THE network of treaties designed to prevent war by providing alternative methods for the settlement of conflicts grows rapidly from year to year. Apart from such major instruments as the Covenant of the League of Nations, the Treaty of Locarno and the Kellogg Pact, there are now a host of secondary or subsidiary engagements; and the legal obstacles to resort to war are being constantly increased. The system is not yet indeed logically complete. But if we are attempting to estimate the prospects of its being adequate to save the world from another war, our doubts do not arise from any logical incompleteness in the system, from the existence of any legal or theoretical gaps. The adequacy of the system depends mainly upon the play of two factors: the strength which it can derive from the determined loyalty of those who have constructed or accepted it, and the strain which deep divergencies of interest and policy may impose upon it.

No one can estimate with precision what strength the system will acquire, or what amount of strain it will safely withstand. But we may perhaps assert with confidence that it should certainly suffice to prevent what may be called accidental or capricious wars -- that is to say, to settle the casual and occasional disputes and conflicts that arise in the course of the world's business, if deeper and more enduring forces are not involved. On the other hand, it is equally clear that no possible machinery for the settlement of disputes without war can be strong enough to stand every conceivable strain. In other words, future peace depends not only upon the character of the preventive machinery, but also upon whether the normal life of the world is, or is not, such as to create deep and intensely felt divergences of policy and interest which will add to the occasional dispute over a particular question an importance and a danger it would not otherwise possess.

The attention of the world during the last ten years has naturally been concentrated mainly upon the more urgent and restricted task of constructing a preventive machinery. But it is essential to remember that this is only half the task. Equally vital, and even more difficult, is the long and gradual work of removing the underlying causes which endanger international relations.

II

These main causes group themselves most conveniently into two main categories, the "political" and the "economic." The first are those which spring in one form or another from national (or racial) consciousness, such as jealousy as to national prestige and status, the desire to impose or extend a national influence or culture, the wish to be governed by those of one's own race or under institutions corresponding to one's racial traditions, problems of minorities, revolutionary movements involving the possibility of intervention from abroad, and so on. Economic causes need no definition, though they will call for illustration. They of course include all those deep divergences of real or imagined economic interest, those fundamental differences of policy and conception from which a sense of intolerable injury and injustice may arise.

The relative importance of these two categories of forces, and the relations between them, are not easily described with precision. The political factor tends to be nearer the surface and is usually more obviously and directly related to any dangerous conflict. Sometimes it derives much of its real strength from some economic factor, but sometimes it is almost or entirely free of any such element. At the present moment it is probably true to say that the political factors in international relationships are more important; that in most cases in which there seems any serious chance of a dangerous dispute in the near future the issue would probably be political, not only in appearance but in reality. The fears as to security, and the competitive armaments which both express and increase them; the grievances of minorities; the national ambitions that claim or deny parity in armed forces as an expression of political status; the ententes or associations or alliances of political friends as against others outside the group; the competitive diplomacy in such regions as the Balkans which this process of group-forming evokes; the rival political systems of democracy, dictatorship and Bolshevism, with their external reactions; the historical and sentimental resentments at the transfer of territory to other sovereignties under recent treaties -- it is to causes such as these that such danger as lies in the immediate international situation may be traced. And they are predominantly political, deriving not only their form of expression but their real strength from sources in which divergences of economic interest have a relatively small part.

But of course even in such questions there is often an economic factor, in varying degrees either explicit and conscious or obscure and unrealized. If we consider for example the existing relationship of Germany and Poland, it is true that the sovereignty of the Corridor, the separation of East Prussia, historic memories and claims and regrets, are the matters present to the consciousness of the great bulk of those of either country. But it is equally true that these political differences are made more dangerous, and the accompanying sentiments kept more alive, by the direct conflict of economic interests between the producers of coal and of pigs in the two countries. Only a limited class are concerned to keep out the others' pigs or coal, or secure free entry for their own, but they are enough to add considerable strength to the more widely entertained political sentiments. In the questions that turn on changes of frontier the sense of economic loss is also a real factor. And the issue between different forms of government is obviously a mixed one as well.

It remains true, none the less, that if a considerable war broke out in any near future an accurate analysis of its causes would be likely to assign the predominant weight to political rather than economic causes.

III

The present political situation is, however, a very misleading guide to any long-term estimate of the future. It is inevitable that for a decade or two after a long and great war which has inflamed all sentiments of nationalism and established new sovereignties and new frontiers, political resentments and disputes should retain an abnormal and disproportionate place in the life and consciousness of the world. We may expect that as the world settles down again to its normal life, as memories of the war and its immediate consequences grow more distant, as here and there adjustments are made and grievances removed, the content of men's thought and consciousness will change accordingly. Political resentments may last long, but in their nature they tend to diminish unless special causes revive them. After all, the normal concern of most men in most countries is how to earn the necessities of life, or to add luxuries to the necessities. Some men at all times, and at some times most men, are supremely concerned with political aspirations or ambitions or resentments. But these are the exceptional persons or the exceptional periods. If the preventive machinery, aided by memories of the last war and by war weariness, can prevent the political resentments arising out of the last struggle from causing another outbreak for some substantial time, nearly all the specifically political forces which make for danger will tend to decrease.

No similar tendency to diminish can be observed in economic dangers. In any future that we can foresee the main occupation and concern of mankind will be the economic struggle; competition between individuals and between groups, whether of the same or different countries, will remain a basic element in human life. The forces so engendered are potentially the strongest in the world, and if they are so developed and directed that their collective might comes into conflict with any human institution, it is difficult to imagine the institution that can withstand the strain.

We may therefore perhaps go a little further than we did above and say that, in any reasonably long view of the future, not only will political dangers tend to diminish in force unless they are reënforced by economic conflicts of interest and outlook, but that the preventive machinery is likely to be adequate to prevent them from leading to war. The risk remains, however, that the normal economic struggle may be so deflected or aggravated as to create not only deep divergences of economic interest between different masses of the world's population but a growing sense of injury and injustice; that the methods and policies responsible for this development may become identified with the collective authority of national governments; and that they may supplement, strengthen and inflame political resentments. In that case no preventive machinery is likely to withstand the strain indefinitely.

No subject, therefore, merits more serious study than that of the forms which economic conflicts are likely to take under modern conditions, and the ways in which we may hope to mitigate the resultant dangers.

IV

Economic factors have always been an element in the complex of conditions leading to war. But sometimes they have been subordinate and subsidiary, as in the periods when conflicts turned mainly upon the personal ambitions of rival dynasties or the fervor of religious proselytism; and when they have been dominant they have assumed very different forms in different periods. In early ages came the mass invasions of nomadic races; in many periods occurred the forcible acquisition of neighboring territories for mixed motives of power, glory and economic resources; as late as the nineteenth century we had the partition of Africa by a process of competitive diplomacy involving danger at every step, and the similarly competitive demarcation of spheres of influence in such countries as China or Persia.

None of these forms of economic competition or conflict are characteristic of the present age. It may be, of course, that some will recur, but for the time being the form and direction are different. The forcible domination of one civilized country by another is recognized as impracticable; the partitioning of the uncivilized parts of the world into colonies has more or less reached its end; and there is no very pressing danger of the forcible transfer of territory from one colonial power to another. The characteristic form of the present struggle is to be found not in the acquisition of territory but in the use of the power of government to influence the course of trade between one territory and another. But before we attempt to define this with more precision it will be well to narrow the field still further by exclusion.

The danger ahead does not consist in the fact of competition itself and cannot be entirely removed by the substitution of cooperation for competition. In many spheres this substitution may be practicable and desirable, but its effect will be rather to change the area within which competition operates than to eliminate it altogether. In any future which we can foresee, competition in some form is likely to be a basic fact of human experience. Nor is there any reason why competition in itself should injure or embitter international relations. The competition between individuals of different countries, as between those of the same country, must involve incidental loss and dislocation, but in the first case as in the second it should bring a general benefit far transcending individual losses: and if it operates within a suitable framework of treaty law and accepted custom which is comparable to that operating in each country in the form of commercial and criminal law, there is no reason why it should lead to international conflict. It is a complete fallacy that the industrial advance of one nation involves loss (apart from incidental dislocations) to others. The industrial rise of Germany in the second half of the nineteenth century seemed to threaten Great Britain's prosperity, and did indeed inflict injury upon individual businesses; but it probably brought more custom than it took away. Nor is it likely that the competition of individuals, even if it includes methods which cause friction and ill will, would endanger international relations very seriously unless it were helped by the action of governments representing the collective authority of their countries and engaging their collective responsibility. We may indeed say that by far the most serious and urgent economic dangers of conflict are those which arise from the relations of governments to the process of economic competition, and that most -- though not all -- arise within the sphere of commercial policy. They are the net result of a number of different factors: the technical development of industry (and to some extent agriculture) in such a way as to make the normal market much wider than the range of the territories comprised within the range of existing frontiers; the technical development of the machine of government and administration which makes possible intricate and extensive measures of control, restraint and preference which deflect the course of trade; and the absence of any accepted code of principles and policy to determine the limits within which these powers can be exercised.

V

In tracing the operation of these factors in different spheres of government action it is natural to think first of the question of tariffs. Of all the forms of government action which affect the economic interests of other countries, tariffs have the most extensive and considerable economic consequences. Practically all countries have some protective tariffs, though they vary very greatly in range and in height; nearly all countries depend to a substantial extent on both exports and imports; a very large proportion at least of manufactured articles are subject to a duty as they pass a frontier; and the natural effect of duties is both to reduce imports and exports and to increase the price of the articles on which they are imposed. Under these conditions no other measures, whether of subsidy or prohibition, or control of production, have any comparable importance in the general economy of the world. It does not follow, however, that tariffs must be or will be the most dangerous source of conflicts and ill will. It is of course true that as the natural range of economic activity grows wider and tariff units show no similar tendency to grow in size, the clash and conflict between the claims of nationalism and economic interest increase, and tariffs more and more cramp industrial development and deflect the natural courses of trade. But the tariffs in themselves, even high tariffs, while economically important, will not necessarily have correspondingly serious political consequences on international relations. If tariffs, even high ones, are non-differential, or differential only on accepted principles and conditions, and if they are not too unequal and are stable, they are in all their effects very much like natural obstacles such as mountain ranges, which make transport more difficult or expensive. That is, they mean some economic loss, but it is a measurable one, the economic organization accepts them as a fact and adjusts itself, and the ill-feeling engendered may not be very great. Countries do not normally regard themselves as having a natural right to free entry into each others' markets. But it is different if they are deprived, especially suddenly, of a right previously enjoyed, if large and important industries which have grown up in response to a trade demand made possible by free entry or low tariffs are suddenly dislocated or destroyed by new duties.

In other words, it is not so much tariffs in themselves as the arbitrary methods by which they are framed and imposed, that are a serious element in international relations. And from this point of view it therefore is best to concentrate attention rather on tariff-making methods than on the general issue of free trade or protection. The first may be preferable in the interests of general world prosperity -- that is another question -- but so far as we are aiming at removing a serious element of friction in international relations we can fortunately largely secure our object by a more practicable method than that of abolishing tariffs. What we most need is to reform their abuses. We shall have enough to do even within this restricted sphere. Many countries still frame and inspire their tariffs under the pressure of various organized interests, when they happen to feel like it and with very little consideration of the kind of dislocation that may be caused elsewhere; the only restraining influence, and that is partial and ineffective, is the fear of retaliation. But both in existing practice and recent policy we see indications of the line of advance. The network of commercial treaties which has been renewed in the last few years in Europe gives at least some temporary stability as between the contracting states. These treaties, however, are usually subject to denunciation within a short period, and the conference held last March in Geneva showed a clear recognition that more is needed. The Commercial Convention then signed provided for a continuance of existing commercial treaties, and embodied the important principle that if a contracting state desired to change a tariff consolidated in a treaty it should give notice and an opportunity of consultation with any seriously affected state. The actual legal effect of this convention is not considerable. But the principles of greater stability, due notice, and the opportunity of consultation -- with the practical recognition they involve of the legitimate interest and concern of other countries in a proposed new tariff -- may prove of the utmost importance in the future development of the world's commercial policies. It is perhaps not too much to say that if they could be given an adequate extension and application, tariffs, while still a factor in the course of the world's economic development and a retarding force in the growth of prosperity, would cease to be a source of very serious friction in international relations.

In contrast with tariffs, state-aided "dumping" causes an amount of friction altogether out of proportion to the actual range of its economic effects. From time to time, in a period of serious depression in some industry which can exercise political pressure, a state assists it to sell its products for export at less than the home prices. When this is done intense feeling is aroused and the effect on the general relations of the country with other countries which both produce and import the commodity is at once noticeable. What is serious is the combination of state association and of dumping. A state subsidy to an industry, even an exporting industry, is very much less resented; indeed, if it is stable and is not accompanied by any differentiation between home and export prices, it comes to be accepted by foreign competitors almost as if it were merely a natural advantage possessed by the industry in question. In time it is seen that it is the home taxpayer who has the more real and enduring grievance. On the other hand "dumping,"[i] if unaided by any form of state action, has a restricted effect, though of course always a regrettable one. It is restricted both in extent and in time by the pressure of home competition, which is always tending to force down home prices to within a small margin of the cost of production; and as the collective responsibility of the nation is not involved, the resentment is confined to the private individuals concerned.

A further category of difficult problems is raised in connection with raw materials. From time to time a government attempts either to enhance above its natural level the price of raw materials produced in territory under its control or to give some advantage to its home-exporting industries by differential prices or preferential supply. Such action is promptly resented abroad and, governmental action being involved, affects political relations. Even more important is the fact that the constant possibility of such action makes countries covetous of territories rich in raw materials which are at present in the possession of other countries. Obviously, if it were an accepted rule that raw materials required by the industries of many countries should always be available on equal terms to all comers, the motives for the forcible acquisition of colonies would be immensely reduced. I am not now suggesting either that such a principle is just and practicable, or that it is not. What needs first to be recognized is that there are no universally accepted principles of policy, that it is very desirable that there should be, and that a necessary preliminary is for many questions to receive close discussion and examination. Is there a real distinction in natural equity between a country reserving its home markets by a tariff or a prohibition against foreign imports and reserving or restricting its supply of raw materials in order to secure a competitive advantage? Should a distinction be made between raw materials produced in the territory of a self-governing sovereign power and those produced in non-self-governing colonies under its control? The range of problems thus suggested calls urgently for serious attention. At present there are few instances of either restriction of production or differential sale of any of the main raw materials. But there have been sufficient instances in the past to keep alive apprehensions as to what may happen in the future. It is much easier to prevent the establishment of undesirable practices than to abolish them once vested interests have grown up round them, and it is well, therefore, that we should not wait till the problem presents itself in a form at once more difficult and more dangerous than at present.

So far I have illustrated the dangers arising out of governmental action in the sphere of commercial policy. Similar issues arise throughout a wide range of daily administrative practice. Take as an example the current work of legations, especially in small capitals. A large part of this work consists of helping the nationals of their respective countries to obtain contracts and concessions. How far is it right and desirable that a minister or a commercial attaché should occupy himself with this sort of thing? Here too there is a singular absence of any recognized etiquette limiting the sphere and prescribing the methods permissible to those who, as official representatives, necessarily engage the collective responsibility of their countries in anything they do. Clearly it is right that they should insist on justice and fair treatment for their nationals. It may also be convenient that they should supply information as to local law and custom, and perhaps regarding trade opportunities, though trade organizations organized privately might do work of this kind. But it is notorious that a minister often goes further. He represents it as being a matter of some interest to his government that a contract or a concession or a loan should be given to a firm of his own nationality. His representation may carry suggestions as to political favor or displeasure; and if negotiations of quite a different character -- such as the arrangement of an entente or the funding of a foreign debt -- are in progress between the two countries, the ministerial intervention may well be decisive. Is a minister justified in using pressure of this kind? Certainly one minister is often suspected of doing so by others; resentment follows; and the disturbance in the relations between the legations is transmitted to their respective foreign offices. The impact of such competitive business diplomacy upon the politics of small European capitals is often very regrettable. Here again the point to stress is that practice in fact varies considerably; different ministers and countries have differing standards. There is no generally recognized and observed code of behavior in such matters, and in its absence friction is inevitable. This may seem to many a trivial source of economic difficulties, but not to those who have watched closely the practical working of modern diplomacy.

Another series of problems, in quite a different sphere, is presented by loans to governments, especially loans of substantial magnitude by important houses or combinations in the great financial countries to small countries with unstable political systems and weak or possibly corrupt governments. For example, suppose a loan is made, perhaps on extortionate terms, perhaps for unwise objects, and perhaps to an unconstitutional government which spends it corruptly; suppose further that a subsequent government repudiates the debt. Should the government of the lenders' country use its influence, which really means the authority based in the last resort on its known possession of armed forces, to insist on the observance of the loan contract? If so, in what circumstances and under what conditions? Or suppose a large banking house arranges a loan which is used for military preparations, and possibly aggressive action, against a neighbor state. Should such loans be subject to a government veto? In some classes of loans to governments, the right rule may be complete government abstention from beginning to end; in others, prior governmental consideration or even international consideration. In this sphere the need probably is not for a new extension of international law, embodied in treaties and binding governments as to the form of action they should take, but for the gradual building up of a recognized standard of behavior and the application of recognized principles suitable to different classes of loan operations.

VI

These instances from different kinds of commercial policy and practice will serve as a basis for considering the methods by which we may mitigate the indicated dangers. Some of these have already been tentatively suggested. It is clear that no single method or guiding principle will suffice. Sweeping and drastic efforts to eliminate governmental action from all interference in the economic struggle by means of an international treaty -- whether or not this is the right ultimate ideal -- are impractical and will not help us through the difficulties of the near future; but within a small sphere the definite abolition of government action, or its restriction within exactly defined limits, may be practicable and desirable. A convention to restrict the cases in which actual prohibitions of imports or exports shall be permissible was recently signed and ratified by the United States, Japan, Great Britain, and by most countries in Europe, and only failed to come into complete and effective operation through the abstention of a single European country. Within this limited sphere this is clearly the right method, and it should be pursued till success is achieved. In the sphere of tariffs, the immediate objectives are indicated by the Commercial Convention of last March -- greater stability, reduction, consultation; and these objectives should be pursued through governmental action, as opportunity offers, so as to extend their application in range, time and content.

But it is equally clear that for the greater part of the problems described -- in many of the spheres of administrative practice, in loan policy, in the questions raised by raw materials -- the time for governmental negotiation has not arrived. Public opinion is not prepared, and in some cases even the necessary basis of knowledge is not available. The present need is for a conscious effort by all who are interested in the improvement of international relations to win continuous attention for this aspect of economic problems. Research as to existing facts and practices must be actively pursued, and there must be constant discussion in conference and in published writings of the principles involved. In this way we shall gradually build up an informed and active public opinion, the necessary prior condition for the translation into treaty law and actual practice of the principles which seem at once the fairest and the most likely to mitigate occasions of friction. Universities, organizations concerned with the discussion of international affairs, individual economists and historians, foundations which encourage and direct research, all have their part to play. Gradually in successive spheres, as knowledge and public opinion and the general temper of the world make it possible, official negotiations may consolidate results in binding conventions or in agreed recommendations of doctrine; and over a wide sphere a standard of recognized practice may develop and win acceptance. If in this way it is possible to create a framework of law and custom which will limit and direct the forms and channels of international competition (especially the action of governments in this sphere), and which is comparable to the body of law and practice that eliminates the worst evils of competition within each country, then the greatest potential danger to the future peace of the world will be averted. But if in the stress of economic depression in this industry or that, one government after another takes action which others consider injurious and unjust, if there is no restraint of either law or recognized custom distinguishing between what is permissible and what is not, it is inevitable that there will be an increasing embitterment of international relations, and sooner or later the preventive machinery established to save the world from further wars will break under the strain.

[i] Which is here used throughout in its strict sense as the fixing of prices for export at less than those for sale at home.

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  • SIR ARTHUR SALTER, for the last eight years Director of the Economic and Finance Section of the League of Nations, which post he has just resigned
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