The effect of the payment of the French indemnity of 1872 upon German industry was analysed at length.

This chapter was criticised by economists in Britain, France, and America. I do not think that a single economist of note admitted the slightest validity in this argument. Several accused the author of adopting protectionist fallacies in an attempt to ‘make out a case.’ It happens that he is a convinced Free Trader. But he is also aware that it is quite impracticable to dissociate national psychology from international commercial problems. Remembering what popular feeling about the expansion of enemy trade must be on the morrow of war, he asked the reader to imagine vast imports of enemy goods as the means of paying an indemnity, and went on:—

The fact that not one single economist, so far as I know, would at the time admit the validity of these arguments, is worth consideration. Very learned men may sometimes be led astray by keeping their learning in watertight compartments, ‘economics’ in one compartment and ‘politics’ or political psychology in another. The politicians seemed to misread the economies and the economists the politics.

What are the post-war facts in this connection? We may get them summarised on the one hand by the Prime Minister of Great Britain and on the other by the expert adviser of the British Delegation to the Peace Conference.

Mr Lloyd George, speaking two years after the Armistice, and after prolonged and exhaustive debates on this problem, says:—

There is not a line here that is not a paraphrase of the chapter in the early edition of The Great Illusion.

The following is the comment of Mr Maynard Keynes, ex-Advisor to the British Treasury, on the claims put forward after the Paris Conference of January 1921:—

If the expert economists failed to admit the validity of The Great Illusion argument fifteen years ago, the general public has barely a glimmering of it to-day. It is true that our miners realise that vast deliveries of coal for nothing by Germany disorganise our coal export trade. British shipbuilding has been disastrously affected by the Treaty clauses touching the surrender of German tonnage—so much so that the Government have now recommended the abandonment of these clauses, which were among the most stringent and popular in the whole Treaty. The French Government has flatly refused to accept German machinery to replace that destroyed by the German armies, while French labour refuses to allow German labour, in any quantity, to operate in the devastated regions. Thus coal, ships, machinery, manufactures, labour, as means of payment, have either already created great economic havoc or have been rejected because they might. Yet our papers continue to shout that ‘Germany can pay,’ implying that failure to do so is merely a matter of her will. Of course she can pay—if we let her. Payment means increasing German foreign trade. Suppose, then, we put the question ‘Can German Foreign Trade be increased?’ Obviously it can. It depends mainly on us. To put the question in its truer form shows that the problem is much more a matter of our will than of Germany’s. Incidentally, of course, German diplomacy has been as stupid as our own. If the German representatives had said, in effect: ‘It is common ground that we can pay only in commodities. If you will indicate the kind and quantity of goods we shall deliver, and will facilitate the import into Germany of, and the payment for, the necessary food and raw material, we will accept—on that condition—even your figures of reparation.’ The Allies, of course, could not have given the necessary undertaking, and the real nature of the problem would have stood revealed.[131]

The review of the situation of France given in the preceding pages will certainly be criticised on the ground that it gives altogether too great weight to the temporary embarrassment, and leaves out the advantages which future generations of Frenchmen will reap.

Now, whatever the future may have in store, it will certainly have for France the task of defending her conquests if she either withholds their product (particularly iron) from the peoples of Central Europe who need them, or if she makes of their possession a means of exacting a tribute which they feel to be burdensome and unjust. Again we are faced by the same dilemma; if Germany gets the iron, her population goes on expanding and her potential power of resistance goes on increasing. Thus France’s burden of defence would grow steadily greater, while her population remained constant or declined. This difficulty of French deficiency in human raw material is not a remote contingency; it is an actual difficulty of to-day, which France is trying to meet in part by the arming of the negro population of her African colonies, and in part by the device of satellite militarisms, as in Poland. But the precariousness of such methods is already apparent.

The arming of the African negro carries its appalling possibilities on its face. Its development cannot possibly avoid the gravest complication of the industrial problem. It is the Servile State in its most sinister form; and unless Europe is itself ready for slavery it will stop this reintroduction of slavery for the purposes of militarism.

The other device has also its self-defeating element. To support an imperialist Poland means a hostile Russia; yet Poland, wedged in between a hostile Slav mass on the one side and a hostile Teutonic one on the other, herself compounded of Russian, German, Austrian, Lithuanian, Ukrainian, and Jewish elements, ruled largely by a landowning aristocracy when the countries on both sides have managed to transfer the great estates to the peasants, is as likely, in these days, to be a military liability as a military asset.

These things are not irrelevant to the problem of turning military power to economic account: they are of the very essence of the problem.

Not less so is this consideration: If France should for political reasons persist in a policy which means a progressive reduction in the productivity of Europe, that policy would be at its very roots directly contrary to the vital interests of England. The foregoing pages have explained why the increasing population of these islands, that live by selling coal or its products, are dependent upon the high productivity of the outside world. France is self-supporting and has no such pre-occupation. Already the divergence is seen in the case of the Russian policy. Britain direly needs the wheat of Russia to reduce the cost of living—or improve the value of what she has to sell, which is very nearly the same thing. France does not need Russian foodstuffs, and in terms of narrow self-interest (cutting her losses in Czarist bonds) can afford to be indifferent to the devastation of Russia. As soon as this divergence reaches a certain degree, rupture becomes inevitable.

The mainspring of French policy during the last two years has been fear—fear of the economic revival of Germany which might be the beginning of a military revival. The measures necessary to check German economic revival inevitably increase German resentment, which is taken as proof of the need for increasingly severe measures of repression. Those measures are tending already to deprive France of her most powerful military Allies. That fact still further increases the burden that will be thrown upon her. Such burdens must inevitably make very large deductions from the ‘profits’ of her new conquests.

Note in view of these circumstances some further difficulties of turning those conquests to account. Take the iron mines of Lorraine.[132] France has now within her borders what is, as already noted, the geographical centre of Continental industry. How shall she turn that fact to account?

For the iron to become wealth at all, for France to become the actual centre of European industry, there must be a European industry: the railroads and factories and steamship lines as consumers of the iron must once more operate. To do that they in their turn must have their market in the shape of active consumption on the part of the millions of Europe. In other words the Continent must be economically restored. But that it cannot be while Germany is economically paralysed. Germany’s industry is the very keystone of the European industry and agriculture—whether in Russia, Poland, the Balkans, or the Near East—which is the indispensable market of the French iron.[133] Even if we could imagine such a thing as a reconstruction of Europe on lines that would in some wonderful way put seventy or eighty million Germans into a secondary place—involving as it would vast redistributions of population—the process obviously would take years or generations. Meantime Europe goes to pieces. ‘Men will not always die quietly’ as Mr Keynes puts it. What is to become of French credit while France is suppressing Bolshevik upheavals in Poland or Hungary caused by the starvation of cities through the new economic readjustments? Europe famishes now for want of credit. But credit implies a certain dependence upon the steady course of future events, some assurance, for instance, that this particular railway line to which advances are made will not find itself, in a year or two’s time, deprived of its traffic in the interest of economic rearrangements resulting from an attempt to re-draw the economic map of Europe. Nor can such re-drawing disregard the present. It is no good telling peasants who have not ploughs or reapers or who cannot get fertilisers because their railroad has no locomotives, that a new line running on their side of the new frontier will be built ten or fifteen years hence. You cannot stop the patients breathing ‘for just a few hours’ while experiments are made with vital organs. The operation must adapt itself to the fact that all the time he must breathe. And to the degree to which we attempt violently to re-direct the economic currents, does the security upon which our credit depends decline.[134]

There are other considerations. A French journalist asks plaintively: ‘If we want the coal why don’t we go in and take it’—by the occupation of the Ruhr. The implication is that France could get the coal for nothing. Well, France has taken over the Saar Valley. By no means does she get the coal for nothing. The miners have to be paid. France tried paying them at an especially low rate. The production fell off; the miners were discontented and underfed. They had to be paid more. Even so the Saar has been ‘very restless’ under French control, and the last word, as we know, will rest with the men. Miners who feel they are working for the enemy of their fatherland are not going to give a high production. It is a long exploded illusion that slave labour—labour under physical compulsion—is a productive form of labour. Its output invariably is small. So assuredly France does not get this coal for nothing. And from the difference between the price which it costs her as owner of the mines and administrator of their workers, and that which she would pay if she had to buy the coal from the original owners and administrators (if there is a difference on the credit side at all) has to be deducted the ultimate cost of defence and of the political complications that that has involved. Precise figures are obviously not available; but it is equally obvious that the profit of seizure is microscopic.

Always does the fundamental dilemma remain. France will need above all, if she is to profit by these raw materials of European industry, markets, and again markets. But markets mean that the iron which has been captured must be returned to the nation from which it was taken, on conditions economically advantageous to that nation. A central Europe that is consuming large quantities of metallurgical products is a Central Europe growing in wealth and power and potentially dangerous unless reconciled. And reconciliation will include economic justice, access to the very ‘property’ that has been seized.

The foregoing is not now, as it was when the present author wrote in similar terms a decade since, mere speculation or hypothesis. Our present difficulties with reference to the indemnity or reparations, the fall in the exchanges, or the supply of coal, are precisely of the order just indicated. The conqueror is caught in the grip of just those difficulties in turning conquest to economic account upon which The Great Illusion so repeatedly insisted.

The part played by credit—as the sensory nerve of the economic organism—has, despite the appearances to the contrary in the early part of the War, confirmed those propositions that dealt with it. Credit—as the extension of the use of money—is society’s bookkeeping. The debauchery of the currencies means of course juggling with the promises to pay. The general relation of credit to a certain dependability upon the future has already been dealt with.[135] The object here is to call attention to the present admissions that the maintenance or re-creation of credit is in very truth an indispensable element in the recovery of Europe. Those admissions consist in the steps that are being taken internationally, the emphasis which the governments themselves are laying upon this factor. Yet ten years ago the ‘diplomatic expert’ positively resented the introduction of such a subject into the discussion of foreign affairs at all. Serious consideration of the subject was generally dismissed by the orthodox authority on international politics with some contemptuous reference to ‘cosmopolitan usury.’

Even now we seize every opportunity of disguising the truth to ourselves. In the midst of the chaos we may sometimes see flamboyant statements that England at any rate is greater and richer than before. (It is a statement, indeed, very apt to come from our European co-belligerents, worse off than ourselves.) It is true, of course, that we have extended our Empire; that we have to-day the same materials of wealth as—or more than—we had before the War; that we have improved technical knowledge. But we are learning that to turn all this to account there must be not only at home, but abroad, a widespread capacity for orderly co-operation; the diffusion throughout the world of a certain moral quality. And the war, for the time being, at least, has very greatly diminished that quality. Because Welsh miners have absorbed certain ideas and developed a certain temperament, the wealth of many millions who are not miners declines. The idea of a self-sufficing Empire that can disregard the chaos of the outside world recedes steadily into the background when we see the infection of certain ideas beginning the work of disintegration within the Empire. Our control over Egypt has almost vanished; that over India is endangered; our relations with Ireland affect those with America and even with some of our white colonies. Our Empire, too, depends upon the prevalence of certain ideas.

CHAPTER VII

COULD THE WAR HAVE BEEN PREVENTED?

Let us recall, for instance, Mr Harrison’s case for German aggression—Germany’s ‘poor access to the sea and its expanding population’:—

Very well. We are to drop preaching moralities and look at the facts. Would successful war by us remove the economic and political causes which were part at least of the explanation of German aggression? Would her need for expansion become less? The preceding pages answer that question. Successful war by us would not dispose of the pressure of German population.

If the German menace was due in part at least to such causes as ‘poor access to the sea,’ the absence of any assurance as to future provision for an expanding population, what measures were proposed for the removal of those causes?

None whatever. Not only so, but any effort towards a frank facing of the economic difficulty was resisted by the very people who had previously urged the economic factors of the conflict, as a ‘sordid’ interpretation of that conflict. We have seen what happened, for instance, in the case of Admiral Mahan. He urged that the competition for undeveloped territory and raw materials lay behind the political struggle. So be it; replies some one; let us see whether we cannot remove that economic cause of conflict, whether indeed there is any real economic conflict at all. And the Admiral then retorts that economics have nothing to do with it. To Mr Frederic Harrison ‘The Great Illusion policy is childish and mischievous rubbish.’ What was that policy? To deny the existence of the German or other aggressiveness? The whole policy was prompted by the very fact of that danger. Did the policy suggest that we should simply yield to German political pretensions? Again, as we have seen, such a course was rejected with every possible emphasis. The one outstanding implication of the policy was that while arming we must find a basis of co-operation by which both peoples could live.

In any serious effort to that end, one overpowering question had to be answered by Englishmen who felt some responsibility for the welfare of their people. Would that co-operation, giving security to others, demand the sacrifice of the interest or welfare of their own people? The Great Illusion replied, No, and set forth the reasons for that reply. And the setting-forth of those reasons made the book an ‘appeal to avarice against patriotism,’ an attempt ‘to restore the blessed hour of money getting.’ Eminent Nonconformist divines and patriotic stockbrokers joined hands in condemning the appalling sordidness of the demonstration which might have led to a removal of the economic causes of international quarrel.

It is not true to say that in the decade preceding Armageddon the alternatives to fighting Germany were exhausted, and that nothing was left but war or submission. We simply had not tried the remedy of removing the economic excuse for aggression. The fact that Germany did face these difficulties and much future uncertainty was indeed urged by those of the school of Mr Harrison and Lord Roberts as a conclusive argument against the possibility of peace or any form of agreement with her. The idea that agreement should reach to such fundamental things as the means of subsistence seemed to involve such an invasion of sovereignty as not even to be imaginable.

To show that such an agreement would not ask a sacrifice of vital national interest, that indeed the economic advantages which could be exacted by military preponderance were exceedingly small or non-existent, seemed the first indispensable step towards bringing some international code of economic right within the area of practical politics, of giving it any chance of acceptance by public opinion. Yet the effort towards that was disparaged and derided as ‘materialistic.’

One hoped at least that this disparagement of material interest as a motive in international politics might give us a peace settlement which would be free from it. But economic interest which is ‘sordid’ when appealed to as a means of preserving the peace, becomes a sacred egoism when invoked on behalf of a policy which makes war almost inevitable.

Why did it create such bitter resentment before the War to suggest that we should discuss the economic grounds of international conflict—why before the War were many writers who now demand that discussion so angry at it being suggested? Among the very hostile critics of The Great Illusion—hostile mainly on the ground that it misread the motive forces in international politics—was Mr J. L. Garvin. Yet his own first post-war book is entitled: The Economic Foundations of Peace, and its first Chapter Summary begins thus:—

And his first paragraph contains the following:—

His second chapter is thus summarised:—

Lord Grey has said that if there had existed in 1914 a League of Nations as tentative even as that embodied in the Covenant, Armageddon could in any case have been delayed, and delay might well have meant prevention. We know now that if war had been delayed the mere march of events would have altered the situation. It is unlikely that a Russian revolution of one kind or another could have been prevented even if there had been no war; and a change in the character of the Russian government might well have terminated on the one side the Serbian agitation against Austria, and on the other the genuine fear of German democrats concerning Russia’s imperialist ambitions. The death of the old Austrian emperor was another factor that might have made for peace.[137]

Assume, in addition to such factors, that Britain had been prepared to recognise Germany’s economic needs and difficulties, as Mr Garvin now urges we should recognise them. Whether even this would have prevented war, no man can say. But we can say—and it is implicit in the economic case now so commonly urged as to the need of Germany for economic security—that since we did not give her that security we did not do all that we might have done to remove the causes of war. ‘Here in the struggle for primary raw materials’ says Mr Garvin in effect over the six hundred pages more or less of his book, ‘are causes of war that must be dealt with if we are to have peace.’ If then, in the years that preceded Armageddon, the world had wanted to avoid that orgy, and had had the necessary wisdom, these are things with which it would have occupied itself.

Yet when the attempt was made to draw the attention of the world to just those factors, publicists even as sincere and able as Mr Garvin disparaged it; and very many misrepresented it by silly distortion. It is easy now to see where that pre-war attempt to work towards some solution was most defective: if greater emphasis had been given to some definite scheme for assuring Germany’s necessary access to resources, the real issue might have been made plainer. A fair implication of The Great Illusion was that as Britain had no real interest in thwarting German expansion, the best hope for the future lay in an increasingly clear demonstration of the fact of community of interest. The more valid conclusion would have been that the absence of conflict in vital interests should have been seized upon as affording an opportunity for concluding definite conventions and obligations which would assuage fears on both sides. But criticism, instead of bringing out this defect, directed itself, for the most part, to an attempt to show that the economic fears or facts had nothing to do with the conflict. Had criticism consisted in taking up the problem where The Great Illusion left it, much more might have been done—perhaps sufficient—to make Armageddon unnecessary.[138]

The importance of the phenomenon we have just touched upon—the disparagement before war of truths we are compelled to face after war—lies in its revelation of subconscious or unconscious motive. There grows up after some years of peace in every nation possessing military and naval traditions and a habit of dominion, a real desire for domination, perhaps even for war itself; the opportunity that it affords for the assertion of collective power; the mysterious dramatic impulse to ‘stop the cackle with a blow; strike, and strike home.’

For the moment we are at the ebb of that feeling and another is beginning perhaps to flow. The results are showing in our policy. We find in what would have been ten years ago very strange places for such things, attacks upon the government for its policy of ‘reckless militarism’ in Mesopotamia or Persia. Although public opinion did not manage to impose a policy of peace with Russia, it did at least make open and declared war impossible, and all the efforts of the Northcliffe Press to inflame passion by stories of Bolshevist atrocities fell completely flat. For thirty years it has been a crime of lèse patrie to mention the fact that we have given solemn and repeated pledges for the evacuation of Egypt. And indeed to secure a free hand in Egypt we were ready to acquiesce in the French evasion of international obligations in Morocco, a policy which played no small part in widening the gulf between ourselves and Germany. Yet the political position on behalf of which ten years ago these risks were taken is to-day surrendered with barely a protest. A policy of almost unqualified ‘scuttle’ which no Cabinet could have faced a decade since, to-day causes scarcely a ripple. And as to the Treaty, certain clauses therein, around which centred less than two years ago a true dementia—the trial of the Kaiser in London, the trial of war prisoners—we have simply forgotten all about.

It is certain that sheer exhaustion of the emotions associated with war explains a good deal. But Turks, Poles, Arabs, Russians, who have suffered war much longer, still fight. The policy of the loan to Germany, the independence of Egypt, the evacuation of Mesopotamia, the refusal to attempt the removal of the Bolshevist ‘menace to freedom and civilisation’ by military means, are explained in part at least by a growing recognition of both the political and the economic futility of the military means, and the absolute need of replacing or supplementing the military method by an increasing measure of agreement and co-operation. The order of events has been such as to induce an interpretation, bring home a conviction, which has influenced policy. But the strength and permanence of the conviction will depend upon the degree of intelligence with which the interpretation is made. Discussion is indispensable and that justifies this re-examination of the suggestions made in The Great Illusion.

In so far as it is mere emotional exhaustion which we are now feeling, and not the beginning of a new tradition and new attitude in which intelligence, however dimly, has its part, it has in it little hope. For inertia has its dangers as grave as those of unseeing passion. In the one case the ship is driven helplessly by a gale on to the rocks, in the other it drifts just as helplessly into the whirlpool. A consciousness of direction, a desire at least to be master of our fate and to make the effort of thought to that end, is the indispensable condition of freedom, salvation. That is the first and last justification for the discussion we have just summarised.