THE MORALS OF
ECONOMIC
INTERNATIONALISM



By

J. A. HOBSON

AUTHOR OF "THE INDUSTRIAL SYSTEM," "THE EVOLUTION
OF MODERN CAPITALISM," "WORK AND WEALTH," ETC.



BOSTON AND NEW YORK
HOUGHTON MIFFLIN COMPANY
The Riverside Press Cambridge
1920

COPYRIGHT, 1920, BY THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA

ALL RIGHTS RESERVED




BARBARA WEINSTOCK
LECTURES ON THE MORALS
OF TRADE

This series will contain essays by representative scholars and men of
affairs dealing with the various phases of the moral law in its bearing
on business life under the new economic order, first delivered at the
University of California on the Weinstock foundation.




THE MORALS OF
ECONOMIC
INTERNATIONALISM


It ought not to be the case that there is one standard of morality for
individuals in their relations with one another, a different and a
slighter standard for corporations, and a third and still slighter
standard for nations. For, after all, what are corporations but
groupings of individuals for ends which in the last resort are personal
ends? And what are nations but wider, closer, and more lasting unions
of persons for the attainment of the end they have in common, i.e., the
commonwealth. Yet we are well aware that the accepted and operative
standards of morality differ widely in the three spheres of conduct. If
a soul is imputed at all to a corporation, it is a leather soul, not
easily penetrable to the probings of pity or compunction, and emitting
much less of the milk of human kindness than do the separate souls of
its directors and stockholders in their ordinary human relations. There
is a sharp recognition of this inferior moral make-up of a corporation
in the attitude of ordinary men and women, who, scrupulously honest in
their dealings with one another, slide almost unconsciously to an
altogether lower level in dealing with a railroad or insurance company.
This attitude is due, no doubt, partly to a resentment of the
oppressive power which great corporations are believed to exercise,
evoking a desire "to get a bit of your own back"; partly to a feeling
that any slight injury to, or even fraud perpetrated on, a corporation
will be so distributed as to inflict no appreciable harm on any
individual stockholder. But largely it is the result of a failure to
envisage a corporation as a moral being at all, to whom one owes
obligations. Corporations are in a sense moral monsters; we say they
behave as such and we are disposed to treat them as such.

The standard of international morality, particularly in matters of
commercial intercourse, is on a still lower level. If, indeed, one were
to press the theoretic issue, whether a state or a nation is a morally
independent being, or whether it is in some sense or degree a member of
what may be called an incipient society of states or nations, nearly
every one would sustain the latter view. We should be reminded that
there was such a thing as international law, however imperfect its
sanctions might be, and that treaties, alliances, and other agreements
between nations implied the recognition of some moral obligation. How
weak this interstate morality is appears not merely from the fact that
under strong temptation governments repudiate their most express and
solemn agreements--to that temptation individuals sometimes yield in
their dealings with one another--but also from the nature of the
defence which they make of such repudiation. The plea of state
necessity, which Germany made for the violation of the neutrality of
Belgium, and which was stretched to cover the brutal mishandling of the
Belgian people, is unfortunately but an extreme instance of conduct to
which every state has had recourse at times, and--still more
significant--which every state defends by adducing the same maxim,
"_salus reipublicæ suprema lex_".

Here is the sharpest distinction between individual and national
morality. There are certain deeds which a good and honorable man would
not do even to save his life; there are no deeds, which it is admitted
that a statesman, acting on behalf of his country, may not do to save
that country. It is foolish to try to shirk this disconcerting
admission. The Machiavellian doctrine of "reason of state" is, in the
last resort, the accepted standard of national conduct. This does not
signify that a nation and its government admit no obligation to fulfil
their promises, or even voluntarily to perform good offices for other
nations, but that there is always implied the reservation that the
necessity, or, shall we say, the vital interests, of the nation
override, cancel, and nullify all such obligations. And when
"necessity" is stretched to cover any vital interest or urgent need, it
is easy to recognize on what a slippery slope such international
morality reposes.

International morality is impaired, however, not only by this feeble
sense of mutual obligation, but by the still more injurious assumption
of conflicting interests between nations. Nations are represented not
merely as self-centered, independent moral systems, but as, in some
degree, mutually repellent systems. This notion is partly the product
of the false patriotic teaching of our schools and press, which seek to
feed our sense of national unity more upon exclusive than inclusive
sentiments. Nations are represented as rivals and competitors in some
struggle for power, or greatness, or prestige, instead of as
coöperators in the general advance of civilization. This presumption
of opposing interests is, of course, more strongly marked in the
presentation of commercial relations than in any other. Putting the
issue roughly, but with substantial truth, the generally accepted image
of international trade is one in which a number of trading communities,
as, for instance, the United States, Britain, Germany, France, Japan,
etc., are engaged in striving, each to win for itself, and at the
expense of the others, the largest possible share of a strictly limited
objective--the world market.

Now there are three fatal flaws in this image. First comes the false
presentation of the United States, Britain, Germany, and other
political beings in the capacity of trading firms. So far as world or
international trade is rightly presented as a competitive process, that
competition takes place, not between America, Britain, Germany, but
between a number of separate American, British, German firms. The
immediate interests of these firms are not directed along political
lines. Generally speaking, the closer rivalry is between firms
belonging to the same nation and conducting their business upon closely
similar conditions. One Lancashire cotton exporter competes much more
closely with other Lancashire exporters than he does with German,
American, or Japanese exporters of similar goods. So it is everywhere,
save in the exceptional times and circumstances in which governments
themselves take over the regulation and conduct of foreign trade.

For certain purposes it is, no doubt, convenient to have balances and
analyses of foreign trade presented separately, so as to show the
volumes and values of different goods which pass from the members of
one nation to those of another. But the imputation of political
significance to these statistics, taken either in aggregate or in
relation to separate countries, as if they were themselves indices of
public gain or public loss, has most injurious reactions upon the
intelligent understanding of commerce.

The second flaw is the assumption of a limited amount of market, which
carries with it the assumption that the groups of traders, gathered
under their national flags, are engaged in a conflict in which they are
entitled to embroil their governments. By tariff bargaining and by all
sorts of diplomatic weapons each government is called upon to assist
its nationals and to cripple or exclude the nationals of other states.
Now it is untrue that the world market is strictly limited, with the
consequence that every advance of one group of traders is at the
expense of another group. The world market is indefinitely expansible,
and is always expanding; and commercial experience shows that the rapid
expansion of the overseas trade of one country does not preclude the
expansion of trade of other countries. I do not, of course, deny that
at a particular time and in relation to some particular lucrative
opportunity, genuine clashes of interests may arise. But, envisaging
the whole range of foreign commerce, one feels that the image of it as
a prize which governments can, and ought to win for their traders at
the expense of the traders supported by other governments, has been a
most fertile source of international misunderstanding.

Perhaps the worst of the three fallacies, and in a sense the
deepest-rooted, is the concept of export trade as of more value than
import trade. This is often traced back to the time when governments
deemed it desirable to accumulate in their countries treasures of gold
and silver and to this end encouraged the sale of goods abroad and
discouraged the payment for them in foreign goods. There are, however,
modern supporters of the assumption that it is more important to sell
than to buy, although the money received for sales has no other
significance or value than its power to buy, and trade can only be
imaged truly as an exchange of goods for goods in which the processes
of selling and of buying are complementary.

The economic explanation of the double falsehood of dividing buying
from selling and of imputing a higher value to the latter process, lies
beyond the scope of this address. But the injuries resulting from the
superior pressure upon governments of organized bodies of producers and
merchants who have things to sell, to the detriment of the consuming
public who have only buying needs, are too grave matters to be
neglected here. It is not too much to say that, if the interests of
consumers and the interests of producers weighed equally in the eyes of
governments, as they should, the strongest of all obstacles to a
peaceful, harmonious society of nations would be overcome. For the
suspicions, jealousies, and hostilities of nations are inspired more by
the tendency of groups of producers to misrepresent their private
interests as the good of their respective countries than by any other
single circumstance.

This analysis has seemed necessary in order to clear away the
intellectual and moral fogs which prevent a true realization of the
economic, and therefore the moral, interdependence of nations. For
every bond of economic interest involves moral obligation also. If it
is true that the fabric of commercial relations is all the time being
knit closer between the different peoples of the earth, then the moral
isolation and the antagonism which earlier statecraft inculcated, and
which still obsess so many minds, must be dissipated and give place to
active sentiments of human coöperation.

There were, indeed, those who thought that already the web of commerce
and finance had been woven strong enough to save nations from the
calamity of war. Their miscalculation arose from underestimating the
power over the mind and the passions of that false image of trade. But
because the modern internationalism of commerce and finance did not
prove strong enough to stem the full and sudden tide of war passions
fed from the barbarous traditions of a dateless past, we ought not to
disparage the potentiality of this internationalism as the foundation
of a new and better world order. For, though those bonds of common
interest broke under the strain of war, the confusion in which we find
ourselves without them is itself a terrible testimony to their value.
The enforced sundering of ordinary trade relations between members of
different countries has taught two clear lessons. The first is this:
that hardly any civilized nation is or can be economically independent
in respect to essential supplies or industries. There is no European
country that does not rely for the subsistence of its inhabitants upon
supplies of goods and raw materials from foreign lands, mostly from
countries outside the European continent. While Britain both leaned
more heavily upon other countries and contributed most to other
countries from her surplus produce, every other country, in larger or
less degree--great countries such as France, Germany, Austria, Italy,
little ones like Belgium, Holland, Switzerland, Scandinavia, and
Denmark--were increasingly dependent upon outside sources for their
livelihood. It is true that there remained a very few great backward
countries, such as Russia and China, where a life of economic isolation
was possible had they been willing to dispense with the higher products
of civilized industry and with the fertilizing streams of capital
without which progress is impossible. No civilized European country was
self-sufficing in the vital factors of a productive and progressive
civilization--food, raw materials, machinery, fuel, transport, finance,
and adequate supplies of skilled labor. The services which countries
near or distant rendered to one another were becoming constantly more
numerous, more complex, and more urgent. The obstructions and stoppages
of war has driven home the lesson painfully to the inhabitants of every
European country, belligerent or neutral. What lesson? That we have
erred in permitting ourselves to grow dependent on the industry,
goodwill, and intercourse of other nations, and that we should endeavor
to hark back to an earlier economic state of national independence?
Well, there are even in Britain rhetorical politicians who speak of the
necessity of retaining all "key" or "essential" industries within their
national control--who propose to reverse the tide of social evolution
by some flimsy apparatus of tariffs and subsidies. This is impossible.
The war has left the European peoples, one and all, more than ever
dependent for their economic livelihood upon one another, and upon the
material resources and labor of other continents.

The second lesson is that, other things equal, it is the most highly
civilized and highly developed countries that are the most dependent
upon others. In a word, there is a presumption that economic
internationalism is an essential feature of civilization.

You will observe that so far I have made no mention of America. And yet
all that I have been saying is, in a sense, introductory to the unique
problem presented by this country. America is the only civilized
country in the world that is virtually self-sufficing as regards the
primary requirements of her economic life. Her soil can and does supply
nearly all her essential foods, her natural resources include the
materials of her great textile, metal, and other basic industries, the
heat, light, electricity, and other forms of natural energy which
satisfy her national needs. She has access to skilled and unskilled
labor sufficient to develop and utilize all these natural resources.
Most of her pre-war imports might be placed under four heads: articles
of luxury and taste in dress, jewelry, etc.; certain chemical and other
scientific products; supplementary supplies of some foods and
materials, from other countries of the American continent, for
manufactures and export trade; and a number of tropical products,
almost all of subsidiary significance in the production and consumption
of the American people. This slight dependence upon foreign countries
has been considerably reduced as the result of war exigency. The art
products of France and Italy, the fine textile goods from Britain, the
dye-stuffs, drugs, and scientific instruments from Germany--in a word,
the great bulk of the imports from Europe, have either been cut out of
American consumption or have been displaced, temporarily, at any rate,
by home products. For several generations the main dependence of
America upon Europe and particularly upon Britain was for capital to
supplement home savings that she might make use of the stream of
immigrant labor in the development of her great continent. This
dependence upon European capital, of greatly diminishing importance
during the last three decades has, of course, now been reversed, and
the principal European countries are heavy debtors to the United
States.

One other important economic lesson war experience has taught, viz.,
the vast capacity for increased productivity which every industrial
nation possesses, and America especially, in better organization and
fuller utilization of natural and human resources. It is evident that,
far from the age of great inventions and of mechanical development
drawing to a close, we are in the actual process of reaching new
discoveries in wealth production, which will make the most famous
advances of the nineteenth century mean by comparison. But without
drawing upon a speculative future, a better and more systematic
application of the knowledge which has been already tested--enlarged
production, elimination of waste, and improved business methods--is
clearly capable of doubling or trebling the output of material wealth
without involving any excessive strain upon human effort.

Here, as in other ways, America stands in a place of unique vantage by
reason of the magnitude and variety of her national resources, and the
vigor and enterprise of her people.

It is evident that, if any country can afford to stand alone in full
economic self-sufficiency, that country is America. It is feasible for
America to contract within very narrow limits her commercial and
political relations with the rest of the world, or, if she chooses, to
confine her commercial and financial relations to this continent,
leaving the old world to get on by itself as well as it can. This view
is, indeed, conformable with the main tradition of American history up
to the close of the last century. Even the Spanish war, with its sequel
of imperialism, was but a slight and reparable breach in this
tradition. The world war seems at first sight to have plunged America
deeper into the European trough. But even this more serious committal
is not irretrievable. She can step back to the doctrine and policy of
'America for Americans' and refuse any organic contact with a
troublesome, a quarrelsome and, as it seems, a ruined Europe. America's
economic status in Europe is not such as to preclude her taking this
course. I may be reminded that the indebtedness of Europe to America is
a solid economic bond, for it cannot be presumed that America would
pursue the policy of liberalism so far as to cancel this debt. But,
large as is this credit, it need not constitute a strong or a lasting
bond of commerce, compelling America to receive such large imports of
goods from Europe as materially to impair her self-sufficiency. A large
and increasing part of the interest and capital of this indebtedness
would be defrayed by the expenditure of American travellers and
residents in Europe, while the importation of objects of art and luxury
would not interfere appreciably with the policy of economic
nationalism. If America decides to go no further in this business, it
will not be too late to draw out.

The choice before her is momentous. So far I have presented it as an
economic problem. It is also quite evidently a political and moral
problem of the first significance, for economic national
self-sufficiency is a phase of political independence. But business and
politics alike belong to the wider art of human conduct; and the choice
before America is primarily a moral choice.

By saying this I do not wish to appear to prejudge the issue. I have
always felt that a stronger case could be made for the political and
economic isolation of America than for that of any other country,
partly because, as I have said, she has within her political domain all
the resources of national well-being; partly, also, because it is of
supreme importance that the great experiment of democracy should not be
unduly hampered by excessive inpourings of ill-assimilable foreign
blood, and by dangerous contacts with obsolete or inapplicable European
institutions. As an economist, steeped in the principles of Cobden and
his British school of liberals, my predilections (prejudices if you
will) have always been in favor of the freest possible movement, alike
of trade and persons, and against fiscal protection and immigrant
restrictions. But, when confronted with the special situation of
America, I have recognized that a reasoned argument could be addressed
to prove that the economy of national security and progress for this
country lay along the lines of political, economic and defensive
self-containedness. I am convinced that many must be led to support
this policy, not on grounds of selfishness, because they desire to
conserve for America alone her great opportunities, and not mainly from
fear, lest America should be embroiled again in the dangerous quarrels
of distant European nations, but because they are animated by that pure
desire, which has inspired so many generations of high-minded
Americans, that American democracy should grow to its full stature by
its own unaided efforts and save the world by its example.

I wish to give due respect to the sincerity of this conviction the more
because I wish to lay before you some grounds for questioning its
ultimate validity. It is no problem of abstract politics or ethics with
which I here confront your minds, but one of concrete and immediate
urgency. Distinctively economic in its substance, it brings right into
the daylight the hitherto obscure issue of the duty of nations as
members of an actual or potential society of nations. As a result of
the destruction of war a large part of Europe lies today in economic
ruin. By that I do not only, or chiefly, refer to the material havoc
wrought by the direct operations of war in France, Belgium, Poland,
Servia, and elsewhere. I mean the imminent starvation which this winter
awaits large populations of those and other countries, both our allies
and our late enemies, and the misery and anarchy arising from their
utter inability to resume the ordinary processes of productive
industry. It is not only food and clothing but raw materials, tools,
machinery, transport, and fuel that are lacking over a large part of
the European continent. If they are left to their own unaided
resources, millions of these people, especially in Russia, Poland,
Austria, and sections of the late Turkish Empire, will perish. They
cannot feed themselves. The land remains, but large tracts of it have
been untilled; large numbers of the peasantry have fallen in the war,
or are wandering as disbanded soldiers, far from home; the women and
the aged and the children, underfed and broken in health and spirit,
are utterly unequal to the task of growing the food for their
livelihood. The factories and workshops are idle or are ill-equipped,
for materials, tools, and fuel are everywhere lacking; unemployment
holds large industrial populations in destitution and despair. Even
where plant and materials are present, the physical strength of the
workers is so let down that efficient productivity is impossible. Even
in countries that are not war-broken, the blockade, and the long
stoppage of normal commerce, have caused great scarcity of many
important foods and materials, and famine prices bring grievous
suffering to the poorer classes. Britain alone among the belligerent
countries is not in immediate distress, but only because she has had
larger outside resources and larger borrowing powers on which to draw.
Even the few neutral nations which are said to have profited by war are
severely crippled by the lack of some essentials of their economic
life.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Is it not the larger and the longer hope and interest of America to
live as a great partner in such a society of nations, rather than to
live a life of isolated prosperity, perhaps the sole survivor in the
collapse of western civilized states? I make this appeal in the
language of Edmund Burke, in his great plea for conciliation with
America, when he reminded his hearers that "Magnanimity in politics is
not seldom the truest wisdom." This, I venture to say, is the true
appeal of Europe to America today. Burke's words, I feel, must kindle
conviction in every generous heart, for in the last resort it is the
desire of the heart and not the calculation of the intellect that
governs and should govern human conduct. For morality among nations, as
among individuals, implies faith and risk-taking, not recklessness,
indeed, but dangerous living, a willingness and a desire to take a hand
in the largest game of life and continually to "pluck out of the
nettle, danger, safety"; but this safety itself only as a momentary
resting-place in the unceasing urge of nations to use their
nationality, not for the achievement of some selfish separate
perfection, but for the ever advancing realization of national ends
within the wider circle of humanity.


_The Riverside Press_
CAMBRIDGE · MASSACHUSETTS
U · S · A







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