Chapter 2

All in different degrees are economic victims of the havoc and the waste of war. It is not Central Europe only, together with large parts of the Balkans, of Russia, and of Eastern Asia, that is in this evil plight. Europe as a whole is unprovided with the foodstuffs with which to feed its population and the raw materials with which to furnish employment. If there were prevailing among them the best of wills and of coöperative arrangements, the European peoples could not keep themselves alive this winter and make any substantial advance towards reparation of the damage of war and industrial recovery. If human coöperation is to save these weak and desperate peoples, it must be a coöperation of more than the nations of Europe. Only by the better provided nations of the world coming to the rescue can the worse-provided nations survive and recover. It would be foolish to mince words in so grave an issue. We are all acquainted with the main facts of the world situation and are familiar with the place which America occupies in it as the chief repository of those surpluses of foods, materials, and manufactured goods which Europe needs so sorely. The term 'surplus' is, of course, somewhat deceptive. Surplus depends largely on home consumption, itself an elastic condition. But for practical purposes we may take the exportable surplus to mean the product which remains for sale abroad after the normal wants of the home population are supplied. It might mean something more, viz., that the home population would voluntarily keep down or reduce their consumption, in order that more might be available for export. The American people actually did exercise this self-denying ordinance to an appreciable extent, in order to help win the war. Are they willing to do the same in order to help the world in a distress as dire as war itself?

It may be said, perhaps truly, that this presumes that America is in the peace as much as she was in the war, that she has decided to link her destiny closely and lastingly with that of Europe, that she definitely accepts a proffered place as a member of the society of nations, and under circumstances which make an immediate call upon her economic and financial resources in a manner in which there can be no direct reciprocity.

Now it may reasonably be urged that America is not prepared for such a committal, that such obligations as she undertook, as an associated power, in the conduct of the war, terminate with the making of peace; and that, as regards the future structure of international relations, she proposes to preserve full freedom to coöperate with other nations, or to stand alone, according to her estimate of each occasion.

It is here convenient to treat separately two issues which are none the less closely related, viz., the issue of international coöperation for the immediate work of the salvage and restoration of Europe, and the issue of a permanent coöperation or agreement for the equitable use of the economic resources of the world. The urgency for Europe of the first issue has been already indicated. If the weaker European nations are left to the ordinary play of economic laws for the supplies they need, they must lapse into starvation and social anarchy. A lifting of the war blockades and embargoes hardly helps them. The formal restoration of free commerce is little better than a mockery to those who lack the power to buy and sell. Free commerce would simply mean that America's surplus, the food, materials, and manufactured goods she has to sell abroad, would be purchased exclusively by those more prosperous foreigners who have the means to pay in money, or in export goods available for credit purposes. Now the populations and the governments of these broken countries have neither money nor goods in hand. The return of peace has left them with depleted purses and empty stores. If the purchase and consumption of the available surplus of foods, materials, and manufactures from America and other prosperous countries is distributed according to the separate powers of purchase in the European countries, the countries and the classes of population which are least in need will get all, those which are most in need, nothing. How can it be otherwise, if immediate ability to pay is the criterion? In ordinary times the machinery of international finance does tend to distribute surplus stocks according to the needs of the different nations, for the production of the actual goods for export trade with which imports are paid for, the true base of credit, is continually proceeding. But the war broke this machinery of regular exchange. It cannot be immediately restored. America or Argentina cannot sell their surplus wheat in the ordinary way to Poland, Austria, Belgium and other needy countries, because, largely for the very lack of these goods and materials, their industries are not operating, so that the goods they should produce, upon which credit would be built, are not forthcoming.

This is one of the most terrible of the vicious circles in which the war has bound the world. The weak nations cannot buy, because they are not producing goods to sell; they cannot produce, because they cannot buy. What are the strong nations, those with surplus goods, the transport, and the credit, going to do about it? It is a question of emergency finance based on an emergency morality. The nations which have surpluses to sell abroad must not only send the goods but provide the credit to pay for them if they are to reach the peoples that need them most. But how, it is said, can you expect the business man in America or any other country to perform such an act of charity? How can you expect them to sell to those who have not credit and cannot pay, instead of selling to those who have credit and can pay? The answer is sometimes stated thus. It is not charity you are asked to perform, but such consideration for customers as a really intelligent sense of self-interest will endorse. We ask you to put up a temporary bridge over the financial chasm in order to afford time for this restoration of the ordinary processes of exchange. If the enfeebled industrial peoples can be furnished now with foods and materials they will set to work, and in the course of time they will be able, out of the product of their industry, to repay your advances and reestablish the normal circle of exchange.

In presenting this course as a policy of intelligent self-interest, I am not really disparaging the claims of humanity or of morals. I am merely maintaining the utilitarian ethics which insist that morality, the performance of human obligations, is the best policy, that policy which in the long run will yield the fullest satisfaction to social beings. If I were an American exporter in control of large amounts of food, it would doubtless pay me better personally at the present time to sell it to firms in European countries which have good credit, for consumption by people who are in no great want. As an individual business man, I could hardly do otherwise with any assurance of financial profit. I am not here presenting the issue as a matter of individual morals. If the surplus of economic supplies is to be distributed according to needs, on an emergency credit basis adjusted to that end, it is evident that this can be done only by international coöperation. This shifts the moral problem from the individual to the nation. Rich nations, or their governments, are asked to assist poor nations by making an apportionment of goods and credit which the individual members of the rich nations, the owners of the surplus, would not make upon their own account. The edge of this issue should not be blunted. If the people and government of America were only concerned to let their individual citizens extort the highest prices they could get for their surplus in the best markets, they would let Central and Eastern Europe starve. If, however, they also take into account the social, political, and economic reactions of a starving Europe upon the future of a world in which they will have to live as members of a world society which must grow ever closer in its physical, economic, and spiritual contacts, they may decide differently. The issue arises in the highest economic sphere, that of finance. Are the nations and governments of the world sufficiently alive to the urgency of the situation to enter into an organization of credit for the emergency use of transport and for the distribution of foods and materials on a basis of proved needs? The richer nations, in proportion to their resources, would appear to be called upon to make a present sacrifice for the benefit of the poorer nations in any such pooling of credit facilities. That risk of sacrifice, however, need not be great, and need not be felt at all by the individual members of rich nations, provided that the hitherto unused resources of national credit can be built into a strong structure of mutual support. If America were invited to find adequate credits for Italian or Polish needs at the present time, she might well hesitate. But if a consortium of European governments, including Britain and the richer neutrals, were joint guarantors of such advances, this coöperative basis might furnish the necessary confidence. It is not within my scope to discuss the various forms a financial consortium might take; whether America, as representative of the creditor nations, should enter such a consortium, or should approach the organized credit of Europe in the capacity of a friendly uncle. It must suffice here to indicate the moral test which this grave issue presents to the nations regarded as economic powers.

Upon the policy adopted for this emergency will doubtless depend in large measure the whole future of economic internationalism. For not only does confidence grow with effective coöperation, but upon this post-war coöperation between nations for an emergency commerce and finance, or its rejection, will depend not only America's future place in a world society but the structure of that world society in its essential character.

For in each great nation of the world the same great choice, the same great struggle of contending principles and policies, is taking place. National self-dependence or internationalism--that is everywhere the issue. It is true that in no European country can that issue be so sharply presented as in America. For economic self-sufficiency in a full sense and, therefore, political isolation, is not possible for any European state. Even a peaceful and reviving Russia must lean upon her more advanced neighbors for the economic essentials of capital and organizing skill. But the several nations can strive to reduce their interdependence and their national aid to the narrowest dimensions, and where they cannot free themselves from extraneous alliances they can restrict the area of economic dependence within a chosen circle. Britain, for example, could set her policy closely and consistently to make her world-wide empire into a self-sufficing system, and if, as is likely, she learned that even the diversified fifth of the entire globe which owns allegiance to her Crown could not satisfy all her wants, she could eke out this inadequacy with some carefully selected and purchased friendships.

This harking back to an economic nationalism is a natural reaction of the war, and is fed by a dangerous and precarious peace. Fear, greed, and suspicion prompt the victorious nations to guard their gains by reverting to a close nationalism or a ringed alliance; humiliation, without humility, the bitter pain of thwarted ambitions, resentment at their punishment, dispose the vanquished nations to keep their own company and form if possible, an economic system of their own. A prolonged war, followed by a bad peace, may leave this indelible scar upon the growing economic internationalism of the world.

The richly nourished patriotism of war breeds divisions and antagonisms which are easily exploited afterwards by political, racial, religious, and cultural passions, but most of all by economic interests.

Before the war internationalism was visibly advancing with every fresh decade. The bonds of commercial and financial intercourse between the peoples of different countries were continually woven closer; the policy of self-sufficiency was continually giving way before the superior economy of specialization on a basis of natural or acquired advantages. Any reversal of this policy would be far costlier than may at present appear, even for those countries best qualified by size and resources to stand alone.

For it is not merely the direct sacrifice of the wider world economy of production and exchange, the advantage of a wider over a narrower area of free commerce, that is involved. It is the indirect perils and costs of the policy of close nationalism or restricted economic alliances that count heaviest. For economic nationalism means protective and discriminative tariffs, and a conservation of national, imperial or allied resources within a circle of favored beneficiaries. This is the temptation held out to the British people today by the protectionist interests working upon the animosity of the war spirit and the sentiment of imperialism. The welding of an empire into an independent economic system, the conservation of essential or key industries and the safeguarding of our industries against "dumping," are the ostensible objectives of a policy whose chief driving motive and end is the establishment of strong industrial, commercial and financial trusts and combinations, defended by tariff walls, and endowed with the profits of monopoly.

There are two difficulties in such a course of action, which, though especially urgent in the case of Britain, beset every great country that chooses the same path, and not least, America. The first is the fomentation of a class war, based upon divisions of interests between capital and labor, producer and consumer, protected and unprotected industries. The initial skirmishes of such a conflict are already visible in every country where wages, prices, and profiteering are burning issues. I would most earnestly appeal to thoughtful citizens in this as in my own country to pause before heaping fuel on these fires. For the policy of national self-sufficiency or isolation means nothing less than this. Not merely does it strengthen the power of capitalistic combinations and thereby incite labor unions to direct action, blackmailing demands, and sabotage. Not merely does it let loose upon the business world all sorts of ill-considered governmental interferences for the fixation of prices or subsidies to consumers. It keeps alive and feeds the habit and the spirit of strife. For it was no accident that the great international war left as its legacy smaller international class wars in European countries. Remove from a nation the economic supports it formerly received from other nations, markets wherein to buy and sell, and you starve that nation; and starvation breeds class war and anarchy. Can any one doubt this with the terrible examples of Russia and Hungary before their eyes? But it is not a matter of war conditions alone. Carry through a policy of economic nationalism, under which all the large and well-equipped nations and empires conserve for their exclusive uses the national resources they command, and what happens? The smaller and the poorer nations, however free in the political sense, become their economic bond slaves, at the mercy of the master states for their foods and other necessaries of life. Take the case of Austria under the new conditions, with a thick population concentrated in a great political capital suddenly deprived of all free access to its former sources of supply and the markets it used to serve. For her it is a sentence of economic strangulation. Here is an extreme instance of the effect of economic isolation on a weak country. But the dangerous truth may be more broadly stated. A very few great empires and nations today control the whole available supplies of many of the foods, fabrics, and metals, the shipping and finance, that are essential to the livelihood and progress of every civilized people. Are Britain, America, France, and Japan--and especially the two greatest of these powers--going to absorb or monopolize for their exclusive purposes of trade or consumption these supplies which every country needs, or are they going to let the rest of the world have fair access to them? I think this to be upon the whole the most important of the many urgent issues that confront us. For, if close nationalism or imperialism should prevail, the weaker placed nations could not acquiesce. Close economic nationalism is not for them a possibility. They must win access to the world's supplies, peacefully if possible, or else by force.

The fatality of the great choice is thus evident. Nations must and will fight for the means of life. Close economic nationalism or imperialism on the part of the great empires must, therefore, compel the restricted countries to organize force for their economic liberation. This in turn will compel the great empires to maintain strong military and naval defences. It is impossible for the other nations of the earth to leave the essential supplies of metals, foods, and oils, and the control of transport in the exclusive possession of one or a few close national corporations or a permanent "Big Four." Under such conditions the sacrifices of the great war would have been made in vain. Nothing would have been done to end war, or to rescue the world from the burden of militarism. The pre-war policy of contending alliances and of competing armaments, draining more deeply than ever the surplus incomes of each people, would be resumed. And it would bring no sense of security, but only the postponement of further inevitable conflicts in which the very roots of western civilization might perish.

The renewed and intolerable burdens of such a militarism, with its accompaniments of autocracy, must let loose class war in every nation which has gone through the agony of the European struggle and has seen the great hope of a peaceful internationalism blighted.

It is predominantly upon America and Britain that this great moral economic choice rests, the choice on which the safety and the progress of humanity depend. A refusal by either of these great powers can make any league of nations and any economic internationalism impossible. The confident consent of both can furnish the material and moral support for the new order. If these countries in close concerted action were prepared to place at the service of the new world order their exclusive or superior resources of foods, materials, transport and finance--the economic pillars of civilization--the stronger pooling their resources with the weaker for the rescue work in this dire emergency, this political coöperation would supply that mutual confidence and goodwill without which no governmental machinery of a League of Nations, however skilfully contrived, can begin to work.

I have spoken of Britain and America as the two countries upon whose choice this supreme issue hangs. But the act of choice is not the same for the two. The British imperial policy (apart from that of the self-governing dominions) has been conducted on a basis of free trade or economic internationalism. A reversion to close imperialism would be for her a retrogression. The United States, on the other hand, has practised a distinctively national economy, and the adoption of a free internationalism would be a great act of faith, or--as some would put it--a leap in the dark.

I prefer the former term as indicative of the new truth which is dawning on the world, the conviction that just as an individual can only fully realize his personality in a society of other individuals, that is, a nation, so nations cannot rise to the full stature of nationalism save in a society of nations. For only thus can nationality, either in its economic or its spiritual side, make full use of its special opportunities for the development of a distinctive national character. The supreme challenge is, therefore, not to the continental European nations, not even to Britain, but to America. For her alone the choice has the full quality of moral freedom. For she alone is able to refuse. Other great western nations might seek to stand alone for economic life and for defence. They could not long succeed; they are too deeply implicated in one another's destinies. Even Britain with her vast extra-European territories could not hope to disentangle herself from the affairs of her near neighbors. America could do this, at any rate for some considerable time to come. True she has economic committals in Europe. She has loaned European governments and peoples some ten milliards of money. She is still lending her credit to support the large surplus supplies of foods and other goods she is selling Europe. If this business is to continue, it will implicate her even closer in European affairs. Europe in its present case can hardly be presented as a safe business proposition. If America proceeds along this path, it will be because she looks beyond the immediate risks to the wider future of a safer and more prosperous world. She could now draw out; she could cut the present economic losses of her European loans; she could divert her attention from the European markets to the development of the American continent as the principal area for the disposal of her surplus goods and energies.

It is open to her to take this course. Prudence may seem to dictate it. The reckless mismanagement of European governments, the wild unsettlement of peoples, the badness of the peace, are, indeed, strong arguments for America cleaving to her old ways.

Europe has no rightful claim upon America, either for the urgent work of economic rescue, or for participation in the permanent project of a society of nations. America not only has the right to refuse; it is probably to her immediate interest to refuse. But, at the risk of misinterpretation, as an officious outsider, I will venture to present an appeal to the wider and deeper interests of Americans. The refusal of America not only shuts the gate of hope for millions of war-broken, famine-ridden people in Central and Eastern Europe, it removes the keystone for the edifice of a society of nations. For effective international coöperation in economic resources and opportunities is the indispensable condition of such a society. No League of Nations can survive its infancy without this economic nourishment. The world's wealth for the world's wants: unless this maxim can in some effective way be realized, no such escape has been made from the pre-war policy of greed and grab as will furnish a reasonable hope for a world redeemed from war--a world clothed and in its right mind.