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

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

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

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

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

CHAPTER VII

COULD THE WAR HAVE BEEN PREVENTED?

'But the real irrelevance of all this discussion,' it will be said, 'is
that however complete our recognition of these truths might have been,
that recognition would not have affected Germany's action. We did not
want territory, or colonies, or mines, or oil-wells, or phosphate
islands, or railway concessions. We fought simply to resist aggression.
The alternatives for us were sheer submission to aggression, or war, a
war of self-defence.'

Let us see. Our danger came from Germany's aggressiveness. What made her
more aggressive than other nations, than those who later became our
Allies--Russia, Rumania, Italy, Japan, France? Sheer original sin, apart
from political or economic circumstance?

Now it was an extraordinary thing that those who were most clamant about
the danger were for the most part quite ready to admit--even to urge and
emphasise as part of their case--that Germany's aggression was _not_ due
to inherent wickedness, but that any nation placed in her position would
behave in just about the same way. That, indeed, was the view of very
many pre-eminent before the War in their warnings of the German peril,
of among others, Lord Roberts, Admiral Mahan, Mr Frederic Harrison, Mr
Blatchford, Professor Wilkinson.

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

     'A mighty nation of 65,000,000, with such superb resources both for
     peace and war, and such overweening pride in its own superiority
     and might, finds itself closed up in a ring-fence too narrow for
     its fecundity as for its pretensions, constructed more by history,
     geography, and circumstances than by design--a fence maintained by
     the fears rather than the hostility of its weaker neighbours. That
     is the rumbling subterranean volcano on which the European State
     system rests.

     'It is inevitable but that a nation with the magnificent resources
     of the German, hemmed in a territory so inadequate to their needs
     and pretensions, and dominated by a soldier, bureaucratic, and
     literary caste, all deeply imbued with the Bismarckian doctrine,
     should thirst to extend their dominions, and their power at any
     sacrifice--of life, of wealth, and of justice. One must take facts
     as they are, and it is idle to be blind to facts, or to rail
     against them. It is as silly to gloss over manifest perils as it is
     to preach moralities about them.... England, Europe, civilisation,
     is in imminent peril from German expansion.'[136]

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

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

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

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

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

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

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

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

     'A primary war, largely about food and raw materials: inseparable
     connection of the politics and economics of the peace.'

And his first paragraph contains the following:--

     'The war with many names was in one main aspect a war about food
     supply and raw materials. To this extent it was Germany's fight to
     escape from the economic position of interdependence without
     security into which she had insensibly fallen--to obtain for
     herself independent control of an ample share in the world's
     supplies of primary resources. The war meant much else, but it
     meant this as well and this was a vital factor in its causes.'

His second chapter is thus summarised:--

     'Former international conditions transformed by the revolution in
     transport and telegraphic intelligence; great nations lose their
     former self-sufficient basis: growth of interdependence between
     peoples and continents.... Germany without sea power follows
     Britain's economic example; interdependence without security:
     national necessities and cosmopolitan speculation: an Armageddon
     unavoidable.'

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

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

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

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

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

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

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

FOOTNOTES:

[1] But British policy can hardly be called less contradictory. A year
after the enactment of a Treaty which quite avowedly was framed for the
purpose of checking the development of German trade, we find the
unemployment crisis producing on the part of the _New Statesman_ the
following comment:--

'It must be admitted, however, that the present wave of depression and
unemployment is far more an international than a national problem. The
abolition of "casual labour" and the adoption of a system of "industrial
maintenance" would appreciably affect it. The international aspect of
the question has always been important, but never so overwhelmingly
important as it is to-day.

'The present great depression, however, is not normal. It is due in the
main to the breakdown of credit and the demoralisation of the
"exchanges" throughout Europe. France cannot buy locomotives in England
if she has to pay 60 francs to the pound sterling. Germany, with an
exchange of 260 (instead of the pre-war 20) marks to the pound, can buy
scarcely anything. Russia, for other reasons cannot buy at all. And even
neutral countries like Sweden and Denmark, which made much money out of
the war and whose "exchanges" are fairly normal, are financially almost
_hors de combat_, owing presumably to the ruin of Germany. There appears
to be no remedy for this position save the economic rehabilitation of
Central Europe.

'As long as German workmen are unable to exercise their full productive
capacity, English workmen will be unemployed. That, at present, is the
root of the problem. For the last two years we, as an industrial nation,
have been cutting off our nose to spite our face. In so far as we ruin
Germany we are ruining ourselves; and in so far as we refuse to trade
with revolutionary Russia we are increasing the likelihood of violent
upheavals in Great Britain. Sooner or later we shall have to scrap every
Treaty that has been signed and begin again the creation of the New
Europe on the basis of universal co-operation and mutual aid. Where we
have demanded indemnities we must offer loans.

'A system of international credit--founded necessarily on British
credit--is as great a necessity for ourselves as it is for Central
Europe. We must finance our customers or lose them and share their ruin,
sinking deeper every month into the morass of doles and relief works.
That is the main lesson of the present crisis.'--(Jan. 1st, 1921.)

[2] Out of a population of 45,000,000 our home-grown wheat suffices for
only about 12,500,000, on the basis of the 1919-20 crop. Sir Henry Rew,
_Food Supplies in Peace and War_, says: 'On the basis of our present
population ... we should still need to import 78 per cent. of our
requirements.' (p. 165). Before the War, according to the same
authority, home produce supplied 48 per cent. in food value of the total
consumption, but the table on which this figure is based does not
include sugar, tea, coffee, or cocoa.

[3] The growing power of the food-producing area and its determination
to be independent as far as possible of the industrial centre, is a fact
too often neglected in considering the revolutionary movements of
Europe. The war of the classes almost everywhere is crossed by another
war, that between cities and country. The land-owning countryman,
whether peasant or noble, tends to become conservative, clerical,
anti-socialist (and anti-social) in his politics and outlook.

[4] 'The Economic Consequences of the Peace,' pp. 275-277.

[5] _Manchester Guardian_, Weekly Edition, February 6th., 1920.

[6] _Daily News_, June 28th., 1920.

[7] Sir William Goode, British Director of Relief, has said, (_Times_
Dec. 6th., 1919):--

'I have myself recently returned from Vienna. I feel as if I had spent
ten days in the cell of a condemned murderer who has given up all hope
of reprieve. I stayed at the best hotel, but I saw no milk and no eggs
the whole time I was there. In the bitter, cold hall of the hotel, once
the gayest rendezvous in Europe, the visitors huddled together in the
gloom of one light where there used to be forty. They were more like
shadows of the Embankment than representatives of the rich. Vienna's
world-famous Opera House is packed every afternoon. Why? Women and men
go there in order to keep themselves warm, and because they have no work
to do.'

He went on:--

'First aid was to hasten peace. Political difficulties combined with
decreased production, demoralisation of railway traffic, to say nothing
of actual shortages of coal, food, and finance, had practically
paralysed industrial and commercial activity. The bold liberation or
creation of areas, without simultaneous steps to reorganise economic
life, had so far proved to be a dangerous experiment. Professor Masaryk,
the able President of Czecho-Slovakia, put the case in a nutshell when
he said: "It is a question of the export of merchandise or of
population."'

[8] The figures for 1913 are:--

  Imports.         From British Possessions      £192,000,000.
                   From Foreign Countries        £577,000,000.
  Exports.         To British Possessions        £195,000,000.
                   To Foreign Countries          £330,000,000.
  Re-exports.      To British Possessions         £14,000,000.
                   To Foreign Countries           £96,000,000.

[9] The question is dealt with more fully in the last chapter of the
'Addendum' to this book. The chapter of 'The Great Illusion' dealing
with the indemnity says: 'The difficulty in the case of a large
indemnity is not so much the payment by the vanquished as the receiving
by the victor.' (p. 76, 1910 Edition.) Mr Lloyd George (Jan. 28th.,
1921) says: 'The real difficulty is in securing payment outside the
limits of Germany.... The only way Germany can pay is by exports--the
difference between German imports and exports.... If she exports too
much for the Allies it means the ruin of their industry.'

Thus the main problem of an indemnity is to secure wealth in exportable
form which will not disorganise the victor's trade. Yet so obscured does
the plainest fact become in the murky atmosphere of war time that in
many of the elaborate studies emanating from Westminster and Paris, as
to 'What Germany can pay' this phase of the problem is not even touched
upon. We get calculations as to Germany's total wealth in railroads,
public buildings, houses, as though these things could be picked up and
transported to France or Belgium. We are told that the Allies should
collect the revenues of the railroads; the _Daily Mail_ wants us to
'take' the income of Herr Stinnes, all without a word as to the form in
which this wealth is to _leave Germany_. Are we prepared to take the
things made in the factories of Herr Stinnes or other Germans? If not,
what do we propose that Germany shall give? Paper marks increased in
quantity until they reach just the value of the paper they are printed
on? Even to secure coal, we must, as we have seen, give in return food.

If the crux of the situation were really understood by the memorialists
who want Germany's pockets searched, their studies would be devoted
_not_ to showing what Germany might produce under favourable
circumstances, which her past has shown to be very great indeed, but
what degree of competitive German production Allied industrialists will
themselves be ready to face.

"Big business" in England is already strongly averse to the payment of
an indemnity, as any conversation in the City or with industrialists
readily reveals. Yet it was the suggestion of what has actually taken
place which excited the derision of critics a few years ago. Obviously
the feasibility of an indemnity is much more a matter of our will than
of Germany's, for it depends on what shall be the size of Germany's
foreign trade. Clearly we can expand that if we want to. We might give
her a preference!

[10] 'What Happened to Europe.'

[11] _Times_, July 3rd., 1920.

[12] The proposal respecting Austria was a loan of 50 millions in
instalments of five years.

[13] Mr Hoover seems to suggest that their repayment should never take
place. To a meeting of Bankers he says:--

'Even if we extend these credits and if upon Europe's recovery we then
attempt to exact the payment of these sums by import of commodities, we
shall have introduced a competition with our own industries that cannot
be turned back by any tariff wall.... I believe that we have to-day an
equipment and a skill in production that yield us a surplus of
commodities for export beyond any compensation we can usefully take by
way of imported commodities.... Gold and remittances and services cannot
cover this gulf in our trade balance.... To me there is only one remedy,
and that is by the systematic permanent investment of our surplus
production in reproductive works abroad. We thus reduce the return we
must receive to a return of interest and profit.'

A writer in the _New Republic_ (Dec. 29th., 1920.) who quotes this says
pertinently enough:--

'Mr Hoover disposes of the principal of our foreign loans. The debtors
cannot return it and we cannot afford to receive it back. But the
interest and profit which he says we may receive--that will have to be
paid in commodities, as the principal would be if it were paid at all.
What shall we do when the volume of foreign commodities received in
payment of interest and profit becomes very large and our industries cry
for protection?'

[14] The present writer declines to join in the condemnation of British
miners for reduced output. In an ultimate sense (which is no part of the
present discussion) the decline in effort of the miner is perhaps
justified. But the facts are none the less striking as showing how great
the difference of output can be. Figures given by Sir John Cadman,
President of the Institute of Mining Engineers a short time ago (and
quoted in the _Fortnightly Review_ for Oct. 1920.), show that in 1916
the coal production per person employed in the United Kingdom was 263
tons, as against 731 tons in the United States. In 1918 the former
amounted to 236 tons, and during 1919 it sank to 197½ tons. In 1913 the
coal produced per man per day in this country was 0.98 tons, and in
America it was 3.91 tons for bituminous coal and 2.19 tons for
anthracite. In 1918 the British output figure was 0.80 tons, and the
American 3.77 tons for bituminous coal and 2.27 for anthracite. Measured
by their daily output, a single American miner does just as much work as
do five Englishmen.

The inferiority in production is, of course, 'to some considerable
extent' due to the fact that the most easily workable deposits in
England are becoming exhausted, while the United States can most easily
draw on their most prolific and most easily workable sites....

It is the fact that in our new and favourable coalfields, such as the
South Yorkshire area, the men working under the most favourable modern
conditions and in new mines where the face is near the shaft, do not
obtain as much coal per man employed, as that got by the miners in the
country generally under the conditions appertaining forty and fifty
years ago.

[15] Mr J. M. Keynes, 'The Economic Consequences of the Peace,' p. 211,
says:--'It is an extraordinary fact that the fundamental economic
problem of a Europe starving and disintegrating before their eyes, was
the one question in which it was impossible to arouse the interest of
the Four.'

[16] Incidentally we see nations not yet brought under capitalist
organisation (e.g. the peasant nations of the Balkans) equally subject
to the hostilities we are discussing.

Bertrand Russell writes (_New Republic_, September 15th., 1920):--'No
doubt commercial rivalry between England and Germany had a great deal to
do with causing the war, but rivalry is a different thing from
profit-seeking. Probably by combination, English and German capitalists
could have made more than they did out of rivalry, but the rivalry was
instinctive, and its economic form was accidental. The capitalists were
in the grip of nationalist instinct as much as their proletarian
'dupes.' In both classes some have gained by the war, but the universal
will to war was not produced by the hope of gain. It was produced by a
different set of instincts, one which Marxian psychology fails to
recognise adequately....

Men desire power, they desire satisfaction for their pride and their
self-respect. They desire victory over their rivals so profoundly that
they will invent a rivalry for the unconscious purpose of making a
victory possible. All these motives cut across the pure economic motive
in ways that are practically important.

There is need of a treatment of political motives by the methods of
psycho-analysis. In politics, as in private life, men invent myths to
rationalise their conduct. If a man thinks that the only reasonable
motive in politics is economic self-advancement, he will persuade
himself that the things he wishes to do will make him rich. When he
wants to fight the Germans, he tells himself that their competition is
ruining his trade. If, on the other hand, he is an 'idealist,' who holds
that his politics should aim at the advancement of the human race, he
will tell himself that the crimes of the Germans demand their
humiliation. The Marxian sees through this latter camouflage, but not
through the former.

[17] 'If the Englishman sells goods in Turkey or Argentina, he is taking
trade from the German, and if the German sells goods in either of these
countries--or any other country, come to that--he is taking trade from
the Englishman; and the well-being of every inhabitant of the great
manufacturing towns, such as London, Paris, or Berlin, is bound up in
the power of the capitalist to sell his wares; and the production of
manufactured articles has outstripped the natural increase of demand by
67 per cent., therefore new markets must be found for these wares or the
existing ones be "forced"; hence the rush for colonies and feverish
trade competition between the great manufacturing countries. And the
production of manufactured goods is still increasing, and the great
cities must sell their wares or starve. Now we understand what trade
rivalry really is. It resolves itself, in fact, into the struggle for
bread.' (A Rifleman: '_Struggle for Bread._' p. 54.)

[18] Mr J. M. Keynes, _The Economic Consequences of the Peace_, says: 'I
do not put the money value of the actual _physical_ loss to Belgian
property by destruction and loot above £150,000,000 as a _maximum_, and
while I hesitate to put yet lower an estimate which differs so widely
from those generally current, I shall be surprised if it proves possible
to substantiate claims even to this amount.... While the French claims
are immensely greater, here too, there has been excessive exaggeration,
as responsible French statisticians have themselves pointed out. Not
above 10 per cent. of the area of France was effectively occupied by the
enemy, and not above 4 per cent. lay within the area of substantial
devastation.... In short, it will be difficult to establish a bill
exceeding £500,000,000 for _physical and material_ damage in the
occupied and devastated areas of Northern France.' (pp. 114-117.)

[19] _The Foundations of International Policy_ pp. xxiii-xxiv.

It is true, of course, that Governments were for their armies and navies
and public departments considerable purchasers in the international
market. But the general truth of the distinction here made is
unaffected. The difference in degree, in this respect, between the
pre-war and post-war state in so great as to make a difference of kind.
The dominant motive for State action has been changed.

[20] See Addendum and also the authors' _War and the Workers_. (National
Labour Press). pp. 29-50.

[21] Note of May 22, 1919.

[22] Speech of September 5, 1919. From report in Philadelphia Public
Ledger, Sept 6.

[23] In German East Africa we have a case in which practically the whole
of the property in land was confiscated. The whole European population
were evicted from the farms and plantations--many, of course,
representing the labour of a lifetime--and deported. A visitor to the
colony describes it as an empty shell, its productivity enormously
reduced. In contradistinction, however, one welcomes General Smuts's
statement in the Union House of Assembly in regard to the Government's
intentions as to German property. He declared that the balance of nine
millions in the hands of the Custodian after claims for damages had been
recovered, would not be paid to the Reparations Commission, as this
would practically mean confiscation. The Government would take the nine
millions, plus interest, as a loan to South Africa for thirty years at
four per cent. While under the Peace Treaty they had the right to
confiscate all private property in South-West Africa, they did not
intend to avail themselves of those rights. They would leave private
property alone. As to the concessions, if the titles to these were
proved, they would also be left untouched. The statement of the South
African Government's intentions, which are the most generous of any
country in the world, was received with repeated cheers from all
sections of the House.

[24] Since the above lines were written the following important
announcement has appeared (according to _The Times_ of October 26th.,
1920.) in the _Board of Trade Journal_ of October 21st.:--

'H. M. Government have informed the German Government that they do not
intend to exercise their rights under paragraph 18 of Annex II to Part
VIII of the Treaty of Versailles, to seize the property of German
nationals in this country in case of voluntary default by Germany. This
applies to German property in the United Kingdom or under United Kingdom
control, whether in the form of bank balances, or in that of goods in
British bottoms, or of goods sent to this country for sale.

'It has already been announced that German property, rights, and
interests acquired since the publication of the General Licence
permitting the resumption of trade with Germany (i.e. since July 12th.,
1919), are not liable to retention under Art. 297 of the Peace Treaty,
which gives the Allied and Associated Powers the right to liquidate all
German property, rights, and interests within their territories at the
date of the coming into force of the Treaty.'

This announcement has called forth strong protests from France and from
some quarters in this country, to which the British Government has
rejoined by a semi-official statement that the concession has been made
solely on account of British commercial interests. The incident
illustrates the difficulty of waiving even permissive powers under the
Treaty, although the exercise of those powers would obviously injure
British traders. Moreover, the Reparations (Recovery) Act, passed in
March 1921, appears to be inconsistent with the above announcement.

[25] A point that seems to have been overlooked is the effect of this
Treaty on the arrangements which may follow changes in the political
status of, say, Egypt or India or Ireland. If some George Washington of
the future were to apply the principles of the Treaty to British
property, the effects might be far-reaching.

A _Quarterly Review_ critic (April 1920) says of these clauses of the
Treaty (particularly Article 297b.):--

'We are justified in regarding this policy with the utmost apprehension,
not only because of its injustice, but also because it is likely to form
precedents of a most mischievous character in the future. If, it will be
said, the Allied Governments ended their great war for justice and right
by confiscating private property and ruining those unfortunate
individuals who happened to have investments outside their own country,
how can private wealth at home complain if a Labour Government proposes
to confiscate private property in any business which it thinks suitable
for "nationalisation"? Under another provision the Reparations
Commission is actually allowed to demand the surrender of German
properties and German enterprises in _neutral_ countries. This will be
found in Article 235, which "introduces a quite novel principle in the
collection of indemnities."'

[26] See quotations in Addendum.

[27] Cmd. 280 (1919), p. 15.

[28] The dilemma is not, of course, as absolute, as this query would
suggest. What I am trying to make perfectly clear here is the _kind_ of
problem that faces us rather than the precise degree of its difficulty.
My own view is that after much suffering especially to the children, and
the reduction during a generation or two, perhaps, of the physical
standard of the race, the German population will find a way round the
sustenance difficulty. For one thing, France needs German coke quite as
badly as Germany needs French ore, and this common need may be made the
basis of a bargain. But though Germany may be able to surmount the
difficulties created for her by her victors, it is those difficulties
which will constitute her grievance, and will present precisely the
kind, if not the degree, of injustice here indicated.

[29] One very commonly sees the statement that France had no adequate
resources in iron ore before the War. This is an entire mistake, as the
Report of the Commission appointed by the Minister of Munitions to visit
Lorraine (issued July, 1919), points out (p. 11.):--'Before the War the
resources of Germany of iron ore were 3,600,000,000 tons and those of
France 3,300,000,000.' What gave Germany the advantage was the
possession not of greater ore resources than France, but of coal
suitable for furnace coke, and this superiority in coal will still
remain even after the Treaty, although the paralysis of transport and
other indispensable factors may render the superiority valueless. The
report just quoted says:--'It is true that Germany will want iron ore
from Lorraine (in 1913 she took 14,000,000 tons from Briey and
18,500,000 tons from Lorraine), but she will not be so entirely
dependent upon this one source of supply as the Lorraine works will be
upon Germany for coke, unless some means are provided to enable Lorraine
to obtain coke from elsewhere, or to produce her own needs from Saar
coal and imported coking coal.' The whole report seems to indicate that
the _mise en valeur_ of France's new 'property' depends upon supplies of
German coal--to say nothing of the needs of a German market and the
markets depending on that market. As it is, the Lorraine steel works are
producing nothing like their full output because of the inability of
Germany to supply furnace coke, owing largely to the Westphalian labour
troubles and transport disorganisation. Whether political passion will
so far subside as to enable the two countries to come to a bargain in
the matter of exchange of ore or basic pig-iron for furnace coke,
remains to be seen. In any case one may say that the ore-fields of
Lorraine will only be of value to France provided that much of their
product is returned to Germany and used for the purpose of giving value
to German coal.

[30] From the summary of a series of lectures on the _Biology of Death_,
as reported in the _Boston Herald_ of December 19th., 1920.

[31] A recent book on the subject, summing up the various
recommendations made in France up to 1918 for increasing the birth-rate
is _La Natalité: ses Lois Economiques et Psychologiques_, by Gaston
Rageot.

The present writer remembers being present ten years before the War at a
Conference at the Sorbonne on this subject. One of the lecturers
summarised all the various plans that had been tried to increase the
birth-rate. 'They have all failed,' he concluded, 'and I doubt if
anything remains to be done.' And one of the savants present added:
'Except to applaud.'

[32] Mr William Harbutt Dawson gives the figures as follows:--

'The decline in the birth-rate was found to have become a settled factor
in the population question.... The birth-rate for the whole Empire
reached the maximum figure in 1876, when it stood at 41.0 per 1000 of
the population.... Since 1876 the movement has been steadily downward,
with the slightest possible break at the beginning of the 'nineties....
Since 1900 the rate has decreased as follows:--

  1900      35.6 per 1000.
  1901      35.7 per   "
  1902      35.1 per   "
  1903      33.9 per   "
  1904      34.1 per 1000.
  1905      33.0 per   "
  1906      33.1 per   "

(_The Evolution of Modern Germany._ p. 309)

[33] Conversely it may be said that the economic position of the border
States becomes impossible unless the greater States are orderly. In
regard to Poland, Mr Keynes remarks: 'Unless her great neighbours are
prosperous and orderly, Poland is an economic impossibility, with no
industry but Jew-baiting.'

Sir William Goode (the British Director of Relief) states that he found
'everywhere never-ending vicious circles of political paradox and
economic complication, with consequent paralysis of national life and
industry. The new States of repartitioned Europe seem not only incapable
of maintaining their own economic life, but also either unable or
unwilling to help their neighbours.' (Cmd. 521 (1920), p. 6.)

[34] From a manifesto signed by a large number of American
intellectuals, business men, and Labour Leaders ('League of Free Nations
Association') on the eve of President Wilson's departure for Paris.

[35] Interview published by _Pearson's Magazine_, March, 1915.

[36] _Times_, March 8, 1915. 'Our honour and interest must have
compelled us to join France and Russia even if Germany had scrupulously
respected the rights of her small neighbours and had sought to hack her
way through the Eastern fortresses. The German Chancellor has insisted
more than once upon this truth. He has fancied apparently that he was
making an argumentative point against us by establishing it. That, like
so much more, only shows his complete misunderstanding of our attitude
and our character.... We reverted to our historical policy of the
Balance of Power.'

The _Times_ maintains the same position five years later (July 31st,
1920): 'It needed more than two years of actual warfare to render the
British people wholly conscious that they were fighting not a quixotic
fight for Belgium and France, but a desperate battle for their own
existence.'

[37] _How the War Came_, p. 238.

[38] Lord Loreburn adds:--

'But Sir Edward Grey in 1914 did not and could not offer similar
Treaties to France and Germany because our relations with France and the
conduct of Germany were such, that for us to join Germany in any event
was unthinkable. And he did not proclaim our neutrality because our
relations with France, as described in his own speech, were such that he
could not in honour refuse to join France in the war. Therefore the
example of 1870 could not be followed in 1914, and Belgium was not saved
but destroyed.'

[39] See the Documents published by the Russian Government in November,
1917.

[40] It is not clear whether the undertaking to Russia was actually
given. Lord R. Cecil in the House of Commons on July 24th, 1917, said:
'It will be for this country to back up the French in what they desire.
I will not go through all the others of our Allies--there are a good
many of them--but the principle (to stand by our Allies) will be equally
there in the case of all and particularly in the case of Serbia.'

[41] Since these lines were written, there has been a change of
government and of policy in Italy. An agreement has been reached with
Yugo-Slavia, which appears to satisfy the moderate elements in both
countries.

[42] Lord Curzon (May 17th, 1920) wrote that he did not see how we could
invoke the League to restrain Poland. The Poles, he added, must choose
war or peace on their own responsibility. Mr Lloyd George (June 19th,
1920) declared that 'the League of Nations could not intervene in
Poland.'

[43] _The War that will End War_, p. 14.

[44] _Ibid._, p. 19.

[45] _The Issue_, p. 37-39.

[46] _Land and Water_, February 21st, 1918.

[47] Even as late as January 13th, 1920, Mr H. W. Wilson of the _Daily
Mail_ writes that if the disarmament of Germany is carried out 'the real
cause of swollen armaments in Europe will vanish.'

On May 18th, 1920, Field-Marshal Sir Henry Wilson (_Morning Post_, May
19th) declares himself thus:--

'We were told that after this last war we were to have peace. We have
not; there are something between twenty and thirty bloody wars going on
at the present moment. We were told that the great war was to end war.
It did not; it could not. We have a very difficult time ahead, whether
on the sea, in the air, or on the land.' He wanted them to take away the
warning from a fellow soldier that their country and their Empire both
wanted them to-day as much as ever they had, and if they were as proud
of belonging to the British Empire as he was they would do their best,
in whatever capacity they served, to qualify themselves for the times
that were coming.

[48] July 31st, 1920.

[49] April 19th, 1919.

[50] A Reuter Despatch dated August 31st, 1920, says:--

'Speaking to-day at Charleston (West Virginia) Mr Daniels, U. S. Naval
Secretary, said: "We are building enormous docks and are constructing 18
dreadnoughts and battle cruisers, with a dozen other powerful ships
which in effective fighting power will give our navy world primacy."'

[51] We are once more back to the Carlylean 'deep, patient ... virtuous
... Germany.'

[52] Sir Henry Wilson, Chief of the Imperial General Staff, in a
memorandum dated December 1st, 1919, which appears in a Blue Book on
'the Evacuation of North Russia, 1919,' says:--'There is one great
lesson to be learned from the history of the campaign.... It is that
once a military force is involved in operations on land it is almost
impossible to limit the magnitude of its commitments.'

[53] And Russo-German co-operation is of course precisely what French
policy must create. Says an American critic:--

'France certainly carries a big stick, but she does not speak softly;
she takes her own part, but she seems to fear neither God nor the
revulsion of man. Yet she has reason to fear. Suppose she succeeds for a
while in reducing Germany to servitude and Russia to a dictatorship of
the Right, in securing her own dominion on the Continent as overlord by
the petty States of Europe. What then? What can be the consequence of a
common hostility of the Teutonic and Slavonic peoples, except in the end
common action on their part to throw off an intolerable yoke? The
nightmare of a militant Russo-German alliance becomes daily a more
sinister prophecy, as France teaches the people of Europe that force
alone is the solvent. France has only to convince all of Germany that
the Treaty of Versailles will be enforced in all its rigour, which means
occupation of the Ruhr and the loss of Silesia, to destroy the final
resistance of those Germans who look to the West rather than to the East
for salvation. Let it be known that the barrier of the Rhine is all
bayonet and threat, and western-minded Germany must go down before the
easterners, Communist or Junker. It will not matter greatly which.'
(_New Republic_, Sept. 15th, 1920).

[54] December 23rd, 1919.

[55] _The Times_ of September 4th, 1920 reproduces an article from the
Matin, on M. Millerand's policy with regard to small States. M.
Millerand's aim was that economic aid should go hand in hand with French
military protection. With this policy in view, a number of large
businesses recently passed under French control, including the Skoda
factory in Czecho-Slovakia, big works at Kattowitz in Upper Silesia, the
firm of Huta-Bankowa in Poland, railway factories in Rumania, and
certain river systems and ports in Yugo-Slavia. In return for assistance
to Admiral Horthy, an agreement was signed whereby France obtained
control of the Hungarian State Railways, of the Credit Bank, the
Hungarian river system and the port of Buda-pest. Other reports state
that France has secured 85 per cent. of the oil-fields of Poland, in
return for her help at the time of the threat to Warsaw. As the majority
of shares in the Polish Oil Company 'Galicia,' which have been in
British hands until recently, have been bought up by a French Company,
the 'Franco-Polonaise,' France now holds an important weapon of
international policy.

[56] The present writer would like to enter a warning here that nothing
in this chapter implies that we should disregard France's very
legitimate fears of a revived militarist Germany. The implication is
that she is going the right way about to create the very dangers that
terrify her. If this were the place to discuss alternative policies, I
should certainly go on to urge that England--and America--should make it
plain to France that they are prepared to pledge their power to her
defence. More than that, both countries should offer to forgo the debts
owing to them by France on condition of French adhesion to more workable
European arrangements. The last thing to be desired is a rupture, or a
mere change of rôles: France to become once more the 'enemy' and Germany
once more the 'Ally.' That outcome would merely duplicate the weary
story of the past.

[57] _The Expansion of England_, p. 202.

[58] The assumption marks even post-war rhetoric. M. Millerand's message
to the Senate and Chamber upon his election as President of the Republic
says: 'True to the Alliances for ever cemented by blood shed in common,'
France will strictly enforce the Treaty of Versailles, 'a new charter of
Europe and the World.' (_Times_, Sept. 27th, 1920). The passage is
typical of the moral fact dealt with in this chapter. M. Millerand
knows, his hearers know, that the war Alliance 'for ever cemented by
blood shed in common,' has already ceased to exist. But the admission of
this patent fact would be fatal to the 'blood' heroics.

[59] Dr L. P. Jacks, Editor of _The Hibbert Journal_, tells us that
before the War the English nation, regarded from the moral point of
view, was a scene of 'indescribable confusion; a moral chaos.' But there
has come to it 'the peace of mind that comes to every man who, after
tossing about among uncertainties, finds at last a mission, a cause to
which he can devote himself.' For this reason, he says, the War has
actually made the English people happier than they were before:
'brighter, more cheerful. The Englishman worries less about himself....
The tone and substance of conversation are better.... There is more
health in our souls and perhaps in our bodies.' And he tells how the War
cured a friend of insomnia. (_The Peacefulness of Being at War_, _New
Republic_, September 11, 1915).

[60] The facts of both the Russian and the Italian bargains are dealt
with in more detail in Chap. III.

[61] Quoted by Mr T. L. Stoddard in an article on Italian Nationalism,
in the _Forum_, Sept. 1915. One may hope that the outcome of the War has
modified the tendencies in Italy of which he treats. But the quotations
he makes from Italian Nationalist writers put Treitschke and Bernhardi
in the shade. Here are some. Corradini says: 'Italy must become once
more the first nation in the world.' Rocco: 'It is said that all the
other territories are occupied. But strong nations, or nations on the
path of progress, conquer.... territories occupied by nations in
decadence.' Luigi Villari rejoices that the cobwebs of mean-spirited
Pacifism have been swept away. Italians are beginning to feel, in
whatever part of the world they may happen to be, something of the pride
of Roman citizens.' Scipione Sighele writes: 'War must be loved for
itself.... To say "War is the most horrible of evils," to talk of war as
"an unhappy necessity," to declare that we should "never attack but
always know how to defend ourselves," to say these things is as
dangerous as to make out-and-out Pacifist and anti-militarist speeches.
It is creating for the future a conflict of duties: duties towards
humanity, duties towards the Fatherland.' Corradini explains the
programme of the Nationalists: 'All our efforts will tend towards making
the Italians a warlike race. We will give it a new will; we will instil
into it the appetite for power, the need of mighty hopes. We will create
a religion--the religion of the Fatherland victorious over the other
nations.'

I am indebted to Mr Stoddard for the translations; but they read quite
'true to type.'

[62] It is true that the Labour Party, alone of all the parties, did
take action, happily effective, against the Russian adventure--after it
had gone on in intermittent form for two years. But the above paragraphs
refer particularly to the period which immediately succeeded the War,
and to a general temper which was unfortunately a fact despite Labour
action.

[63] Mr Hartley Manners, the playwright, who produced during the War a
book entitled _Hate with a Will to Victory_, writes thus:--

'And in voicing our doctrine of Hate let us not forget that the German
people were, and are still, solidly behind him (the Kaiser) in
everything he does.' ...

'The German people are actively and passively with their Government to
the last man and the last mark. No people receive their faith and their
rules of conduct more fatuously from their rulers than do the German
people. Fronting the world they stand as one with their beloved Kaiser.
He who builds on a revolution in Germany as a possible ending of the
war, knows not what he says. They will follow through any degradation of
the body, through any torture of spirit, the tyrants they have been
taught from infancy to regard as their Supreme Masters of body and
soul.' ...

And here is his picture of 'the German':--

... 'a slave from birth, with no rights as a free man, owing allegiance
to a militaristic Government to whom he looks for his very life; crushed
by taxation to keep up the military machine; ill-nourished, ignorant,
prone to crime in greater measure than the peasants of any other
country--as the German statistics of crime show--a degraded peasant, a
wretched future, and a loathesome past--these are the inheritances to
which the German peasant is born. What type of nature can develop in
such conditions? But one--the _brute_. And the four years' commerce of
this War has shown the German from prince to peasant as offspring of the
one family--the _brute_ family.' ...

[64] The following--which appeared in _The Times_ of April 17, 1915--is
merely a type of at least thirty or forty similar reports published by
the German Army Headquarters: 'In yesterday's clear weather the airmen
were very active. Enemy airmen bombarded places behind our positions.
Freiburg was again visited, and several civilians, the majority being
children, were killed and wounded.' A few days later the Paris _Temps_
(April 22, 1915) reproduced the German accounts of French air-raids
where bombs were dropped on Kandern, Loerrach, Mulheim, Habsheim,
Wiesenthal, Tüblingen, Mannheim. These raids were carried out by squads
of airmen, and the bombs were thrown particularly at railway stations
and factories. Previous to this, British and French airmen had been
particularly active in Belgium, dropping bombs on Zeebrugge, Bruges,
Middlekirke, and other towns. One German official report tells how a
bomb fell on to a loaded street car, killing many women and children.
Another (dated September 7, 1915) contains the following: 'In the course
of an enemy aeroplane attack on Lichtervelde, north of Roulers in
Flanders, seven Belgian inhabitants were killed and two injured.' A
despatch from Zürich, dated Sept. 24, 1915, says: 'At yesterday's
meeting of the Stuttgart City Council, the Mayor and Councillors
protested vigorously against the recent French raid upon an undefended
city. Burgomaster Lautenschlager asserted that an enemy that attacked
harmless civilians was fighting a lost cause.'

[65] March 27th, 1919.

[66] In Drinkwater's play, _Abraham Lincoln_, the fire-eating wife of
the war-profiteer, who had been violently abusing an old Quaker lady, is
thus addressed by Lincoln:--

'I don't agree with her, but I honour her. She's wrong, but she is
noble. You've told me what you think. I don't agree with you, and I'm
ashamed of you and your like. You, who have sacrificed nothing babble
about destroying the South while other people conquer it. I accepted
this war with a sick heart, and I've a heart that's near to breaking
every day. I accepted it in the name of humanity, and just and merciful
dealing, and the hope of love and charity on earth. And you come to me,
talking of revenge and destruction, and malice, and enduring hate. These
gentle people are mistaken, but they are mistaken cleanly, and in a
great name. It is you that dishonour the cause for which we stand--it is
you who would make it a mean and little thing....'

[67] The official record of the Meeting of the Council of Ten on January
16, 1919, as furnished to the Foreign Relations Committee of the
American Senate, reports Mr Lloyd George as saying:--

'The mere idea of crushing Bolshevism by military force is pure
madness....

'The Russian blockade would be a "death cordon," condemning women and
children to starvation, a policy which, as humane people, those present
could not consider.'

[68] While attempting in this chapter to reveal the essential difference
of the two methods open to us, it is hardly necessary to say that in the
complexities and cross-currents of human society practical policy can
rarely be guided by a single absolute principle. Reference has been made
to the putting of the pooled force of the nations behind a principle or
law as the alternative of each attempting to use his own for enforcing
his own view. The writer does not suppose for an instant that it is
possible immediately to draw up a complete Federal Code of Law for
Europe, to create a well-defined European constitution and then raise a
European army to defend it, or body of police to enforce it. He is
probably the last person in the world likely to believe the political
ideas of the European capable of such an agile adaptation.

[69] Delivered at Portland, Maine, on March 28th, 1918; reported in _New
York Times_, March 29th.

[70] Bertrand Russell: _Principles of Social Reconstruction._

Mr. Trotter in _Instincts of the Herd in War and Peace_, says:--

'We see one instinct producing manifestations directly hostile to each
other--prompting to ever-advancing developments of altruism while it
necessarily leads to any new product of advance being attacked. It
shows, moreover ... that a gregarious species rapidly developing a
complex society can be saved from inextricable confusion only by the
appearance of reason and the application of it to life. (p. 46.)

... 'The conscious direction of man's destiny is plainly indicated by
Nature as the only mechanism by which the social life of so complex an
animal can be guaranteed against disaster and brought to yield its full
possibilities, (p. 162.)

... 'Such a directing intelligence or group of intelligences would take
into account before all things the biological character of man.... It
would discover when natural inclinations in man must be indulged, and
would make them respectable, what inclinations in him must be controlled
for the advantage of the species, and make them insignificant.' (p.
162-3.)

[71] The opening sentence of a five volume _History of the Peace
Conference of Paris_, edited by H. W. V. Temperley, and published under
the auspices of the Institute of International Affairs, is as follows:--

'The war was a conflict between the principles of freedom and of
autocracy, between the principles of moral influence and of material
force, of government by consent and of government by compulsion.'

[72] Foremost as examples stand out the claims of German Austria to
federate with Germany; the German population of the Southern Tyrol with
Austria; the Bohemian Germans with Austria; the Transylvanian Magyars
with Hungary; the Bulgarians of Macedonia, the Bulgarians of the
Dobrudja, and the Bulgarians of Western Thrace with Bulgaria; the Serbs
of the Serbian Banat with Yugo-Slavia; the Lithuanians and Ukrainians
for freedom from Polish dominion.

[73] We know now (see the interview with M. Paderewski in the _New York
World_) that we compelled Poland to remain at war when she wanted to
make peace. It has never been fully explained why the Prinkipo peace
policy urged by Mr Lloyd George as early as December 1918 was defeated,
and why instead we furnished munitions, tanks, aeroplanes, poison gas,
military missions and subsidies in turn to Koltchak, Denikin, Yudenitch,
Wrangel, and Poland. We prolonged the blockade--which in the early
phases forbade Germany that was starving to catch fish in the Baltic,
and stopped medicine and hospital supplies to the Russians--for fear,
apparently, of the very thing which might have helped to save Europe,
the economic co-operation of Russia and Central Europe.

[74] 'We have no quarrel with the German people. We have no feeling
towards them but one of sympathy and friendship. It was not upon their
impulse that their government acted in entering this war.' ... 'We are
glad ... to fight thus for the ultimate peace of the world, and for the
liberation of its peoples, the German peoples included: for the rights
of nations great and small ... to choose their way of life.' (President
Wilson, Address to Congress, April 2nd, 1917).

[75] _The Economic Consequences of the Peace_, p. 211.

[76] See quotations from Sir A. Conan Doyle, later in this Chapter.

[77] See, e.g., the facts as to the repression of Socialism in America,
Chapter V.

[78] _The Atlantic Monthly_, November 1920.

[79] _Realities of War_, pp. 426-7, 441.

[80] Is it necessary to say that the present writer does not accept it?

[81] The argument is not invalidated in the least by sporadic instances
of liberal activity here--an isolated article or two. For iteration is
the essence of propaganda as an opinion forming factor.

[82] In an article in the _North American Review_, just before America's
entrance into the War, I attempted to indicate the danger by making one
character in an imaginary symposium say: 'One talks of "Wilson's
programme," "Wilson's policy." There will be only one programme and one
policy possible as soon as the first American soldier sets foot on
European soil: Victory. Bottomley and Maxse will be milk and water to
what we shall see America producing. We shall have a settlement so
monstrous that Germany will offer any price to Russia and Japan for
their future help.... America's part in the War will absorb about all
the attention and interest that busy people can give to public affairs.
They will forget about these international arrangements concerning the
sea, the League of Peace--the things for which the country entered the
War. In fact if Wilson so much as tries to remind them of the objects of
the War he will be accused of pro-Germanism, and you will have their
ginger Press demanding that the "old gang" be "combed out."'

[83] 'If we take the extremist possibility, and suppose a revolution in
Germany or in South Germany, and the replacement of the Hohenzollerns in
all or part of Germany by a Republic, then I am convinced that for
republican Germany there would be not simply forgiveness, but a warm
welcome back to the comity of nations. The French, British, Belgians,
and Italians, and every civilised force in Russia would tumble over one
another in their eager greeting of this return to sanity.' (_What is
coming?_ p. 198).

[84] See the memoranda published in _The Secrets of Crewe House_.

[85] Mr Keynes is not alone in declaring that the Treaty makes of our
armistice engagements a 'scrap of paper.' _The Round Table_, in an
article which aims at justifying the Treaty as a whole, says: 'Opinions
may differ as to the actual letter of the engagements which we made at
the Armistice, but the spirit of them is undoubtedly strained in some of
the detailed provisions of the peace. There is some honest ground for
the feeling manifested in Germany that the terms on which she laid down
her arms have not been observed in all respects.'

A very unwilling witness to our obligations is Mr Leo Maxse, who writes
(_National Review_, February, 1921):--

'Thanks to the American revelations we are in a better position to
appreciate the trickery and treachery of the pre-Armistice negotiations,
as well as the hideous imposture of the Paris Peace Conference, which,
we now learn for the first time, was governed by the self-denying
ordinance of the previous November, when, unbeknown to the countries
betrayed, the Fourteen Points had been inextricably woven into the
Armistice. Thus was John Bull effectively 'dished' of every farthing of
his war costs.'

As a fact, of course, the self-denying ordinance was not 'unbeknown to
the countries betrayed.' The Fourteen Points commitment was quite open;
the European Allies could have repudiated them, as, on one point,
Britain did.

[86] A quite considerable school, who presumably intend to be taken
seriously, would have us believe that the French Revolution, the Russian
Revolution, the English Trade Union Movement are all the work of a small
secret Jewish Club or Junta--their work, that is, in the sense that but
for them the Revolutions or Revolutionary movements would not have taken
place. These arguments are usually brought by 'intense nationalists' who
also believe that sentiments like nationalism are so deeply rooted that
mere ideas or theories can never alter them.

[87] An American playwright has indicated amusingly with what ingenuity
we can create a 'collectivity.' One of the characters in the play
applies for a chauffeur's job. A few questions reveal the fact that he
does not know anything about it. 'Why does he want to be a chauffeur?'
'Well, I'll tell you, boss. Last year I got knocked down by an
automobile and badly hurt. And I made up my mind that when I came out of
the hospital I'd get a bit of my own back. Get even by knocking over a
few guys, see?' A policy of 'reprisals,' in fact.

[88] December 26th, 1917.

[89] A thing which happens about once a week in the United States.

[90] October 16th, 1917.

[91] The amazing rapidity with which we can change sides and causes, and
the enemy become the Ally, and the Ally the enemy, in the course of a
few weeks, approaches the burlesque.

At the head of the Polish armies is Marshal Pilsudski, who fought under
Austro-German command, against Russia. His ally is the Ukrainian
adventurer, General Petlura, who first made a separate peace at
Brest-Litovsk, and contracted there to let the German armies into the
Ukraine, and to deliver up to them its stores of grain. These in May
1920 were the friends of the Allies. The Polish Finance Minister at the
time we were aiding Poland was Baron Bilinski, a gentleman who filled
the same post in the Austrian Cabinet which let loose the world war,
insisted hotly on the ultimatum to Serbia, helped to ruin the finances
of the Hapsburg dominions by war, and then after the collapse repeated
the same operation in Poland. On the other side the command has passed,
it is said, to the dashing General Brusiloff, who again and again saved
the Eastern front from Austrian and German offensives. He is now the
'enemy' and his opponents our 'Allies.' They are fighting to tear the
Ukraine, which means all South Russia, away from the Russian State. The
preceding year we spent millions to achieve the opposite result. The
French sent their troops to Odessa, and we gave our tanks to Denikin, in
order to enable him to recover this region for Imperial Russia.

[92] The Russian case is less evident. But only the moral inertia
following on a long war could have made our Russian record possible.

[93] He complained that I had 'publicly reproved him' for supporting
severity in warfare. He was mistaken. As he really did believe in the
effectiveness of terrorism, he did a very real service by standing
publicly for his conviction.

[94] Here is what the _Times_ of December 10th, 1870, has to say about
France and Germany respectively, and on the Alsace-Lorraine question:--

'We must say with all frankness that France has never shown herself so
senseless, so pitiful, so worthy of contempt and reprobation, as at the
present moment, when she obstinately declines to look facts in the face,
and refuses to accept the misfortune her own conduct has brought upon
her. A France broken up in utter anarchy, Ministers who have no
recognised chief, who rise from the dust in their air balloons, and who
carry with them for ballast shameful and manifest lies and proclamations
of victories that exist only in their imagination, a Government which is
sustained by lies and imposture, and chooses rather to continue and
increase the waste of lives than to resign its own dictatorship and its
wonderful Utopia of a republic; that is the spectacle which France
presents to-day. It is hard to say whether any nation ever before
burdened itself with such a load of shame. The quantity of lies which
France officially and unofficially has been manufacturing for us in the
full knowledge that they are lies, is something frightful and absolutely
unprecedented. Perhaps it is not much after all in comparison with the
immeasurable heaps of delusions and unconscious lies which have so long
been in circulation among the French. Their men of genius who are
recognised as such in all departments of literature are apparently of
opinion that France outshines other nations in a superhuman wisdom, that
she is the new Zion of the whole world, and that the literary
productions of the French, for the last fifty years, however insipid,
unhealthy, and often indeed devilish, contain a real gospel, rich in
blessing for all the children of men.

We believe that Bismarck will take as much of Alsace-Lorraine, too, as
he chooses, and that it will be the better for him, the better for us,
the better for all the world but France, and the better in the long run
for France herself. Through large and quiet measures, Count von Bismarck
is aiming with eminent ability at a single object; the well-being of
Germany and of the world, of the large-hearted, peace-loving,
enlightened, and honest people of Germany growing into one nation; and
if Germany becomes mistress of the Continent in place of France, which
is light-hearted, ambitious, quarrelsome, and over-excitable, it will be
the most momentous event of the present day, and all the world must hope
that it will soon come about.'

[95] We realise without difficulty that no society could be formed by
individuals each of whom had been taught to base his conduct on adages
such as these: 'Myself alone'; 'myself before anybody else'; 'my ego is
sacred'; 'myself over all'; 'myself right or wrong.' Yet those are the
slogans of Patriotism the world over and are regarded as noble and
inspiring, shouted with a moral and approving thrill.

[96] However mischievous some of the manifestations of Nationalism may
prove, the worst possible method of dealing with it is by the forcible
repression of any of its claims which can be granted with due regard to
the general interest. To give Nationalism full play, as far as possible,
is the best means of attenuating its worst features and preventing its
worst developments. This, after all, is the line of conduct which we
adopt to certain religious beliefs which we may regard as dangerous
superstitions. Although the belief may have dangers, the social dangers
involved in forcible repression would be greater still.

[97] _The Great Illusion_, p. 326

[98] 'The Pacifists lie when they tell us that the danger of war is
over.' General Leonard Wood.

[99] _The Science of Power_, p. 14.

[100] Ibid, p. 144.

[101] See quotations, Part I, Chapters I and III.

[102] The validity of this assumption still holds even though we take
the view that the defence of war as an inevitable struggle for bread is
merely a rationalisation (using that word in the technical sense of the
psychologists) of impulse or instinct, merely, that is, an attempt to
find a 'reason' for conduct the real explanation of which is the
subconscious promptings of pugnacities or hostilities, the craving of
our nature for certain kinds of action. If we could not justify our
behaviour in terms of self-preservation, it would stand so plainly
condemned ethically and socially that discipline of instinct--as in the
case of sex instinct--would obviously be called for and enforced. In
either case, the road to better behaviour is by a clearer revelation of
the social mischief of the predominant policy.

[103] Rear-Admiral A. T. Mahan: _Force in International Relations_.

[104] _The Interest of America in International Conditions_, by
Rear-Admiral A. T. Mahan, pp. 47-87.

[105] _Government and the War_, p. 62.

[106] _State Morality and a League of Nations_, pp 83-85.

[107] _North American Review_, March 1912.

[108] Admiral Mahan himself makes precisely this appeal:--

'That extension of national authority over alien communities, which is
the dominant note in the world politics of to-day, dignifies and
enlarges each State and each citizen that enters its fold.... Sentiment,
imagination, aspiration, the satisfaction of the rational and moral
faculties in some object better than bread alone, all must find a part
in a worthy motive. Like individuals, nations and empires have souls as
well as bodies. Great and beneficent achievement ministers to worthier
contentment than the filling of the pocket.'

[109] It is not necessary to enter exhaustively into the difficult
problem of 'natural right.' It suffices for the purpose of this argument
that the claim of others to life will certainly be made and that we can
only refuse it at a cost which diminishes our own chances of survival.

[110] See Mr Churchill's declaration, quoted Part I Chapter V.

[111] Mr J. L. Garvin, who was among those who bitterly criticised this
thesis on account of its 'sordidness,' now writes: 'Armageddon might
become almost as frequent as General Elections if belligerency were not
restrained by sheer dread of the consequences in an age of economic
interdependence when even victory has ceased to pay.'

(Quoted in _Westminster Gazette_, Jan. 24, 1921.)

[112] The introductory synopsis reads:--

What are the fundamental motives that explain the present rivalry of
armaments in Europe, notably the Anglo-German? Each nation pleads the
need for defence; but this implies that some one is likely to attack,
and has therefore a presumed interest in so doing. What are the motives
which each State thus fears its neighbours may obey?

They are based on the universal assumption that a nation, in order to
find outlets for expanding population and increasing industry, or simply
to ensure the best conditions possible for its people, is necessarily
pushed to territorial expansion and the exercise of political force
against others (German naval competition is assumed to be the expression
of the growing need of an expanding population for a larger place in the
world, a need which will find a realisation in the conquest of English
Colonies or trade, unless these were defended); it is assumed,
therefore, that a nation's relative prosperity is broadly determined by
its political power; that nations being competing units, advantage, in
the last resort, goes to the possessor of preponderant military force,
the weaker going to the wall, as in the other forms of the struggle for
life.

The author challenges this whole doctrine.

[113] See chapters _The Psychological Case for Peace_, _Unchanging Human
Nature_, and _Is the Political Reformation Possible?_

'Not the facts, but men's opinions about the facts, is what matters.
Men's conduct is determined, not necessarily by the right conclusion
from facts, but the conclusion they believe to be right.'

In another pre-war book of the present writer (_The Foundations of
International Polity_) the same view is developed, particularly in the
passage which has been reproduced in Chapter VI of this book, 'The
Alternative Risks of Status and Contract.'

[114] The cessation of religious war indicates the greatest outstanding
fact in the history of civilised mankind during the last thousand years,
which is this: that all civilised Governments have abandoned their claim
to dictate the belief of their subjects. For very long that was a right
tenaciously held, and it was held on grounds for which there is an
immense deal to be said. It was held that as belief is an integral part
of conduct, that as conduct springs from belief, and the purpose of the
State is to ensure such conduct as will enable us to go about our
business in safety, it was obviously the duty of the State to protect
those beliefs, the abandonment of which seemed to undermine the
foundations of conduct. I do not believe that this case has ever been
completely answered.... Men of profound thought and profound learning
to-day defend it, and personally I have found it very difficult to make
a clear and simple case for the defence of the principle on which every
civilised Government in the world is to-day founded. How do you account
for this--that a principle which I do not believe one man in a million
could defend from all objections has become the dominating rule of
civilised government throughout the world?

'Well, that once universal policy has been abandoned, not because every
argument, or even perhaps most of the arguments, which led to it, have
been answered, but because the fundamental one has. The conception on
which it rested has been shown to be, not in every detail, but in the
essentials at least, an illusion, a _mis_conception.

'The world of religious wars and of the Inquisition was a world which
had a quite definite conception of the relation of authority to
religious belief and to truth--as that authority was the source of
truth; that truth could be, and should be, protected by force; that
Catholics who did not resent an insult offered to their faith (like the
failure of a Huguenot to salute a passing religious procession) were
renegade.

'Now, what broke down this conception was a growing realisation that
authority, force, was irrelevant to the issues of truth (a party of
heretics triumphed by virtue of some physical accident, as that they
occupied a mountain region); that it was ineffective, and that the
essence of truth was something outside the scope of physical conflict.
As the realisation of this grew, the conflicts declined.'--_Foundations
of International Polity_, p. 214.

[115] An attempt is made, in _The Great Illusion_, to sketch the process
which lies behind the progressive substitution of bargain for coercion
(The Economic Interpretation of the History of Development 'From Status
to Contract') on pages 187-192, and further developed in a chapter 'the
Diminishing Factor of Physical Force' (p. 257).

[116] 'When we learn that London, instead of using its police for the
running in of burglars and "drunks," is using them to lead an attack on
Birmingham for the purpose of capturing that city as part of a policy of
"municipal expansion," or "Civic Imperialism," or "Pan-Londonism," or
what not; or is using its force to repel an attack by the Birmingham
police acting as the result of a similar policy on the part of the
Birmingham patriots--when that happens you can safely approximate a
police force to a European army. But until it does, it is quite evident
that the two--the army and the police force--have in reality
diametrically opposed roles. The police exist as an instrument of social
co-operation; the armies as the natural outcome of the quaint illusion
that though one city could never enrich itself by "capturing" or
"subjugating" another, in some wonderful (and unexplained) way one
country can enrich itself by capturing or subjugating another....

'France has benefited by the conquest of Algeria, England by that of
India, because in each case the arms were employed not, properly
speaking, for conquest, but for police purposes, for the establishment
and maintenance of order; and, so far as they filled that role, their
role was a useful one....

'Germany has no need to maintain order in England, nor England in
Germany, and the latent struggle, therefore, between these two countries
is futile....

'It is one of the humours of the whole Anglo-German conflict that so
much has the British public been concerned with the myths and bogeys of
the matter, that it seems calmly to have ignored the realities. While
even the wildest Pan-German does not cast his eyes in the direction of
Canada, he does cast them in the direction of Asia Minor; and the
political activities of Germany may centre on that area for precisely
the reasons which result from the distinction between policing and
conquest which I have drawn. German industry is coming to have a
dominating situation in the Near East, and as those interests--her
markets and investments--increase, the necessity for better order in,
and the better organisation of, such territories, increases in
corresponding degree. Germany may need to police Asia Minor.' (_The
Great Illusion_, pp. 131-2-3.)

[117] 'If a great country benefits every time it annexes a province, and
her people are the richer for the widened territory, the small nations
ought to be immeasurably poorer than the great; instead of which, by
every test which you like to apply--public credit, amounts in savings
banks, standard of living, social progress, general well-being--citizens
of small States are, other things being equal, as well off as, or better
off than, the citizens of great. The citizens of countries like Holland,
Belgium, Denmark, Sweden, Norway, are, by every possible test, just as
well off as the citizens of countries like Germany, Austria, or Russia.
These are the facts which are so much more potent than any theory. If it
were true that a country benefited by the acquisition of territory, and
widened territory meant general well-being, why do the facts so
eternally deny it? There is something wrong with the theory.' (_The
Great Illusion_, p. 44).

[118] See Chapters of _The Great Illusion_, _The State as a Person_, and
_A False Analogy and its Consequences_.

[119] In the synopsis of the book the point is put thus: 'If credit and
commercial contract are tampered with an attempt at confiscation, the
credit-dependent wealth is undermined, and its collapse involves that of
the conqueror; so that if conquest is not to be self-injurious it must
respect the enemy's property, in which case it becomes economically
futile.'

[120] 'We need markets. What is a market? "A place where things are
sold." That is only half the truth. It is a place where things are
bought and sold, and one operation is impossible without the other, and
the notion that one nation can sell for ever and never buy is simply the
theory of perpetual motion applied to economics; and international trade
can no more be based upon perpetual motion than can engineering. As
between economically highly-organised nations a customer must also be a
competitor, a fact which bayonets cannot alter. To the extent to which
they destroy him as a competitor, they destroy him, speaking generally
and largely, as a customer.... This is the paradox, the futility of
conquest--the great illusion which the history of our own empire so well
illustrates. We "own" our empire by allowing its component parts to
develop themselves in their own way, and in view of their own ends, and
all the empires which have pursued any other policy have only ended by
impoverishing their own populations and falling to pieces.' (p. 75).

[121] See Part I, Chapter II.

[122] _Government and the War_, pp. 52-59.

[123] _The Political Theory of Mr Norman Angell_, by Professor A. D.
Lindsay, _The Political Quarterly_, December 1914.

[124] In order that the reader may grasp more clearly Mr Lindsay's
point, here are some longer passages in which he elaborates it:--

'If all nations really recognised the truth of Mr Angell's arguments,
that they all had common interests which war destroyed, and that
therefore war was an evil for victors as well as for vanquished, the
European situation would be less dangerous, but were every one in the
world as wisely concerned with their own interests as Mr Angell would
have men to be, if they were nevertheless bound by no political ties,
the situation would be infinitely more dangerous than it is. For
unchecked competition, as Hobbes showed long ago, leads straight to war
however rational men are. The only escape from its dangers is by
submitting it to some political control. And for that reason the growth
of economic relations at the expense of political, which Mr Angell
heralds with such enthusiasm, is the greatest peril of modern times.

'If men are to avoid the danger that, in competing with one another in
the small but immediate matters where their interests diverge, they may
overreach themselves and bring about their mutual ruin, two things are
essential, one moral or emotional, the other practical. It is not enough
that men should recognise that what they do affects other men, and vice
versa. They must care for how their actions affect other men, not only
for how they may react on themselves. They must, that is, love their
neighbours. They must further agree with one another in caring for
certain ways of action quite irrespective of how such ways of action
affect their personal interests. They must, that is, be not only
economic but moral men. Secondly, recognising that the range of their
personal sympathies with other men is more restricted than their
interdependence, and that in the excitement of competition all else is
apt to be neglected, they must depute certain persons to stand out of
the competitive struggle and look after just those vital common
interests and greater issues which the contending parties are apt to
neglect. These men will represent the common interests of all, their
common ideals and their mutual sympathies; they will give to men's
concern for these common ends a focus which will enable them to resist
the pull of divergent interests and round their actions will gather the
authority which these common ends inspire....

' ... Such propositions are of course elementary. It is, however,
important to observe that economic relations are in this most
distinguished from political relations, that men can enter into economic
relations without having any real purpose in common. For the money which
they gain by their co-operation may represent power to carry out the
most diverse and conflicting purposes....

' ... Politics implies mutual confidence and respect and a certain
measure of agreement in ideals. The consequence is that co-operation for
economic is infinitely easier than for political purposes and spreads
much more rapidly. Hence it easily overruns any political boundaries,
and by doing so has produced the modern situation which Mr Angell has
described.'

[125] I have in mind, of course, the writings of Cole, Laski, Figgis,
and Webb. In _A Constitution for the Socialist Commonwealth of Great
Britain_, Mr Webb writes:--

'Whilst metaphysical philosophers had been debating what was the nature
of the State--by which they always meant the sovereign Political
State--the sovereignty, and even the moral authority of the State
itself, in the sense of the political government, were being silently
and almost unwittingly undermined by the growth of new forms of
Democracy.' (p. xv.)

In _Social Theory_, Mr Cole, speaking of the necessary co-ordination of
the new forms of association, writes:--

'To entrust the State with the function of co-ordination would be to
entrust it in many cases with the task of arbitrating between itself and
some other functional association, say a church or a trade union.' There
must be a co-ordinating body, but it 'must be not any single
association, but a combination of associations, a federal body in which
some or all of the various functional associations are linked together.'
(pp. 101 and 134.) A reviewer summarises Mr Cole as saying: 'I do not
want any single supreme authority. It is the sovereignty of the State
that I object to, as fatal to liberty. For single sovereignty I
substitute a federal union of functions, and I see the guarantee of
personal freedom in the severalty which prevents any one of them from
undue encroachments.'

[126] The British Treasury has issued statements showing that the French
people at the end of last year were paying £2. 7s., and the British
people £15. 3s. per head in direct taxation. The French tax is
calculated at 3.5. per cent. on large incomes, whereas similar incomes
in Great Britain would pay at least 25 per cent. This does not mean that
the burden of taxes on the poor in France is small. Both the working and
middle classes have been very hard hit by indirect taxes and by the rise
in prices, which is greater in France than in England.

The point is that in France the taxation is mainly indirect, this
falling most heavily upon the poor; while in England it is much more
largely direct.

The French consumers are much more heavily taxed than the British, but
the protective taxes of France bring in comparatively little revenue,
while they raise the price of living and force the French Government and
the French local authorities to spend larger and larger amounts on
salaries and wages.

The Budget for the year 1920 is made the occasion for an illuminating
review of France's financial position by the reporter of the Finance
Commission, M. Paul Doumar.

The expenditure due to the War until the present date amounts roughly to
233,000 million francs (equivalent, at the normal rate of exchange, to
£9,320,000,000) whereof the sum of 43,000 million francs has been met
out of revenue, leaving a deficit of 190 billions.

This huge sum has been borrowed in various ways--26 billions from the
Bank of France, 35 billions from abroad, 46 billions in Treasury notes,
and 72 billions in regular loans. The total public debt on July 1 is put
at 233,729 millions, reckoning foreign loans on the basis of exchange at
par.

M. Doumer declares that so long as this debt weighs on the State, the
financial situation must remain precarious and its credit mediocre.

[127] January, 1921.

[128] An authorised interview published by the daily papers of January
28th, 1921.

M. Briand, the French Premier, in explaining what he and Mr Lloyd George
arranged at Paris to the Chamber and Senate on February 3rd, remarked:--

'We must not lose sight of the fact that in order to pay us Germany must
every year create wealth abroad for herself by developing her exports
and reducing her imports to strictly necessary things. She can only do
that to the detriment of the commerce and industry of the Allies. That
is a strange and regrettable consequence of facts. The placing of an
annuity on her exports, payable in foreign values, will, however,
correct as much as possible this paradoxical situation.'

[129] Version appearing in the _Times_ of January 28th, 1921.

[130] _The Manchester Guardian_, Jan 31st, 1921.

[131] Mr John Foster Dulles, who was a member of the American delegation
at the Peace Conference, has, in an article in _The New Republic_ for
March 30th, 1921, outlined the facts concerning the problem of payment
more completely than I have yet seen it done. The facts he reveals
constitute a complete and overwhelming vindication of the case as stated
in the first edition of _The Great Illusion_.

[132] As the Lorraine ores are of a kind that demand much less than
their own weight of coal for smelting, it is more economic to bring the
coal to the ore than vice versa. It was for political and military
reasons that the German State encouraged the placing of some of the
great furnaces on the right instead of the left bank of the Rhine.

[133] It is worth while to recall here a passage from _The Economic
Consequences of the Peace_, by Mr J. M. Keynes, quoted in Chapter I. of
this book.

[134] There is one aspect of the possible success of France which is
certainly worth consideration. France has now in her possession the
greatest iron ore fields in Europe. Assume that she is so far successful
in her policy of military coercion that she succeeds in securing vast
quantities of coal and coke for nothing. French industry then secures a
very marked advantage--and an artificial and 'uneconomic' one--over
British industry, in the conversion of raw materials into finished
products. The present export by France of coal which she gets for
nothing to Dutch and other markets heretofore supplied by Britain might
be followed by the 'dumping' of steel and iron products on terms which
British industry could not meet. This, of course, is on the hypothesis
of success in obtaining 'coal for nothing,' which the present writer
regards as extremely unlikely for the reasons here given. But it should
be noted that the failure of French effort in this matter will be from
causes just as disastrous for British prosperity as French success would
be.

[135] See Part I, Chapter I.

[136] _English Review_, January 1913.

Lord Roberts, in his 'Message to the Nation,' declared that Germany's
refusal to accept the world's _status quo_ was 'as statesmanlike as it
is unanswerable.' He said further:--

'How was this Empire of Britain founded? War founded this Empire--war
and conquest! When we, therefore, masters by war of one-third of the
habitable globe, when _we_ propose to Germany to disarm, to curtail her
navy or diminish her army, Germany naturally refuses; and pointing, not
without justice, to the road by which England, sword in hand, has
climbed to her unmatched eminence, declares openly, or in the veiled
language of diplomacy, that by the same path, if by no other, Germany is
determined also to ascend! Who amongst us, knowing the past of this
nation, and the past of all nations and cities that have ever added the
lustre of their name to human annals, can accuse Germany or regard the
utterance of one of her greatest a year and a half ago, (or of General
Bernhardi three months ago) with any feelings except those of respect?'
(pp. 8-9.)

[137] Lord Loreburn says: 'The whole train of causes which brought about
the tragedy of August 1914 would have been dissolved by a Russian
revolution.... We could have come to terms with Germany as regards Asia
Minor: Nor could the Alsace-Lorraine difficulty have produced trouble.
No one will pretend that France would have been aggressive when deprived
of Russian support considering that she was devoted to peace even when
she had that support. Had the Russian revolution come, war would not
have come.' (_How the War Came_, p. 278.)

[138] Mr Walter Lippmann did tackle the problem in much the way I have
in mind in _The Stakes of Diplomacy_. That book is critical of my own
point of view. But if books like that had been directed at _The Great
Illusion_, we might have made headway. As it is, of course, Mr
Lippmann's book has been useful in suggesting most that is good in the
mandate system of the League of Nations.

Typographical errors corrected by the etext transcriber:

wth Great Britain=> with Great Britain {pg xvii}

his colleages=> his colleagues {pg 38}

retore devastated districts=> restore devastated districts {pg 39}

aquiescence=> acquiescence {pg 45}

indispensible=> indispensable {pg 46}

the Lorrarine work=> the Lorraine work {pg 86}

rcently passed=> recently passed {pg 135}

Allied aerodomes on the Rhine=> Allied aerodromes on the Rhine {pg 163}

the sublest=> the subtlest {pg 239}

the enemy's propetry=> the enemy's property {pg 294}

a monoply=> a monopoly {pg 299}

goverments=> governments {pg 299}

econmic=> economic {pg 303}