Hyndman October 1915
Source: English Review, xxi (Oct. 1915), pp. 283-94;
Transcribed: by Ted Crawford.
The Germanic Powers probably never made a greater mistake in their trade policy than when, in their exultation at their temporary success over Russia and our disasters in the Dardanelles, they proclaimed their intention to establish a strong Customs Union between Germany, Austria-Hungary, and Turkey (with such of the Balkan States as they could dominate) against the Allies, after the war. This proposal showed plainly that the vigorous commercial campaign which Germany has waged single-handed against her rivals, as a matter of State policy, since 1878, will be carried on henceforth with even greater assiduity and determination, by a solid combination of not fewer than 150,000,000 people, under the economic leadership and management of Prussia.
The natural reply to such a hostile manoeuvre was at once suggested from many quarters. Great Britain with all her free Colonies and India, France with her Colonies and Dependencies, Russia, Italy, Japan, Belgium and her Colonies, Serbia, and any neutrals who might take part on our side, should immediately endeavour to set on foot a similar trade combination against our present enemies. All countries belonging to the second group, whatever arrangements they might make with one another, would then undertake to impose prohibitive duties on goods shipped from the Teutonic Zollverein, and would exclude all Teutonic vessels from their ports.
This, of course, would be a declaration of trade war against the Teutonic countries who are preparing a more serious commercial attack than ever upon ourselves and our Allies. It is a distinct repudiation of Free Trade as between the Allied and the Germanic nations.
But the island of Great Britain is the single Free Trade element in the entire Allied combination, and such an international agreement would make Free Trade possible over a much greater area and a far larger population than the Americans secure for themselves under their stringent system of Protection. Therefore there could be little objection to such a counteracting League from any point of view, save that of the most extreme capitalist Free Trade bigots and their hangers-on. We have had but too much evidence of the use which Germany has made of our easy-going, happy-go-lucky, Free Trade arrangements. Germany, that is to say, contrived, within little more than thirty years, to become so much the master of our domestic industry, our general finance, and large departments of our Colonial business, that we found ourselves, in August last year, subjected to such a drain on our gold reserves and so heavy a strain on our manufacturing departments that all our State efforts have hitherto not sufficed to replace anarchy by organisation.
It is almost impossible to estimate what our commercial and financial dependence upon Germany and pro-Germans has cost us in blood and treasure. We can only be certain that, had the same pro-German trade policy been pursued by Great Britain for another ten years, we could no longer have held our own against the industrial and military resources which, at the end of that period, the enemy would have peacefully piled up against us, unless – unless we had ourselves resolved in the meantime to take not merely a single leaf but whole chapters out of Germany’s book: had given up, in short, the policy to which we were devoted.
But now we are forced to consider the alternative. In the September number of this REVIEW Dr. E.J. Dillon, regretting and evidently alarmed at the complete failure of Sir Edward Grey’s diplomacy in the Near East, reasons upon the best means of bringing the Balkan States to a better frame of mind towards the Allies. His argument is that only by systematically applying to them a policy of economic rewards and economic punishments can these various peoples be induced to accept arrangements which are really greatly to their own advantage. And this inevitably leads to the wider scheme of a Customs Union already shadowed forth in other quarters. Thus Dr. Dillon proposes in so many words: – “The adoption by the Allies of two customs tariffs for all produce and manufactured goods entering their respective countries from abroad, a lesser one to be applied to imports from Allied countries and another very much higher to be levied on all merchandise coming from other States.”
This is precisely the view of the situation taken by the Unionist Press, and represents, from the tariff side, what may be called the international and Allied, as opposed to the dominating Germanic, idea of what should be done. Obviously, the Germans, from the Junkers to the Social-Democrats, have made up their minds that, whether they win or lose, whether they exact indemnities from others or have to pay for their depredations themselves, the markets of Great Britain and her Colonies will be open to them, ere many months have passed, just as they were before the war. In fact, they are already preparing, even while the war is at its height, to take the fullest advantage of the opportunities which, when peace ensues, they feel confident will still be placed at their disposal. German efficiency, organisation, and power of adaptation will enable them, as they believe, to recover their position in England, France, and Russia within a very few years.
So far, whatever France and Russia may do, it is clear that our own Government, unless checked by public feeling, intends to play directly into their hands. German and pro-German influences are every bit as strong in the Coalition Cabinet as they were in Mr. Asquith’s previous administration. Even our Sea-Power is being jeopardised by the fatuity of our Foreign Office, which, with its usual fatal pusillanimity, is already surrendering to American “bluff” and German intrigue. Thus, instead of making ready to encounter a renewed and still more powerful commercial rivalry, we are now, in deference to America, actually strengthening the enemy by enabling him to sell his goods at great profit across the Atlantic, to fill up his depleted war chest by this means, and to defeat the very objects for which our Grand Fleet is maintained in the North Sea – maintained at great cost and with an amount of hard work and personal sacrifice on the part of our sailors that is still not commonly appreciated. Worse than this, our rulers are deciding, without taking counsel of the nation, to give way upon “the freedom of the seas,” in the interest of Germany and America, when the Peace Congress is finally summoned. At the same time, they seem disposed to permit the former Power to maintain her enormous army on land and to construct as many submarines, secretly, as she may think desirable.
Moreover, sham Free Trade, and a foolish belief in the general goodwill of our Protectionist rivals and enemies are still to dictate our national policy, a policy only temporarily suspended on account of its very damaging effect upon us during the greatest war of all time. In short, the ideas which underlay the pro-German unratified Declaration of London, and were acted upon by our Government for many months after the war commenced, remain unshaken in the minds of the men who control the destinies of our country. Thus, the tens of thousands of valuable lives we are losing will be utterly thrown away, unless we realise that the Germanic Powers at bottom mean very ill to us, our Colonies, and our Allies, and that the treacherous “freedom of the seas” publicly accepted by Sir Edward Grey is directed against our future welfare.
But all this shows the considerable difficulties we have to encounter on the very threshold of any attempt to organise the Allied forces, in peace as in war, against a strong and persistent enemy. Even at home we Englishmen have not yet begun to use the new and enormous powers of the State for improving our agriculture and industry to meet the heavy demands which are already being made upon them. Though our liberties are suspended and criticism is virtually suppressed, there is very little progress made. Our manufacturers are calculating upon the termination of the war to bring them again their customary imports of dyes, optical glass, and so forth from Germany, and our sweetstuff magnates are awaiting the cargoes of beet sugar which shall give them their usual satisfactory profits. Thus we shall again be as dependent upon Germany as before. Well then may Mr. Frederic Harrison, at the end of his book on The German Peril, write: “Our low scientific and, indeed, general education, our impatience of discipline, our domestic and party imbroglios, and the universal rage to get the cheapest of everything, regardless of quality and of the national risks of destroying home industries, will stare us in the face for a generation. Verily, when peace comes at last, this nation will have much to repent of, much to amend and reorganise, much to learn, and many a cruel lesson to be driven into our souls.” But only Social-Democracy in its widest and most complete sense can solve the economic problems which we must face. Mr. Harrison himself sees this.
Yet while the process of reconstruction is going on within, we must entirely break with the laissez-faire which was introduced by the great manufacturers in their own interest – long before German competition had come into existence – and was accepted by the workers, in their ignorance and contrary to the vehement advice of the great Chartists, as beneficial to themselves. This system, if such it can be called, broke down immediately the war began. The State intervened in every direction to save private capitalism from bankruptcy. But the mass of the people do not understand this; the majority of the employees adhere to the worn-out fetish of commercial individualism; and the “leaders” of the twain political factions, now one flesh, are still supinely waiting for a lead.
Even though the prejudice in favour of the fiscal and economic methods which have prevailed since 1846 should be overcome among the more intelligent middle class, much must be done before any thorough policy of commercial combination against the Germanic Zollverein is adopted by the English people. The complications are very great. So great that the mere suggestion of an economic agreement between all the Allied Powers and their dependencies is at present little more than an invitation to criticism, and a summons to take account of the obstacles immediately ahead.
Take our own free Colonies, for example – Australia, New Zealand, and South Africa, apart from India and Egypt. I have some right to speak on this subject; for so long ago as 1868, when both the great political parties at home were in favour of “cutting the painter,” I advocated a closer connection with our Colonies; and on my return from Australia I wrote an article in favour of complete Federation in Fraser’s Magazine of 1872. Yet to-day, more than forty years later, though the relations between the Mother Country and these same democratic Colonies have astonished the world, and our Colonial brethren are fighting their hardest in the mad and disastrous Dardanelles expedition – even now we have not arranged a beneficial Customs Union with them.
“Our Colonies being ours should be us,” wrote a famous political economist of the seventeenth century. Our Colonies being ours should be snubbed, when they offer to tax German goods to our advantage, say the geniuses who guide our twentieth-century policy. It is often assumed by writers and speakers of the Unionist faction that Mr. Joseph Chamberlain would have settled all this finally had he been allowed to have his way. But, as I pointed out at meeting after meeting, when I followed him round through the country, he was very far from doing so. Leaving the reorganisation of agriculture, factory, industry, and transport in Great Britain entirely on one side, all he proposed was that certain advantages should be accorded to our Colonies under a new mutual tariff. This was good as far as it went, and, properly developed into a complete policy, it would have checked such self-injuring tactics as those which gave the Germans control of the Australian metal market, and threatened at one time to allow them similar domination in South Africa.
But, unfortunately, the whole scheme, as then formulated, entirely failed to harmonise the interests of English and Canadian agriculturists, or to persuade the majority of English wage-earners that they would gain more than they lost by a tax on all wheat except that imported from British possessions. Obviously, unless our system of landownership, cultivation, and transport is entirely revolutionised, the competition of the Canadian farmer and the Australian farmer (and the Russian farmer) is just as dangerous to the English producer as that of the farmer of the United States or the Argentina. The reorganisation of agriculture in Great Britain itself is our primary interest: the arrangement even with our own Colonists necessarily takes a second place. I do not say that the two objects may not be simultaneously achieved; I believe they can. But everything depends upon our recognising from the start that this must be a matter of mutual advantage, and not merely a tariff war against the Germanic Powers, important as I feel this to be.
We may be quite sure also that, if they understand what they are doing, the workers of this island will never agree to bring about a further increase in the price of the necessaries of life simply for the benefit of the landlord, the capitalist farmer, and the distributors. Not they. Some sacrifices they might make, as they are making untold sacrifices now, if assured that these will lead to democratic advance and social reconstruction. But not even the remembrance of German atrocities and piracies and wholesale treachery will induce them to strengthen the economic domination of our profiteering classes after the war.
Again, Japan forms part of the Allied combination, and our own Colonies do so as well. The rise of Japan to the rank of a first-rate Power, alike in industry and in military affairs, is one of the miracles of history. In both departments she is as formidable in Asia as Germany is in Europe, and no long time will elapse before her position on the world market must be fully recognised. Of the wider scope of her policy it is not necessary to speak here. Her appearance at the Peace Congress at the close of the war will mark an epoch in her advance. But if Japan should enter into the Allied Customs Union, it is well to bear in mind that this will be another step towards the fortification of her claims to hold precisely the same status as any other civilised nation. It may be taken as certain, therefore, that any plan which brings in Japan as a portion of the Allied commercial combination will have a further influence in the same direction. For Japan herself expects in the near future to do more than hold her own against Europe in the China market, or extend her influence in the Pacific Ocean against America. Already she has a very definite Treaty of Alliance with ourselves, the full purport of which was foolishly overlooked by our Foreign Office when it allowed the United States to “bluff” us in the matter of German imports; and quite recently she proposed an even more definite Treaty to Russia which could scarcely fail to lead to the partition of China. All this means that another Germany, with sea-power as the main basis of its international influence, has grown up in the Far East, with a population of not less than 70,000,000 in the islands and on the mainland: a Power whose confidence in its future has assuredly not been decreased by the madness which has seized upon the whole of Europe, weakening for at least a generation, as it must, the whole dominant white race.
But the stronger Japan grows, with China in the background, the more difficult does it become to discriminate against Japanese as immigrants in countries where Europeans hold the mastery. The Americans of the Pacific Slope have taken up an attitude towards their unwelcome Asiatic visitors which gives Japan a reasonable casus belli against the United States at any moment. Under our own Treaty with Japan, however, we are bound to help her in such a venture, if any other Power, say Chili, or Mexico, or even Venezuela, takes part with the United States. That is an ugly feature of our existing commitments to begin with.
But our own Colonists, from whom we are receiving such valuable assistance in this cataclysmic struggle, take just the same view of the economic and social dangers of Japanese immigration as the Californians do; and they are as little likely to admit these able Eastern colonisers to a position of equality. What, then, will Great Britain – who is thus in much the same position as the Government of the United States with its doctrine of State rights – what will Great Britain do in regard to her own anti-Japanese free Colonies?
On the one hand, we have a very important Treaty with the powerful and far-sighted island Empire of the East which we desire to expand into a commercial agreement with ourselves and our Allies. On the other hand, our own Colonies, with whom we are still more closely connected, regard the Japanese – who represent to the workers the Yellow Peril in a far more threatening shape than did the Chinese forty years ago – with increasing alarm, and legislate strongly against them. It may be possible to reconcile these widely divergent political and economic, to say nothing of social, incompatibilities – and there is no doubt that they could be reconciled under Socialism; but as matters stand to-day it will be no easy undertaking to persuade the powerful and capable Elder Statesmen of Japan that the equality of fiscal antagonism towards German goods and German shipping should not be accompanied by equality of individual and collective rights in the possessions of all the Allies, if this new Commercial League is accepted. The international boycott of the Germanic Powers and Germanic commerce may suit Japanese policy. But it is incredible that so far-seeing a nation will engage itself to participation in such a league, even for a term of years, unless the bargain carries with it the recognition of rights which it will be no easy matter for us to secure to them.
The advocates of the Customs Union of the Allies in opposition to German State competition, I observe, carefully avoid any consideration of Japan in the matter. But when we think of Japan as a possible commercial partner with the Germanic Powers, within a few years of peace, we may perhaps realise that such an omission might easily be fatal to the whole scheme.
The position with Russia is very different. Russia is genuinely anxious to free herself from that German domination to which she owes much of her reactionary policy in peace, and not a little of the lack of preparation which has cost her so terribly dear in war. She will do a great deal, therefore, to emancipate herself effectively from Teutonic thraldom. But three things she requires and must have in order to reorganise her internal economy after the war. First, a profitable outlet for her produce. Second, capital – since she is further than any European State from the Socialist period – to develop her stupendous resources. Third, a supply of good and cheap machinery in return for her agricultural and mineral exports. Unfortunately, Russia’s economic policy for the past forty years has brought her into such indebtedness towards Western Europe, more particularly France, that bankruptcy has long threatened her. She has only been saved from actual failure to pay interest on her loans by contracting greater and still greater obligations. I am purposely understating the amount of annual payments due from her to her Western creditors at £50,000,000. This drain appears necessarily in the excess of exports over imports in the trade returns, unless balanced by the amount of new loans incurred. Prior to the war there was a shortage on these trade remittances of not less than £120,000,000 in five years. That was serious enough.
What will be the state of affairs after war? What amount of extra annual interest will she have to pay? Where is that extra annual interest to come from over and above the payment for loans previously incurred? Where is the additional capital for development to be obtained? France and England will have none at disposal. Germany will be in far worse case. From the United States alone can there be hope of financial assistance, and that not to any considerable extent. While, therefore, a tariff arrangement may be possible with Russia, to the detriment of Germanic trade, it is clear that the Russian Empire will be unable to pay the interest on its indebtedness to France, without involving its own population in terrible distress and eventually in wholesale ruin.
These facts and economic and financial considerations do not affect the truth that whether some arrangement is made with France for a temporary moratorium or not, Russia will gladly find an outlet for her agricultural products and her mineral output in our markets. Nor do they modify the advantage which Russia will gain by entering into an Allied Customs Union. But it is essential that no illusory conceptions or sentimental exaggerations should mislead us as to the immediately available wealth of our greatest Ally; and in any common commercial and financial programme we must be sure to examine the terrible internal difficulties that will lie ahead of Russia after the war.
It is not too much to say that the whole future of Eastern Europe for at least a generation will depend upon the policy adopted by the Western Powers towards the vast Muscovite Empire. To relieve Russia from German bureaucratic dominance in favour of Anglo-French democratic influence may prove, even from the commercial standpoint, more valuable than the favoured tariff which is now being discussed. There need in future be no political and fiscal antagonism between the Western Powers and Russia. If the Russian people are allowed to proceed steadily on the road to social and economic freedom, there will certainly grow up much closer relations than those which exist to-day – relations that will then be upon common interests and mutual respect.
A Customs Union, and something more, with France and Italy would be easy to arrange and in these cases, as both countries have suffered from open and secret attacks by Germany upon their economic and financial independence, the probability is that anything in the shape of public advances to German banks or finance houses might be closely restricted or rendered impossible for a term of years, while the Allied combination fortified itself against a renewal of the Germanic attack. It is possible that not only the Balkan States, but the Scandinavian nations, might also be induced to enter the Union, provided the Allies agreed to keep open to all the commerce of the Mediterranean, to secure freedom of transport on the Black Sea, and to prevent Constantinople and the Dardanelles from being used to their disadvantage by Russia in the South, while similar guarantees of commercial and political freedom were given to the Scandinavian peoples in the Baltic.
It is well to recognise at once that such a vast programme as this can only be successful if arranged, in the first instance, for a limited period. Its continuance depends on the power of the fleets of the Allies to dominate ocean traffic and to exercise the strictest supervision over imports from any countries which refuse to enter into their fold.
The object of the Union is to prevent the Germanic Powers from using their wonderful skill in organisation and their scientific efficiency to check the development and override the interests of the combined nations during the years which they devote to the improvement of their own industries. But to turn this temporary expedient into a policy of permanent exclusion of the productions of a most important portion of the human race – itself, as we may hope, developing in the direction of complete democracy and social progress – would be a most foolish and injurious form of reaction. Bitter as we must all feel towards the enemy of to-day, who is preparing, even in war, for a furious trade conflict in peace, the time will assuredly come when the memory of the crimes committed by the Teutonic Empires will fade, and commercial relations will be renewed with the new generation of Germans, as they were with the French after the great Napoleonic wars, which extended over twenty years. International comity cannot be permanently suppressed, whatever national feeling; as well as national interest, may reasonably counsel for the time being.
Meanwhile, our own main business at home is to learn from Germany those lessons of agricultural, industrial, and distributive efficiency which she has been teaching us for more than thirty years. Unless we at once set to work so to re-order our national life that huge slum areas, with the physical deterioration they engender, are finally swept away; to establish a system of training, feeding, and clothing which shall ensure health and strength to all from childhood onwards; to put an end to the furious profiteering of competition which renders all social reform under capitalism illusory and futile in the long run; to regard all measures as beneficial only in so far as they increase the well-being of the whole community, and thus secure the fullest development, physical, mental, and moral of each individual; to bring our political forms into direct democratic harmony with our economic collectivism – unless we do all these things, and do them quickly and thoroughly, all the tariff regulations and Customs Unions in the world will not save our nation from anarchical revolution or possibly final ruin.
Optimism and procrastination under such conditions as we see around us are mere fatuity. Even this stupendous war will not have been wholly harmful if, having saved Europe from the tyranny of Junkerdom, it forces England to enter upon the path of scientific Social-Democracy. Individual and company forms of capitalism have alike failed to hinder the degradation of the people by wage-slavery. It is high time we should all recognise that, only through the conscious action of the community as a whole in the common interest can we enter upon the new period of universal co-operation. Then, through the abolition of private property in the means of making wealth, we shall open up a new and glorious period for the happiness of the human race.
1. To their own advantage; because the victory of the Germanic Powers must mean that all the Balkan States to a position of vassaldom to Prussia and – Turkey!
2. The German Peril, p.285
3. In my book, England For All, of 1881, I again strongly advocated the closer connection with our free Colonies as a portion of a complete democratic policy.
4. The total population included in the suggested Allied Customs Union would comprise not fewer than 65o,000,000 of the human race with increasing influence over China.