The World in Chains - Some Aspects of War and Trade
by John Mavrogordato
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[Footnote 45: In the July, 1914, issue of the Asiatic Review, to which I have already referred.]

[Footnote 46: I need hardly say that in speaking of the commercial class I do not include its instrument the workers. The international Socialist movement has not yet succeeded in uniting them; but the exhortation addressed to them by Marx has been obeyed instead by the capitalists.]

Sec. 5

The greater the Capital, the greater the War Profit?

The over-production in modern industrial states, from which Trade can only be saved by some such catastrophic remedy as war, may be attributed not only to the tyranny of machines, but also to the financial jugglery known as over-capitalisation. If it could be shown that over-capitalisation were a consequence of national wealth it would follow that the richer nations would enjoy a greater benefit from war than their poorer neighbours. But this will only be true if we do not measure national wealth by the average wealth of every citizen; if we speak in this case of national wealth quite apart from any question of its equitable distribution, and are careful to distinguish it from national welfare; a wealthy nation in this case would have to mean a nation blessed with a class of wealthy capitalists, or supporting a large parasitic colony of the persons described as financiers; and such a nation would have as a corollary to be blessed with a class of workers disproportionately large and disproportionately poor. For if industrial conditions are fair over-production is impossible.


[Footnote 47: Here, for instance, is an illuminating sentence from a private report on Greek trade during the Balkan Wars: "I commercianti Greci hanno guadagnato molto durante la guerra, perche hanno venduto tutte le merci che avevano in deposito a prezzi molto piu alti, che la gente era obbligata di comperare a cagione che non potevano importare merci straniere."]

Sec. 6

The Blessings of Invasion

If war is regarded primarily as a commercial stimulant, we might carry the argument farther and conclude that invasion and even ravage are actually beneficial to the trade of a country that suffers them; for ultimately they must make way for a direct demand on the spot for the primary commodities of life. Houses, fences, roads, factories will all have to be replaced. It is obvious that the war will have to be followed by a time of rebuilding.[48] It might be urged that such a phase of convalescence would be retarded or altogether prevented by the lack of private capital for such an enormous enterprise. But private capital, thanks to the credit system, is practically inexhaustible so long as it is required for a genuinely productive purpose: and even if it failed in this case to come forward, the money required would certainly be advanced out of the indemnity which will have to be provided for the invaded provinces, or would be guaranteed in some other way by the Government concerned. In which case Trade, even after the conclusion of peace, would rejoice in another period of Government contracts. If it be admitted, however, that we have not sufficient data to make this suggestion more than probable, we can at any rate be certain of the effect produced by the mere numbers of an invading army or a defensive garrison. The Jewish traders of Salonica enjoyed a time of unexampled prosperity in 1912 and 1913, owing to the mere presence of the Turkish, the Greek and the Bulgarian armies, to whom they sold out at their own prices.[49] They are now repeating the process with the English and French armies; and in the interval they were kept busy restocking the Macedonian villages depleted or destroyed during the campaign of 1912. As for the small shopkeepers of Flanders any member of the British Expeditionary Force will tell you that they are at present so prosperous that even a German bombardment will hardly drive them from their counters.


[Footnote 48: Since this chapter was written I have seen a pamphlet with the following title: "The Chance for British Firms in the Rebuilding of Belgium, by a Belgian Contractor. London, Technical Journals, Limited, 27-29 Tothill Street, Westminster."]

Sec. 7

The Luxury Trades don't do so badly

The most obvious if not the only exception to our tale of war profits is to be found in the case of the parasitic industries which specialise in the production of the unnecessary. It is not easy rigidly to define the luxury trade, for the luxury of one generation is the necessity of the next; but it is enough to suggest a broad idea of the industries that fall under this heading. "The income-tax assessments show," says The Times,[50] speaking of Berlin after nine months of war, "that among the trades which have suffered most are fruiterers, breweries, public-houses, bars, cafes, chemists and perfumers, goldsmiths and silversmiths, jewellers, milliners, furniture and piano dealers, and music and booksellers. Landowners, land speculators, builders and the carrying trade have also suffered." We may also notice that in the early months of the war Florence, the great market of the shoddy "souvenir" and the "tourist's delight," suffered a good deal more than London, although Italy still remained neutral. In London itself a good example of the parasitic industry are the firms which make ingeniously useless silver toys for rich people to give each other at Christmas.[51]

Many such industries may indeed have suffered in England, although many of the trades mentioned in the Berlin list have not been affected in London, and at least two of them have made conspicuous profits. But in any case it is probable that they suffered if at all only during the first period of the war, when the general feeling of strangeness and insecurity was strong enough to inhibit the shopping instinct of the wealthier classes. As soon as these became accustomed to the state of war they reverted with even greater energy to their old pastime of spending money: and meanwhile the luxury trades had acquired an entirely new set of customers, for a large part of the profits accumulated in other trades were now being spent by a newly enriched class who were unaccustomed to save, for the simple reason that they had never before been in a position to do so. Consequently the luxury trades after a year of war had not only recouped their temporary losses but were doing a bigger business than ever. The natural adaptability of the trades which pander to fashion must also be taken into account. A number of them after the first panic recaptured the failing demand by advertising very simple modifications of their ordinary supply. Some, for instance, turned to the manufacture of equally plausible superfluities of military equipment—such as silver and gold identity disks and watches with luminous dials and queer little hieroglyphs in place of the ordinary figures. Trades already so well organised for exploitation could easily defeat any general attempt at social economy. Thus for women of the upper middle class the most obvious form of war economy was to carry on with only a slight alteration of last year's dresses; and such was their declared intention when their hands were forced by the Dressmakers' revolutionary change in the fashion which substituted the full skirt for the tight skirt of 1913-14. The extraordinary ingenuity of this move was, not only that it thwarted any good intention of not buying a new dress this year, it being manifestly impossible to "alter" a tight skirt into a crinoline, but also that the extra cloth required for the unusually full skirts more than compensated the trade for the continued abstention of a few unfashionable obstinates, as well as for the extra cost of labour.[52]


[Footnote 49: One Jewish contractor supplied corn and fodder to all three armies. As soon as his Turkish customers had capitulated, he tendered for the supply of the victorious Greeks, and he still had enough to spare for the Bulgarians when they entered the town.]

[Footnote 50: May 17, 1915.]

[Footnote 51: Such "labour-saving devices," for instance, as "poached egg servers."]

Sec. 8

Trade Profits in war not shared by the Nation but confined to Employers

The trade profits which are thus directly stimulated by the conditions of war, do not imply the prosperity of the Trade as a whole, if a Trade is understood to mean a certain section of the nation including in a sort of guild or hierarchy representatives of every class engaged in a particular Trade. They do imply the prosperity of a particular class, for they are all employers' profits, profits on the capital involved. Unfortunately the profits of the Capitalists do not involve the profits of the Labourers, and cannot therefore be tested by statistics of unemployment. But of course the fluctuations of unemployment do very materially affect the opportunities of Trade, and it might reasonably be argued that the apparent profits created by War are really modified by the conditions of the Labour market or otherwise equitably distributed among the general population. Unfortunately it is quite easy to show that the one policy of employers during the present war has been to maintain their profits without any concern for the general population, and that the effect of war has been to increase the profits of Capital not only by increasing the demand but also by making the Employers increasingly independent of the labourers' claims.

At the beginning of War the Employer, on the grounds of general insecurity and "not knowing what was going to happen next," cut down wages and raised the cry of "Business as Usual"; which meant that business was so much better than usual that he was afraid it could not possibly last. So he cut down wages, laughed at buyers who offered him the usual prices, and charged L48 a ton for hides and 6s. 10d. for a yard of cloth that usually cost half a crown. If the private buyer would not pay his prices the Government would. It was indeed too good to last, for such prosperity became impossible to conceal:[53] it also reduced the margin of unemployment on which he had always depended, and he soon found himself obliged to return to the normal rate of wages which he had paid before the war. He was disappointed to find that "Business as Usual" meant wages as usual, but he struggled on, imploring the assistance of the Government in order to "capture Germany's Trade." Worse was to follow: after nine months of war recruiting for the army had begun in earnest, and "there was on the whole less unemployment in Great Britain than at any previous moment in the present century."[54] But he was determined to "carry on," and for the sake of the Government introduced child labour into his workshops.[55] Meanwhile, however, the cost of living was steadily rising, and after a year of war, and of profits, the labourers' demand for an increase of wages could not be altogether ignored. The employer decided to carry the war into the enemy's country. The nation must hang together, he said, and all work was practically national work. So he boldly accused his workmen of lack of patriotism, and roundly declared that "but for the trade unions the war would probably have been over by this time, with a victory for the Allies.... Organised labour is the rotten limb of the body politic, which must be cut off if health is to be restored to the system."[56] It was hard work, but in spite of the shortage of labour and in spite of the rise in the cost of living, he managed to hold wages down by repeating that any demand for a rise in wages was unpatriotic.[57] One by one, on the plea of urgent Government work, he obtained the suspension of all Trade Union rules and thus deprived his workmen of even the natural rights of negotiation; and when after fifteen months of war they again ventured to raise their voices on the Clyde, he openly accused them of being paid by German agitators.[58] On the whole therefore he has been extraordinarily successful in keeping his profits to himself, and as the present demand is likely to continue for some time after the war, his chief anxiety at present is to maintain after the war the compulsory relaxation of Trade Union rules which nothing less than war could accomplish. The slight danger that a prolonged war may kill off a considerable part of his margin of unemployment is more than balanced by his successful introduction of women's labour: and he means that War, in addition to the actual profits of his Trade, shall give him the enormous potential advantage of having broken the Trade Unions.[59]


[Footnote 52: As a matter of fact, nearly all the luxury trades cut down their scale of wages during the first year of the war; and many of these ostentatiously gave to some War Charity a fraction of the sum thus extracted from their employees. I suppose it would be libellous to give examples.]

[Footnote 53: Though frantic attempts to conceal it have been made since the Tax on War Profits was introduced.]

[Footnote 54: The New Statesman, May 22, 1915.]

[Footnote 55: See above, p. 47, note 4. Some illuminating details are given in the Nation, May 22, 1915, concerning the unscrupulous plea of Government work in order to excuse the employment of children.]

[Footnote 56: The Saturday Review, September 18, 1915.]

[Footnote 57: "The shortage" too was a permanent excuse just as good for holding prices up as for holding wages down. Cf. a correspondent in The Times, May 17, 1916: "This position of affairs makes one doubt if the shortage in these articles (bottles, jars, tins, boxes, etc.) is as stated, or that the shortage pays better and the various trades do not wish the tension to be in any way relieved."]

[Footnote 58: I hope it will not soon be forgotten that Punch was not ashamed to endorse this charge.]

[Footnote 59: Cf. Mr. Emil Davies in the New Statesman, April 8, 1916: "My impression is that the annoyance of Clyde manufacturers at the present labour troubles is not wholly free from a certain grim satisfaction. They are not anxious to see carried out the pledge that shop conditions should go back to the pre-war basis, and, they argue, if the men are discredited with the public, it will be all to the good of the employers in the big industrial struggle they look upon as inevitable after the war. They regard this struggle without anxiety and are accumulating funds; some of them talk of special funds being created for the purpose by the employers in association. These are the impressions gained from conversations with prominent members of the Glasgow business world."]

Sec. 9

Trade Profit and National Loss

It need not therefore be supposed that the War Profits, of which there is such abundant evidence, conflict at all with Mr. Norman Angell's contention[60] that all modern war, even if the military operations end in a military success, is futile and unprofitable from the national point of view. The general truth seems to be that War, whether it be apparently victorious or apparently unsuccessful, is always profitable for a small commercial class in each belligerent nation.[61] Unfortunately the profits thus earned by the economic effects of war are not diffused vertically throughout the whole nation from top to bottom, but rather horizontally along a shallow commercial stratum in every nation. In every nation war diminishes the national wealth, but concentrates the residue with greater inequality in one particular class. The representative of this class, commonly called the Capitalist, is the real cosmopolitan, because his interests in each belligerent nation are identical, and the war, successful or not, contributes to his financial advantage. It is an illuminating coincidence that the classes in every nation which most enthusiastically demand the violent prosecution of the war seem to be proportionately anxious to annul the hardly-won privileges of democracy. Thus the Saturday Review, in a passage already quoted, solemnly, openly and unforgettably declares the secret wishes of the militarists; and we may be surprised to consider how many safeguards of democracy, how many rights of free thought and free speech, how many of the precarious limitations of sweating and child-labour and wage-slavery have been quietly suppressed since the beginning of the war. But if war is ultimately unprofitable for the nation as a whole, it might be argued that Trade itself must ultimately be involved in the national loss. The answer is that even if the Trader's interests were identical with those of the nation and were ultimately bound to suffer with the nation as a whole, he would undoubtedly ignore the possibility of a loss so much remoter than his immediate and obvious profits; especially as he is certainly ignorant of the economic fact that in modern times military victory and military defeat are equally unprofitable, and if he ever did pause to consider the results for the whole nation he would certainly, perhaps in good faith, identify the national interest with his own, and assume, for psychological rather than economic reasons, that his own interests demanded a military victory; real ignorance and emotional excitement sufficing to explain his apparently hypocritical professions of patriotism. As a matter of fact however his private interests are not dependent on those of the whole nation; for commercial wealth is not the same as national wealth, and prosperous Trade is quite consistent with national unhappiness. The average citizen of Switzerland is more contented than the average citizen of any of the great commercial powers of the world; and some of the causes that make for commercial prosperity, causes of which War is not the least effective, actually decrease the civic efficiency of the greater number of the population, and reduce their chances of happiness. "If an expanding trade," writes Mr. R. B. Cunninghame Graham,[62] "is the sure sign of national happiness clearly the four countries, the figures of whose trade are tabulated (Chile, Peru, Brazil and Argentine) should be amongst the happiest in the world. Yet still a doubt creeps in whether expanding Trade is the sure test of happiness; for recently I have revisited some of the countries of the River Plate that I knew thirty years ago, and it appears to me that they were happier then. True, they were not so rich.... Wealth has increased, but so has poverty...."

War is an artificial process for accelerating that concentration of wealth in the hands of a small class which distinguishes the present unholy stage of political development.[63]


[Footnote 60: The Great Illusion, passim.]

[Footnote 61: This is not necessarily inconsistent with H. N. Brailsford's similar remark (The War of Steel and Gold, p. 163): "War is a folly from the standpoint of national self-interest; it may none the less be perfectly rational from the standpoint of a small but powerful governing class."]

[Footnote 62: Reviewing a work on South America in The Nation, November 6, 1915.]

[Footnote 63: This process is further accelerated by the fact that the War is being paid for very largely by means of Loans, subscribed naturally by the richer classes; in future the richer classes will be receiving the interest on these loans. But in order to pay this interest the State will have to resort to taxation, some part of which will fall presumably on the poor. See Professor Pigou's Economy and Finance of the War.]


Candide etait etendu dans la rue et couvert de debris. Il disait a Pangloss: Helas! procure-moi un pen de vin et d'huile; je me meurs. Ce tremblement de terre n'est pas une chose nouvelle, repondit Pangloss; la ville de Lima eprouva les memes secousses en Amerique l'annee passee; memes causes, memes effets: il y a certainement une trainee de souphre sous terre depuis Lima jusqu'a Lisbonne. Rien n'est plus probable, dit Candide; mais, pour Dieu, un peu d'huile et de vin. Comment, probable? repliqua le philosophe; je soutiens que la chose est demontree.

Candide perdit connaissance, ... et Pangloss lui apporta un peu d'eau d'une fontaine voisine.

VOLTAIRE, Candide.

Sec. 1

Dialectics round the Death-bed

Philosophical aloofness is all very well in its way, but while we argue about economic causes and attempt to induce a philosophy of earthquakes, our bright young democracy lies bleeding under the ruins. The urgent necessity is a little first aid, a little cessation of the killing. I don't know how many young men in different parts of the world have been deliberately and scientifically murdered during the writing of this protest. England alone, who has been criticised for her delay in exposing her youth to the slaughter, is having about half a million of her best citizens stabbed or pierced or crushed or mutilated or poisoned or torn to pieces in one year[64] of modern warfare. And life is not the only instrument of vital progress that is being thrown away. Britannia has beaten her trident into a shovel, and with it is shovelling gold; and not only gold, but youth and love and happiness into the deep sea. The belligerent nations are frantically engaged in destroying two thousand years of education and all the accumulated capital of humanity. Only the enemies of civilisation, the sellers of arms and the sowers of hatred, are growing rich on its ruins. It is impossible to deny that the longer the war continues the greater will be the subsequent sufferings, spiritual and material, of every nation engaged. It is impossible to maintain that any nation or class or individual will be any better in any respect for the Great War, with the single exception of that parasitic class who, as a class, and therefore perhaps not consciously, are chiefly responsible for its inception. We must have Peace first and congresses afterwards. The survivors of civilisation cannot discuss a lasting settlement while they are still under fire.


[Footnote 64: The total British casualties from the beginning of the war till July 18, 1915, were given as 321,889, of whom 61,384 were killed.]

Sec. 2

German Responsibility for the War

Nor is it necessary to continue the slaughter while we argue about which belligerent must bear the chief responsibility for the outbreak. The dialectical exercises of the German Chancellor and Mr. Asquith are so futile that they remind us only of two naughty children who drag out their squabble with stubborn outcries of "He began it." The first consideration is to stop fighting. Such academic discussions are necessarily endless, for the simple reason that every nation has its faults, to which criminal motives can always be attached: every nation has its fools, whom its enemies can describe as typical representatives. The question of responsibility for the Great War must be left to the historians of the future. I am quite confident (though even Viscount Grey or Professor Gilbert Murray cannot prove) that they will hold Germany responsible: but I am equally confident that the blame they throw on the nation responsible for the war will be less pronounced than the praise they will reserve for the nation which first has the courage to speak of peace. My belief in Germany's responsibility is based largely on German apologetics and strengthened by the evidence of commercial conditions in Germany before the outbreak. Professor Millioud, for instance, has shown that "German industry was built up on a top-heavy system of credit, unable to keep solvent without expansion, and unable to expand sufficiently without war."[65] Or if a good working test of German responsibility were needed it would be sufficient to point out that no nation innocent of aggressive intentions would have drafted such an ultimatum as that which Austria, with German connivance, sent to Serbia; and that no nation anxious for war would have drafted such a conciliatory reply as that which Serbia returned to Austria by Russia's instructions. It is in fact clear that as long ago as 1913 Austria had determined to crush Serbia, and that in 1913 that determination was only postponed; and postponed not, as we thought at the time, by the tact of Lord Grey at the Conference of London, but only by Italy's refusal to join in the adventure, as we now know from the revelations of San Giuliano and Salandra. Similarly, knowing as we do that England is no exception to the rule that no imperial nation can be wholly compact of righteousness, we might hesitate to accept The Times' version of British innocence, and we might hesitate to accept Lord Bryce's report on the German atrocities in Belgium, knowing as we do that it is based almost entirely on the hearsay evidence of refugees who would be anxious to distinguish themselves as witnesses from the general ruck of destitution; but it happens that the general charges of German aggressiveness and German brutality are fully corroborated by German literature.[66] Unfortunately these distinctions between brutal and chevaleresque methods of warfare remain only questions of method; they concern manners rather than morals, and are as irrelevant to our hopes for the abolition of war as the questions of diplomatic method already mentioned.[67] Equally irrelevant, in any discussion of the possibility of substituting "compulsory arbitration" for war, is the attempt to distinguish between aggressive and defensive war, or to throw all the blame of aggression on either of the two belligerents; for the simple reason that each belligerent will perhaps never believe and will quite certainly never admit that his own intentions were anything but defensive or altruistic.[68] The locus classicus for such protestations of innocence occurs in the Italian Green Book, where Austrian diplomats may be found declaring, with every appearance of sincerity, that the invasion of Serbia was a purely defensive measure. And in a sense, in such a well-armed continent, every aggression is indeed a fore-arming against the future. It might also be suggested that the crime of aggression is an offence not against an individual but against the peace of the community: and until the European community is constituted the guilt of such a crime cannot be brought home to either of the belligerents.


[Footnote 65: The Ruling Caste and Frenzied Trade in Germany, by Maurice Millioud, Professor of Sociology in the University of Lausanne. (1915.) Reviewed in the Manchester Guardian by R. C. K. E.]

[Footnote 66: All that we need know, for instance, of German military conduct in Belgium is contained in the following communication made to the Koelnische Zeitung by Captain Walter Brum, adjutant to the Governor-General of Belgium, who may be presumed to know the inner history of these appalling transactions:—

"The principle according to which the whole community must be punished for the fault of a single individual is justified by the theory of terrorisation. The innocent must suffer with the guilty; if the latter are unknown the innocent must even be punished in their place, and note that the punishment is applied not because a misdeed has been committed, but in order that no more shall be committed. To burn a neighbourhood, shoot hostages, decimate a population which has taken up arms against the army—all this is far less a reprisal than the sounding of a note of warning for the territory not yet occupied. Do not doubt it; it was as a note of warning that Baltin, Herve, Louvain, and Dinant were burned. The burnings and bloodshed at the opening of the war showed the great cities of Belgium how perilous it was for them ..." etc.]

[Footnote 67: Chapter I, Sec.Sec. 9-11.]

[Footnote 68: See below, note on p. 113; and compare Brailsford, The War of Steel and Gold, p. 22, on "preparations which are always supposed to be defensive," and p. 264, on the methods used to support the plea that large navies are purely "defensive."]

Sec. 3

The Value of German Culture

The question whether Germany is actually attempting or would be justified in attempting to impose her culture on the rest of Europe; or whether England has good reasons for the limitation or suppression of German culture, is another side-issue. German culture (in Matthew Arnold's correct use of the word, meaning, that is, the average of intellectual and social civilisation), has not on a general inspection much to be proud of. The modern literature of Germany is largely a transcription of Russian, French and English authors, and it is significant that among foreign authors the widest success is reserved for purveyors of le faux bon, writers whose work is distinguished by its spirited failure quite to attain the first-class.[69] The most promising of modern authors writing in the German language, Schnitzler, is an Austrian Jew. Hauptmann, the most distinguished and original of German dramatists, has for thirty years been writing plays which would pass for imitations of Mr. John Galsworthy's failures. Sudermann's style reminds one of a snail crawling over the Indian lilies which he describes.... Germany, it is true, has reason to be proud of her theatres, but that is a matter of State enterprise, rather than an indication of national culture. The German State has been efficient enough to perceive that good theatres are a fundamental necessity of national education, and that good theatres, owing to the excessive rents they have to pay, can never be kept going without a State subsidy. But these admirable theatres can hardly be called the vehicles of a high native culture. Their famous Reinhardts are more efficient only because more acquisitive than our own Jewish impresarios. The ideas they have acquired are chiefly Russian or English: and they have profited by the ideas of Granville Barker and Gordon Craig in order to produce the plays of Shakespeare and Shaw—(just as industrial Germany profited by the ideas of Bessemer[70] and Perkins). Germany's claim to artistic vitality, to genuinely original culture, can be supported only by a certain distinct excellence in sculpture and caricature, two arts which often seem to go hand in hand, perhaps because both are based on a precise simplification of form. But for the activity of a small band of sculptors and caricaturists centred for the most part in Munich,[71] we might be content to regard Germany not as a fount of culture but rather as one of the world's workshops, a well-organised ergastulum for dealing with the drudgery of modern civilisation, for manipulating secondary products and extracting derivatives, a large factory for the production of dictionaries, drugs and electrical machinery.[72]

The extraordinary efficiency of Germany, as a workshop, is not due to any intellectual pre-eminence of the nation as a whole. It is most clearly and emphatically due to the fact that the German autocracy, whatever its political iniquity, has had the intelligence and the national solidarity to choose its business men from among the brains of the community. In Germany any man of conspicuous intellectual capacity may be picked out, roughly speaking, and assigned to the direction of a particular industry. In England we achieve inefficiency by the contrary process, and are only willing to regard a man as capable and revere him as an "expert" if he happens to have been occupied exclusively for a certain number of years in the narrow routine of a particular subject. This pernicious fallacy of the "Expert" is actually preached in England as a means to the very Efficiency which in fact it almost invariably excludes. It is commonly assumed that no man can write a good play unless he has been a bad actor, or that a retired admiral, quite incapable of grasping any general idea that was not popular in the Navy twenty years ago or in the smoking-room of his club, would be better able to direct the affairs of the Navy than Mr. Winston Churchill or Mr. Balfour.[73] There is a similar outcry for a government of "Business Men," although anyone who happens to have heard a couple of average business men discuss a problem of their own business in one of their own offices will hardly be able to deny that a capable poet and a capable painter would have settled the question in a quarter of the time. Instead of superstitiously believing that only "Business Men" can be efficient, Germany picks out her business men (and her bureaucrats) for their general efficiency. She has attained efficiency by abandoning the fallacy of the Expert in favour of the maxim of Confucius—"the Higher type of man is not like a vessel which is designed for some special use."[74]

But from the fact that German industry and German theatres are better managed than our own it does not follow that there is any natural or national antagonism between England and Germany. The real hatred of Germany if it exists in England at all should be found among what it is becoming the fashion to call "the intelligentsia." Such a purely intellectual hatred of the sentimental melodrama of Faust and of the semitic luxuriance of Wagner and Reinhardt is not likely to become a democratic motive in England. Here brains are always unpopular, and Park Lane will never be stormed by the mob until it is inhabited by the Bernard Shaws, the Lowes Dickinsons and the Bertrand Russells, instead of by German financiers.

There is no national hatred between England and Germany. The two peoples are natural friends. Even the men in the trenches (or perhaps I should say particularly the men in the trenches), fraternise with their opponents whenever they get the chance.[75] Even now a press campaign of a few months would suffice to make Germany popular in England; and if that were ever to happen, which is not improbable, only the "intellectuals," who are most strongly opposed to this war, would still find much to dislike, but not to fight about, in the national culture produced by the German character.


[Footnote 69: E.g. Oscar Wilde and Artzibashev.]

[Footnote 70: "The whole industrial expansion of Germany dates from the introduction of the Bessemer process in 1879, by which its supplies of iron became possible to work at a profit."—Bertrand Russell.]

[Footnote 71: It is unnecessary to refer at length to the world-famous caricaturists of Simplicissimus, although it may be noted that the best of them, Gulbrannson, is a Norwegian, while his chief rival, Heine, is a Jew. Munich sculptors whose names might be mentioned are Hildebrand, Taschner, Hahn, and Wrba.]

[Footnote 72: Even such scientific achievements as those of Ehrlich and Ostwald should be regarded as results of regulated industry and diligent experiment.]

[Footnote 73: Another instance of the fallacy is the quite unjustified prejudice in the Army in favour of "Regular" officers.]

[Footnote 74: The foundation of German business efficiency not on the practical science of the specialist but on theoretic and general mental exercise is further illustrated by the great and increasing prevalence of Latin and Greek in German education ... while again our own "Business Experts" are reversing the process. The passages that follow are quoted from a letter of Dr. Rice Holmes in The Times of August 11, 1916.

"In German schools not only are classics taught more systematically and more thoroughly than in all but a few of our own, but they are learned by a greater proportion of the population; and, moreover, the hours devoted to natural science in those schools in which it is taught are fewer than in our public schools.... Since 1903 the number of German boys receiving a classical education has steadily increased. In 1904 there were 196,175 pupils in schools (Gymnasien and Realgymnasien) where Latin is compulsory, of whom 153,680 belonged to the classical schools (Gymnasien), and therefore learned Greek as well (W. Lexis, Unterrichtswesen im Deutschen Reich, ii. 218); in 1911, as Mr. R. W. Livingstone has shown (The Times Educational Supplement, April 4, p. 49, col. 2), the corresponding figures were 240,000 and 170,000; and in 1908, 'out of a total of 31,622 students entering 18 out of 21 German universities (Munich, Erlangen, and Wurzburg not reporting), ... only 7-1/2 per cent entered without Latin or Greek' (Professor Francis W. Kelsey, Latin and Greek in American Education, 1911, p. 43). "Moege das Studium der griechischen und roemischen Literatur immerfort die Basis der hoeheren Bildung bleiben." So wrote the greatest of the Germans; and the countrymen of Goethe, whose genius was scientific as well as poetical, have not forgotten his words. On the other hand, in the modern schools (Realgymnasien and Oberrealschulen) only a small fraction of the time-table—from two hours a week (out of twenty-five) to six (out of thirty-one)—is devoted to natural science. To anyone who has read Matthew Arnold's Higher Schools and Universities in Germany, or Dr. M. E. Sadler's The Realschulen in Berlin, or who is acquainted with the opinions expressed by Helmholtz, A. W. Hofmann, Bauer, and other 'eminent scientific professors,' it will not appear paradoxical that the object of thus restricting the hours devoted to the teaching of natural science in schools is to promote the scientific efficiency of the German nation. It was with this object that by the regulations published in 1901 the time devoted to Latin in the Realgymnasien was increased. And those who do not learn natural science learn what for the nation is equally important—the value of scientific method."]

[Footnote 75: The Daily News, October 20, 1915:—

"A pathetic story is told in the Vorwaerts by Herr Adolf Koester (who acts as war correspondent for the German Socialist Press) in connection with the recent fighting at Hooge. A German soldier told him of a young Scotsman whom he had killed with a hand-grenade in whose pocket he had found a little pocket-book:—

"'We looked through the booklet. It contained postcards from the front, from home, from a sister and from a sweetheart—photographs from the battlefields of brave soldiers and from home. There was also a small amateur photograph, rather badly made, of a young girl sitting at a typewriter. She had blonde hair and on the back of the photo she had written: "Look at the waves of my hair and note also how very diligent I am" (English in the original). One of us asked the soldier to give him this photograph. But he replied: "You can take the whole book, photos, postcards, etc. But this picture I will keep in memory of my friend." By "his friend" he meant the Scotsman whom he had killed by his hand-grenade.'"]

Sec. 4

The Manufacture of Hatred

But if there is no natural hatred between the two belligerent protagonists, there is a feverish production of the artificial variety. Indeed this diligent manufacture of hatred is probably the most demoralising result of warfare, particularly disastrous in its ethical effect on the individual. It proceeds by the ordinary methods of deceit, suppression of the true and suggestion of the untrue, and by means of the newspapers this process of moral degeneration is sometimes actively directed, sometimes only permitted or encouraged by the Governments concerned. The London press is always ready to swallow the pathetic fabrications of unscrupulous refugees, and publishes with joy any Rotterdam rumour about German bestiality; but refuses to print any report however authentic which ventures to suggest that the Germans are as human as ourselves. There was, for instance, a Canadian woman, Dr. Scarlett-Synge, who under the aegis of her medical diploma, returned from Serbia through Germany, and discovered that some of the German internment camps are not as bad as they are commonly believed to be. Whatever her qualifications and opportunities for forming a correct opinion, and they happen to have been particularly good, there is no doubt that this woman's report was of the highest interest. Yet not a single daily paper in England would consider its publication, on the ground presumably that it might reduce the national inflammation and thereby "prejudice recruiting." As if true patriotism, sane and lovely, had anything to do with the pathological condition of hatred. "Recruiting be damned," says the patriotic philosopher, "odium nunquam potest esse bonum."[76] The method of distortion is also abundantly used by journalists of both parties. German hatred of England has often been stoked up by isolated mistranslations of sentences from The Times, and English and French journalists have not been slow in following the German example. It is said that after the fall of Antwerp the Koelnische Zeitung announced that "as soon as the fall of Antwerp was known the church bells in Germany were rung," a harmless message which was successively distorted by the Matin, the Daily Mail, and the Corriere della Sera, until it finally reappeared in the Matin in the following form: "According to the information of the Corriere della Sera from London and Cologne it is confirmed that the barbaric conquerors of Antwerp punished the unfortunate Belgian priests for their heroic refusal to ring the church bells by hanging them as living clappers to the bells with their heads downwards."[77]

The Manufacture of Hatred is unfortunately become a part of the Nationalist Movement in nearly all modern European States. The spurious Nationalism which is the result not of race but of education, depends for its existence almost entirely on so-called ethnological propaganda and continues to thrive by the cultivation of two propositions, neither of which is true: that all the members of one national group are racially different from all the members of the neighbouring group; and that this racial difference naturally and necessarily and properly implies the mutual hatred of the two nations. They proclaim, in fact, that certain nations are the "natural enemies " of certain others, by hating which they are only fulfilling the national function of self-realisation. By such arguments, which have no genuine ethnological foundation, the false prophets of nationalism are filling Europe with the racial prejudice of artificial Kelts, artificial Poles, and artificial Teutons. Of course race hatred between Slav and Teuton is no more "natural" than family hatred between Jones and Robinson; and even if it were, even that is if the cultures of two neighbouring races were mutually exclusive, it could still be argued—as it must in any case be argued—that no nation is racially pure. The last "Pole" I met proudly professed that the hatred of Russia was in his blood. Yet he was born in Bessarabia, and it was therefore not surprising that his facial type was distinctly Roumanian; he came, that is, if race means anything at all, of a Graeco-Latin stock, and his hatred of Russia, which seemed to be the beginning and the end of his programme of "Polish nationalism," was the result of a few years of neglected education. Half the conflicting "Nationalisms" of Europe are programmes of artificial hatred, the propagandists of which may actually be of the same blood as their opponents; a single generation suffices for the manufacture of the racial enthusiast, which is often completed by a modification of the family name. Even Greeks and Bulgars are frequently of common descent. When a Macedonian village changes hands the Greek Karagiozes has been known to develop into the Bulgarian Karagiozoff; and a Mazarakis will boast a racial incompatibility with his second cousin Madjarieff. The same process for the manufacture of nationalism may be detected at the other end of Europe: at Mons of glorious memory there was a Walloon with the good old Walloon name of Le Grand, whose grandfather had been an equally enthusiastic Fleming with the good old Flemish name of De Groodt.

True nationalism may indeed be differentiated by the absence of this artificial element of ethnological hatred. True nationalism is simply the feeling for the small independent community, a movement for the autonomy of the local group. No true manifestation of the nationalist movement in Europe is ever opposed to other nationalisms; but all alike are involved in a desperate political conflict with their common enemy Imperialism.


[Footnote 76: Spinoza, Ethica, IV, 45.]

[Footnote 77: Labour Leader, March 30, 1916, quoting an address by Mr. Arthur Ponsonby, M.P.—I have not been able to verify these references, so I give the story only as an example of the method of progressive distortion, and not as one that actually occurred, though it may have done so.]

Sec. 5

Imperialism the Enemy

Imperialism, on the other hand, is the feeling for large dominions and is very often only an unreasoning lust for the possession of territory:[78] surviving perhaps from the time when the land of the community was regarded as the reserved hunting-ground of the tribal chief, or at least as the private estate of the national monarch. But in so far as this passionate desire for extending the superficial territory under the central government is a reasoning desire, in so far that is as attempts have been made to justify by retrospective theories the almost instinctive achievements of painting the map red, it is fairly clear (although the issues have been confused by altruistic and Kiplingesque but not by any means unfounded views about the White Man's Burden) that Imperialism is based on the insatiable claims of over-productive commerce. Commerce at any rate is the ex post facto excuse for the foundation of the British Empire, and if it can no longer be pleaded as a reason for the maintenance of the British Empire, it is simply because the British Empire is no longer an empire, but for the most part a federation of autonomous states.[79] But Imperialism has only been scotched by the unconscious wisdom of English political development. It still unhappily survives not only in the intermittent demand for the acquisition of fresh colonial territory, but also, in its crudest form, without even the shadow of an excuse commercial or altruistic, in the continued subjection of Ireland to English rule. We must not be surprised if the imperialistic elements of the State receive after the war a new lease of life from the mutual encouragement of commerce and militarism.

The commercial classes of course support Imperialism because, with an obtuseness permitted only to our "business men," they believe that the acquisition of more colonies still means the discovery of new markets.[80] They have not yet realised that nowadays all markets are practically open markets, and that no tariff can effectively exclude goods for which there is any demand, for the simple reason that an effective demand cheerfully pays an increased price. All nations in fact stand to share fairly the commercial advantage of each other's colonial markets: and it might even be shown by a little simple book-keeping that the particular balance any nation gains from trading with a colony of its own must be debited with the expense of governing that colony. In short, the commercial excuse for Imperialism is actually obsolete. Yet commerce continues to support Imperialism, and although the original reason for this support is no longer valid, it is still, unconsciously perhaps but very methodically, serving its own interests by this support, in so far as Imperialism involves militarism (or "navalism") and so leads to the probability of war. But even if the commercial reasons which constitute the only possible excuse for Imperialism were still valid, it would still remain equally valid and much more important that Imperialism is bad in itself, the enemy of liberty and the begetter of arrogance.

Imperialism is bad on general grounds because it implies a centralisation of authority which violates the natural rights of nationalities. A nationality, as has already been suggested, means not necessarily a pure racial enclave, but simply a small local group, in the formation of which similarity of "race," religion, and culture will not be ignored but will naturally be considered as modifications of primarily geographical boundaries. The right of nationalities to local autonomy, to deal again only with the simplest general reason, is based on the idea of democracy, the exercise of a political voice being regarded as a natural and inalienable right of the free citizen. Democracy means representative government, and representative government simply does not work in a large and mixed community of more than twenty millions.[81] Hence the right of nationalities to local autonomy is fundamental, and is inconsistent with Imperialism as such.

Imperialism is bad because it is based on conquest, implies a "subject race," and sooner or later will have to be maintained by war. It breeds a conquering and commercial spirit, which is never satisfied unless it is carrying some one else's burden (at a high freight). The imperialist plutocracy will then find itself so much occupied with other people's affairs that it will be neglecting domestic politics altogether: and this neglect will be the more disastrous in so far as poverty and servitude will have increased at the same rate as luxury. The citizens of an Imperialist state will be unable to control their commercial masters, and, as Rousseau said of the English, will soon find themselves a nation of slaves[82]: and that not only because a policy of conquest is incompatible with democracy; but also because the lust of conquest and the arrogance of


[Footnote 78: H. N. Brailsford (The War of Steel and Gold, p. 125) speaks of an "indifferent democracy." Unhappily our democracy is not indifferent to Imperialism, for it is misled to believe that mere expansion is somehow grand and good; the only geography it learns at school is miscalled "patriotic" because it is designed to encourage this belief.]

[Footnote 79: I.e. as a real "Empire," the British Empire was a failure, as all Empires must be. It has been a success since it ceased to be an Empire about a hundred years ago. Cf. Professor H. E. Egerton's remark:—

"The British Colonial Empire of to-day is not the Empire which was the outcome of seventeenth-century methods. So far as the colonists themselves were concerned, English colonisation (in the seventeenth and eighteenth centuries) was a complete success, but from the point of view of the mother country it was a failure, and the rock on which it foundered was the same rock which lost America to Spain and caused Canada to acquiesce in separation from France."]

[Footnote 80: I am ashamed to say that when I wrote these chapters I had not read Mr. H. N. Brailsford's War of Steel and Gold. But Mr. Brailsford's brilliant examination of the connection between War and Finance is quite consistent with my supplementary theory of War and Trade. "Trade supplies no explanation of Imperialism," says Mr. Brailsford (p. 75). It does, in so far as Traders support Imperialism because they think it is good for Trade: while financiers, as Mr. Brailsford shows, support Imperialism because they know it is good for investments.]

[Footnote 81: "What is vital to any real Democracy in a densely-peopled, economically-complicated modern State, is that the Government should not be one. The very concentration of authority which is essential in war is, in peace, fatally destructive not of freedom alone, but also of that maximum individual development which is the very end and purpose for which society exists."—Sidney Webb, Towards Social Democracy?, 1916.]

militarism acquire strength with each fresh licence until the community as a whole is quite unable to control its own baser passions—a condition which more than any other merits the name of servitude.[83] Imperialism is a form of political corruption in which a nation is consoled for its own slavery by the pride of enslaving its neighbours. The attainment of permanent peace connotes the abandonment of Imperialism.


[Footnote 82: "Les Anglais veulent etre conquerants; donc ils ne tarderont pas d'etre esclaves."—Political Writings, C. E. Vaughan, I, 373.]

Sec. 6

Possible Objects of War

If the nations are prepared to abandon the claims of Imperialism there will be very little else left to fight about. An examination of the documents connected with any war of the last century shows that the object of a belligerent in prolonging the agony is usually expressed in vague language that can be dissolved by a little analysis. Sometimes a government will propose, in the interests of peace and good government, to crush the enemy's aggressiveness by a purely defensive aggression, an excuse for bloodshed which only the most fanatical pacifist could confuse with Mr. Asquith's blunt watchword of "crushing German militarism." The logical fallacy of such an excuse which is almost invariably pleaded by powerful belligerents,[84] a fallacy of which no one could wish to accuse Mr. Asquith's solid intellect, lies (quite apart from any question of the priority of aggression) in the fact that any attempt to crush by force the Will to Conquer inevitably breeds more militarism. The tag about taking a lesson from the enemy, fas est et ab hoste doceri, is only one half of the unhappy truth that the fighter is fatally bound to acquire his enemy's worst characteristics. The object undertaken apparently in the interests of democracy can only be accomplished by the wholesale suppression of democratic rights, and involves an organised manufacture of imperialistic emotion which ends by delegating the authority of the State to a reactionary triumvirate of bureaucracy, jingoism and vulgarity (or Tory, Landowner and Journalist). The guarantees of democracy, the rights of free thought and free speech, every sort of civil liberty and every defence against the servile state, will all have to be suppressed in the interests of the nation at war. It is the old story of the conversion of Thais by Paphnutius: the preacher snatches lovely Thais from the burning, but himself is damned—"si hideux qu'en passant la main sur son visage, il sentit sa laideur." A is white and finds it necessary to whitewash B, who is black: after several years of hopeless grey, A finds that he has indeed put some very satisfactory daubs of whitewash all over B, but that his own coat has been blackened in the course of the struggle. It is as if a gardener, having heard of the cannibalistic habit of earwigs, proposed to exterminate the earwig in his rose-garden by importing a special army of five million earwigs collected at great expense from the surrounding country.

Other belligerent governments will raise the plea of checking the spread of a hostile and dangerous culture; a plausible because apparently philosophical justification of war as the only means of extirpating a heresy that might pervert the whole future of European civilisation. Unfortunately such a moral effect, such a "conversion by shock," could only be accomplished by a very sudden, complete and shattering victory; and it is now beginning to be recognised that spectacular triumphs are not to be expected in modern warfare. But even if it were as possible by violence as it might conceivably be desirable to extirpate or even to limit the propagation of a particular form of mental culture, the achievement would certainly not be worth the cost to the unhappy survivors and their posterity. It would indeed be a crime against humanity to eliminate the better part of the younger generation, the flower of human brains, in the monstrous pedantry of attempting to correct an intellectual error. For the risks of modern warfare are not ordinary. It is not sufficiently realised that in six months of offensive tactics under modern conditions no man in the front line has more than one chance in a million of escaping death or mutilation.

There may remain the plea that a prolonged campaign is necessary in order by exhaustion to compel the enemy to evacuate some territory that he may have wrongfully occupied. The inevitable answer to such a plea would be that if a war had arrived at a stage in which there was a clear possibility of coercing the enemy by a process of exhaustion, that possibility, if it were well-founded, would certainly not have escaped the intelligence of the enemy, who would consequently be prepared to save his face by coming to terms. The evacuation of the occupied territory, or whatever it is that was to be achieved by the coercive exhaustion of another year or two of battle, might then be obtained by negotiation at once, and at the cost of a certain amount of paper and ink, instead of being forced on a revengeful and embittered opponent by the expensive process of killing young men, a process which has the disadvantage of working both ways.

The conclusion of these general considerations seems to be that all the arguments that are likely to be put forward in the course of a war in order to excuse and ensure its continuation, are only excuses to gain time, put forward in hope that the chances of a further campaign may enable the government concerned to retrieve some apparent advantage out of the disastrous muddle through which they drifted into the first declaration of war. Having drawn the sword in a moment of embarrassment, they have now jolly well got to pretend that it was the right thing to do, and are not going to sheathe it till they see a chance of proving that they are glad they drew it. In short, there comes a point in all modern wars in which the belligerents are fighting for nothing at all, except for a more or less advantageous position from which to discuss a way to stop fighting.[85]


[Footnote 83: Spinoza, Ethica, IV, praefat. ad init. Humanam impotentiam in moderandis et coercendis affectibus servitutem voco.]

[Footnote 84: See above, Sec. 2, on "defensive" war, and compare a passage from Mr. C. Grant Robertson's letter in The Times of August 15, 1916:—

"Bismarck repeatedly and explicitly in the Reichstag justified the wars of 1864, 1866, and 1870 as 'defensive'—i.e. as not 'willed' by Prussia. On the contrary, they were wars 'forced' on a peace-loving State denied its 'rights' by Denmark, Austria, and France. The argument, briefly, on Bismarckian principles is this. Prussia's policy is an 'Interessenpolitik'—a policy of 'interests.' An 'interest' confers a 'right.' The satisfaction of 'national interest' is therefore the achievement of 'national rights.' If these 'rights' can be achieved by a compromise—i.e. by the complete surrender of Prussia's opponents to the demands based on these 'rights'—that is a proof of her peace-loving nature. But if her opponents refuse, then the war by which the 'rights' are secured is a war 'forced' on Prussia. She has not 'willed' it. It is a 'defensive' war to prevent the robbery of her 'rights' by others; Bismarck, not without difficulty, converted his Sovereign to this argument. In each case—1864, 1866, 1870—William I was ultimately convinced that Denmark, Austria, and France were resisting the 'rights' of Prussia, and that war to secure them was 'defensive,' 'forced' on the King, and just. The successful issues confirmed William's conscience and proved that Bismarckian principles had the Divine sanction."]

[Footnote 85: This attitude is well illustrated by the history of the Crimean War. In January, 1855, "peace seemed impossible until some of the disgrace was wiped away, and the pacificists, Cobden and Bright, were burned in effigy.... The prolongation of the war called out no protest from the public." Yet "the popular war produced an unpopular peace." When after another year of fighting our French allies finally insisted on peace, "'there was no indication,' said a Frenchman, 'as to which was the victor and which the vanquished.' Reviews and illuminations could not obscure the truth; Britain had sacrificed lives and treasure and obtained little in return."—Alice Green's Epilogue to J. R. Green's Short History of the English People.]

Sec. 7

Physical Force in a Moral World

The explanation of all this seems to lie in the simple fact that it is for ever impossible to solve questions of moral or political principle by the expenditure of physical force. Anyone at all conversant with philosophical thought, if I may adopt a simile used by Mr. H. G. Wells, "would as soon think of trying to kill the square root of 2 with a rook rifle." Physical violence can only solve purely physical problems. But as man no longer exists, if he ever did exist, in the completely unsocial "state of nature,"[86] the relations of one individual with another are no longer purely physical: their position as members of one society has given them a moral relation, questions affecting which can only be settled by reference to the judgment of the society as a whole. Within the limits of the State this fact is already clearly recognised by the common voice of public opinion. If Smith quarrels with his neighbour Robinson, because Smith's old English sheep-dog is suspected of having scratched up Robinson's lawn, and Smith says the poor dog would never do such a thing, and anyhow Robinson had no business to leave his back gate open, while Robinson declares that that brute is becoming a damned nuisance, and so provokes Smith to express a hope that now perhaps that grass of Robinson's won't want so much godless mowing on Sunday morning: if two neighbours, in short, have a difference of opinion they both know perfectly well that the rights of the argument can never be decided by a free fight in the middle of the road, even if one of them happens to be a heavy-weight champion. Moreover, if they do come to blows it is perfectly certain that the opinion of the whole road will be against them, and that the Law, to which they might have appealed in the first instance, will intervene as the embodiment of that opinion. The street fight is clearly recognised as not only futile but immoral; it not only settles no questions of principle but it constitutes a breach of the moral relation between two members of one community; it is become merely a rather sordid exhibition of irrelevant physical facts. The average citizen of England or Germany would never think of encouraging a fight between two sides of a street: why does he not recognise with equal directness the futility and immorality of a fight between two sides of a continent?[87] It is only because public opinion has not yet effectively realised that the moral sphere includes not only the citizens of one city and the cities of one nation, but the nations of a continent and the continents of the world. But it is a fact that the moral sphere does include the whole of humanity, who are colleagues in the task of civilisation, inspired by the twentieth-century corollary of gloomy nineteenth-century religious agnosticism, the cheerful corollary that it is Man's duty rather than God's to improve the habitable earth. The truth of this fact is already recognised by the better thought of all the nations concerned, and there is no reason why it should be withheld any longer from the people who suffer most by its suppression. As soon as public opinion is allowed to grasp this truth—and it is only too willing to clutch at any generalisation that is emotionally encouraged by its governors—there need be no difficulty at all in embodying that opinion in some form of international government: for, as Rousseau might have said, where there's a General Will, there's a way. As a matter of fact the way has already been admirably mapped by several parties of surveyors.[88]

On the constitution of an International Authority, even on the general aspiration of Europe towards some form of supernational judicature, war will cease to have any more attraction or justification than the street brawl. For war is actually in the community of nations what the street fight is between individual citizens. War is futile, because it can settle no questions of principle; it is immoral, because it is an offence against the membership of a moral community. There is abundant evidence in Blue Books and in the overt acts of Germany that war releases and encourages the elementary brutality of the individual which is normally inhibited by the consciousness of social relations. I have tried to show in a former chapter that war serves the lowest interests of a parasitic commercial class at the expense of the better part of the community. War fosters at the same time the basest elements in the individual, and the basest individuals in the community. War is a crime against the peace of the people.


[Footnote 86: Supra, I, Sec. 5.]

[Footnote 87: Mr. Gilbert Cannan has noted somewhere that "a 'straight' fight between Great Britain and Germany will be like a fight between two drunken women in a slum."]

[Footnote 88: See, for example, the quite definite and complete report on International Government, published by the Fabian Society (1916): and compare Mr. J. A. Hobson's book Towards International Government, and Mr. H. G. Wells' The World Set Free.]

Sec. 8

Imperialism and Capitalism through War and Trade the Enemies: Socialism to the Rescue

It is the most remarkable fact in political bibliography that all the Utopias worth mentioning have been written by Socialists. The fact is not surprising to anyone who has considered that the Socialists are the only political party in the State who ever attempt to look more than a dozen years ahead. The ordinary politician steers the ship by keeping a look-out for rocks and squalls, and does not trouble to make for any distant landmark. Only the Socialist looks ahead to a harbour attainable perhaps in a hundred years, from which a happier voyage may be begun. Only the Socialist seems to realise that in the world conceived, as modern thought must conceive it, as a continuous process, Government rather than Trade, Science and Art rather than Industry are the chief activities of the citizen. Government is nothing less than the organisation of the State to take its place among the other States of the world. It includes of course education, being itself a form of education: for the State must be educated to fulfil its duty to other States, just as the citizen must be (and more or less is) educated in duty towards his neighbour. The first task of education is naturally to eliminate violence, to inhibit, by inducing in the young citizen the recognition of mutual rights, those acts of ferocity by which primitive man instinctively expresses his solipsistic passions.

But where, it may well be asked, is the authority which is to begin the neglected education of the nations of Europe? Where is what Mr. Boon (or Mr. Bliss) would call "the Mind of the Race"? At present the only body of doctrine with any conception of the nature of government for the collective benefit of humanity is International Socialism. It is the International Socialists who must lead the attack on War, if only because the only instigators of war themselves form an international body in so far as the only occasions for war are contrived by the Imperialists and Capitalists who are to be found in every nation. To Socialism belongs the duty of educating Europe against Imperialism, as it has begun to educate the nation against Capitalism; for Imperialism is only an allotropic form of Capitalism, manifesting itself in the exploitation of fellow-nations instead of in the exploitation of fellow-citizens. The first step in that education must be the fight not only against "private" or profiteering Trade, but against "private" or profiteering War: and "private war" is every war that is not authorised by an International Authority and waged by an International army.

I seem to have heard it said before that there is only one way to break the chains that bind us: and that Amalgamation is the mother of Liberty. The need for the education of Europe is a call to the Trade Unionists and Fabians and Collectivists and Guildsmen of every Nation:


* * * * *



I. The Manchester Guardian, January 3, 1916:


The first full calendar year of war has been a period of unparalleled industrial activity and, generally speaking, prosperity in this country. Heavy losses and bad times have been encountered in a few important industries, but these are balanced by unprecedented profits made by a large variety of industries, whether directly or indirectly affected by the war. One frequently finds that the neutral visitor carries away with him an impression of industrial England as one great living arsenal. That is not surprising, as since July last the Munitions Ministry has erected (or improvised) and started a large number (it is not permissible to say how many) of State munitions works, and it has also mobilised the whole engineering resources of the nation to such an extent that in the first week of December no fewer than 2026 manufacturing establishments had been declared "controlled firms."

But it would be a mistake to suppose that, while war manufactures prospered, all other industry languished and decayed. To prove the contrary and show that only here and there were there heavy losses, we may quote some figures compiled by the Economist, which show that 720 industrial concerns publishing their reports during the first nine months of 1915, and having a capital of L531,678,701, made profits amounting to L52,881,300, or under 2-1/4 millions less than in the previous year (which in the case of almost all the reports was a year before the war).

Dissecting these figures, we find that not only iron, coal, steel, and shipping companies report enormous profits, but that increased earnings were shown by breweries, gas, rubber, oil, and trust companies, and others. The large exceptions which depressed the total profits were textile companies (other than those engaged on war contracts), catering, and cement companies. Shipping leads the van of prosperity owing to phenomenal freight rates, while iron and steel and shipbuilding, as direct and established purveyors of armaments, are close behind. As showing the industrial tendency of the year, one may quote the remarks of a trust company chairman at a recent meeting. Of 150 home investments possessed by his company, he remarked that a hundred had since the war yielded the same as in the year before war, while thirty had paid less and twenty more.

Into the circle of munition producers have been drawn cycle and motor, machinery, electrical, and many other branches of manufacture. Of other industries driven to fever heat by the war may be mentioned woollen and leather factories. Secondary effects of the war also produced a boom in several unexpected quarters. For instance, the high wages earned by war workers, and too generously spent in a vast number of cases, led to a strong demand for cheap furniture, pianos and many types of household goods which in normal times are usually out of reach of the purse of most wage-earners. But one trouble has beset all industries in common—a shortage of labour, which cannot but grow with every increase to the numbers of men drafted from the ranks of productive industry into the army or the munitions works. From all quarters comes the tale of orders, both from home and from abroad, that cannot be accepted. In the case of foreign orders that have to be refused, the labour shortage has what one fears may be lasting consequences. For custom once diverted to America or elsewhere is not easily regained.

2. The Manchester Guardian, March 3, 1916:



The China Mutual Steam Navigation Company (Holt Line) has had a greater year than ever. It has been supposed that regular liners were getting little benefit from the boom in freights, but a profit of L591,005, as against about L294,000 in 1914 and L386,418 in 1913, can only be explained by a very large participation in special war-time gains. The dividend and bonus on the ordinary shares make 106 per cent for the fourth year in succession, and a still larger sum is being kept in hand, L200,000 being put to the reserve, as against L50,000 for 1914 and L100,000 for each of two years before that, and the balance forward is raised from L81,014 to L201,367. Most of the Company's capital, however, only bears 6 per cent interest. The ordinary shares (which we believe are held privately) only amount to a little over L83,000.

3. Pall Mall Gazette, September 24, 1915:


The other taxes are accepted by the public and traders alike as inevitable, but special interest is being taken in the excess war profits tax. That Mr. McKenna is likely to find his estimate of L30,000,000 largely exceeded is admitted. The Daily Chronicle publishes a table in which the City Editor compares the last profits announced by some of our greatest undertakings, covering a considerable portion of the war period in most and some portion of it in all cases, with the average of the previous three years. It will be seen that in every instance the war has brought greatly increased prosperity.

Last Average Profit. Previous Increase. 3 years. L L L

ARMSTRONG WHITWORTH 802,000 624,000 178,000 (Engineering, Shipb., etc.)

WM. BEARDMORE 219,000 185,000 34,000 (Engineering, Shipb., etc.)

JOHN BROWN 586,000 347,000 239,000 (Engineers, Shipbuilders, etc.)

BEYER PEACOCK 83,000 35,000 48,000 (Locomotive Builders)

BRUNNER MOND 824,000 770,000 54,000 (Alkali Manufacturers)

CAMMELL, LAIRD 238,000 147,000 91,000 (Iron, Steel, and Shipb.)

HAWTHORN LESLIE 202,000 102,000 100,000 (Sh'b. & Marine Engin'ring)

KYNOCH'S 153,000 114,000 39,000 (Explosives)

LAMBERT BROS. 142,000 84,000 58,000 (Coal Exporters, etc.)

POWELL DUFFRYN 422,000 279,000 143,000 (Collieries)

SAMUEL FOX 66,000 39,000 27,000 (Engineers)

SPILLERS & BAKERS 367,000 140,000 227,000 (Millers)

VICKERS, LTD. 1,019,000 809,000 210,000 (Eng. and Shipbuilding)

This table indicates that the Chancellor may expect to receive far more than the sum he estimated from the war profits tax.

4. The Manchester Guardian, Feb. 28, 1916:


The tale of colliery war profits is continued by the report of North's Navigation Collieries (Glamorganshire). The output for 1915 was actually less by 87,810 tons (1,141,900 tons against 1,229,710), but the profit was nearly doubled—L130,071 against L65,578. With the L10,496 brought into the account the directors had their biggest total in recent years available for distribution. The ordinary shareholders get 10 per cent and a bonus of 2-1/2 per cent, which is the best payment since the 15 per cent paid for 1907. Advantage is taken of a prosperous year to place L35,000 to the reserve fund, which has been rather overlooked recently, only one allocation of L20,000 having been made in four years. It now stands at L155,000, against L650,000 of share capital. For depreciation, with regard to which item substantial provision is made each year, L15,000 is written off. This leaves L10,567 to be carried forward. The Company has the reputation of being well managed, and its coal properties are regarded as being very valuable. The recently opened St. John's pits are being developed satisfactorily, it appears, a further increase in output being shown.

Despite a decrease in output of nearly 400,000 tons, the Powell Duffryn Steam Coal Company is enabled to show a profit for 1915 of L438,799, as compared with L422,204 for 1914 and L364,421 for 1913. The usual 20 per cent is distributed on the ordinary shares, free of income tax, and last year's allocation of L50,000 to the reserve fund is repeated. In addition, the reserve for income tax benefits to the extent of L50,052, and there remains L120,236 to carry forward. The decrease in output, it should be noted, is due to the enlistment of the miners, and its restoration to the normal and probable increase after the war should balance the decline in profit that may be expected to attend the decreased demand.

5. The Times, May 19, 1916:


Presiding yesterday at the annual meeting of Joseph Watson and Sons (Limited), soapmakers, Leeds, Mr. Joseph Watson said that the company's profits for the year amounted to L122,000, or L19,000 in excess of any previous year's profits. Their turnover had largely increased because they were now supplying soap to France, Belgium, Scandinavia, and a small amount to Spain and Italy. It was not a question to-day of getting orders; it was a question of refusing them. They had at the present time three months' orders on the books.

6. The New Witness:


It is a sinister and deplorable fact—one of the most ironical with which the continuance of the War has yet confronted us—that there has grown up in Great Britain a number of firms and businesses to whom a successful prosecution of the campaign would mean ruin, and who have an actual vested interest in the indecisive continuance of hostilities. This is due entirely to the lack of grip and resolution which the Government have displayed in dealing with the ugly phenomenon of War Profits. We know, of course, what happens to those profits at present. Half is taken by the State: half passes to the firms who are getting "rich quick" out of its necessities. In theory, it is an anomalous arrangement, indefensible in logic, and opposed to every canon alike of justice and of taxation. In practice it works out in the way we have indicated: that certain privileged firms and individuals are amassing huge fortunes out of the gravest crisis through which the nation has passed, and which will pinch us all before it is over.

Let us give some examples of the mammoth profits that some of these concerns are making. There is first of all the famous old English firm of Levinstein—Messrs. Levinstein of Manchester—to be considered. This "all-British" concern has not done badly out of the terrible situation through which we are slowly toiling. While mere vulgar English Tommies have been dying in the trenches or have returned incapacitated to England—to find that their country cannot afford them a pension—Levinsteins have been pocketing several thousands of that country's cash. Levinsteins' are dye-makers, and in 1914-15 they made a profit of L80,000 on a capital of L90,000: a profit large enough to make the mouth of the deceased usurer Kirkwood dry with envy. But, while our legislature passed laws to restrain the usurer in his exactions, the "war profiteer" has no restriction placed on him. His workmen can, in certain cases, be fined or sent to prison if they absent themselves from work, and hundreds have been proceeded against under the Defence of the Realm Act. But the profiteer himself is immune! It is childish to say that the State can recover half of the profit he has wrung from the country's necessity. What right has he to the other half? In the case of Levinstein, this L80,000 profit enables the company to pay 14-1/2 years' preference dividend, to distribute a dividend of 30 per cent on its ordinary shares, and to write off L21,000 for depreciation! It is merely fatuous to pretend, or to endeavour to pretend, that the appropriation of half these profits squares matters between the community and the British firm in question.

As with Levinstein, so with other firms. Messrs. Cammell, Laird & Co. averaged profits of L146,000 for the three years before the war. Since last year those profits have risen to L237,000. Those profits, of course, are subject to war profits taxation. But most manifestly that taxation is utterly inadequate. So it is in the case of Messrs. W. Beardmore, whose profits rose from L184,000 (three years' pre-war average) to L219,000; of the British Westinghouse Co., which rose from L56,000 to L151,000; and of Beyer Peacock's, which increased from L57,000 to L109,000.

In all these cases the deduction of 50 per cent by the Government is entirely inadequate and utterly misleading. It is at once an admission that the firm in question has no right to amass huge profits out of the welter and tragedy of the European War, and that the State is content to stultify itself by surrendering the other half.

Many of these profits have been made by covering rises in raw material far in excess of the actual increases. Many have been wrung from the poor and the needy, who are now being enjoined by the Government to eat less meat. Messrs. Spillers & Baker, of South Wales, increased their profits from an average of L140,000 (three years' pre-war average) to L367,000 in 1914-15. We do not blame them. The rise in price was beyond their control. They could hardly help benefiting. But it is mere madness for the Government to leave them in possession of these vast accretions of wealth. Firms that paid 8 per cent before the war, now paying 22-1/2 per cent (such as Messrs. Richard Dickeson & Co., the Army contractors) are able to pocket tens of thousands that ought to go to strengthen the resources of the nation. Others, like the Mercantile Steamship Co., increase their dividend from 20 per cent to 35 per cent; and some are able to pay dividends actually larger than the capital of the company itself!

It is ludicrous for the Government to allow this condition of affairs to continue. Their course is quite clear. They should limit profits to the average of three years before the war, and add at the most 5 per cent. Anything short of this is a betrayal of the national interests to private firms.

7. The New Statesman, March 25, 1916:

An innocent person might think that when a manufacturing company is faced with an enormous rise in the cost of the principal commodity it consumes, its profits would be diminished. Some law must be in operation which has escaped the attention of economists, for so far from this being the case, what appears to happen is that the profits of manufacturers rise in a greater degree than the price of the raw material. Thus, so far from being hit by the enormous rise in the price of flour, Peek, Frean & Co., the well-known biscuit manufacturers, made a net profit of L107,478 last year, as compared with L99,578 in 1914, and L98,607 in 1913. After paying the usual 5 per cent on the L300,000 of preference shares no less than 25 per cent is paid on the L230,000 of ordinary share capital, which has been issued. This company raised its money very cheaply from the public, which paid 102 per cent for its 4 per cent debenture stock and par for the 5 per cent preference shares. The investing public does not benefit by the big dividend on the ordinary shares. These were never offered to the public, but are privately held.

Another shipping company, sister to the Court Line, mentioned in these notes last week, has issued its report. This is the Cressington Steamship Company, which owns two modern tramp steamers of slightly over 7,000 tons each. The company was very fortunate in that one of these vessels was delivered in February, 1915, it having been contracted for at pre-war prices. The profits for the year amounted to L50,015, as compared with L6,861 in 1914 (when only one vessel was trading). The dividend for the year is 15 per cent, L7,072 is allocated to depreciation, L22,000 for special war profits and income-tax, whilst about L3,000 is being carried forward. The financial position of the company is such that if its ships were sold at L2 15s. per ton, shareholders would receive the return of their capital in full. On present prices, however, they would probably fetch over L15 per ton. The shares are now quoted at 28s.

The Bengal Iron and Steel Company, whose report has also been issued during the week, has had an interesting career; it works large iron ore and coalmining areas in Bengal. At first the company did well, but then it went in for an unfortunate steel venture and fell into arrears with its preference dividend. This was overcome, and during the past few years the company has done well, particularly from its coal business. The report for the year ended September 30th, 1915, shows a working profit of L144,913, as compared with L79,200 during the previous year. This considerable improvement enables the company, after writing off various old items, to place to a general reserve L20,000, and to declare a dividend payable quarterly of 24 per cent on the L224,850 of ordinary shares, which compares with 12 per cent a year ago. By way of a change, the report states that the trading results would have been even better had war conditions not prevailed.


8. The New Statesman, May 27, 1916:

Markets have displayed unwonted cheerfulness during the past week, and all sorts of peace rumours are in circulation. It is more than likely, however, that it is the firmness of the market which is responsible for the rumours, and not vice versa. There is a steady stream of orders from the Midlands and the North, where people are making money, and these have the effect of putting up prices in several of the markets. The Brazilian Funding Loan, which was recommended here on the 29th April at 74, has been noticeably firm, and is now 77-1/4. It still appears to be the cheapest Government Loan. Brazilian securities are attracting more attention, and Brazil Traction Common, which a year ago was below 50, now stands at 64. There has been a large business in Castner Kellner on the working agreement between that chemical company and Brunner, Mond & Co., the shares having jumped four or five shillings to their present price of 69s. 6d. Precisely a year ago they were recommended in these notes at 66s. 10-1/2d. Shipping shares have been exceptionally firm; Court Lines have risen another few shillings to 34s., the large business in them being probably due to the fact that they are one of the few shipping shares which can be obtained. Rubber shares are equally firm. Nobel's Explosive Company has just issued its report for last year, showing a profit of L529,738 after providing for excess profits duty. The dividend is 15 per cent, free of income-tax, or 5 per cent more than last year. This increase in the dividend came as a surprise to the market, and the price of the shares (which are a favourite investment in Glasgow) jumped from 31s. to 38s. 3d.

The profits of the Oceanic Steam Navigation Company (the White Star Line) for last year have attracted a good deal of attention. They were stated as being L1,968,285, as compared with L887,548 in 1914 and L1,121,268 in 1913, which was the Company's record year; but the figure given for 1915 does not indicate the full profit, for it is arrived at "after providing for excess profits taxation and contingent liabilities." Replying to a question asked in the House of Commons by Mr. W. C. Anderson, Captain Pretyman stated that the Company informed him that the profit mentioned was before deduction of debenture interest and depreciation. Captain Pretyman added that the sum divided as dividend was L487,500, the same amount as in the year 1913 before the war. Where people are protesting against large war profits it may, at first sight, appear an adequate answer to point out that a Company is not paying out more in dividends than it did in the year preceding the war. As a statement of fact it is perfectly correct, but it has no bearing upon the amount of profit that has been made, as the following calculation will show. We now know that the 1915 profit shown in the accounts is after allowing for excess profits taxation, deferred repairs, contingent liabilities, debenture interest and depreciation. Since 1913 the Company has increased its debenture issue, and last year had to pay in debenture interest L109,536, as compared with L65,211 in 1914. How much has been placed on one side for depreciation before showing the profits can only be known to very few people, but the amount the Company must have put on one side for excess profits taxation must be at least half a million, and possibly a great deal more. The actual profits for last year were therefore probably in the neighbourhood of three millions, if not more. As indicated above, out of the L1,968,285 shown as profit, only L487,500 is paid out in dividends, the remainder going to various reserves. The dividend works out at 65 per cent, but all goes to the International Mercantile Marine Company, the much-talked-of American shipping trust associated with the name of the late J. Pierpont Morgan, which holds all the Ordinary Shares. The trust was in a bankrupt condition prior to the war, but the present state of affairs is radically altering its position. It must be annoying to the American holders that a large slice of the profits of an American-owned concern has to go to the British Government in the shape of war taxation.

9. The New Statesman, June 24, 1916:

Another firm which has apparently benefited by the war is Ruston, Proctor & Co., the well-known Lincoln manufacturers of agricultural implements. A final dividend of 5-1/2 per cent is declared, plus a bonus of 2 per cent, making 10 per cent for the year, which still allows the Company to place L45,000 to reserve and to carry over L16,300. This dividend is 3 per cent more than was paid last year, and is the highest in the twenty-six years' history of the Company. Shipping shares remain firm, and it is almost impossible to purchase any of the best shares. As an illustration of the profits that are being made, the Nitrate Producers' Steamship Company's accounts for the year ended April 30th last show a gross profit of L404,022, as compared with L151,905 and L135,986 in 1914 and 1913 respectively. The dividend is 25 per cent, free of income tax, L100,000 is placed to reserve, L200,000 to a special fund for excess profits tax, income tax, etc., L30,000 is added to the insurance fund, and the carry forward is increased by some L7000. The Company owned a fleet of ten steamers, which has, however, been reduced to five by the sinking of one last September by an enemy submarine and by the sale of four vessels. A new vessel is under construction, and should be ready for delivery in August. The capital of the Company consists of L200,000 in Ordinary Shares and L200,000 in 5 per cent Cumulative Preference Shares.

10. The New Witness, June 15, 1916:


It is essential that a determined effort should be made to rouse the nation to a sense of the gross and scandalous injustice of the huge profits that are at present being "earned" by certain firms piling up wealth which is really amazing to contemplate. This is not mere empty rhetoric; the figures support the description up to the hilt. Let us take the case of five well-known companies, all engaged in "war work," and see to what account they have turned our soldiers' sacrifices:—


1913 1914 1915


Cammell, Laird 171,700 235,500 301,500

Curtis & Harvey 48,100 77,800 143,800

Projectile 14,000 40,400 192,700

Webley & Scott 9,500 16,400 61,300

Thornycroft 13,000 107,640 267,333 (6 mos.)

These figures can only be described as staggering—staggering, that is, to anyone who cherishes a faint, lingering belief that "equality of sacrifice" is to be a reality and not merely a bitter jest. Look for a moment at the tale that these profits show! The Projectile Company has multiplied its 1913 profit thirteen times over! Five or six years ago its affairs were in so parlous a state that 19s. had to be written off as lost from each 20s. share. Now, as Mr. Charles Duguid reminds us, "it is paying a first dividend of 50 per cent and is returning to the shareholders 3s. 6d. out of the 19s. they regarded as lost." The return on the shares, according to the same financial authority, is 400 per cent!!!

Look at the case of Thornycrofts. The profits for the first half of 1915 are twenty times as big as the profit for the whole of 1913—an increase, as Mr. Duguid reminds us, of 3800 per cent upon the year, a year that will spell blank financial ruin, impoverishment and destitution to the families of thousands and tens of thousands of our fighting men!

Thornycrofts are by no means peculiarly fortunate; Nobels, for instance, have managed to earn quite a tidy little profit. Their net profit for 1915 comes out, we learn, at over half a million sterling (L529,800), exclusive of L213,900 brought forward out of the large profit of the preceding year, and this makes the total amount available for distribution as much as L743,700. Even after paying a dividend of 10 per cent and a bonus of 5 per cent, making 15 per cent, all free of income tax, the Company has still L424,700 unallocated. In its most prosperous year, 1913-1914, the net profit of the Nobel Dynamite Trust did not amount to more than L381,300. We have, we need hardly say, no feeling against Nobels or Thornycrofts or the Projectile Company. We only want fair play in this matter. If this aggregation of profits is not stopped the wealth of England will be in the hands of men who will regard the triumphant conclusion of the War as spelling ruin to themselves and who will see in victory only the cessation of profits that in normal times they have never dared to contemplate.

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