The Great Illusion / A Study of the Relation of Military Power to National Advantage

There is just one other possible meaning that the English patriot may have in his mind. He may plead that great military and naval establishments do not exist for the purpose of the conquest of territory or of destroying a rival's trade, but for "protecting" or indirectly aiding trade and industry. We are allowed to infer that in some not clearly defined way a great Power can aid the trade of its citizens by the use of the prestige which a great navy and a great army bring, and by exercising bargaining power, in the matter of tariffs, with other nations. But again the condition of the small nations in Europe gives the lie to this assumption.

It is evident that the neutral does not buy English products and refuse Germany's because England has a larger navy. If one can imagine the representatives of an English and a German firm meeting in the office of a merchant in Argentina, or Brazil, or Bulgaria, or Finland, both of them selling cutlery, the German is not going to secure the order because he is able to show the Argentinian, or the Brazilian, or the Bulgarian, or the Finn that Germany has twelve Dreadnoughts and England only eight. The German will take the order if, on the whole, he can make a more advantageous offer to the prospective buyer, and for no other reason whatsoever, and the buyer will go to the merchant of any nation whatever, whether he be German, or Swiss, or Belgian, or British, irrespective of the armies and navies which may lie behind the nationality of the seller. Nor does it appear that armies and navies weigh in the least when it comes to a question of a tariff bargain. Switzerland wages a tariff war with Germany, and wins. The whole history of the trade of the small nations shows that the political prestige of the great ones gives them practically no commercial advantage.

We continually talk as though carrying trade were in some special sense the result of the growth of a great navy, but Norway has a carrying trade which, relatively to her population, is nearly three times as great as Britain's, and the same reasons which would make it impossible for another nation to confiscate the gold reserve of the Bank of England would make it impossible for another nation to confiscate British shipping on the morrow of a British naval defeat. In what way can her carrying trade or any other trade be said to depend upon military power?

As I write these lines there comes to my notice a series of articles in the London Daily Mail, written by Mr. F.A. McKenzie, explaining how it is that England is losing the trade of Canada. In one article he quotes a number of Canadian merchants:

"We buy very little direct from England," said Mr. Harry McGee, one of the vice-presidents of the company, in answer to my questions. "We keep a staff in London of twenty, supervising our European purchases, but the orders go mostly to France, Germany, and Switzerland, and not to England."

And in a further article he notes that many orders are going to Belgium. Now the question arises: What more can a navy do that it has not done for England in Canada? And yet the trade goes to Switzerland and Belgium. Is England going to protect herself against the commercial "aggression" of Switzerland by building a dozen more Dreadnoughts? Suppose she could conquer Switzerland and Belgium with her Dreadnoughts, would not the trade of Switzerland and Belgium go on all the same? Her arms have brought her Canada—but no monopoly of the Canadian orders, which go, in part, to Switzerland.

If the traders of little nations can snap their fingers at the great war lords, why do British traders need Dreadnoughts? If Swiss commercial prosperity is secure from the aggression of a neighbor who outweighs Switzerland in military power a hundred to one, how comes it that the trade and industry, the very life-bread of her children, as Mr. Harrison would have us believe, of the greatest nation in history is in danger of imminent annihilation the moment she loses her military predominance?

If the statesmen of Europe would tell us how the military power of a great nation is used to advance the commercial interest of its citizens, would explain to us the modus operandi, and not refer us to large and vague phrases about "exercising due weight in the councils of the nations," we might accept their philosophy. But, until they do so, we are surely justified in assuming that their political terminology is simply a survival—an inheritance from a state of things which has, in fact, passed away.

It is facts of the nature of those I have instanced which constitute the real protection of the small State, and which are bound as they gain in general recognition to constitute the real protection from outside aggression of all States, great or small.

One financial authority from whom I have quoted noted that this elaborate financial interdependence of the modern world has grown up in spite of ourselves, "without our noticing it until we put it to some rude test." Men are fundamentally just as disposed as they were at any time to take wealth that does not belong to them, which they have not earned. But their relative interest in the matter has changed. In very primitive conditions robbery is a moderately profitable enterprise. Where the rewards of labor, owing to the inefficiency of the means of production, are small and uncertain, and where all wealth is portable, raiding and theft offer the best reward for the enterprise of the courageous; in such conditions the size of man's wealth depends a good deal on the size of his club and the agility with which he wields it. But to the man whose wealth so largely depends upon his credit and on his paper being "good paper" at the bank, dishonesty has become as precarious and profitless as honest toil was in more primitive times.

The instincts of the business man may, at bottom, be just as predatory as those of the cattle-lifter or the robber baron, but taking property by force has become one of the least profitable and the most speculative forms of enterprise upon which he could engage. The force of commercial events has rendered the thing impossible. I know that the defender of arms will reply that it is the police who have rendered it impossible. This is not true. There were as many armed men in Europe in the days when the robber baron carried on his occupation as there are in our day. To say that the policeman makes him impossible is to put the cart before the horse. What created the police and made them possible, if it was not the general recognition of the fact that disorder and aggression make trade impossible?

Just note what is taking place in South America. States in which repudiation was a commonplace of everyday politics have of recent years become as stable and as respectable as the City of London, and have come to discharge their obligations as regularly. These countries were during hundreds of years a slough of disorder and a never-ending sanguinary scramble for the spoils, and yet in a matter of fifteen or twenty years the conditions have radically changed. Does this mean that the nature of these populations has fundamentally altered in less than a generation? In that case many a militarist claim must be rejected. There is a simpler explanation.

These countries, like Brazil and the Argentine, have been drawn into the circle of international trade, exchange, and finance. Their economic relationships have become sufficiently extensive and complex to make repudiation the least profitable form of theft. The financier will tell you "they cannot afford to repudiate." If any attempt at repudiation were made, all sorts of property, either directly or indirectly connected with the orderly execution of Governmental functions, would suffer, banks would become involved, great businesses would stagger, and the whole financial community would protest. To attempt to escape the payment of a single loan would involve the business world in losses amounting to many times the value of the loan.

It is only where a community has nothing to lose, no banks, no personal fortunes dependent upon public good faith, no great businesses, no industries, that the Government can afford to repudiate its obligations or to disregard the general code of economic morality. This was the case with Argentina and Brazil a generation ago; it is still the case, to some extent, with some Central American States to-day. It is not because the armies in these States have grown that the public credit has improved. Their armies were greater a generation ago than they are now. It is because they know that trade and finance are built upon credit—that is, confidence in the fulfilment of obligations, upon security of tenure in titles, upon the enforcement of contract according to law—and that if credit is seriously shaken, there is not a section of the elaborate fabric which is not affected.

The more our commercial system gains in complication, the more does the common prosperity of all of us come to depend upon the reliance which can be placed on the due performance of all contracts. This is the real basis of "prestige," national and individual; circumstances stronger than ourselves are pushing us, despite what the cynical critics of our commercial civilization may say, towards the unvarying observance of this simple ideal. When we drop back from it—and such relapses occur as we should expect them to occur, especially in those societies which have just emerged from a more or less primitive state—punishment is generally swift and sure.

What was the real origin of the bank crisis of 1907 in the United States, which had for American business men such disastrous consequences? It was the loss by American financiers and American bankers of the confidence of the American public. At bottom there was no other reason. One talks of cash reserves and currency errors; but London, which does the banking of the universe, works on the smallest cash reserve in the world, because, as an American authority has put it, English bankers work with a "psychological reserve."

I quote from Mr. Withers:

It is because they (English bankers) are so safe, so straight, so sensible, from an American point of view so unenterprising, that they are able to build up a bigger credit fabric on a smaller gold basis, and even carry this building to a height which they themselves have decided to be questionable. This "psychological reserve" is the priceless possession that has been handed down through generations of good bankers, and every individual of every generation who receives it can do something to maintain and improve it.

But it was not always thus, and it is merely the many ramifications of the English commercial and financial world that have brought this about. In the end the Americans will imitate it, or they will suffer from a hopeless disadvantage in their financial competition with England. Commercial development is broadly illustrating one profound truth: that the real basis of social morality is self-interest. If English banks and insurance companies have become absolutely honest in their administration, it is because the dishonesty of any one of them threatened the prosperity of all.

Must we assume that the Governments of the world, which, presumably, are directed by men as far-sighted as bankers, are permanently to fall below the banker in their conception of enlightened self-interest? Must we assume that what is self-evident to the banker—namely, that the repudiation of engagements, or any attempt at financial plunder, is sheer stupidity and commercial suicide—is for ever to remain unperceived by the ruler? Then, when he realizes this truth, shall we not at least have made some progress towards laying the foundations for a sane international polity?

The following correspondence, provoked by the first edition of this book, may throw light on some of the points dealt with in this chapter. A correspondent of London Public Opinion criticized a part of the thesis here dealt with as a "series of half-truths," questioning as follows:

What is "natural wealth," and how can trade be carried on with it unless there are markets for it when worked? Would the writer maintain that markets cannot be permanently or seriously affected by military conquests, especially if conquest be followed by the imposition upon the vanquished of commercial conditions framed in the interests of the victor?... Germany has derived, and continues to derive, great advantages from the most-favored-nation clause which she compelled France to insert in the Treaty of Frankfurt.... Bismarck, it is true, underestimated the financial resilience of France, and was sorely disappointed when the French paid off the indemnity with such astonishing rapidity, and thus liberated themselves from the equally crushing burden of having to maintain the German army of occupation. He regretted not having demanded an indemnity twice as large. Germany would not repeat the mistake, and any country having the misfortune to be vanquished by her in future will be likely to find its commercial prosperity compromised for decades.

To which I replied:

Will your correspondent forgive my saying that while he talks of half-truths, the whole of this passage indicates the domination of that particular half-truth which lies at the bottom of the illusion with which my book deals?

What is a market? Your correspondent evidently conceives it as a place where things are sold. That is only half the truth. It is a place where things are bought and sold, and one operation is impossible without the other, and the notion that one nation can sell for ever and never buy is simply the theory of perpetual motion applied to economics; and international trade can no more be based upon perpetual motion than can engineering. As between economically highly-organized nations a customer must also be a competitor, a fact which bayonets cannot alter. To the extent to which they destroy him as a competitor, they destroy him, speaking generally, and largely, as a customer.

The late Mr. Seddon conceived England as making her purchases with "a stream of golden sovereigns" flowing from a stock all the time getting smaller. That "practical" man, however, who so despised "mere theories," was himself the victim of a pure theory, and the picture which he conjured up from his inner consciousness has no existence in fact. England has hardly enough gold to pay one year's taxes, and if she paid for her imports in gold she would exhaust her stock in three months; and the process by which she really pays has been going on for sixty years. She is a buyer just as long as she is a seller, and if she is to afford a market to Germany she must procure the money wherewith to pay for Germany's goods by selling goods to Germany or elsewhere, and if that process of sale stops, Germany loses a market, not only the English market, but also those markets which depend in their turn upon England's capacity to buy—that is to say, to sell, for, again, the one operation is impossible without the other.

If your correspondent had had the whole process in his mind instead of half of it, I do not think that he would have written the passages I have quoted. In his endorsement of the Bismarckian conception of political economy he evidently deems that one nation's gain is the measure of another nation's loss, and that nations live by robbing their neighbors in a lesser or greater degree. This is economics in the style of Tamerlane and the Red Indian, and, happily, has no relation to the real facts of modern commercial intercourse.

The conception of one-half of the case only, dominates your correspondent's letter throughout. He says, "Germany has derived, and continues to derive, great advantage from the most-favored-nation clause which she compelled France to insert in the Treaty of Frankfurt," which is quite true, but leaves out the other half of the truth, somewhat important to our discussion—viz., that France has also greatly benefited, in that the scope of fruitless tariff war has been by so much restricted.

A further illustration: Why should Germany have been sorely disappointed at France's rapid recovery? The German people are not going to be the richer for having a poor neighbor—on the contrary, they are going to be the poorer, and there is not an economist with a reputation to lose, whatever his views of fiscal policy, who would challenge this for a moment.

How would Germany impose upon a vanquished England commercial arrangements which would impoverish the vanquished and enrich the victor? By enforcing another Frankfurt treaty, by which English ports should be kept open to German goods? But that is precisely what English ports have been for sixty years, and Germany has not been obliged to wage a costly war to effect it. Would Germany close her own markets to our goods? But, again, that is precisely what she has done—again without war, and by a right which we never dream of challenging. How is war going to affect the question one way or another? I have been asking for a detailed answer to that question from European publicists and statesmen for the last ten years, and I have never yet been answered, save by much vagueness, much fine phrasing concerning commercial supremacy, a spirited foreign policy, national prestige, and much else, which no one seems able to define, but a real policy, a modus operandi, a balance-sheet which one can analyze, never. And until such is forthcoming I shall continue to believe that the whole thing is based upon an illusion.

The true test of fallacies of this kind is progression. Imagine Germany (as our Jingoes seem to dream of her) absolute master of Europe, and able to dictate any policy that she pleased. How would she treat such a European empire? By impoverishing its component parts? But that would be suicidal. Where would her big industrial population find their markets?[15] If she set out to develop and enrich the component parts, these would become merely efficient competitors, and she need not have undertaken the costliest war of history to arrive at that result. This is the paradox, the futility of conquest—the great illusion which the history of our own Empire so well illustrates. We British "own" our Empire by allowing its component parts to develop themselves in their own way, and in view of their own ends, and all the empires which have pursued any other policy have only ended by impoverishing their own populations and falling to pieces.

Your correspondent asks: "Is Mr. Norman Angell prepared to maintain that Japan has derived no political or commercial advantages from her victories, and that Russia has suffered no loss from defeat?"

What I am prepared to maintain, and what the experts know to be the truth, is that the Japanese people are the poorer, not the richer for their war, and that the Russian people will gain more from defeat than they could possibly have gained by victory, since defeat will constitute a check on the economically sterile policy of military and territorial aggrandizement and turn Russian energies to social and economic development; and it is because of this fact that Russia is at the present moment, despite her desperate internal troubles, showing a capacity for economic regeneration as great as, if not greater than, that of Japan. This latter country is breaking all modern records, civilized or uncivilized, in the burdensomeness of her taxation. On the average, the Japanese people pay 30 per cent.—nearly one-third—of their net income in taxation in one form or another, and so far have they been compelled to push the progressive principle that a Japanese lucky enough to possess an income of ten thousand a year has to surrender over six thousand of it in taxation, a condition of things which would, of course, create a revolution in any European country in twenty-four hours. And this is quoted as a result so brilliant that those who question it cannot be doing so seriously![16] On the other side, for the first time in twenty years the Russian Budget shows a surplus.

This recovery of the defeated nation after wars is not even peculiar to our generation. Ten years after the Franco-Prussian War France was in a better financial position than Germany, as she is in a better financial position to-day, and though her foreign trade does not show as great expansion as that of Germany—because her population remains absolutely stationary, while that of Germany increases by leaps and bounds—the French people as a whole are more prosperous, more comfortable, more economically secure, with a greater reserve of savings, and all the moral and social advantages that go therewith, than are the Germans. In the same way the social and industrial renaissance of modern Spain dates from the day that she was defeated and lost her colonies, and it is since her defeat that Spanish securities have just doubled in value.[17] It is since England added the "gold-fields of the world" to her "possessions" that British Consols have dropped twenty points. Such is the outcome in terms of social well-being of military success and political prestige!

CHAPTER VI

In 1872, Sir Robert (then Mr.) Giffen wrote a notable article summarizing the results of the Franco-German War thus: it meant to France a loss of 3500 million dollars, and to Germany a total net gain of 870 millions, a money difference in favor of Germany exceeding in value the whole amount of the British National Debt!

An arithmetical statement of this kind seems at first sight so conclusive that those who have since discussed the financial outcome of the war of 1870 have quite overlooked the fact that, if such a balance-sheet as that indicated be sound, the whole financial history of Germany and France during the forty years which have followed the war is meaningless.

The truth is, of course, that such a balance-sheet is meaningless—a verdict which does not reflect upon Sir Robert Giffen, because he drew it up in ignorance of the sequel of the war. It does, however, reflect on those who have adopted the result shown on such a balance-sheet. Indeed, Sir Robert Giffen himself made the most important reservations. He had at least an inkling of the practical difficulties of profiting by an indemnity, and indicated plainly that the nominal figures had to be very heavily discounted.

A critic[18] of an early edition of this book seems to have adopted most of Sir Robert Giffen's figures, disregarding, however, certain of his reservations, and to this critic I replied as follows:

In arriving at this balance my critic, like the company-promoting genius who promises you 150 per cent. for your money, leaves so much out of the account. There are a few items not considered, e.g. the increase in the French army which took place immediately after the war, and as the direct result thereof, compelled Germany to increase her army by at least one hundred thousand men, an increase which has been maintained for forty years. The expenditure throughout this time amounts to at least a billion dollars. We have already wiped out the "profit," and I have only dealt with one item yet—to this we must add,—loss of markets for Germany involved in the destruction of so many French lives and so much French wealth; loss from the general disturbance throughout Europe, and still greater loss from the fact that the unproductive expenditure on armaments throughout the greater part of Europe which has followed the war, the diversion of energies which is the result of it, has directly deprived Germany of large markets and by a general check of development indirectly deprived her of immense ones.

But it is absurd to bring figures to bear on such a system of bookkeeping as that adopted by my critic. Germany had several years' preparation for the war, and has had, as the direct result thereof and as an integral part of the general war system which her own policy supports, certain obligations during forty years. All this is ignored. Just note how the same principle would work if applied in ordinary commercial matters; because, for instance, on an estate the actual harvest only takes a fortnight, you disregard altogether the working expenses for the remaining fifty weeks of the year, charge only the actual cost of the harvest (and not all of that), deduct this from the gross proceeds of the crops, and call the result "profit"! Such "finance" is really luminous. Applied by the ordinary business man, it would in an incredibly short time put his business in the bankruptcy court and himself in gaol!

But were my critic's figures as complete as they are absurdly incomplete and misleading, I should still be unimpressed, because the facts which stare us in the face would not corroborate his statistical performance. We are examining what is from the money point of view the most successful war ever recorded in history, and if the general proposition that such a war is financially profitable were sound, and if the results of the war were anything like as brilliant as they are represented, money should be cheaper and more plentiful in Germany than in France, and credit, public and private, should be sounder. Well, it is the exact reverse which is the case. As a net result of the whole thing Germany was, ten years after the war, a good deal worse off, financially, than her vanquished rival, and was at that date trying, as she is trying to-day, to borrow money from her victim. Within twenty months of the payment of the last of the indemnity, the bank rate was higher in Berlin than in Paris, and we know that Bismarck's later life was clouded by the spectacle of what he regarded as an absurd miracle: the vanquished recovering more quickly than the victor. We have the testimony of his own speeches to this fact, and to the fact that France weathered the financial storms of 1878-9 a great deal better than did Germany. And to-day, when Germany is compelled to pay nearly 4 per cent. for money, France can secure it for 3.... We are not for the moment considering anything but the money view—the advantages and disadvantages of a certain financial operation—and by any test that you care to apply, France, the vanquished, is better off than Germany, the victor. The French people are as a whole more prosperous, more comfortable, more economically secure, with greater reserve of savings and all the moral and social advantages that go therewith, than are the Germans, a fact expressed briefly by French Rentes standing at 98 and German Consols at 83. There is something wrong with a financial operation that gives these results.

The something wrong, of course, is that in order to arrive at any financial profit at all essential facts have to be disregarded, those facts being what necessarily precedes and what necessarily follows a war of this kind. In the case of highly organized industrial nations like England and Germany, dependent for the very livelihood of great masses of their population upon the fact that neighboring nations furnish a market for their goods, a general policy of "piracy," imposing upon those neighbors an expenditure which limits their purchasing power, creates a burden of which the nation responsible for that policy of piracy pays its part. It is not France alone which has paid the greater part of the real cost of the Franco-German War, it is Europe—and particularly Germany—in the burdensome military system and the general political situation which that war has created or intensified.

But there is a more special consideration connected with the exaction of an indemnity, which demands notice, and that is the practical difficulty with regard to the transfer of an immense sum of money outside the ordinary operations of commerce.

The history of the German experience with the French indemnity suggests the question whether in every case an enormous discount on the nominal value of a large money indemnity must not be allowed owing to the practical financial difficulties of its payment and receipt, difficulties unavoidable in any circumstances which we need consider.

These difficulties were clearly foreseen by Sir Robert Giffen, though his warnings, and the important reservations that he made on this point, are generally overlooked by those who wish to make use of his conclusions.

These warnings he summarized as follows:

As regards Germany, a doubt is expressed whether the Germans will gain so much as France loses, the capital of the indemnity being transferred from individuals to the German Government, who cannot use it so profitably as individuals. It is doubted whether the practice of lending out large sums, though a preferable course to locking them up, will not in the end be injurious.

The financial operations incidental to these great losses and expenses seriously affect the money market. They have been a fruitful cause, in the first place, of spasmodic disturbance. The outbreak of war caused a monetary panic in July, 1870, by the anxiety of people who had money engagements to meet to provide against the chances of war, and there was another monetary crash in September, 1871, owing to the sudden withdrawal by the German Government of the money it had to receive. The war thus illustrates the tendency of wars in general to cause spasmodic disturbance in a market so delicately organized as that of London now is.

And it is to be noted in this connection that the difficulties of 1872 were trifling compared to what they would necessarily be in our day. In 1872, Germany was self-sufficing, little dependent upon credit; to-day undisturbed credit in Europe is the very life-blood of her industry; it is, in fact, the very food of her people, as the events of 1911 have sufficiently proved.

It is not generally realized how abundantly the whole history of the German indemnity bears out Sir Robert Giffen's warning; how this flood of gold turned indeed to dust and ashes as far as the German nation is concerned.

First, anyone familiar with financial problems might have expected that the receipt of so large a sum of money by Germany would cause prices to rise and so handicap export trade in competition with France, where the reverse process would cause prices to fall. This result was, in fact, produced. M. Paul Beaulieu and M. Léon Say[19] have both shown that this factor operated through the value of commercial bills of exchange, giving to the French exporter a bonus and to the German a handicap which affected trade most perceptibly. Captain Bernard Serrigny, who has collected in his work a wealth of evidence bearing on this subject, writes:

The rise in prices influenced seriously the cost of production, and the German manufacturers fought, in consequence, at a disadvantage with England and France. Finally the goods produced at this high cost were thrown upon the home market at the moment when the increase in the cost of living was diminishing seriously the purchasing power of the bulk of consumers. These goods had to compete, not only with home over-production due to the failure to sell abroad, but with foreign goods, which, despite the tariff, were by their lower price able to push their way into the German market, where relatively higher prices attracted them. In this competition France was particularly prominent. In France the lack of metallic money had engendered great financial caution, and had considerably lowered prices all around, so that there was a general financial and commercial condition very different from that in Germany, where the payment of the indemnity had been followed by reckless speculation. Moreover, owing to the heavy foreign payments made by France, bills drawn on foreign centres were at a premium, a premium which constituted a sensible additional profit to French exporters, so considerable in certain cases that it was worth while for French manufacturers to sell their goods at an actual loss in order to realize the profit on the bill of exchange. The German market was thus being captured by the French at the very moment when the Germans supposed they would, thanks to the indemnity, be starting out to capture the world.

The German economist Max Wirth ("Geschichte der Handelskrisen") expressed in 1874 his astonishment at France's financial and industrial recovery: "The most striking example of the economic force of the country is shown by the exports, which rose immediately after the signature of peace, despite a war which swallowed a hundred thousand lives and more than ten milliards (two billion dollars)." A similar conclusion is drawn by Professor Biermer ("Fürst Bismarck als Volkswirt"), who indicates that the Protectionist movement in 1879 was to a large extent due to the result of the payment of the indemnity.

This disturbance of the balance of trade, however, was only one factor among several: the financial disorganization, a fictitious expansion of expenditure creating a morbid speculation, precipitated the worst financial crisis in Germany which she has known in modern times. Monsieur Lavisse summarizes the experience thus:

Enormous sums of money were lost. If one takes the aggregate of the securities quoted on the Berlin Bourse, railroad, mining and industrial securities generally, it is by thousands of millions of marks that one must estimate the value of such securities in 1870 and 1871. But a large number of enterprises were started in Germany of which the Berlin Bourse knew nothing. Cologne, Hamburg, Frankfurt, Leipzig, Breslau, Stuttgart, had all their local groups of speculative securities; hundreds of millions must be added to the thousands of millions. These differences did not represent merely a transfer of wealth, for a great proportion of the capital sunk was lost altogether, having been eaten up in ill-considered and unattractive expenditure.... There can be no sort of doubt that the money lost in these worthless enterprises constitutes an absolute loss for Germany.

The decade from 1870-1880 was for France a great recuperative period, although for several other nations in Europe it was one of great depression, notably, after the "boom" of 1872, for Germany. No less an authority than Bismarck himself testifies to the double fact. We know that Bismarck was astonished and dismayed by seeing the regeneration of France after the war taking place more rapidly and more completely than the regeneration of Germany. This weighed so heavily upon his mind that in introducing his Protectionist Bill in 1879 he declared that Germany was "slowly bleeding to death," and that if the present process were continued she would find herself ruined. Speaking in the Reichstag on May 2, 1879, he said:

We see that France manages to support the present difficult business situation of the civilized world better than we do; that her Budget has increased since 1871 by a milliard and a half, and that thanks not only to loans; we see that she has more resources than Germany, and that, in short, over there they complain less of bad times.

And in a speech two years later (November 29, 1881) he returned to the same idea:

It was towards 1877 that I was first struck with the general and growing distress in Germany as compared with France. I saw furnaces banked, the standard of well-being reduced, and the general position of workmen becoming worse and business as a whole terribly bad.

In the book from which these extracts are taken[20] the author writes as an introduction to Bismarck's speeches:

Trade and industry were in a miserable condition. Thousands of workmen were without employment, and in the winter of 1876-77 unemployment took great proportions, and soup-kitchens and State workshops had to be established.

Every author who deals with this period seems to tell broadly the same tale, however much they may differ in detail. "If only we could get back to the general position of things before the war," said M. Block in 1879. "But salaries diminish and prices go up."[21]

At the very time that the French millions were raining in upon Germany (1873) she was suffering from a grave financial crisis, and so little effect did the transfer of the money have upon trade and finance in general, that twelve months after the payment of the last of the indemnity we find the bank rate higher in Berlin than in Paris; and, as was shown by the German economist Soetbeer, by the year 1878 far more money was in circulation in France than in Germany.[22] Hans Blum, indeed, directly ascribed the series of crises between the years 1873 and 1880 to the indemnity: "A burst of prosperity and then ruin for thousands."[23] Throughout the year 1875 the bank rate in Paris was uniformly 3 per cent. In Berlin (Preussische Bank, which preceded the Reichs Bank) it varied from 4 to 6 per cent. A similar difference is reflected by the fact that, between the years 1872 and 1877, the deposits in the State savings banks in Germany actually fell by roughly 20 per cent., while in the same period the French deposits increased about 20 per cent.

Two tendencies plainly show the condition of Germany during the decade which followed the war: the enormous growth of Socialism—relatively much greater than any which we have ever since seen—and the immense stimulus given to emigration.

Perhaps no thesis is commoner with the defender of war than this: that, though one may not be able in a narrow economic sense to justify an enterprise like that of 1870, the moral stimulus which victory gave to the German people is accepted as being of incalculable benefit to the race and the nation. Its alleged effect in bringing about a national solidarity, in stimulating patriotic sentiment and national pride, in the wiping out of internal differences and Heaven knows what, are claims I have dealt with at greater length elsewhere, and I wish only to note here that all this high-falutin does not stand the test of facts. The two phenomena just mentioned—the extraordinary progress of Socialism and the enormous stimulus given to emigration during the years which immediately followed the war—give the lie to all the claims in question. In 1872-73, the very years in which the moral stimulus of victory and the economic stimulus of the indemnity should have kept at home every able-bodied German, emigration was, relatively to the population, greater than it has ever been before or since, the figures for 1872 being 154,000 and for 1873 134,000.[24] And at no period since the fifties was the internal political struggle so bitter—it was a period of repression, of prescription on the one side and class-hatred on the other—"the golden age of the drill-sergeant," some German has called it.

It will be replied that, after the first decade, Germany's trade has shown an expansion which has not been shown by that of France. Those who are hypnotized by this, quietly ignore altogether one great fact or which has affected both France and Germany, not only since the war, but during the whole of the nineteenth century, and that factor is that the population of France, from causes in no way connected with the Franco-Prussian War, since the tendency was a pronounced one for fifty years before, is practically quite stationary; while the population of Germany, also for reasons in no way connected with the war, since the tendency was also pronounced half a century previously, has shown an abounding expansion. Since 1875 the population of Germany has increased by twenty million souls. That of France has not increased at all. Is it astonishing that the labor of twenty million souls makes some stir in the industrial world? Is it not evident that the necessity of earning a livelihood for this increasing population gives to German industry an expansion outside the limits of her territory which cannot be looked for in the case of a nation whose social energies are not faced with any such problem? There is this, moreover, to be borne in mind: Germany has secured her foreign trade on what are, in the terms of the relative comfort of her people, hard conditions. In other words, she has secured that trade by cutting profits, in the way that a business fighting desperately for life will cut profits, in order to secure orders, and by making sacrifices that the comfortable business man will not make. Notwithstanding the fact that France has made no sensational splash in foreign trade since the war, the standard of comfort among her people has been rising steadily, and is without doubt generally higher to-day than is that of the German people. This higher standard of comfort is reflected in her financial situation. It is Germany, the victor, which is to-day in the position of a suppliant in regard to France, and it is revealing no diplomatic secrets to say that, for many years now, Germany has been employing all the wiles of her diplomacy to obtain the official recognition of German securities on the French Bourses. France financially has, in a very real sense, the whip hand.

That is not all. Those who point triumphantly to German industrial expansion, as a proof of the benefits of war and conquest, ignore certain facts which cannot be ignored if that argument is to have any value, and they are these:

1. Such progress is not peculiar to Germany; it is shown in an equal or greater degree (I am speaking now of the general wealth and social progress of the average individual citizen) by States that have had no victorious war—the Scandinavian States, the Netherlands, Switzerland.

2. Even if it were special to Germany, which it is not, we should be entitled to ask whether certain developments of German political evolution, which preceded the war, and which one may fairly claim have a more direct and understandable bearing upon industrial progress, are not a much more appreciable factor in that progress than the war itself—I refer particularly, of course, to the immense change involved in the fiscal union of the German States, which was completed before the Franco-German War of 1870 had been declared; to say nothing of such other factors as the invention of the Thomas-Gilchrist process which enabled the phosphoric iron ores of Germany, previously useless, to be utilized.

3. The very serious social difficulties (which have, of course, their economic aspect) that do confront the German people—the intense class friction, the backwardness of parliamentary government, the survival of reactionary political ideas, wrapped up with the domination of the "Prussian ideal"—all difficulties which States whose political development has been less marked by successful war (the lesser European States just mentioned, for instance)—are not faced with in the same degree. These difficulties, special, among the great European nations, to Germany, are certainly in a large measure a legacy of the Franco-German War, a part of the general system to which that war gave rise, the general character of the political union which it provoked.

The general ascription of such real progress as Germany has made to the effects of the war and nothing else—a conclusion which calmly ignores factors which have evidently a more direct bearing—is one of those a priori judgments repeated, parrot fashion, without investigation or care even by publicists of repute; it is characteristic of the carelessness which dominates this whole subject. This more general consideration, which does not properly belong to the special problem of an indemnity, I have dealt with at greater length in the next section. The evidence bearing on the particular question, as to whether in practice the exaction of a large monetary indemnity from a conquered foe can ever be economically profitable or of real advantage to the conqueror, is of a simpler character. If we put the question in this form, "Was the receipt of the indemnity, in the most characteristic and successful case in history, of advantage to the conqueror?" the reply is simple enough: all the evidence plainly and conclusively shows that it was of no advantage; that the conqueror would probably have been better without it.

Even if we draw from that evidence a contrary conclusion, even if we conclude that the actual payment of the indemnity was as beneficial as all the evidence would seem to show it was mischievous; even if we could set aside completely the financial and commercial difficulties which its payment seems to have involved; if we ascribe to other causes the great financial crises which followed that payment; if we deduct no discount from the nominal value of the indemnity, but assume that every mark and thaler of it represented its full face value to Germany—even admitting all this, it is still inevitable that the direct cost of preparing for a war and of guarding against a subsequent war of retribution must, from the nature of the case, exceed the value of the indemnity which can be exacted. This is not merely a hypothetical statement, it is a commercial fact, supported by evidence which is familiar to us all. In order to avoid repaying, with interest, the indemnity drawn from France, Germany has had to expend upon armaments a sum of money at least equal to that indemnity. In order to exact a still larger indemnity from Great Britain, Germany would have to spend a still larger sum in preparations, and to guard against repayment would be led into indefinite expenditure, which has only to go on long enough inevitably to exceed the very definite indemnity. For, it must be remembered that the amount of an indemnity extractable from a modern community, of the credit era, has very definite limits: an insolvent community can pay more. If the Statesmen of Europe could lay on one side, for a moment, the irrelevant considerations which cloud their minds, they would see that the direct cost of acquisition by force must in these circumstances necessarily exceed in value the property acquired. When the indirect costs are also considered, the balance of loss becomes incalculably greater.

Those who urge that through an indemnity, war can be made to "pay" (and it is for them that this chapter is written), have before them problems and difficulties—difficulties of not merely a military, but of a financial and social character—of the very deepest kind. It was precisely in this section of the subject that German science failed in 1870. There is no evidence that much progress has been made in the study of this phase of the problem by either side since the war—indeed, there is plenty of evidence that it has been neglected. It is time that it was scientifically and systematically attacked.

Those who wish well for Europe will encourage the study, for it can have but one result: to show that less and less can war be made to pay; that all those forces of our world which daily gain in strength make it, as a commercial venture, more and more preposterous. The study of this department of international polity will tend to the same result as the study of any of its facets: the undermining of those beliefs which have in the past so often led to, and are to-day so often claimed as the motives likely to lead to, war between civilized peoples.

CHAPTER VII

Let us try to read some meaning into a phrase which, however childish it may appear on analysis, is very commonly in the mouths of those who are responsible for British political ideas.

In this connection it is necessary to point out—as, indeed, it is in every phase of this problem of the relationship of States—that the world has moved, that methods have changed. It is hardly possible to discuss this matter of the necessary futility of military force in the modern world for ten minutes without it being urged that as England has acquired her Colonies by the sword, it is evident that the sword may do a like service for modern States desiring Colonies. About as reasonably could one say that, as certain tribes and nations in the past enriched themselves by capturing slaves and women among neighboring tribes, the desire to capture slaves and women will always be an operative motive in warfare between nations, as though slavery had not been put economically out of court by modern industrial methods, and as though the change in social methods had not put the forcible capture of women out of court.

What was the problem confronting the merchant adventurer of the sixteenth century? There were newly-discovered foreign lands containing, as he believed, precious metals and stones and spices, and inhabited by savages or semi-savages. If other traders got those stones, it was quite evident that he could not. His colonial policy, therefore, had to be directed to two ends: first, such effective political occupation of the country that he could keep the savage or semi-savage population in check, and could exploit the territory for its wealth; and, secondly, such arrangements as would prevent other nations from searching for this wealth in precious metals, spices, etc., since, if they obtained it, he could not.

That is the story of the French and Dutch in India, and of the Spanish in South America. But as soon as there grew up in those countries an organized community living in the country itself, the whole problem changed. The Colonies, in this later stage of development, have a value to the Mother Country mainly as a market and a source of food and raw material, and if their value in those respects is to be developed to the full, they inevitably become self-governing communities in greater or less degree, and the Mother Country exploits them exactly as she exploits any other community with which she may be trading. Germany might acquire Canada, but it could no longer be a question of her taking Canada's wealth in precious metals, or in any other form, to the exclusion of other nations. Could Germany "own" Canada, she would have to "own" it in the same way that Britain does; the Germans would have to pay for every sack of wheat and every pound of beef that they might buy, just as though Canada "belonged" to England or to anybody else. Germany could not have even the meagre satisfaction of Germanizing these great communities, for one knows that they are far too firmly "set." Their language, law, morals, would have to be, after German conquest, what they are now. Germany would find that the German Canada was pretty much the Canada that it is now—a country where Germans are free to go and do go; a field for Germany's expanding population.

As a matter of fact, Germany feeds her expanding population from territories like Canada and the United States and South America without sending its citizens there. The era of emigration from Germany has stopped, because the compound steam-engine has rendered emigration largely unnecessary. And it is the developments which are the necessary outcome of such forces, that have made the whole colonial problem of the twentieth century radically different from that of the eighteenth or seventeenth.

I have stated the case thus: No nation could gain any advantage by the conquest of the British Colonies, and Great Britain could not suffer material damage by their "loss," however much this would be regretted on sentimental grounds, and as rendering less easy a certain useful social co-operation between kindred peoples. For the British Colonies are, in fact, independent nations in alliance with the Mother Country, to whom they are no source of tribute or economic profit (except in the way that foreign nations are), their economic relations being settled not by the Mother Country, but by the Colonies. Economically, England would gain by their formal separation, since she would be relieved of the cost of their defence. Their loss, involving, therefore, no change in economic fact (beyond saving the Mother Country the cost of their defence), could not involve the ruin of the Empire and the starvation of the Mother Country, as those who commonly treat of such a contingency are apt to aver. As England is not able to exact tribute or economic advantage, it is inconceivable that any other country, necessarily less experienced in colonial management, would be able to succeed where England had failed, especially in view of the past history of the Spanish, Portuguese, French, and British Colonial Empires. This history also demonstrates that the position of British Crown Colonies, in the respect which we are considering, is not sensibly different from that of the self-governing ones. It is not to be presumed, therefore, that any European nation would attempt the desperately expensive business of the conquest of England, for the purpose of making an experiment with her Colonies which all colonial history shows to be doomed to failure.

What are the facts? Great Britain is the most successful colonizing nation in the world, and the policy into which her experience has driven her is that outlined by Sir C.P. Lucas, one of the greatest authorities on colonial questions. He writes, speaking of the history of the British Colonies on the American continent, thus:

It was seen—but it might not have been seen had the United States not won their independence—that English colonists, like Greek Colonies of old, go out on terms of being equal, not subordinate, to those who are left behind; that when they have effectively planted another and a distant land, they must, within the widest limits, be left to rule themselves; that, whether they are right, or whether they are wrong—more, perhaps, when they are wrong than when they are right—they cannot be made amenable by force; that mutual good feeling, community of interest, and abstention from pressing rightful claims to their logical conclusion, can alone hold together a true Colonial Empire.

But what in the name of common sense is the advantage of conquering them if the only policy is to let them do as they like, "whether they are right, or whether they are wrong—more, perhaps, when they are wrong than when they are right"? And what avails it to conquer them if they cannot be made amenable to force? Surely this makes the whole thing a reductio ad absurdum. Were a Power like Germany to use force to conquer Colonies, she would find out that they were not amenable to force, and that the only working policy was to let them do exactly as they did before she conquered them, and to allow them, if they chose—and many of the British Colonies do so choose—to treat the Mother Country absolutely as a foreign country. There has recently been going on in Canada a discussion as to the position which that Dominion should hold with reference to the British in the event of war, and that discussion has made Canada's position quite plain. It has been summarized thus: "We must always be free to give or refuse support."[25]

Could a foreign nation say more? In what sense does England "own" Canada when Canadians must always be free to give or refuse their military support to England; and in what way does Canada differ from a foreign nation while England may be at war when Canada can be at peace? Mr. Asquith formally endorses this conception.[26]

This shows clearly that no Dominion is held to be bound by virtue of its allegiance to the Sovereign of the British Empire to place its forces at his disposition, no matter how real may be the emergency. If it should not desire so to do, it is free to refuse so to do. This is to convert the British Empire into a loose alliance of independent Sovereign States, which are not even bound to help each other in case of war. The military alliance between Austria and Germany is far more stringent than the tie which unites, for purposes of war, the component parts of the British Empire.

One critic, commenting on this, says:

Whatever language is used to describe this new movement of Imperial defence, it is virtually one more step towards complete national independence on the part of the Colonies. For not only will the consciousness of the assumption of this task of self-defence feed with new vigor the spirit of nationality, it will entail the further power of full control over foreign relations. This has already been virtually admitted in the case of Canada, now entitled to a determinant voice in all treaties or other engagements in which her interests are especially involved. The extension of this right to the other colonial nations may be taken as a matter of course. Home rule in national defence thus established reduces the Imperial connection to its thinnest terms.[27]

Still more significant, perhaps, is the following emphatic declaration from Mr. Balfour himself. Speaking in London, on November 6, 1911, he said:

We depend as an Empire upon the co-operation of absolutely independent Parliaments. I am not talking as a lawyer; I am talking as a politician. I believe from a legal point of view that the British Parliament is supreme over the Parliament of Canada or Australasia or the Cape or South Africa, but in fact they are independent Parliaments, absolutely independent, and it is our business to recognize that and to frame the British Empire upon the co-operation of absolutely independent Parliaments.[28]

Which means, of course, that England's position with regard to Canada or Australia is just England's position with regard to any other independent State; that she has no more "ownership" in Australia than she has in Argentina. Indeed, facts of very recent English history have established quite incontrovertibly this ridiculous paradox: England has more influence—that is to say, a freer opportunity of enforcing her point of view—with foreign nations than with her own Colonies. Indeed, does not Sir C. P. Lucas's statement that "whether they are right or wrong—still more, perhaps, when they are wrong," they must be left alone, necessarily mean that her position with the Colonies is weaker than her position with foreign nations? In the present state of international feeling an English Statesman would never dream of advocating that she should submit to foreign nations when they are wrong. Recent history is illuminating on this point.

What were the larger motives that pushed England into war with the Dutch Republics? To vindicate the supremacy of the British race in South Africa, to enforce British ideals as against Boer ideals, to secure the rights of British Indians and other British subjects, to protect the native against Boer oppression, to take the government of the country generally from a people whom, at that date, she was apt to describe as "inherently incapable of civilization." What, however, is the outcome of spending a billion and a quarter of dollars upon the accomplishment of these objects? The present Government of the Transvaal is in the hands of the Boer party.[29] England has achieved the union of South Africa in which the Boer element is predominant. Britain has enforced against the British Indian in the Transvaal and Natal the same Boer regulations which were one of her grievances before the war, and the Houses of Parliament have ratified an Act of Union in which the Boer attitude with reference to the native is codified and made permanent. Sir Charles Dilke, in the debate in the House of Commons on the South African Bill, made this quite clear. He said: "The old British principle in South Africa, as distinct from the Boer principle, in regard to the treatment of natives, was equal rights for all civilized men. At the beginning of the South African War the country was told that one of its main objects, and certainly that the one predominant factor in any treaty of peace, would be the assertion of the British principle as against the Boer principle. Now the Boer principle dominates throughout the whole of South Africa." Mr. Asquith, as representing the British Government, admitted that this was the case, and that "the opinion of this country is almost unanimous in objecting to the color bar in the Union Parliament." He went on to say that "the opinion of the British Government and the opinion of the British people must not be allowed to lead to any interference with a self-governing Colony." So that, having expended in the conquest of the Transvaal a greater sum than Germany exacted from France at the close of the Franco-Prussian War, England has not even the right to enforce her views on those whose contrary views were the casus belli!

A year or two since there was in London a deputation from the British Indians in the Transvaal pointing out that the regulations there deprive them of the ordinary rights of British citizens. The British Government informed them that the Transvaal being a self-governing Colony, the Imperial Government could do nothing for them.[30] Now, it will not be forgotten that, at a time when Britain was quarrelling with Paul Krüger, one of the liveliest of her grievances was the treatment of British Indians. Having conquered Krüger, and now "owning" his country, do the British themselves act as they were trying to compel Paul Krüger as a foreign ruler to act? They do not. They (or rather the responsible Government of the Colony, with whom they dare not interfere, although they were ready enough to make representations to Krüger) simply and purely enforce his own regulations. Moreover, the Australian Commonwealth and British Columbia have since taken the view with reference to British Indians which President Krüger took, and which view England made almost a casus belli. Yet in the case of her Colonies she does absolutely nothing.

So the process is this: The Government of a foreign territory does something which we ask it to cease doing. The refusal of the foreign Government constitutes a casus belli. We fight, we conquer, and the territory in question becomes one of our Colonies, and we allow the Government of that Colony to continue doing the very thing which constituted, in the case of a foreign nation, a casus belli.

Do we not, taking the English case as typical, arrive, therefore, at the absurdity I have already indicated—that we are in a worse position to enforce our views in our own territory—that is to say, in our Colonies—than in foreign territory?

Would England submit tamely if a foreign Government should exercise permanently gross oppression on an important section of her citizens? Certainly she would not. But when the Government exercising that oppression happens to be the Government of her own Colonies she does nothing, and a great British authority lays it down that, even more when the Colonial Government is wrong than when it is right, must she do nothing, and that, though wrong, the Colonial Government cannot be amenable to force. Nor can it be said that Crown Colonies differ essentially in this matter from self-governing dominions. Not only is there an irresistible tendency for Crown Colonies to acquire the practical rights of self-governing dominions, but it has become a practical impossibility to disregard their special interests. Experience is conclusive on this point.

I am not here playing with words or attempting to make paradoxes. This reductio ad absurdum—the fact that when she owns a territory she renounces the privilege of using force to ensure observance of her views—is becoming more and more a commonplace of British colonial government.

As to the fiscal position of the Colonies, that is precisely what their political relation is in all but name; they are foreign nations. They erect tariffs against Great Britain; they exclude large sections of British subjects absolutely (practically speaking, no British Indian is allowed to set foot in Australia, and yet British India constitutes the greater part of the British Empire), and even against British subjects from Great Britain vexatious exclusion laws are enacted. Again the question arises: Could a foreign country do more? If fiscal preference is extended to Great Britain, that preference is not the result of British "ownership" of the Colonies, but is the free act of the colonial legislators, and could as well be made by any foreign nation desiring to court closer fiscal relations with Great Britain.[31]

Is it conceivable that Germany, if the real relations between Great Britain and her Colonies were understood, would undertake the costliest war of conquest in history in order to acquire an absurd and profitless position from which she could not exact even the shadow of a material advantage?

It may be pleaded that Germany might on the morrow of conquest attempt to enforce a policy which gave her a material advantage in the Colonies, such as Spain and Portugal attempted to create for themselves. But in that case, is it conceivable that Germany, without colonial experience, would be able to enforce a policy which Great Britain was obliged to abandon a hundred years ago? Is it imaginable that, if Great Britain has been utterly unable to carry out a policy by which the Colonies shall pay anything resembling tribute to the Mother Country, Germany, without experience, and at an enormous disadvantage in the matter of language, tradition, racial tie, and the rest, would be able to make such a policy a success? Surely, if the elements of this question were in the least understood in Germany, such a preposterous notion could not be entertained for a moment.

Does anyone seriously pretend that the present system of British Colony-holding is due to British philanthropy or high-mindedness? We all know, of course, that it is simply due to the fact that the older system of exploitation by monopoly broke down. It was a complete social, commercial, and political failure long before it was abolished by law. If England had persisted in the use of force to impose a disadvantageous situation on the Colonies, she would have followed in the trail of Spain, Portugal, and France, and she would have lost her Colonies, and her Empire would have broken up.

It took England anything from two to three centuries to learn the real colonial policy, but it would not take so long in our day for a conqueror to realize the only situation possible between one great community and another. European history, indeed, has recently furnished a striking illustration of how the forces which compel the relationship, which England has adopted towards her Colonies, are operative, even in the case of quite small Colonies, which could not be termed "great communities." Under the Méline régime in France, less than twenty years ago, a highly Protectionist policy, somewhat corresponding to the old English colonial monopoly system, was enforced in the case of certain French Colonies. None of these Colonies was very considerable—indeed, they were all quite small—and yet the forces which they represented in the matter of the life of France have sufficed to change radically the attitude of the French Government in the matter of the policy which less than twenty years ago was imposed on them. In Le Temps of April 5, 1911, appeared the following:

Our Colonies can consider yesterday a red-letter day. The debate in the Chamber gives hope that the stifling fiscal policy imposed on them heretofore is about to be very greatly modified. The Tariff Commission of the Chamber has hitherto been a very citadel of the blindest type of Protectionism in this matter. M. Thierry is the present President of this Commission, and yet it is from him that we learn that a new era in the Colonies is about to be inaugurated. It is a very great change, and one that may have incalculable consequences in the future development of our Colonial Empire.

The Customs Law of 1892 committed two injustices with regard to our possessions. The first was that it obliged the Colonies to receive, free of duty, goods coming from France, while it taxed colonial goods coming into France. Now, it is impossible to imagine a treaty of that kind being passed between two free countries, and if it was passed with the Colonies, it was because these Colonies were weak, and not in the position to defend themselves vis-à-vis the Mother Country.... The Minister of the Colonies himself, animated by a newer and better spirit, which we are so happy to see appear in our treatment of colonial questions, has promised to give all his efforts towards terminating the present bad system.

A further defect of the law of 1892 is that all the Colonies have been subjected to the same fiscal arrangement, as though there could be anything in common between countries separated by the width of the whole globe. Happily the policy was too outrageous ever to be put into full execution. Certain of our African Colonies[32] were tied by international treaties at the time that the law was voted, so that the Government was compelled to make exceptions. But Monsieur Méline's idea at this period was to bring all the Colonies under one fiscal arrangement imposed by the Mother Country, just as soon as the international treaty should have expired. The exceptions have thus furnished a most useful demonstration as to the results which flow from the two systems; the fiscal policy imposed by the Mother Country in view merely of its own immediate interest, and the fiscal policy framed to some extent by the Colony in view of its own special interests. Well, what is the result? It is this. That those Colonies which have been free to frame their own fiscal policy have enjoyed undeniable prosperity, while those which have been obliged to submit to the policy imposed by another country have been sinking into a condition of veritable ruin; they are faced by positive disaster! Only one conclusion is possible. Each Colony must be free to make those arrangements which in its view are suited to its local conditions. That is not at all what M. Méline desired, but it is what experience imposes.... It is not merely a matter of injustice. Our policy has been absurd. What is it that France desires in her Colonies? An addition of wealth and power to the Mother Country. But if we compel the Colonies to submit to disadvantageous fiscal arrangements, which result in their poverty, how can they possibly be a source of wealth and power to the Mother Country? A Colony which can sell nothing is a Colony which can buy nothing: it is a customer lost to French industry.