Remedies

It is difficult to maintain true perspective in large
affairs. I have criticised the work of Paris, and have depicted
in sombre colours the condition and the prospects of Europe. This
is one aspect of the position and, I believe, a true one. But in
so complex a phenomenon the prognostics do not all point one way;
and we may make the error of expecting consequences to follow too
swiftly and too inevitably from what perhaps are not all the
relevant causes. The blackness of the prospect itself leads us to
doubt its accuracy; our imagination is dulled rather than
stimulated by too woeful a narration, and our minds rebound from
what is felt 'too bad to be true'. But before the reader allows
himself to be too much swayed by these natural reflections, and
before I lead him, as is the intention of this chapter, towards
and ameliorations remedies and the discovery of happier
tendencies, let him redress the balance of his thought by
recalling two contrasts -- England and Russia, of which the one
may encourage his optimism too much, but the other should remind
him that catastrophes can still happen, and that modern society
is not immune from the very greatest evils.

In the chapters of this book I have not generally had in mind
the situation or the problems of England. 'Europe' in my
narration must generally be interpreted to exclude the British
Isles. England is in a state of transition, and her economic
problems are serious. We may be on the eve of great changes in
her social and industrial structure. Some of us may welcome such
prospects and some of us deplore them. But they are of a
different kind altogether from those impending on Europe. I do
not perceive in England the slightest possibility of catastrophe
or any serious likelihood of a general upheaval of society. The
war has impoverished us, but not seriously -- I should judge that
the real wealth of the country in 1919 is at least equal to what
it was in 1900. Our balance of trade is adverse, but not so much
so that the readjustment of it need disorder our economic
life.(1*) The deficit in our budget is large, but not beyond what
firm and prudent statesmanship could bridge. The shortening of
the hours of labour may have somewhat diminished our
productivity. But it should not be too much to hope that this is
a feature of transition, and no one who is acquainted with the
British working man can doubt that, if it suits him, and if he is
in sympathy and reasonable contentment with the conditions of his
life, he can produce at least as much in a shorter working day as
he did in the longer hours which prevailed formerly. The most
serious problems for England have been brought to a head by the
war, but are in their origins more fundamental. The forces of the
nineteenth century have run their course and are exhausted. The
economic motives and ideals of that generation no longer satisfy
us: we must find a new way and must suffer again the malaise, and
finally the pangs, of a new industrial birth.
This is one
element. The other is that on which I have enlarged in chapter 2
-- the increase in the real cost of food and the diminishing
response of Nature to any further increase in the population of
the world, a tendency which must be especially injurious to the
greatest of all industrial countries and the most dependent on
imported supplies of food.

But these secular problems are such as no age is free from.
They are of an altogether different order from those which may
afflict the peoples of Central Europe. Those readers who, chiefly
mindful of the British conditions with which they are familiar,
are apt to indulge their optimism, and still more those whose
immediate environment is American, must cast their minds to
Russia, Turkey, Hungary, or Austria, where the most dreadful
material evils which men can suffer -- famine, cold, disease,
war, murder, and anarchy -- are an actual present experience, if
they are to apprehend the character of the misfortunes against
the further extension of which it must surely be our duty to seek
the remedy, if there is one.
What then is to be done? The tentative suggestions of this
chapter may appear to the reader inadequate. But the opportunity
was missed at Paris during the six months which followed the
armistice, and nothing we can do now can repair the mischief
wrought at that time. Great privation and great risks to society
have become unavoidable. All that is now open to us is to
redirect, so far as lies in our power, the fundamental economic
tendencies which underlie the events of the hour, so that they
promote the re-establishment of prosperity and order, instead of
leading us deeper into misfortune.

We must first escape from the atmosphere and the methods of
Paris. Those who controlled the conference may bow before the
gusts of popular opinion, but they will never lead us out of our
troubles. It is hardly to be supposed that the Council of Four
can retrace their steps, even if they wished to do so. The
replacement of the existing governments of Europe is, therefore,
an almost indispensable preliminary.

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The Relation of the Old World to the New

The accumulative habits of Europe before the war were the
necessary condition of the greatest of the external factors which maintained the European equipoise.

Of the surplus capital goods accumulated by Europe a
substantial part was exported abroad, where its investment made
possible the development of the new resources of food, materials,
and transport, and at the same time enabled the Old World to
stake out a claim in the natural wealth and virgin potentialities
of the New. This last factor came to be of the vastest
importance. The Old World employed with an immense prudence the
annual tribute it was thus entitled to draw. The benefit of cheap
and abundant supplies, resulting from the new developments which
its surplus capital had made possible was, it is true, enjoyed
and not postponed. But the greater part of the money interest
accruing on these foreign investments was reinvested and allowed
to accumulate, as a reserve (it was then hoped) against the less
happy day when the industrial labour of Europe could no longer
purchase on such easy terms the produce of other continents, and
when the due balance would be threatened between its historical
civilisations and the multiplying races of other climates and
environments. Thus the whole of the European races tended to
benefit alike from the development of new resources whether they
pursued their culture at home or adventured it abroad.

Even before the war, however, the equilibrium thus
established between old civilisations and new resources was being
threatened. The prosperity of Europe was based on the facts that,
owing to the large exportable surplus of foodstuffs in America,
she was able to purchase food at a cheap rate measured in terms
of the labour required to produce her own exports, and that, as a
result of her previous investments of capital, she was entitled
to a substantial amount annually without any payment in return at
all. The second of these factors then seemed out of danger but,
as a result of the growth of population overseas, chiefly in the
United States, the first was not so secure.

When first the virgin soils of America came into bearing, the
proportions of the population of those continents themselves, and
consequently of their own local requirements, to those of Europe
were very small. As lately as 1890 Europe had a population three
times that of North and South America added together. But by 1914
the domestic requirements of the United states for wheat were
approaching their production, and the date was evidently near
when there would be an exportable surplus only in years of
exceptionally favourable harvest. Indeed, the present domestic
requirements of the United States are estimated at more than
ninety per cent of the average yield of the five years
1909-13.(4*) At that time, however, the tendency towards
stringency was showing itself, not so much in a lack of abundance
as in a steady increase of real cost. That is to say, taking the
world as a whole, there was no deficiency of wheat, but in order
to call forth an adequate supply it was necessary to offer a
higher real price. The most favourable factor in the situation
was to be found in the extent to which Central and Western Europe was being fed from the exportable surplus of Russia and Roumania.

In short, Europe's claim on the resources of the New World
was becoming precarious; the law of diminishing returns was at
last reasserting itself, and was making it necessary year by year
for Europe to offer a greater quantity of other commodities to
obtain the same amount of bread; and Europe, therefore, could by
no means afford the disorganisation of any of her principal
sources of supply.

Much else might be said in an attempt to portray the economic
peculiarities of the Europe of 1914. I have selected for emphasis
the three or four greatest factors of instability -- the
instability of an excessive population dependent for its
livelihood on a complicated and artificial organisation, the
psychological instability of the labouring and capitalist
classes, and the instability of Europe's claim, coupled with the
completeness of her dependence, on the food supplies of the New
World.

The war had so shaken this system as to endanger the life of
Europe altogether. A great part of the continent was sick and
dying; its population was greatly in excess of the numbers for
which a livelihood was available; its organisation was destroyed,
its transport system ruptured, and its food supplies terribly
impaired.

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