THE GREAT ILLUSION
These views founded on a gross and dangerous misconception--What
a German victory could and could not accomplish--What an English
victory could and could not accomplish--The optical illusion of
conquest--There can be no transfer of wealth--The prosperity of the
little States in Europe--German Three per Cents. at 82 and Belgian
at 96--Russian Three and a Half per Cents. at 81, Norwegian at
102--What this really means--If Germany annexed Holland, would
any German benefit or any Hollander?--The "cash value" of
Alsace-Lorraine.
I think it will be admitted that there is not much chance of
misunderstanding the general idea embodied in the passage quoted at the
end of the last chapter. Mr. Harrison is especially definite. At the
risk of "damnable iteration" I would again recall the fact that he is
merely expressing one of the universally accepted axioms of European
politics, namely, that a nation's financial and industrial stability,
its security in commercial activity--in short, its prosperity and well
being depend, upon its being able to defend itself against the
aggression of other nations, who will, if they are able, be tempted to
commit such aggression because in so doing they will increase their
power, prosperity and well-being, at the cost of the weaker and
vanquished.
I have quoted, it is true, largely journalistic authorities because I
desired to indicate real public opinion, not merely scholarly opinion.
But Mr. Harrison has the support of other scholars of all sorts. Thus
Mr. Spenser Wilkinson, Chichele Professor of Military History at Oxford,
and a deservedly respected authority on the subject, confirms in almost
every point in his various writings the opinions that I have quoted, and
gives emphatic confirmation to all that Mr. Frederic Harrison has
expressed. In his book, "Britain at Bay," Professor Wilkinson says: "No
one thought when in 1888 the American observer, Captain Mahan, published
his volume on the influence of sea-power upon history, that other
nations beside the British read from that book the lesson that victory
at sea carried with it a prosperity and influence and a greatness
obtainable by no other means."
Well, it is the object of these pages to show that this all but
universal idea, of which Mr. Harrison's letter is a particularly vivid
expression, is a gross and desperately dangerous misconception,
partaking at times of the nature of an optical illusion, at times of the
nature of a superstition--a misconception not only gross and universal,
but so profoundly mischievous as to misdirect an immense part of the
energies of mankind, and to misdirect them to such degree that unless we
liberate ourselves from this superstition civilization itself will be
threatened.
And one of the most extraordinary features of this whole question is
that the absolute demonstration of the falsity of this idea, the
complete exposure of the illusion which gives it birth, is neither
abstruse nor difficult. This demonstration does not repose upon any
elaborately constructed theorem, but upon the simple exposition of the
political facts of Europe as they exist to-day. These facts, which are
incontrovertible, and which I shall elaborate presently, may be summed
up in a few simple propositions stated thus:
1. An extent of devastation, even approximating to that which Mr.
Harrison foreshadows as the result of the conquest of Great Britain,
could only be inflicted by an invader as a means of punishment costly to
himself, or as the result of an unselfish and expensive desire to
inflict misery for the mere joy of inflicting it. Since trade depends
upon the existence of natural wealth and a population capable of working
it, an invader cannot "utterly destroy it," except by destroying the
population, which is not practicable. If he could destroy the population
he would thereby destroy his own market, actual or potential, which
would be commercially suicidal.[6]
2. If an invasion of Great Britain by Germany did involve, as Mr.
Harrison and those who think with him say it would, the "total collapse
of the Empire, our trade, and the means of feeding forty millions in
these islands ... the disturbance of capital and destruction of
credit," German capital would also be disturbed, because of the
internationalization and delicate interdependence of our credit-built
finance and industry, and German credit would also collapse, and the
only means of restoring it would be for Germany to put an end to the
chaos in England by putting an end to the condition which had produced
it. Moreover, because of this delicate interdependence of our
credit-built finance, the confiscation by an invader of private
property, whether stocks, shares, ships, mines, or anything more
valuable than jewellery or furniture--anything, in short, which is bound
up with the economic life of the people--would so react upon the finance
of the invader's country as to make the damage to the invader resulting
from the confiscation exceed in value the property confiscated. So that
Germany's success in conquest would be a demonstration of the complete
economic futility of conquest.
3. For allied reasons, in our day the exaction of tribute from a
conquered people has become an economic impossibility; the exaction of a
large indemnity so costly directly and indirectly as to be an extremely
disadvantageous financial operation.
4. It is a physical and economic impossibility to capture the external
or carrying trade of another nation by military conquest. Large navies
are impotent to create trade for the nations owning them, and can do
nothing to "confine the commercial rivalry" of other nations. Nor can a
conqueror destroy the competition of a conquered nation by annexation;
his competitors would still compete with him--_i.e._, if Germany
conquered Holland, German merchants would still have to meet the
competition of Dutch merchants, and on keener terms than originally,
because the Dutch merchants would then be within the German's customs
lines; the notion that the trade competition of rivals can be disposed
of by conquering those rivals being one of the illustrations of the
curious optical illusion which lies behind the misconception dominating
this subject.
5. The wealth, prosperity, and well-being of a nation depend in no way
upon its political power; otherwise we should find the commercial
prosperity and social well-being of the smaller nations, which exercise
no political power, manifestly below that of the great nations which
control Europe, whereas this is not the case. The populations of States
like Switzerland, Holland, Belgium, Denmark, Sweden, are in every way as
prosperous as the citizens of States like Germany, Russia, Austria, and
France. The wealth _per capita_ of the small nations is in many cases in
excess of that of the great nations. Not only the question of the
security of small States, which, it might be urged, is due to treaties
of neutrality, is here involved, but the question of whether political
power can be turned in a positive sense to economic advantage.
6. No other nation could gain any advantage by the conquest of the
British Colonies, and Great Britain could not suffer material damage by
their loss, however much such loss would be regretted on sentimental
grounds, and as rendering less easy a certain useful social co-operation
between kindred peoples. The use, indeed, of the word "loss" is
misleading. Great Britain does not "own" her Colonies. They are, in
fact, independent nations in alliance with the Mother Country, to whom
they are no source of tribute or economic profit (except as foreign
nations are a source of profit), their economic relations being settled,
not by the Mother Country, but by the Colonies. Economically, England
would gain by their formal separation, since she would be relieved of
the cost of their defence. Their "loss" involving, therefore, no change
in economic fact (beyond saving the Mother Country the cost of their
defence), could not involve the ruin of the Empire, and the starvation
of the Mother Country, as those who commonly treat of such a contingency
are apt to aver. As England is not able to exact tribute or economic
advantage, it is inconceivable that any other country, necessarily less
experienced in colonial management, would be able to succeed where
England had failed, especially in view of the past history of the
Spanish, Portuguese, French, and British Colonial Empires. This history
also demonstrates that the position of British Crown Colonies, in the
respect which we are considering, is not sensibly different from that of
the self-governing ones. It is _not_ to be presumed, therefore, that any
European nation, realizing the facts, would attempt the desperately
expensive business of the conquest of England for the purpose of making
an experiment which all colonial history shows to be doomed to failure.
The foregoing propositions traverse sufficiently the ground covered in
the series of those typical statements of policy, both English and
German, from which I have quoted. The simple statement of these
propositions, based as they are upon the self-evident facts of
present-day European politics, sufficiently exposes the nature of those
political axioms which I have quoted. But as men even of the calibre of
Mr. Harrison normally disregard these self-evident facts, it is
necessary to elaborate them at somewhat greater length.
For the purpose of presenting a due parallel to the statement of policy
embodied in the quotations made from the London _Times_ and Mr. Harrison
and others, I have divided the propositions which I desire to
demonstrate into seven clauses, but such a division is quite arbitrary,
and made only in order to bring about the parallel in question. The
whole seven can be put into one, as follows: That as the only possible
policy in our day for a conqueror to pursue is to leave the wealth of a
territory in the complete possession of the individuals inhabiting that
territory, it is a logical fallacy and an optical illusion to regard a
nation as increasing its wealth when it increases its territory; because
when a province or State is annexed, the population, who are the real
and only owners of the wealth therein, are also annexed, and the
conqueror gets nothing. The facts of modern history abundantly
demonstrate this. When Germany annexed Schleswig-Holstein and Alsatia
not a single ordinary German citizen was one _pfennig_ the richer.
Although England "owns" Canada, the English merchant is driven out of
the Canadian markets by the merchant of Switzerland, who does not "own"
Canada. Even where territory is not formally annexed, the conqueror is
unable to take the wealth of a conquered territory, owing to the
delicate interdependence of the financial world (an outcome of our
credit and banking systems), which makes the financial and industrial
security of the victor dependent upon financial and industrial security
in all considerable civilized centres; so that widespread confiscation
or destruction of trade and commerce in a conquered territory would
react disastrously upon the conqueror. The conqueror is thus reduced to
economic impotence, which means that political and military power is
economically futile--that is to say, can do nothing for the trade and
well-being of the individuals exercising such power. Conversely, armies
and navies cannot destroy the trade of rivals, nor can they capture it.
The great nations of Europe do not destroy the trade of the small
nations for their own benefit, because they cannot; and the Dutch
citizen, whose Government possesses no military power, is just as well
off as the German citizen, whose Government possesses an army of two
million men, and a great deal better off than the Russian, whose
Government possesses an army of something like four million. Thus, as a
rough-and-ready though incomplete indication of the relative wealth and
security of the respective States, the Three per Cents. of powerless
Belgium are quoted at 96, and the Three per Cents. of powerful Germany
at 82; the Three and a Half per Cents. of the Russian Empire, with its
hundred and twenty million souls and its four million army, are quoted
at 81, while the Three and a Half per Cents. of Norway, which has not an
army at all (or any that need be considered in this discussion), are
quoted at 102. All of which carries with it the paradox that the more a
nation's wealth is militarily protected the less secure does it
become.[7]
The late Lord Salisbury, speaking to a delegation of business men, made
this notable observation: The conduct of men of affairs acting
individually in their business capacity differs radically in its
principles and application from the conduct of the same men when they
act collectively in political affairs. And one of the most astonishing
things in politics is the little trouble business men take to bring
their political creed into keeping with their daily behavior; how
little, indeed, they realize the political implication of their daily
work. It is a case, indeed, of the forest and the trees.
But for some such phenomenon we certainly should not see the
contradiction between the daily practice of the business world and the
prevailing political philosophy, which the security of property in, and
the high prosperity of, the smaller States involves. We are told by all
the political experts that great navies and great armies are necessary
to protect our wealth against the aggression of powerful neighbors,
whose cupidity and voracity can be controlled by force alone; that
treaties avail nothing, and that in international politics might makes
right, that military and commercial security are identical, that
armaments are justified by the necessity of commercial security; that
our navy is an "insurance," and that a country without military power
with which their diplomats can "bargain" in the Council of Europe is at
a hopeless disadvantage economically. Yet when the investor, studying
the question in its purely financial and material aspect, has to decide
between the great States, with all their imposing paraphernalia of
colossal armies and fabulously costly navies, and the little States,
possessing relatively no military power whatever, he plumps solidly, and
with what is in the circumstances a tremendous difference, in favor of
the small and helpless. For a difference of twenty points, which we find
as between Norwegian and Russian, and fourteen as between Belgian and
German securities, is the difference between a safe and a speculative
one--the difference between an American railroad bond in time of
profound security and in time of widespread panic. And what is true of
the Government funds is true, in an only slightly less degree, of the
industrial securities in the national comparison just drawn.
Is it a sort of altruism or quixotism which thus impels the capitalists
of Europe to conclude that the public funds and investments of powerless
Holland and Sweden (any day at the mercy of their big neighbors) are 10
to 20 per cent. safer than those of the greatest Power of Continental
Europe. The question is, of course, absurd. The only consideration of
the financier is profit and security, and he has decided that the funds
of the undefended nation are more secure than the funds of one defended
by colossal armaments. How does he arrive at this decision, unless it be
through his knowledge as a financier, which, of course, he exercises
without reference to the political implication of his decision, that
modern wealth requires no defence, because it cannot be confiscated?
If Mr. Harrison is right; if, as he implies, a nation's commerce, its
very industrial existence, would disappear if it allowed neighbors who
envied it that commerce to become its superiors in armaments, and to
exercise political weight in the world, how does he explain the fact
that the great Powers of the Continent are flanked by little nations far
weaker than themselves having nearly always a commercial development
equal to, and in most cases greater than theirs? If the common
doctrines be true, the financiers would not invest a dollar in the
territories of the undefended nations, and yet, far from that being the
case, they consider that a Swiss or a Dutch investment is more secure
than a German one; that industrial undertakings in a country like
Switzerland defended by an army of a few thousand men, are preferable in
point of security to enterprises backed by two millions of the most
perfectly trained soldiers in the world. The attitude of European
finance in this matter is the absolute condemnation of the view commonly
taken by the statesman. If a country's trade were really at the mercy of
the first successful invader; if armies and navies were really necessary
for the protection and promotion of trade, the small countries would be
in a hopelessly inferior position, and could only exist on the
sufferance of what we are told are unscrupulous aggressors. And yet
Norway has relatively to population a greater carrying trade than Great
Britain,[8] and Dutch, Swiss, and Belgian merchants compete in all the
markets of the world successfully with those of Germany and France.
The prosperity of the small States is thus a fact which proves a good
deal more than that wealth can be secure without armaments. We have seen
that the exponents of the orthodox statecraft--notably such authorities
as Admiral Mahan--plead that armaments are a necessary part of the
industrial struggle, that they are used as a means of exacting economic
advantage for a nation which would be impossible without them. "The
logical sequence," we are told, is "markets, control, navy, bases." The
nation without political and military power is, we are assured, at a
hopeless disadvantage economically and industrially.[9]
Well, the relative economic situation of the small States gives the lie
to this profound philosophy. It is seen to be just learned nonsense when
we realize that all the might of Russia or Germany cannot secure for the
individual citizen better general economic conditions than those
prevalent in the little States. The citizens of Switzerland, Belgium, or
Holland, countries without "control," or navy, or bases, or "weight in
the councils of Europe," or the "prestige of a great Power," are just as
well off as Germans, and a great deal better off than Austrians or
Russians.
Thus, even if it could be argued that the security of the small States
is due to the various treaties guaranteeing their neutrality, it cannot
be argued that those treaties give them the political power and
"control" and "weight in the councils of the nations" which Admiral
Mahan and the other exponents of the orthodox statecraft assure us are
such necessary factors in national prosperity.
I want, with all possible emphasis, to indicate the limits of the
argument that I am trying to enforce. That argument is not that the
facts just cited show armaments or the absence of them to be the sole
or even the determining factor in national wealth. It does show that
the security of wealth is due to other things than armaments; that
absence of political and military power is on the one hand no obstacle
to, and on the other hand no guarantee of, prosperity; that the mere
size of the administrative area has no relation to the wealth of those
inhabiting it.
Those who argue that the security of the small States is due to the
international treaties protecting their neutrality are precisely those
who argue that treaty rights are things that can never give security!
Thus one British military writer says:
The principle practically acted on by statesmen, though, of
course, not openly admitted, is that frankly enunciated by
Machiavelli: "A prudent ruler ought not to keep faith when by
so doing it would be against his interests, and when the
reasons which made him bind himself no longer exist." Prince
Bismarck said practically the same thing, only not quite so
nakedly. The European waste-paper basket is the place to which
all treaties eventually find their way, and a thing which can
any day be placed in a waste-paper basket is a poor thing on
which to hang our national safety. Yet there are plenty of
people in this country who quote treaties to us as if we could
depend on their never being torn up. Very plausible and very
dangerous people they are--idealists too good and innocent for
a hard, cruel world, where force is the chief law. Yet there
are some such innocent people in Parliament even at present. It
is to be hoped that we shall see none of them there in
future.[10]
Major Murray is right to this extent: the militarist view, the view of
those who "believe in war," and defend it even on moral grounds as a
thing without which men would be "sordid," supports this philosophy of
force, which flourishes in the atmosphere which the militarist regimen
engenders.
But the militarist view involves a serious dilemma. If the security of a
nation's wealth can only be assured by force, and treaty rights are mere
waste paper, how can we explain the evident security of the wealth of
States possessing relatively no force? By the mutual jealousies of those
guaranteeing their neutrality? Then that mutual jealousy could equally
well guarantee the security of any one of the larger States against the
rest. Another Englishman, Mr. Farrer, has put the case thus:
If that recent agreement between England, Germany, France,
Denmark, and Holland can so effectively relieve Denmark and
Holland from the fear of invasion that Denmark can seriously
consider the actual abolition of her army and navy, it seems
only one further step to go, for all the Powers collectively,
great and small, to guarantee the territorial independence of
each one of them severally.
In either case, the plea of the militarist stands condemned: national
safety can be secured by means other than military force.
But the real truth involves a distinction which is essential to the
right understanding of this phenomenon: the political security of the
small States is _not_ assured; no man would take heavy odds on Holland
being able to maintain complete political independence if Germany cared
seriously to threaten it. But Holland's economic security _is_ assured.
Every financier in Europe knows that if Germany conquered Holland or
Belgium to-morrow, she would have to leave their wealth untouched; there
could be no confiscation. And that is why the stocks of the lesser
States, not in reality threatened by confiscation, yet relieved in part
at least of the charge of armaments, stand fifteen to twenty points
higher than those of the military States. Belgium, politically, might
disappear to-morrow; her wealth would remain practically unchanged.
Yet, by one of those curious contradictions we are frequently meeting in
the development of ideas, while a fact like this is at least
subconsciously recognized by those whom it concerns, the necessary
corollary of it--the positive form of the merely negative truth that a
community's wealth cannot be stolen--is not recognized. We admit that a
people's wealth must remain unaffected by conquest, and yet we are quite
prepared to urge that we can enrich ourselves by conquering them! But if
we must leave their wealth alone, how can we take it?
I do not speak merely of "loot." It is evident, even on cursory
examination, that no real advantage of any kind is achieved for the mass
of one people by the conquest of another. Yet that end is set up in
European politics as desirable beyond all others. Here, for instance,
are the Pan-Germanists of Germany. This party has set before itself the
object of grouping into one great Power all the peoples of the Germanic
race or language in Europe. Were this aim achieved, Germany would become
the dominating Power of the Continent, and might become the dominating
Power of the world. And according to the commonly accepted view, such an
achievement would, from the point of view of Germany, be worth any
sacrifice that Germans could make. It would be an object so great, so
desirable, that German citizens should not hesitate for an instant to
give everything, life itself, in its accomplishment. Very good. Let us
assume that at the cost of great sacrifice, the greatest sacrifice which
it is possible to imagine a modern civilized nation making, this has
been accomplished, and that Belgium and Holland and Germany, Switzerland
and Austria, have all become part of the great German hegemony: _is
there one ordinary German citizen who would be able to say that his
well-being had been increased by such a change_? Germany would then
"own" Holland. _But would a single German citizen be the richer for the
ownership?_ The Hollander, from having been the citizen of a small and
insignificant State, would become the citizen of a very great one.
_Would the individual Hollander be any the richer or any the better?_ We
know that, as a matter of fact, neither the German nor the Hollander
would be one whit the better; and we know also, as a matter of fact,
that in all probability they would be a great deal the worse. We may,
indeed, say that the Hollander would be certainly the worse, in that he
would have exchanged the relatively light taxation and light military
service of Holland for the much heavier taxation and the much longer
military service of the "great" German Empire.
The following, which appeared in the London _Daily Mail_ in reply to an
article in that paper, throws some further light on the points
elaborated in this chapter. The _Daily Mail_ critic had placed
Alsace-Lorraine as an asset in the German conquest worth $330,000,000
"cash value," and added: "If Alsace-Lorraine had remained French, it
would have yielded, at the present rate of French taxation, a revenue of
$40,000,000 a year to the State. That revenue is lost to France, and is
placed at the disposal of Germany."
To which I replied:
Thus, if we take the interest of the "cash value" at the
present price of money in Germany, Alsace-Lorraine should be
worth to the Germans about $15,000,000 a year. If we take the
other figure, $40,000,000. Suppose we split the difference, and
take, say, 20. Now, if the Germans are enriched by 20 millions
a year--if Alsace-Lorraine is really worth that income to the
German people--how much should the English people draw from
their "possessions"? On the basis of population, somewhere in
the region of $5,000,000,000; on the basis of area, still
more--enough not only to pay all English taxes, wipe out the
National Debt, support the army and navy, but give every family
in the land a fat income into the bargain. There is evidently
something wrong.
Does not my critic really see that this whole notion of
national possessions benefiting the individual is founded on
mystification, upon an illusion? Germany conquered France and
annexed Alsace-Lorraine. The "Germans" consequently "own" it,
and enrich themselves with this newly acquired wealth. That is
my critic's view, as it is the view of most European statesmen;
and it is all false. Alsace-Lorraine is owned by its
inhabitants, and nobody else; and Germany, with all her
ruthlessness, has not been able to dispossess them, as is
proved by the fact that the matricular contribution
(_matrikularbeitrag_) of the newly acquired State to the
Imperial treasury (which incidentally is neither 15 millions
nor 40, but just over five) is fixed on exactly the same scale
as that of the other States of the Empire. Prussia, the
conqueror, pays _per capita_ just as much as and no less than
Alsace, the conquered, who, if she were not paying this
$5,600,000 to Germany, would be paying it--or, according to my
critic, a much larger sum--to France; and if Germany did not
"own" Alsace-Lorraine, she would be relieved of charges that
amount not to five but many more millions. The change of
"ownership" does not therefore of itself change the money
position (which is what we are now discussing) of either owner
or owned.
In examining, in the last article on this matter, my critic's
balance-sheet, I remarked that were his figures as complete as
they are absurdly incomplete and misleading, I should still
have been unimpressed. We all know that very marvellous results
are possible with figures; but one can generally find some
simple fact which puts them to the supreme test without undue
mathematics. I do not know whether it has ever happened to my
critic, as it has happened to me, while watching the gambling
in the casino of a Continental watering resort, to have a
financial genius present weird columns of figures, which
demonstrate conclusively, irrefragably, that by the system
which they embody one can break the bank and win a million. I
have never examined these figures, and never shall, for this
reason: the genius in question is prepared to sell his
wonderful secret for twenty francs. Now, in the face of that
fact I am not interested in his figures. If they were worth
examination they would not be for sale.
And so in this matter there are certain test facts which upset
the adroitest statistical legerdemain. Though, really, the
fallacy which regards an addition of territory as an addition
of wealth to the "owning" nation is a very much simpler matter
than the fallacies lying behind gambling systems, which are
bound up with the laws of chance and the law of averages and
much else that philosophers will quarrel about till the end of
time. It requires an exceptional mathematical brain to refute
those fallacies, whereas the one we are dealing with is due
simply to the difficulty experienced by most of us in carrying
in our heads two facts at the same time. It is so much easier
to seize on one fact and forget the other. Thus we realize that
when Germany has conquered Alsace-Lorraine she has "captured" a
province worth, "cash value," in my critic's phrase,
$330,000,000. What we overlook is that Germany has also
captured the people who own the property and who continue to
own it. We have multiplied by _x_, it is true, but we have
overlooked the fact that we have had to divide by _x_, and that
the result is consequently, so far as the individual is
concerned, exactly what it was before. My critic remembered the
multiplication all right, but he forgot the division. Let us
apply the test fact. If a great country benefits every time it
annexes a province, and her people are the richer for the
widened territory, the small nations ought to be immeasurably
poorer than the great, instead of which, by every test which
you like to apply--public credit, amounts in savings banks,
standard of living, social progress, general
well-being--citizens of small States are, other things being
equal, as well off as, or better off than, the citizens of
great States. The citizens of countries like Holland, Belgium,
Denmark, Sweden, Norway are, by every possible test, just as
well off as the citizens of countries like Germany, Austria, or
Russia. These are the facts which are so much more potent than
any theory. If it is true that a country benefits by the
acquisition of territory, and widened territory means general
well-being, why do the facts so eternally deny it? There is
something wrong with the theory.
In every civilized State, revenues which are drawn from a
territory are expended on that territory, and there is no
process known to modern government by which wealth may first be
drawn from a territory into the treasury and then be
redistributed with a profit to the individuals who have
contributed it, or to others. It would be just as reasonable to
say that the citizens of London are richer than the citizens of
Birmingham because London has a richer treasury; or that
Londoners would become richer if the London County Council were
to annex the county of Hertford; as to say that people's wealth
varies according to the size of the administrative area which
they inhabit. The whole thing is, as I have called it, an
optical illusion, due to the hypnotism of an obsolete
terminology. Just as poverty may be greater in the large city
than in the small one, and taxation heavier, so the citizens of
a great State may be poorer than the citizens of a small one,
as they very often are. Modern government is mainly, and tends
to become entirely, a matter of administration. A mere
jugglery with the administrative entities, the absorption of
small States into large ones, or the breaking up of large
States into small, is not of itself going to affect the matter
one way or the other.