Not Just Another Recession
Why the Global Economy May Never Be the Same
NOT the least disappointing feature of the disappointing aftermath of the war has been the failure of the Anglo-American relationship to develop according to promise. America's entry into the war, it had been proclaimed at the time, would end the era of her isolation: henceforward the Democracy of the New World would work hand in hand with the Democracies of the Old World for the regeneration of mankind. Especially was there to be the closest cooperation between the English-speaking nations. For a few fleeting months before and after the armistice it looked as though this vision of the reversal of Canning's famous phrase was about to be realized. But now four years after the end of the war the United States and Great Britain, despite joint sacrifices, joint promises, and, if their people would only realize it, joint interests, seem nearly as far apart as ever they were. On both sides of the Atlantic there is disillusionment; in the United States it has produced aloofness, in England a sort of weary impatience.
The British are and always will be intensely grateful for American partnership during the war. They realize that they could not have carried on during the last two years of the struggle without the generous financial aid of the American Government and people; they appreciate and admire all that was done in the United States in the way of food-saving and ship-building; they know that Marshal Foch would have lacked the man-power to press victory home in the autumn of 1918 had it not been for the American armies so triumphantly extemporized.
To those great achievements American policy since the peace has proved a disconcerting contrast. It began with such a splendid promise. At the Peace Conference it seemed that the United States and the British Empire had reached a final and constructive understanding. Europe was assured by President Wilson, with an authority and solemnity which it never occurred to the average man could be the product of anything but a firm knowledge that he was morally and constitutionally the plenipotentiary of his country, that it might henceforward count without reserve upon the United States. Upon that assurance more than upon any other single fact the fabric of the main peace settlement was based. Shattered and shocked by war, acutely conscious of the difficulty of recapturing and holding to the paths of peace, Europe acclaimed the assistance of the one country which had emerged from the furnace with enhanced authority and virtually unimpaired vitality and strength.
The two main keys of the peace arrangements were the League of Nations and the treaty whereby the United States and Great Britain undertook to help to defend the frontiers of France from unprovoked aggression. The treaty was to reassure France that Germany was powerless to hurt her and might therefore be allowed with impunity to grow strong enough to play her all-important part in European economic reconstruction. The chief function of the League of Nations was, firstly, to restrain the interplay of racial and national animosities, ambitions, fears and suspicions by which it was all too plain that Europe was still torn; secondly, to apportion among the powers most competent to bear it responsibility for the tutelage of the orphan colonies and infant states left by the collapse of the German colonial system and the disintegration of Turkey. To both treaty and League America was to bring the authority which Great Britain alone was not strong enough to wield. She was to help to reassure France; she was, according to President Wilson's undertakings, to take a hand in the Near Eastern question by accepting a mandate for Armenia, that is to say, by establishing her authority in Asia Minor in such a way as would have obviated the ill-fated Greek venture in that country and might well have reduced the Near Eastern question to manageable proportions.
After four years, what seems to the average British mind to have happened? The Near Eastern question is still in a state of most troublesome flux and Great Britain has just been forced to a single-handed stand to prevent the armed irruption of the Turk into Europe, with all its incalculable consequences. The League of Nations, lacking American support, is little more than a receptacle for minor problems which the governments of Europe from time to time almost contemptuously cast to it. It has been powerless to press its plans for land disarmament and economic reconstruction.
The French frontier treaty has been rejected by the American Senate and has come to nothing. France has condemned as a failure what may be called the new Anglo-Saxon doctrine of preventative international cooperation. She has returned to the old practice of European diplomacy. Her aim is not to build up Europe but to keep her old enemy under, even if it means the disintegration of the Continent.
The French position is one which neither Englishmen nor Americans ought to criticise too roughly, much as they may deplore it. When the armistice came France felt, rightly or wrongly, that Germany had not been effectively defeated. She feared a war of revenge. She noted that Germany still had a far larger population than hers, reinforced by a much more rapid birth rate. Her natural impulse was to get the Rhine as a strategic frontier. Mr. Wilson and Mr. Lloyd George imposed a veto upon that idea. They refused to allow the incorporation in France of a large German population. After some argument they got France to give up the idea of the left bank of the Rhine. They persuaded her with the promise of the support of the League of Nations and of the treaty guaranteeing her frontier. Neither promise has materialized. France feels that she is left alone in Europe. Small wonder if, after such a disillusionment, she should be trying to keep Germany in the dust, hedge her round with military alliances and invoke against her the old European doctrine of the balance of power. Small wonder that she should make difficulties about the reduction of German reparations to an economic level. It is not merely that being more nearly self-supporting than England she feels less acutely the need for European stability; her sense of logic is outraged. Why, she asks, should she be expected to remit part of a debt justly owed her by her enemy before her friends have told her how much of her debt they are willing to eschew?
To blame the United States for all this is of course manifestly unfair. Even the most energetic American support might well have failed, in the present dispensation of things, to make the Treaty of Versailles work. But it is perhaps fair to remind those American observers who, like Mr. Hoover, inveigh against the militarism of European countries, against their unbalanced budgets and against their intrigues and quarrels, that American cooperation with Great Britain was regarded by the peacemakers in Paris as perhaps the most important ingredient of the sedative which they had prepared for the post-bellum fever of the Old World. Great Britain has so far failed, single handed, to hold the patient down. It may have been, as critics of Mr. Lloyd George aver, to no small extent her own fault that she has failed; but Englishmen would be more than human if in surveying the lost opportunities of the peace and the precarious future of Europe they did not at times feel a certain impatience at the American attitude towards themselves and their problems. They might have been able to understand and sympathize with the causes of the failure of the United States to live up to President Wilson's promises. They have suffered themselves from the recklessness of wayward statesmen; especially in recent years they have been not unfamiliar with the spectacle of foreign policy being used as a football on the field of domestic politics. What they find difficult to understand is the apparent failure of the American people to sympathize with the countries which for reasons of national policy they have been forced to leave in the lurch and to realize, first, that the United States has in the long run as great an interest as Great Britain in getting Europe on to her feet; second, that Europe can only be got on to her feet by positive action.
The British nation, more heavily taxed already than any of the Allies, is the only one of America's European debtors who is paying interest on its American debt. Though the sum of this interest equals the proceeds of an extra ten per cent upon an income tax which now starts from twenty-five per cent on small incomes, there is no Englishman who does not wish it to be paid so long as the state and he can do it. Nor is there any resentment that the United States should expect to be paid. But it is found difficult to understand the intimation that the United States will not join with Great Britain in overhauling the general question of inter-governmental indebtedness and that, because she thinks that Europe needs disciplining, it would be wrong to let her off any of her obligations while she continues in her present anarchic ways. It is felt that Americans who talk like that have got hold of the wrong end of the stick. It is held to be clear beyond all peradventure that France, Italy and Germany and the other debtor nations will never pay anything unless a start is made in the process of reconstruction by reducing indebtedness to a tolerable figure all round. France for the moment is the key to the situation. Her attitude reduced to its simplest terms is, as explained above, that it is unfair to expect her to play the generous creditor to her enemy until she knows how much her creditors, who are her allies, are prepared to let her off. Surely, it is argued, people like Mr. Hoover must see that unless the United States cooperates with Great Britain to render possible the scaling down of inter-governmental indebtedness to a practical, as opposed to an ethically justifiable figure, things may come to such a pass that she will never get a cent of interest or capital from any of her continental debtors.
Englishmen, in fact, are inclined to be puzzled that a nation which has acquired a reputation for the highest business acumen should stand critically and suspiciously aloof from a situation which must be put right if the world is ever to get comfortable again and which can only be put right if all the nations, and especially the United States and Great Britain, pull together, each making allowances for the special difficulties, problems and points of view of the rest.
Nor, unfortunately, is this aloofness the only thing in the present American attitude towards the Old World which clouds the British vision. Judging from what one hears in clubs, counting houses, newspaper offices and other places where foreign affairs are discussed--the man in the street, here as in the United States, lifts his eyes across the seas only so long as some dramatic external crisis is in progress--there is a feeling that while refusing the responsibilities of her share in the peace treaty America has perhaps been disproportionately avid in retaining the advantages which she would have obtained had she ratified it. Her arrangement with Germany to keep privileges which Germany would have given her under the Treaty of Versailles has been the subject of a good deal of rather ill-informed but none the less mischievous criticism. The same must be said of her request, which incidentally the British Government has been only too glad to grant, that in British mandated territories her citizens should be given the same privileges as the citizens of countries which are members of the League. There is, however, a vague idea that Americans are trying to avail themselves of the troubles of Europe in general and of the British Empire in particular to establish an hegemony over the trade and finance of the world. The idea has been inspired by such things as the propaganda activities of the American shipping board, the discovery that American Consuls abroad have been rather impetuously patriotic in drumming up trade for American ships, and until lately the supposed anti-British attitude of certain American oil interests in Europe and elsewhere.
Add all this and other similar journalistic tittle-tattle to what has been said above and some notion will have been attained of the spirit of disillusionment which for the moment marks the British popular purview of Anglo-American relations. Even American praise for certain aspects of British policy almost fails to arouse appreciation, for to a person in pretty desperate difficulties kind words from a comfortable distance often do little more than irritate frayed nerves with impatient regrets that they are not accompanied by something more substantial.
American readers must not misunderstand what has just been said. No Englishman has in reality any right to cavil at the aloofness of the United States. The British plenipotentiaries at the Peace Conference had only themselves to blame if they were taken in by Mr. Wilson's claims to infallibility. A cursory study of the American Constitution would have shown them that an American President has full power to sign a treaty only when he is absolutely sure of his Senate; a scrutiny of American newspapers or periodicals would have told them that President Wilson had lost his control over the Senate as the result of a Congressional election just before he sailed for France.
Nor have we the right to criticise America's refusal to be drawn into the resultant mess. Her aloofness from Europe is mutatis mutandis precisely the attitude adopted by England after the Napoleonic wars. England, a hundred years ago, did not like the undemocratic attitude of the autocrats who in the name of the so-called Holy Alliance took it upon themselves to mismanage Europe. She had her own urgent problems of reconstruction. She therefore isolated herself behind the barrier of the Channel and only reached out again into continental affairs when it became her practical interest to do so. Until then she merely preached and criticised when illiberal things were done in Europe, refusing to sit in at the conferences which then, as now, were held at frequent intervals, sending to them, on one occasion at least, an unconsidered functionary whom she called "an unofficial observer." The Atlantic today is still as broad as the Channel was a century ago; the state of Europe is certainly as chaotically alarming as it was then; and America's problems of reconstruction have certainly been as absorbing as were those of England in the days of the Peterloo Massacre or the Cato Street Conspiracy.
The modern American has, however, the spirit of isolation more deeply inculcated into him than the Englishman of even a hundred years ago. England all through her history has had to make periodical forays, diplomatic or military, into European affairs. For America the necessity arose for the first time five years ago. Before that time geography, commercial and economic expediency, the tradition of her older stock and the prejudices of the majority of her younger stock, all made for an aloofness such as England has often tried to attain but has never been able to enjoy for more than brief periods.
But if America's repudiation of Wilsonism and all that word has meant for Europe is perfectly intelligible to the small number of people who have tried to think things out, there can be little doubt that the misconception and prejudice which have been sketched above are in danger of taking root among the British electorate as a whole.
So far as the long-distance observer can judge, a complementary set of misconceptions have at the same time grown up in America. Allusion has already been made to the apparently current suspicion that we are being unfair about American trade and especially about American shipping. There would seem also to be an idea that we are trying to drag America into our difficulties and to involve her in the entanglements of the European tragedy. The suspicion that we are trying to "down" American commerce has no foundation in fact. Neither our government nor our traders, so far as anybody knows, are doing anything save encourage legitimate competition. For the idea that we are trying to "entangle" the United States there is unfortunately some justification. That justification lies in the apparently congenital inability of many British statesmen and journalists to realize that America really means it when she announces that for the present she proposes to keep out of Europe. Whenever any crisis comes along, whether it concerns the stability of European finance or the security of the Bosphorus, somebody in authority is almost sure to say something which gives Americans good excuse for believing that we are trying to drag them in. The Balfour note was perhaps the crowning example of this type of ineptitude, as is now recognized by the whole British press and by the majority of British politicians.
The truth is that we are paying for the fact that ever since it existed the Anglo-American relationship has been based upon misconceptions and mutual ignorance. In the old days it did not much matter. Neither country needed the other. The United States was prosperously immersed in the exploitation of a virgin continent. Great Britain, having stolen a march on the rest of the world in intensive industrialism, was engaged in the development of markets for her wares in Europe, India and the East. Great Britain, as the Lancashire cotton crisis proved during the Civil War, depended upon American cotton; the United States depended to some extent upon British capital for her tumultuously expanding railways and industries; but the contact was not such as to make for real political or economic inter-dependence. Indeed the fact that the United States was a debtor nation rendered possible those high tariff walls wherewith for fifty years the Republican party reinforced the American instinct of isolation. A generation or even less ago the average American was inclined to think that economic insularity, freedom from the competition of the "pauper labor" of Europe, was the welcome corollary of the doctrine of political isolation under which his country had reached adolescence. To Great Britain the United States was almost incredibly remote, cut off physically and mentally from the Old World, occupied with the assimilation of immigrants, with the taming of deserts in the West, with problems of municipal government in the East, the parent, it is true, of wonderful inventions like the telephone and the Pullman car, the home of charming people who on their visits to Europe proved to be surprisingly cosmopolitan in education and outlook, but nevertheless outside of the work-a-day sphere of British diplomacy and commerce.
This aloofness was in the minds of British observers reinforced by more positive features. The Irish-American, and later the German-American, were forever ready to misrepresent and vilify the country which they respectively regarded as the oppressor and the rival of their kinsmen across the Atlantic. Even over the Anglo-Saxon element of the population there still seemed to brood at times the shadow of the Revolutionary War and of the other bickerings which marred Anglo-American relations during the early days of the American commonwealth. School books magnified into calculated malignity the ignorant ineptitude of England's Georgian Ministers. Waves of distrust for some aspect of British policy were sometimes seen to pass inexplicably over the land. Patriotic orators within Congress and without were heard to sneer at the effete institutions of the Older World.
The Spanish War established the United States as a world power with over-seas responsibilities. Germany began to take her into her calculations, trying to win her by the visits of princes and the intrigues of propagandists. Great Britain welcomed her appearance as the sharer of the "white man's burden." A movement was instituted for the promotion of Anglo-American understanding. It produced much pleasant post-prandial eloquence and stimulating pilgrimages to and fro across the Atlantic. But so far as the public opinions of the countries were concerned, after-events incline one to the judgment that it all did really more harm than good. It got things on to the wrong basis. The argument that blood is thicker than water was not a very intelligent one in the case of two countries in one of which two out of the three largest of its racial elements were congenitally and professionally hostile to the other country. Nor could the argument of community of ideals make much way. Behind a veil of polite platitude and fraudulent flattery the American and British peoples were really as far apart as ever, mainly because the exponents of Anglo-American friendship had not found the real argument.
The real argument is that the United States and the British Empire have a very practical community of interests. To put the case in its crudest terms, they are both of them too large to fear the law-abiding prosperity of any other country and together are strong enough to see that any country or group of countries keeps the law.
What the writer means is best illustrated by much that happened, or rather did not happen, during the fateful days before the outbreak of the war. It is argued by many, whether with justice or not we shall probably never know, that war would have been averted had the British Government been in a position to declare that, if Germany attacked her, France would be joined off-hand by the whole might of the British Empire. The British Government could not commit itself, mainly because the strength of the British peace party in the Cabinet (whose leader it is interesting to remember was Mr. Lloyd George) hopelessly hampered the freedom of action of Lord--then Sir Edward--Grey, Mr. Asquith and the other clearer sighted members. Had not only the British Empire been ready to stand armed at the outset on the side of peace, but had the United States stood with the Empire, who can doubt that war would have been avoided not only then but probably indefinitely? Germany would never have dared challenge the imminent might of the whole English-speaking world. This is said in no spirit of reproach. When England hesitated, with her whole future patently at stake, to throw herself once more into her accustomed role of the champion of European freedom, it would have been absurd to have expected the United States to apprehend the issue. Even the most virile of modern American statesmen congratulated his country on its neutrality in an article published, if the writer recollects correctly, some weeks after the rape of Belgium. To any Englishman familiar with all the United States and not with her deceptively unrepresentative Eastern seaboard alone the wonder is not that the United States took so long to come into the war but rather that when she did come in it was with such an impetus of splendid and self-sacrificing unanimity.
It is reasonable to suppose that President Wilson and those Americans who favored America's participation in the Treaty of Versailles thought that the war had brought to everybody the realization of this fundamental community of interests. Events prove that they were sadly led astray by their enthusiasms. And that, in the writer's estimation, gives yet another key to the present disappointing plight of Anglo-American relationship. The relationship has been the victim of extremes of suspicion and sentimentalism, of carelessness and effusiveness, of Utopianism and pessimism. Wilsonism has been the last of those fatal extremes--Wilsonism encouraged by Great Britain's impetuous desire for a partner in the work of reconstruction. We are suffering now from the inevitable reaction and we shall continue to suffer until on both sides of the Atlantic we recognize facts as they are. The American people should make allowances for the disappointment of the British peoples and the discomfiture of the European peoples at the way in which Mr. Wilson's promises have been brought to nought; they must realize that while still reeling under the shock of the war, while still taxed as no people has even been taxed before and hag-ridden by unemployment, we, a nation dependent for our life upon our external trade, are threatened with the permanent loss of our best markets should Europe go under. The British people on their side must take the United States as she is; they should realize that she is behaving as England would probably have behaved had their positions been reversed, that it is unfair to expect a country to jettison overnight the tradition of its whole life-time.
As for those who in both countries believe that the future of the world may best be assured by close Anglo-American cooperation, theirs is perhaps the hardest task of all. They must abandon their over-generous enthusiasms. They must bring their feet down from the clouds of sentimentalism of the blood-is-thicker-than-water variety and plant them firmly upon the earth of realities; they must eschew visions of an Anglo-American alliance and other short-cuts to Utopia and concentrate upon duller but more practical aims. They must work for understanding and cooperation only when and in so far as understanding and cooperation are immediately feasible. They must teach their peoples by slow degrees to understand one another. They must expect their countries to work together only when the advantage of so doing is easily demonstrated to the popular mind. American initiative and imagination have already given them a signal example of the sort of thing that can be done in that respect. Nothing better shows the possibilities of a healthy Anglo-American understanding than the masterly way in which President Harding conceived and Mr. Hughes handled the Washington Conference for the Limitation of Armament. Mr. Harding and Mr. Hughes saw clearly just how far Britain would go in translating into diplomatic facts the doctrine of community of interest upon which the future Anglo-American relationship must rest. Aided by Lord Balfour, they brought about a practical demonstration of Anglo-American solidarity in the pursuit of limited but nevertheless very important objectives which startled the Foreign Offices of Europe and, one likes to think, marks out that course of common sense and piece-meal cooperation which, if only the public opinions in the two countries are patient and public men tactful, may still enable the English-speaking nations to pull the world together, making it a safe and profitable place for their financiers and their traders, and reduce to a minimum the danger of another great war.
For if Europe now fails to pull itself together the United States will suffer almost as severely in the long run as Great Britain would suffer immediately. The market for American cotton and copper and other exports would be shot to pieces; American shipping would lack freight; American investors in European loans, commercial, municipal and government, would be in the same hopeless position as French investors in the loans of the Russian Tsarist Government. The deeps of civilization would, in fact, be broken up, to the immeasurable disadvantage of all civilized powers and to the great advantage of all the forces of disorder within and without their gates. There is sufficient scope in an orderly world for the full activities of both our countries. There will be plenty of opportunities, when once the buying power of Europe is reestablished, for the mercantile marine of both; there will be plenty of room for the surplus financial and commercial energy of both. There will also be plenty of opportunity for profitable team work.
One is seeing that already in the oil industry. Two years ago the press of both countries was full of complaints and prophecies concerning bitter rivalry between the British and American interests. Great Britain, it was proclaimed in the United States, was planning to keep the American interests out of many of the most important fields of the world; the American interests, it was proclaimed in Great Britain, were preparing to wage bitter warfare in return. What has happened? The interests most concerned have been talking things over under the informal auspices of their governments. In the Near East the British have given or promised the United States a share in virtually all their oil fields and oil concessions; in regard to Russia, after many rumors of bitter competition there is now talk of an amicable arrangement between one of the greatest American companies and one of its chief British and European competitors. Into the counsels of one of the most important of modern industries, an industry which happens to be mainly in American and British hands, Mr. Hughes' inspiration of common sense cooperation has thus already spread.
That it will spread further, despite the present rather unsatisfactory state of Anglo-American sentiment, can hardly be doubted if only the peoples of both countries will try to see things as they are and not as they are depicted by pessimists on the one hand and enthusiasts on the other, if they will make due allowance for the inevitable differences between their points of view upon many subjects. Then it may be possible slowly to realize those generous visions of the consummation of a working understanding between the English-speaking nations,--in their own interests and in the interest of the decent conduct of the world,--which at the time of the armistice seemed to many observers to present the best guarantee for the establishment and perpetuation of a better civilization.