Europe, no country has ever been completely ravaged by war. When I
returned from Europe more than a year ago, I was convinced that economic
exhaustion would be the determining factor: that victory would perch on
the side of the biggest bank roll. After a second trip to the warring
lands I am convinced that I was wrong in my first impression.
Observation again in England and France leads me to believe that man
power--beef, not gold--will win. The extents to which financial credit
can be extended in the countries at war seem to be almost without limit.
This leads to the final but all essential detail: How will the European
nations pay?
Since the Allies practically have a monopoly on the American money sent
abroad for war purposes, let us briefly look at the equity behind the
Thing known as National Honour. Its first and foremost bulwark is
Wealth. Take England first. The wealth of the United Kingdom is
$90,000,000,000: the annual income of the people $12,000,000,000. To
this you can add the wealth, resource and income of all her far-flung
colonies and the immense amount of money due to her from foreign
countries. Unlike France and save for a few Zeppelin raids, the Empire
is absolutely free from the ravage of war. The principal assault has
been upon her income, for her great Principal is still intact.
In examining the methods adopted by England and France to meet the cost
of the war, you find a sharp difference of procedure which is
characteristic of the countries. Following the British tradition,
England is trying to make the war "pay its way" with taxation. Out of a
total expenditure of $9,500,000,000 for the current year, no less than
$2,500,000,000 was raised by taxation. The rest was obtained by loans at
home and abroad.
The income tax alone will serve to show the enormous increase in
tribute. From .04 per cent on small incomes to 13 per cent on large ones
before the war it has risen to 1 per cent on small incomes to over 41½
per cent on big ones. Again, 60 per cent of all excess profits earned
since the war are surrendered to the State.
I can give no better evidence of the result of this taxation than to
repeat what Reginald McKenna, Chancellor of the British Exchequer, said
to me in London last August:
"The English position is so sound," he declared, "that if the war ended
at the end of the current financial year, that is, on March the 31st,
1917, our present scale of taxation would provide not only for the whole
of our peace expenditures and the interest on the entire National Debt
but also for a sinking fund calculated to redeem that debt in less than
forty years. There would still remain a surplus sufficient to allow me
to wipe out the excess profit tax and to reduce other taxes
considerably."
When I asked him to make this more specific, he continued:
"The total revenue for the current year is $2,545,000,000. Our last
Peace Budget was $1,000,000,000. Assuming that the war would end by next
March 1st, you must add another $590,000,000 for interest and sinking
fund on the war debt together with a further $100,000,000 for pensions
which would make the total yearly expenditure for the first year of
peace $1,690,000,000. Deducting this from the existing taxation you get
a surplus of $855,000,000. Thus after withdrawing the $430,000,000
received from the excess profits tax there still remains a margin of
$425,000,000."
Indeed, to analyze British war finance to-day is to find something
besides debits and credits and balances. It is a great moral force that
does not reckon in terms of pounds or pence. There is no thought of
indemnity to soothe the scars of waste: no dream of conquest to atone
for friendly land despoiled.
Money grubbing has gone, if only for the moment, along with the other
baser things that have evaporated in the giant melting pot of the war.
In England to-day there are only two things, Work and Fight. They are
giving the nation an economic rebirth: a new idea of the dignity of
toil: they have begot a spirit of denial that is rearing an impregnable
rampart of resource.
Even more marvellous is the financial devotion of the French who present
a spectacle of unselfish sacrifice that merely to touch, as alien, is to
have a thrilling and unforgettable experience.
When you look into the French method of paying for the war you get the
really picturesque and human interest details. In place of taxation you
find that the war is being paid, in the main, out of the savings of the
people. Instead of mortgaging the future, the Gaul is utilising his
thrifty past.
Never in all history is there a more impressive or inspiring
demonstration of the value of thrift as a national asset. It has reared
the bulwark that will enable France to withstand whatever economic
attack the war will make.
The difference between the English and French system of war financing
is psychological as well as material. The average Frenchman has a great
deal of the peasant in him. He is willing to give his life and his
honour to the nation but he absolutely draws the line at paying taxes.
This is why the French have made it a war of loans.
Go up and down the battle line in France and you get startling evidence
of the French devotion to savings. More than one English officer has
told me of tearful requests from French peasants for permission to go
back to their steel-swept and war-torn little farms to dig up the few
hundreds of francs buried in some corner of field or garden. Equally
impressive is the sight of farmers--usually old men and women--working
in the fields while shells shriek overhead and the artillery rumbles
along dusty highways.
Thus the French war debt will be met because of the almost incredible
saving power of the French people. It is at once their pride and their
prosperity. When all is said and done, you discover that with nations as
with individuals it is not what they make but what they save that makes
them strong and enduring.
One afternoon last summer I talked in Paris with M. Alexandre Ribot, the
French Minister of Finance: a stately white-bearded figure of a man who
looked as if he had just stepped out of a Rembrandt etching. He sat in a
richly tapestried room in the old Louvre Palace where more than one King
had danced to merry tune. Now this stately apartment was the nerve
centre of a marvellous and close-knit structure that represented a real
financial democracy.
"How long can France stand the financial strain of war?" I asked the
Minister.
Light flashed in his eyes as he replied:
"So long as the French people know how to save, and this means
indefinitely."
Although the invader has crossed her threshold, France continues to
save. Every wife in the Republic who is earning her livelihood while her
husband is at the front (and nearly every man who can carry a gun is
fighting or in training), is putting something by. It means the building
up of a future financial reserve against which the nation can draw for
war or peace.
One rock of French economic solidity lies in her immense gold supply.
The per capita amount of gold is $30.02 and is larger than any other
country in the world. The United States is next with $19.39, after which
come the United Kingdom with $18.28, and Germany $14.08. Let me add, in
this connection, that a good deal of the French gold is still in
stocking and cupboard.
By the end of 1916 the war had cost France $11,000,000,000, which means
an annual fixed charge of $600,000,000, to which must be added
$200,000,000 for pensions, making the total fixed burden of
$800,000,000.
All this cannot be paid out of savings, although in normal times France
saves exactly $1,000,000,000 a year. But the Government has one big
trump card up its sleeve. It is the large fortunes of her citizens. They
have been untouched by the war because practically no income tax has
been levied.
While the average Frenchman will sacrifice his life rather than submit
to taxation, the upper and wealthy class will do both. The annual income
of the people of France is $6,000,000,000. Therefore a 12 per cent tax
on this income would very nearly produce the entire fixed charge on the
war debt. France looks into the financial future unafraid.
Financially, Russia ambles along like the Big Bear she typifies. In one
respect her method of financing the war cost differs distinctly from her
Allies in the fact that she has received heavy advances from England and
France. From England alone she borrowed $1,250,000,000 which was
expended for arms and ammunition and field equipment. The Czar's Empire
has put out five internal loans while the rest of the money needed has
been raised out of the sale of short term Treasury Bills, paper money
issues and tax levies.
Except for the few millions of dollars obtained in the United States,
Germany's financing--like her whole conduct of the war--is
self-contained. Through five Imperial 5 per cent loans ranging from one
to three billion dollars each, she has established a war credit of
$12,500,000,000. This money--to a smaller degree than in France--has
come from the great mass of the German people.
Other sources of revenue that are enabling the Kaiser to pay for the
war are Treasury Bills sold at home and a taxation that is moderate
compared with the colossal pre-war taxation which spelled Germany's
Preparedness. At the time I write this chapter her war expenditure had
passed the $14,000,000,000 mark. Tack on to this Germany's peace debt of
$5,000,000,000 more and you begin to see--with all the uncertainty of
the war's duration--the immense burden that the Fatherland will have to
carry. The war's drain on the German future is perhaps greater than that
of any other country because all her war loans are long term. She has
also loaned nearly $1,000,000,000 to Austria, Turkey and Bulgaria.
The Teutonic war cost has one distinct advantage over all others in that
it is confined within the German borders. Hence Germany can do as she
pleases with regard to its settlement. If the Mailed Fist obtains after
the war she can clamp it down on her loans, wipe them out as she chooses
and no one can offer a protest.
Now let us dump all these statistics that represent so much blood, agony
and sacrifice into the middle of the table and strike a final balance
sheet.
On one hand you have the assets of the warring countries as represented
by their national wealth. For the Allies, including Roumania, they show
a total of $273,000,000,000: for the Central Powers they register
$134,000,000,000. If wealth is the winning factor then the Allies have
the advantage in weight of buying metal.
Take the other side of the ledger and you see that up to November 1,
1916, the four principal allied countries, England, France, Russia and
Italy, had spent on direct war cost approximately $34,000,000,000, while
the total Teutonic war expenditures have been $21,000,000,000. To this
actual war cost must be added the peace debts of the belligerent nations
which would supplement the allied expense account by $17,465,000,000 and
that of the enemy nations by $9,808,000,000.
Striking a grand total of liabilities, you find that if the war
mercifully ends by August 1, 1917 (as Kitchener predicted it might), the
fighting peoples would face a debt burden of all kinds that had reached
$105,773,000,000.
After this colossal scale of expenditures you may well ask: Will it ever
be possible for European finance to see straight or count normally
again?
Be that as it may, no one can doubt that the battling nations,
individually or with the marvellous team-work that kinship in their
respective causes has begot, are able to pay their way while the
struggle lasts. Grim To-day will take care of itself under the stress of
passion born of desire to win. It is the Reckoning of that Uncertain
To-morrow that will prove to be the problem.
You cannot bankrupt a nation any more than you can ruin an individual so
long as brains and energy are available. Peace therefore will not find a
ruined Europe but it will dawn on a group of depleted countries facing
enormous responsibilities. War ends but the cost of it endures. Just as
present millions are paying with their lives so will unborn hosts pay
with the sweat of their brows.
Meanwhile our Financial Stake in the Great Struggle is secure. How much
more we will have to put into Europe's Red Pay Envelope remains to be
seen. In any event, we have learned how to do it.
VII--_The Man Lloyd George_
The door opened and almost before I had crossed the threshold the little
grey-haired man down at the end of the long stately room began to speak.
Lloyd George was in action.
I had last seen him a year ago in the murk of a London railway station
when I bade him farewell after a memorable day. With him I had gone to
Bristol where he had made an impassioned plea for harmony to the Trade
Union Congress. Then he was Minister of Munitions, Shell-Master of the
Nation in its critical hour of Ammunition Need.
Now he had succeeded the lamented Kitchener as Minister of War; sat in
the Seat of Strategy, head of the far-flung khakied hosts that even at
this moment were breasting death on half a dozen fronts. Just as twelve
months before he had unflinchingly met the Great Emergency that
threatened his country's existence, so did he again fill the National
Breach.
England's Man of Destiny whose long career is one continuous and
spectacular public performance was on the job.
But it was not the same Lloyd George who had sounded the call for
Military and Industrial Conscription from the Peaks of Empire. Another
year of war had etched the travail of its long agony upon his features,
saddened the eyes that had always beheld the Vision of the Greater
Things. The little man was fresh from the front and full of all that its
mighty sacrifice betokened not only to the embattled nations but to the
world as well.
Though we spoke of Politics, Presidents and the Great Social Forces that
so far as England was concerned acknowledged him as leader, the current
of speech always swept back to war and its significance for us.
"Since the war means so much to us," I said, "have you no message for
America?"
Throughout our talk he had sat in a low chair sometimes tilting it
backward as he swayed with the vehemency of his words. Suddenly he
became still. He turned his head and looked dreamily out the window at
his left where he could see the throng of Whitehall as it swept back
and forth along London's Great Military Way.
Then rising slowly and with eloquent gesture and trembling voice (he
might have been speaking to thousands instead of one person), he said:
"The hope of the world is that America will realise the call that
Destiny is making to her in tones that are getting louder and more
insistent as the terrible months go by. That Destiny lies in the
enforcement of respect for International Law and International Rights."
It was a pregnant and unforgettable moment. From the Throne Room of a
Mighty Conflict England's War Lord was sounding the note of a distant
process of peace.
If you had probed behind this kindling utterance you would have seen
with Lloyd George himself that beyond the flaming battle-lines and past
the tumult of a World at War was the hope of some far-away Tribunal that
would judge nations and keep them, just as individuals are kept, in the
path of Right and Humanity.
But before any such bloodless antidote can be applied to International
Dispute, to quote Lloyd George again: "This war must be fought to a
finish."
These final words, snapped like a whip-lash and emphasised with a
fist-beat on the table, meant that England would see her Titan Task
through and if for no other reason because the man who drives the war
gods wills it so. What sort of man is this who goes from post to post
with inspired faith and unfailing execution? What are the qualities that
have lifted him from obscure provincial solicitor to be the Prop of a
People?
"Let George do it," has become the chronic plea of all Britain in her
time of trial. How does he do it?
To understand any man you must get at his beginnings. Thus to appreciate
Lloyd George you must first know that he is Welsh and this means that he
was cradled in revolt. He must have come into the world crying protest.
He was reared in a land of frowning crags and lovely dales, of mingled
snow and sunshine, of poetry and passion. About him love of liberty
clashed with vested tyranny. These conflicting things shaped his
character, entered into his very being and made him temperamentally a
creature of magnificent ironies.
But this conflict did not end with emotion. All his life Contrast,
sometimes grotesque but always dramatic, has marked him for its own. You
behold the Apostle of Peace who once espoused the Boer, translated into
the flaming Disciple and Maker of War through the Rape of Belgium. You
see the fiery Radical, jeered and despised by the Aristocracy, become
the Protector of Peers. No wonder he stands to-day as the most
picturesque, compelling and challenging figure of the English speaking
race. Only one other man--Theodore Roosevelt--vies with him for this
many-sided distinction.
The son of a village schoolmaster who died when he was scarcely three:
the ward of a shoe-maker who was also inspired lay-preacher: the
political protege of a Militant Nationalist whose heart bled at the
oppression of the Welsh, Lloyd George early looked out upon a life
smarting with grievance and clamouring to be free. Knowing this, you can
understand that the dominant characteristic of this man is to rebel
against established order. Swaddled in Democracy, he became its
Embodiment and its Voice.
The world knows about the Lloyd George childhood spent amidst poverty in
a Welsh village. The big-eyed boy ate, thought and dreamed in Welsh,
"the language that meant a daily fare of barley bread." When he learned
English it was like acquiring a foreign tongue. He grew up amid a great
revival of Welsh art, letters and religion that stirred his soul. He
missed the pulpit by a narrow margin, yet he has never lost the
evangelistic fervour which is one of the secrets of his control and
command of people.
With the alphabet Lloyd George absorbed the wrongs of his people and
they were many. The Welsh had a double bondage: the grasp of the
Landlord and the Thrall of the Church. All about him quivered the
aspiration for a free land, a free people and a free religion. In those
days Wales was like another Ireland with all the hardship that Eviction
imposes.
The call to leadership came early. As a boy in school he led his mates
in rebellion against the drastic dictates of a Church which prescribed
liberty of religious thoughts and speech. He became the Apostle of
Nonconformity and for it waged some of his fiercest battles.
Always the gift of oratory was his. He preached temperance almost with
his advent into his teens: he was a convincing speaker before most boys
talked straight.
In due time Lloyd George became a solicitor but it was merely the step
into public life. To plead is instinct with him and with advocacy of a
case in court he was always urging some reform for his little country.
Politics was meat and drink to him and he stood for Parliament. An
ardent Home Ruler, he swayed his followers with such intensity that what
came to be known as Lloyd George's Battle Song sprang into being. Sung
to the American tune of "Marching Through Georgia" it was hailed as the
fighting hymn of Welsh Nationalism. Two lines show where the young Welsh
lawyer stood in his early twenties: they also point his whole future:
"The Grand Young Man will triumph,
Lloyd George will win the day----"
There is something Lincoln-like in the spectacle of his first struggle.
This lowly lad fought the forces of "Squirearchy and Hierarchy." The
Tories hurled at him the anathema that he "had been born in a cottage."
"Ah," replied Lloyd George, when he heard of it: "the Tories have not
realised that the day of the cottage-bred man has dawned."
Before he got through he was destined to show, that so far as
opportunity was concerned, the Cottage in Great Britain was to be on a
par with a Palace.
As you analyse Lloyd George's life you find that he has always been a
sort of Human Lightning Rod that attracted the bolts of abuse. A
campaign meant violent controversy, frequently physical conflict. The
reason was that he always stated his cause so violently as to arouse
bitter resentment.
Into his first election he flung himself with the fury of youth and the
eager passion of a zealot. He threw conventional Liberalism to the wind
and made a fight for a Free and United Wales. He frankly believed
himself to be the inspired leader of his people: often his meetings
became riots. More than once he was warned that the Tories would kill
him and on several occasions he narrowly escaped death. Once while
riding with his wife in an open carriage through the streets of Bangor
he was assailed by a hooting, jeering mob. Some one threw a blazing fire
ball, dipped in paraffine, into the vehicle. It knocked off the
candidate's hat and fell into Mrs. Lloyd George's lap setting her afire.
Lloyd George threw off his coat, smothered the flames and after finding
that the innocent victim of the assault was uninjured, calmly proceeded
to the Town Hall where he spoke, accompanied by a fusillade of stones
which smashed every window in the structure.
In this campaign, as in all succeeding ones, Lloyd George used the full
powers of press publicity. He made reporters his confidants. Often he
rehearsed his speeches before them, striding up and down and declaiming
as passionately as if he were facing huge audiences. In fact he acquired
an interest in a group of Welsh papers.
Already Welsh chieftainship was being crystallised in the aggressive
little fire-eater. Anticipating the coming call of the Mother Country
she was laying her burdens on his stalwart shoulders. And what George
was now doing for Wales he was soon to do in the larger arena of the
Empire.
Once in Parliament Lloyd George was no man's man. He became a free lance
and while sometimes he ran amuck his cause was always the cause of his
people.
In those earlier Parliamentary days you find some of the traits that
distinguished him later on. For one thing he disdained the drudgery of
committee work: he chafed at the confinement of the conference room;
eagle-like he yearned to spread his wings. His forte was talking. He
loathed to mull over dull and unresponsive reports. He frankly admitted
a disinclination to work, and it makes him one of the most superficial
of men in what the world calls culture. His intelligence has more than
once been characterised as "brilliant but hasty."
But offsetting all this is the man's persuasive and pleading personality
which always gets him over the shallow ground of ignorance. This is one
reason why Lloyd George has always been stronger in attack than in
defence. His tactic has always been either to assault first or make a
swift counterdrive. He is a sort of Stonewall Jackson of Debate.
Then, as throughout his whole career, he showed an extraordinary
aversion to letter-writing. He became known in Parliament as the "Great
Unanswered." He used to say, and still does, that an unanswered letter
answers itself in time. This led to the tradition that the only way to
get a written reply out of Lloyd George was to enclose two addressed and
stamped cards, one bearing the word "Yes" and the other "No." More than
once, however, when friends and constituents tried this ruse they got
both cards back in the same envelope!
Not long ago a well known Englishman wanted to make a written request of
Lloyd George and on consulting one of his associates was given this
instruction: "Make it brief. Lloyd George never reads a letter that
fills more than half a page."
There is no need of rehearsing here the long-drawn struggle through
which he made his way to party leadership. In Parliament and out, he was
a hornet--a good thing to let alone, and an ugly customer to stir up.
Whether he lined up with the Government or Opposition it mattered
little. Lloyd George has always been an insurgent at heart.