The Great Illusion - The Original Classic Edition. Angell Norman

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of a tariff bargain. Switzerland wages a tariff war with Germany, and wins. The whole history of the trade of the small nations shows that the political prestige of the great ones gives them practically no commercial advantage.

       We continually talk as though carrying trade were in some special sense the result of the growth of a great navy, but Norway has a carrying trade which, relatively to her population, is nearly three times as great as Britain's, and the same reasons which would make it impossible for another nation to confiscate the gold reserve of the Bank of England would make it impossible for another nation to confiscate British shipping on the morrow of a British naval defeat. In what way can her carrying trade or any other trade be said to depend upon military power?[Pg 75]

       As I write these lines there comes to my notice a series of articles in the London Daily Mail, written by Mr. F.A. McKenzie, explain-

       ing how it is that England is losing the trade of Canada. In one article he quotes a number of Canadian merchants:

       "We buy very little direct from England," said Mr. Harry McGee, one of the vice-presidents of the company, in answer to my questions. "We keep a staff in London of twenty, supervising our European purchases, but the orders go mostly to France, Germany, and Switzerland, and not to England."

       And in a further article he notes that many orders are going to Belgium. Now the question arises: What more can a navy do that it

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       has not done for England in Canada? And yet the trade goes to Switzerland and Belgium. Is England going to protect herself against the commercial "aggression" of Switzerland by building a dozen more Dreadnoughts? Suppose she could conquer Switzerland and Belgium with her Dreadnoughts, would not the trade of Switzerland and Belgium go on all the same? Her arms have brought her Canada--but no monopoly of the Canadian orders, which go, in part, to Switzerland.

       If the traders of little nations can snap their fingers at the great war lords, why do British traders need Dreadnoughts? If Swiss commercial prosperity is secure from the aggression of a neighbor who outweighs Switzerland in military power a hundred to one, how comes it that the trade and industry, the[Pg 76] very life-bread of her children, as Mr. Harrison would have us believe, of the greatest nation in history is in danger of imminent annihilation the moment she loses her military predominance?

       If the statesmen of Europe would tell us how the military power of a great nation is used to advance the commercial interest of its citizens, would explain to us the modus operandi, and not refer us to large and vague phrases about "exercising due weight in the councils of the nations," we might accept their philosophy. But, until they do so, we are surely justified in assuming that their political terminology is simply a survival--an inheritance from a state of things which has, in fact, passed away.

       It is facts of the nature of those I have instanced which constitute the real protection of the small State, and which are bound as they gain in general recognition to constitute the real protection from outside aggression of all States, great or small.

       One financial authority from whom I have quoted noted that this elaborate financial interdependence of the modern world has grown up in spite of ourselves, "without our noticing it until we put it to some rude test." Men are fundamentally just as disposed as they were at any time to take wealth that does not belong to them, which they have not earned. But their relative interest in the mat-ter has changed. In very primitive conditions robbery is a moderately profitable enterprise. Where the rewards of labor, owing to the inefficiency of the means of production, are small and uncertain, and where all[Pg 77] wealth is portable, raiding and theft offer the best reward for the enterprise of the courageous; in such conditions the size of man's wealth depends a good deal on the size of his club and the agility with which he wields it. But to the man whose wealth so largely depends upon his credit and on his paper being "good paper" at the bank, dishonesty has become as precarious and profitless as honest toil was in more primitive times.

       The instincts of the business man may, at bottom, be just as predatory as those of the cattle-lifter or the robber baron, but taking property by force has become one of the least profitable and the most speculative forms of enterprise upon which he could engage. The force of commercial events has rendered the thing impossible. I know that the defender of arms will reply that it is the police who have rendered it impossible. This is not true. There were as many armed men in Europe in the days when the robber baron carried on his occupation as there are in our day. To say that the policeman makes him impossible is to put the cart before the horse. What created the police and made them possible, if it was not the general recognition of the fact that disorder and aggression make trade impossible?

       Just note what is taking place in South America. States in which repudiation was a commonplace of everyday politics have of recent years become as stable and as respectable as the City of London, and have come to discharge their obligations as regularly. These countries were during hundreds of years a[Pg 78] slough of disorder and a never-ending sanguinary scramble for the spoils, and yet in a matter of fifteen or twenty years the conditions have radically changed. Does this mean that the nature of these populations has fundamentally altered in less than a generation? In that case many a militarist claim must be rejected. There is a simpler explanation.

       These countries, like Brazil and the Argentine, have been drawn into the circle of international trade, exchange, and finance. Their economic relationships have become sufficiently extensive and complex to make repudiation the least profitable form of theft. The financier will tell you "they cannot afford to repudiate." If any attempt at repudiation were made, all sorts of property, either directly or indirectly connected with the orderly execution of Governmental functions, would suffer, banks would become involved, great businesses would stagger, and the whole financial community would protest. To attempt to escape the payment of a single loan would involve the business world in losses amounting to many times the value of the loan.

       It is only where a community has nothing to lose, no banks, no personal fortunes dependent upon public good faith, no great businesses, no industries, that the Government can afford to repudiate its obligations or to disregard the general code of economic morality. This was the case with Argentina and Brazil a generation ago; it is still the case, to some extent, with some Central American States[Pg 79] to-day. It is not because the armies in these States have grown that the public credit has improved. Their armies were greater a generation ago than they are now. It is because they know that trade and finance are built upon credit--that is, confidence in the fulfilment of obligations, upon security of tenure in titles, upon the enforcement of contract according to law--and that if credit is seriously shaken, there is not a section of the elaborate fabric which is not affected.

       The more our commercial system gains in complication, the more does the common prosperity of all of us come to depend upon the reliance which can be placed on the due performance of all contracts. This is the real basis of "prestige," national and individual;

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       circumstances stronger than ourselves are pushing us, despite what the cynical critics of our commercial civilization may say, towards the unvarying observance of this simple ideal. When we drop back from it--and such relapses occur as we should expect them to occur, especially in those societies which have just emerged from a more or less primitive state--punishment is generally swift and sure.

       What was the real origin of the bank crisis of 1907 in the United States, which had for American business men such disastrous consequences? It was the loss by American financiers and American bankers of the confidence of the American public. At bottom there was no other reason. One talks of cash reserves and currency errors; but London, which[Pg 80] does the banking of the universe, works on the smallest cash reserve in the world, because, as an American authority has put it, English bankers work with a "psychological reserve."

       I quote from Mr. Withers:

       It is because they (English

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