old method is automatically replaced by the new (indeed nationalisation is mostly the means by which the old individualism is brought to an end); between nations, on the other hand, no organised socialistic internationalism replaces the old method which is destroyed. The world is left without any settled international economy.

Let us note the process of destruction of the old economy.

In July, 1914, the advocacy of economic nationalisation or Socialism would have been met with elaborate arguments from perhaps nine average Englishmen out of ten, to the effect that control or management of industries and services by the Government was impossible, by reason of the sheer inefficiency which marks Governmental work. Then comes the War, and an efficient railway service and the co-ordination of industry and finance to national ends becomes a matter of life and death. In this grave emergency, what policy does this same average Englishman, who has argued so elaborately against State control, and the possibility of governments ever administering public services, pursue? Almost as a matter of course, as the one thing to be done, he clamours for the railways and other public services to be taken over by the Government, and for the State to control the industry, trade, and finance of the country.

Now it may well be that the Socialist would deny that the system which obtained during the War was Socialism, and would say that it came nearer to being State Capitalism than State Socialism; the individualist may argue that the methods would never be tolerated as a normal method of national life. But when all allowances are made the fact remains that when our need was greatest we resorted to the very system which we had always declared to be the worst from the point of view of efficiency. As Sir Leo Chiozza Money, in sketching the history of this change, which he has called ‘The Triumph of Nationalisation,’ says: ‘The nation won through the unprecedented economic difficulties of the greatest War in history by methods which it had despised. National organisation triumphed in a land where it had been denied.’ In this sense the England of 1914-1920 was a Socialist England; and it was a Socialist England by common consent.

This fact has an effect on the moral outlook not generally realised.

For very many, as the War went on and increasing sacrifices of life and youth were demanded, new light was thrown upon the relations of the individual to the State. A whole generation of young Englishmen were suddenly confronted with the fact that their lives did not belong to themselves, that each owed his life to the State. But if each must give, or at least risk, everything that he possessed, even life itself, were others giving or risking what they possessed? Here was new light on the institution of private property. If the life of each belongs to the community, then assuredly does his property. The Communist State which says to the citizen, ‘You must work and surrender your private property or you will have no vote,’ asks, after all, somewhat less than the bourgeois Military State which says to the conscript, ‘Fight and give your person to the State or we will kill you.’ For great masses of the British working-classes conscription has answered the ethical problem involved in the confiscation of capital. The Eighth Commandment no longer stands in the way, as it stood so long in the case of a people still religiously minded and still feeling the weight of Puritan tradition.

Moreover, the War showed that the communal organisation of industry could be made to work. It could ‘deliver the goods’ if those goods were, say, munitions. And if it could work for the purposes of war, why not for those of peace? The War showed that by co-ordinated and centralised action the whole economic structure can without disaster be altered to a degree that before the War no economist would have supposed possible. We witnessed the economic miracle mentioned in the last chapter, but worth recalling here. Suppose before the War you had collected into one room all the great capitalist economists in England, and had said to them: ‘During the next few years you will withdraw from normal production five or six millions of the best workers. The mere residue of the workers will be able to feed, clothe, and generally maintain those five or six millions, themselves, and the country at large, at a standard of living on the whole as high, if not higher, than that to which the people were accustomed before those five or six million workers were withdrawn.’ If you had said that to those capitalist economists, there would not have been one who would have admitted the possibility of the thing, or regarded the forecast as anything but rubbish.

Yet that economic miracle has been performed, and it has been performed thanks to Nationalisation and Socialism, and could not have been performed otherwise.

However, one may qualify in certain points this summary of the outstanding economic facts of the War, it is impossible to exaggerate the extent to which the revelation of economic possibilities has influenced working-class opinion.

To the effect of this on the minds of the more intelligent workers, we have to add another psychological effect, a certain recklessness, inseparable from the conditions of war, reflected in the workers’ attitude towards social reform.

Perhaps a further factor in the tendency towards Communism is the habituation to confiscation which currency inflation involves. Under the influence of war contrivances States have learned to pay their debts in paper not equivalent in value to the gold in which the loan was made: whole classes of bondholders have thus been deprived of anything from one-half to two-thirds of the value of their property. It is confiscation in its most indiscriminate and sometimes most cruel form. Bourgeois society has accepted it. A socialistic society of to-morrow may be tempted to find funds for its social experiments in somewhat the same way.

Whatever weight we may attach to some of these factors, this much is certain: not only war, but preparation for war, means, to a much greater degree than it has ever meant before, mobilisation of the whole resources of the country—men, women, industry. This form of ‘nationalisation’ cannot go on for years and not affect the permanent form of the society subjected to it. It has affected it very deeply. It has involved a change in the position of private property and individual enterprise that since the War has created a new cleavage in the West. The future of private property which was before the War a theoretical speculation, has become within a year or two, and especially, perhaps, since the Bolshevist Revolution in Russia, a dominating issue in European social and political development. It has subjected European society to a new strain. The wearing down of the distinction between the citizen and the State, and the inroads upon the sacro-sanctity of private property and individual enterprise, make each citizen much more dependent upon his State, much more a part of it. Control of foreign trade so largely by the State has made international trade less a matter of processes maintained by individuals who disregarded their nationality, and more a matter of arrangement between States, in which the non-political individual activity tends to disappear. We have here a group of forces which has achieved a revolution, a revolution in the relationship of the individual European to the European State, and of the States to one another.

The socialising and communist tendencies set up by measures of industrial mobilisation for the purposes of the War, have been carried forward in another sphere by the economic terms of the Treaty of Versailles. These latter, if even partly carried into effect, will mean in very large degree the compulsory socialisation, even communisation, of the enemy States. Not only the country’s foreign trade, but much of its internal industry must be taken out of the hands of private traders or manufacturers. The provisions of the Treaty assuredly help to destroy the process upon which the old economic order in Europe rested.

Let the reader ask himself what is likely to be the influence upon the institution of private property and private commerce of a Treaty world-wide in its operation, which will take a generation to carry out, which may well be used as a precedent for future settlements between States (settlements which may include very great politico-economic changes in the position of Egypt, Ireland, and India), and of which the chief economic provisions are as follows:—

‘It deprives Germany of nearly the whole of her overseas marine. It banishes German sovereignty and economic influence from all her overseas possessions, and sequestrates the private property of Germans in those places, in Alsace-Lorraine, and in all countries within Allied jurisdiction. It puts at the disposal of the Allies all German financial rights and interests, both in the countries of her former Allies and in the States and territories which have been formed out of them. It gives the Reparations Commission power to put its finger on any great business or property in Germany and to demand its surrender. Outside her own frontiers Germany can be stripped of everything she possesses, and inside them, until an impossible indemnity has been paid to the last farthing, she can truly call nothing her own.