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diff --git a/.gitattributes b/.gitattributes new file mode 100644 index 0000000..6833f05 --- /dev/null +++ b/.gitattributes @@ -0,0 +1,3 @@ +* text=auto +*.txt text +*.md text diff --git a/29881-8.txt b/29881-8.txt new file mode 100644 index 0000000..6c261e4 --- /dev/null +++ b/29881-8.txt @@ -0,0 +1,1197 @@ +Project Gutenberg's Morals of Economic Internationalism, by John A. Hobson + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Morals of Economic Internationalism + +Author: John A. Hobson + +Release Date: September 1, 2009 [EBook #29881] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK ECONOMIC INTERNATIONALISM *** + + + + +Produced by The Online Distributed Proofreading Team at +http://www.pgdp.net (This file was produced from images +generously made available by The Internet Archive/American +Libraries.) + + + + + + +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 + + + + + +End of the Project Gutenberg EBook of Morals of Economic Internationalism, by +John A. 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Hobson + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Morals of Economic Internationalism + +Author: John A. Hobson + +Release Date: September 1, 2009 [EBook #29881] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK ECONOMIC INTERNATIONALISM *** + + + + +Produced by The Online Distributed Proofreading Team at +http://www.pgdp.net (This file was produced from images +generously made available by The Internet Archive/American +Libraries.) + + + + + + +</pre> + + +<h1> +THE MORALS OF<br> +ECONOMIC<br> +INTERNATIONALISM +</h1> + +<br> + +<h3> +By +</h3> + +<h2> +J. A. HOBSON +</h2> + +<h3> +AUTHOR OF "THE INDUSTRIAL SYSTEM," "THE EVOLUTION<br> +OF MODERN CAPITALISM," "WORK AND WEALTH," ETC. +</h3> + +<div class="figcenter"><img src="images/001.jpg" alt="Logo" width="116" height="150"></div> + +<h4> +BOSTON AND NEW YORK<br> +HOUGHTON MIFFLIN COMPANY<br> +The Riverside Press Cambridge<br> +1920 +</h4> + +<h4> +COPYRIGHT, 1920, BY THE REGENTS OF THE<br> +UNIVERSITY OF CALIFORNIA +</h4> + +<h5> +ALL RIGHTS RESERVED +</h5> + +<hr class="med"> + + +<div class="box"> +<p class="ctr"> +BARBARA WEINSTOCK<br> +LECTURES ON THE MORALS<br> +OF TRADE +</p> +<p> +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. +</p> +</div> + + +<hr class="long"> +<h3> +THE MORALS OF<br> +ECONOMIC<br> +INTERNATIONALISM +</h3> + +<p class="gap"> </p> +<p class="dropcap"> +<span class="dcap">It</span> 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. +</p> + +<p> +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, +"<i>salus reipublicæ suprema lex</i>". +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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? +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<p> +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. +</p> + +<br> +<p class="ctr"> +<i>The Riverside Press</i><br> +CAMBRIDGE · MASSACHUSETTS<br> +U · S · A +</p> + + + + + + + +<pre> + + + + + +End of the Project Gutenberg EBook of Morals of Economic Internationalism, by +John A. 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You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Morals of Economic Internationalism + +Author: John A. Hobson + +Release Date: September 1, 2009 [EBook #29881] + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK ECONOMIC INTERNATIONALISM *** + + + + +Produced by The Online Distributed Proofreading Team at +http://www.pgdp.net (This file was produced from images +generously made available by The Internet Archive/American +Libraries.) + + + + + + +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 reipublicae 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 +cooeperators 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 cooeperation. + +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 cooeperative 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 +cooeperation is to save these weak and desperate peoples, it must be a +cooeperation 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 cooeperate 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 cooeperation for +the immediate work of the salvage and restoration of Europe, and the +issue of a permanent cooeperation 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 +cooeperation. 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 cooeperative 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 cooeperation, but upon this +post-war cooeperation 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 cooeperation 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 cooeperation 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 + + + + + +End of the Project Gutenberg EBook of Morals of Economic Internationalism, by +John A. 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