CHAPTER I

Produced by David Edwards, Chuck Greif and the Online

Distributed Proofreading Team at http://www.pgdp.net (This

file was produced from images generously made available

by The Internet Archive)

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

[Illustration: colophon]

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 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 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

CHAPTER PAGE

I OUR DAILY BREAD 3

II THE OLD ECONOMY AND THE POST-WAR STATE 61

III NATIONALITY, ECONOMICS, AND THE ASSERTION OF

RIGHT 81

IV MILITARY PREDOMINANCE--AND INSECURITY 112

V PATRIOTISM AND POWER IN WAR AND PEACE: THE

SOCIAL OUTCOME 142

VI THE ALTERNATIVE RISKS OF STATUS AND CONTRACT 169

VII THE SPIRITUAL ROOTS OF THE SETTLEMENT 199

ADDENDUM: SOME NOTES ON 'THE GREAT ILLUSION'

AND ITS PRESENT RELEVANCE 253

I. The 'Impossibility of War' Myth. II. 'Economic'

and 'Moral' Motives in International Affairs. III. The

'Great Illusion' Argument. IV. Arguments now out of

date. V. The Argument as an attack on the State.

VI. Vindication by Events. VII. Could the War have

been prevented?

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-oedema. 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.