Not Just Another Recession
Why the Global Economy May Never Be the Same
THE nineteenth century was an era of comparative peace. The seventeenth and the eighteenth centuries had been racked by European and world wars. But after the defeat of Napoleon in 1815 there was no world war till 1914. There were two main reasons for this. The first was because nations were preoccupied with the industrial revolution and because during the Victorian age there was relative freedom for migration, trade and the export of capital throughout a large part of the world. The second was because the supremacy of the British fleet, established after Trafalgar, made impossible European warlike adventures overseas.
This period of relative stability ended when the Kaiser, dissatisfied with the "place in the sun" enjoyed by the new German Empire, decided to force attention to his claims by building a navy comparable with the British, and by pursuing an aggressive diplomacy. This drove Great Britain out of her old detachment from the European Balance of Power and made her a part of it. The crisis approached with the threatened collapse first of Turkey and then of the Austro-Hungarian Empire under the disintegrating effect of internal agitation for national self-determination. The collapse of Austria-Hungary would not only have gravely weakened Germany, standing between the Franco-Russian alliance, but raised the question whether Germany or Russia was to be the heir to the Hapsburgs in the Balkans. From 1904 all the nations of Europe began to prepare for war, some hopeful, some fearful, none ready to start it, but all feeling that war was becoming inevitable as armaments rose. Germany was confident that if war came she could win it. Europe escaped war while Turkey was being driven back to Constantinople by the Balkan nationalities; but it was unable to escape it a few years later when Franz Ferdinand, the heir to the Austro-Hungarian throne and the one man who might have kept the Empire together, was shot by a South Slav assassin. This crime produced the Austrian ultimatum to Belgrade, backed by Germany and by a mobilization of the Austro-Hungarian army. It was this mobilization which set in motion the fatal military timetable, since it was followed almost inevitably by the mobilization first of Russia, then of Germany, then of France, and finally of Great Britain -- each fearful of being caught unprepared. Directly mobilization was complete the German General Staff made its fierce thrust through Belgium, on the ground that the national existence of Germany required the defeat of the French Army in the west before the slow moving Russian steamroller was ready to cross her eastern frontier. It was this military timetable which swept to one side the efforts of Sir Edward Grey and other statesmen to find a solution for the Austro-Hungarian conflict by conference, and which sucked the whole world into an universal war which nobody really wanted and for which nobody deliberately pressed the button.
I set forth this brief analysis of the origin of the World War because we are rapidly drifting back into a not dissimilar situation.
Why was the United States drawn into the maelstrom? So far as I can judge -- and I had some contemporary means of judging -- the reasons were as follows:
There was deep feeling in America about the outrage of the invasion of Belgium contrary to guarantee, and a general, though by no means uncritical, conviction that on the whole France and Great Britain were fighting for democracy and national self-determination as against military dictatorship. It was this general sentiment which, when the inevitable conflict arose over neutral rights at sea (the freedom of the seas), made it practically impossible for the United States to go to war with France and Great Britain in defense of American neutral rights, or to prohibit trade in munitions; and which, when the tension became unbearable after the second German submarine campaign, insured that the United States took action against Germany and not against the Allies. The factor of the wartime trade in munitions and loans did not influence Congress so much but helped to drive Germany towards the unlimited submarine campaign which precipitated the American decision. Finally, there was the fact that in January 1917, after President Wilson's drive for peace had failed, it looked as if Germany had won the war. She had practically destroyed Russia, was master of Eastern Europe, the Balkans and Turkey, and had possession of Belgium and Northern France. There seemed no likelihood that the Allied armies by themselves could evict her. If, therefore, she could endure the blockade long enough by exploiting the resources of Russia, she had only to stand pat to compel the Allies to make peace on terms which might not only give her an enlarged colonial empire but a permanent military hegemony over Europe as the price for evacuating Belgium and France.
The conviction that the victory of Germany would be a challenge both to American ideals and even eventually to American security, had marked influence both on the opinions of persons in high office in Washington and, less consciously and more intuitively, on American opinion at large. And, in fact, it was the American contribution which was decisive. Without it Germany might have won the war. It is difficult for journalist-historians, writing in the security which victory insured, to recapture the sentiments of a period of deep anxiety and doubt, and it is easy for them to attribute to clever propaganda decisions for which there were more fundamental explanations.
It was Woodrow Wilson's speeches which crystallized Allied and American opinion on the purposes for which they were fighting and the general nature of the peace which ought to ensue. President Wilson not unnaturally sought to apply to the problem of peace the fruits of American experience. The war, like that of 1776, was for the right to national freedom, and peace was to be secured by ending the international anarchy which was the ultimate cause of the 1914 catastrophe by the nearest approach to a world federation for which the nations were ready. That was the lesson of the era 1781-1787. War was inherent in an anarchy of sovereign nations. So Wilson's central purpose was to add to the liberty of nationality achieved by the war a League of Nations which would end war. But the world was clearly not ready for the surrender of sovereignty involved in federation as were the American States in 1787. It was not even ready for confederation. Every nation insisted on the retention of full national sovereignty. So the Covenant of the League of Nations attempted to square the circle. The core of the Covenant was an agreement by the sovereign states whereby they undertook to meet annually to discuss world affairs, to refer every dispute not solved by diplomacy to judicial settlement, arbitration or investigation by a standing Council and Secretariat of the League during a prescribed period, and to take economic sanctions against any state which went to war before the League thus had time to find a pacific solution. This system, later supplemented by the Kellogg Pact not to use war at all as an instrument of national policy, was to be the guarantee of peace in a new world order.
It is curious that neither President Wilson nor the American League to Enforce Peace, which also had much to say in forming public opinion about the League, grasped the central lesson of American experience as set forth with ruthless logic by Alexander Hamilton, Madison and Jay in the pages of The Federalist. That lesson was that there is no real halfway house between the anarchy of state sovereignties and full federation, and that attempts to combine sovereign states by contract is foredoomed to failure, for the reason that under such a system no alteration in the status quo is possible except by the consent of the states immediately concerned; that state sovereignty is bound to express itself in economic nationalism with fatal results for the trade of the world; and that the only method by which any League can, in the last resort, coerce one of its own members is by war. At the best, the League system could only have been a temporary halfway house leading either to a true federation of nations, or at least of some nations, or to a relapse into anarchy.
But even to make the League work as a transitional system certain conditions were essential. The first was universal membership. The second was free trade or at least universal low tariffs and the cancellation of war debts and reparations or the reduction of both to quite low levels. The third was a common moral basis in democracy. The fourth was universal limitation of armaments.
It is worth while to trace briefly the stages whereby these omissions -- quite inevitable at the time -- have gradually destroyed the bright vision of 1918-19. The frontiers laid down at Paris were the best that Europe had ever had. It has been the retention of complete national sovereignty -- especially in economics -- which has led to the present welter of armaments, unemployment and dictatorship.
Wilson saw the vital importance of free trade. One of the Fourteen Points provided for "the removal, so far as possible, of all economic barriers and an equality of trade conditions." However, not only was he utterly unable to promise any reduction of the American protectionist tariff; he could not even discuss the possibility of balancing a reduction in American claims for war debts against an equivalent reduction in the Allied claims for reparations. So the new international order started off, not with that internal free trade which has been one of the main secrets of American prosperity and stability, but with a vast increase in interstate indebtedness -- an indebtedness which could only be met by a gigantic transfer across national frontiers of goods and services which the sovereign nations were quite unwilling to receive, or by a transfer of gold of which the total supply was adequate only if it was not used to pay war debts or reparations. And this indebtedness, though the utter impossibility of its being discharged was disguised for a time by Anglo-American lending, became a principal factor in creating economic dislocations which led not to lower but to higher tariffs, quotas, embargoes, and finally to the destruction of the international gold standard. These conditions together destroyed the greater part of international trade and investment, and so created the unemployment and social distress which has caused democracy to be replaced by dictatorship over more than half the globe. Rather than abandon its protectionist nationalism, the United States eventually sacrificed some $14,000,000,000 which the world had borrowed from it during and after the war, and instead collected and sterilized in its vaults some 40 percent of the world's gold supply.
But the principle that the new order must be based on the retention of complete national sovereignty led to still further disastrous effects. It raised no barrier to those immigration restrictions which almost completely stopped that migration across the Atlantic to North and South America and Australia which had relieved Europe of intolerable strains and pressures during the nineteenth century. It led some of the Great Powers to withdraw from the League of Nations. It has inexorably undermined the League's capacity either to bring about peaceful change or to give its members security and has thus led back to the reappearance of the system of competitive armaments and alliances which is inherent in the anarchy of sovereign states.
Though President Wilson had been the principal champion of the new international order represented by the League of Nations, the United States was the first to reject it. It did so, partly no doubt because of the strength of the Washingtonian tradition against foreign alliances, but also, I think, because the Senate remembered one lesson of what Fiske has called the "critical period" of American history from 1781 to 1787. The central lesson of that period was that under a system of voluntary coöperation of sovereign states the decisions of the central authority could be enforced in the last resort only by war. If the states refused their quotas of cash or soldiers, if they refused to conform to collective decisions, if they acted injuriously against one another or the Confederation, the only remedy in the hands of the center was compulsion of the states. Yet, as Madison insisted, compulsion of one government by another government could only be done by war. The success of any coöperative system therefore depended on voluntary agreement because attempts to use compulsion spelt war. It was this consideration that had clinched the argument for federation, for the creation of a federal government to which the individual citizen owed allegiance in its own sphere, and which had taxing and legislative powers and sole control of army and navy and of tariffs on foreign trade.
The Covenant of the League, however, did provide for compulsion under both Articles 10 and 16. Article 10 required members to "respect and preserve against external aggression the territorial integrity and existing political independence of all other members." Article 16 required them to take economic sanctions, and possibly military sanctions, against an aggressor who resorted to war. President Wilson declared that Article 10 was "the heart of the Covenant." Yet as Senator Lodge says in his book, "The Senate and the League of Nations," Article 10 "was the storm center of the debate and did more than all other provisions put together to defeat the treaty," or as he also says: "There is no question that the preservation of a State against external aggression can contemplate nothing but war." So the first breach in the League as a universal system for the prevention of war was made.
Not less far reaching in its efforts than the refusal of the United States to join the League, was its decision not to ratify the Anglo-American Treaty which gave France a joint guarantee against "unprovoked aggression." France's supreme preoccupation was her own security. Nobody can understand the psychology of Europe who does not realize that France, even more than Germany, is suffering from the psychosis of defeat. Germany was defeated by all the Allies acting together in 1918. But if one regards the World War as the latest of the duels which have been going on between France and Germany for a thousand years, France was decisively defeated, both in 1870 and in 1918, by a power permanently possessed of larger industrial resources and man power and at least equal in military talent. To French opinion, therefore, security meant a continuance of that close military association with the British Commonwealth and the United States which had rescued France from inevitable defeat and which was embodied in the Anglo-American Treaty of Guarantee. Had that treaty been ratified and had the United States joined the League so that the three victorious democracies remained its center of gravity, the League might have found it possible to discharge that function which Wilson, in his speech recommending the Covenant to the Plenary Conference at Paris, declared should be the first duty of the League, to remedy those inequalities and injustices which were inevitable in a peace imposed even by victorious democracies at the end of four years of war.
But no sooner did the Anglo-American Treaty of Guarantee disappear than France, left as she felt to face Germany alone, fell back upon an alternative system of security. She set to work to build up a set of military alliances with Poland and the powers of the Little Entente which insured absolute military preponderance over a Germany disarmed and compelled to keep the Rhineland demilitarized. This was not only a system of security for France and the new nations of Eastern Europe, it was a system of peace for Europe itself, for so long as there was a complete military preponderance behind the Versailles settlement it was useless for Germany or Bulgaria or Hungary to think of trying to alter it by force. But it was essentially impermanent because it rested upon enforced inequality for Germany, the most virile nation in Europe. The vacillations in British foreign policy, so brilliantly described by "Pertinax" in recent pages of FOREIGN AFFAIRS, have been due to the conviction that the French solution of the European problem, the permanent inequality and encirclement of Germany, was bound in the end to defeat itself.
The politics of Europe, ever since the rejection by the Senate of the League and the Treaty of Guarantee, have been dominated by the struggle of France to maintain her own security and the peace of Europe by her preponderance over Germany, and to use the League of Nations as support for the maintenance of the status quo against the efforts of Germany to change it. The struggle began with the French invasion of the Ruhr. Great Britain in January 1922 had offered on her own account the same guarantee to France against unprovoked aggression that had been contained in the unratified Anglo-American Treaty, in return for a French agreement to work out a solution of Europe's most urgent problems at a new conference at Genoa which Germany and Russia were to attend for the first time on equal terms. But Poincaré, convinced that European peace and French security could only be assured by proving to Germany that resistance to the Versailles Treaty and to French preponderance was hopeless, rejected this offer and invaded the Ruhr. That invasion accomplished its primary object, though it proved very costly to France and produced the inflation and the German Ruhr-fighters who were the real beginning of National Socialism. Europe then recovered an uneasy breathing space through the Locarno Treaties, whereby Great Britain and Italy undertook to guarantee the demilitarized zone against invasion either by France or by Germany; Germany in turn entered the League, and through the Dawes and Young Plans and the American loans postponed for a few years the inevitable failure of the attempt to collect mountainous reparations and war debts in a nationalist and protectionist world. This was the great era of the League in Europe.
But the great depression wrecked these economic arrangements, ended war debt and reparation payments, intensified economic nationalism with embargoes and quotas, and swept Hitler into power on a wave of unemployment and social unrest. The first article of the Hitler creed was that Germany should no longer acquiesce in the position of compulsory inferiority imposed upon her by the Treaty of Versailles. He waited a few months to see if he could gain equality in armaments by the disarmament of his neighbors. But though the United States and Great Britain had been pressing for all-round reduction of armaments as the best guarantee of peace, France resolutely rejected every proposal for disarmament unless it was combined with guarantees for security. As Britain would not go beyond the Locarno guarantees and was herself largely disarmed, and as the United States would enter into no commitment at all, the deadlock remained unresolved. Hitler then, on the ground that Germany was refused the equality she had been promised, left the League, began to rearm contrary to the Treaty, and on April 16, 1935, restored conscription in Germany for an army of 500,000 men, and proclaimed the formation of an immense air force and a navy which, on his own proposal, he agreed should not exceed 35 percent of the British Navy.
France's answer to German rearmament was to extend her military alliances among those who were interested in maintaining the status quo. She composed her ancient quarrel with Italy, who was chiefly concerned to prevent Germany's appearing on the Brenner Pass as a result of the Anschluss. Austria became to all intents and purposes a dependency of Mussolini. France and her ally Czechoslovakia then initialled treaties of mutual assistance with Russia -- now rapidly expanding her military strength and increasingly alarmed at the growing military menace of Fascist Germany. Russia also joined the League. No sooner was the Franco-Russian Pact ratified by the French Chamber of Deputies than Hitler sent 30,000 troops into the Rhineland in order to reassert German sovereignty there and her right to refortify it in self defense. At the same time he made proposals for a 25-year period of European peace. As justification for his unilateral breach of the Locarno treaties he declared that the basis on which Germany had accepted the unilateral Locarno demilitarization had been destroyed by the Franco-Russian military alliance. France, as the price of not attempting militarily to reoccupy the Rhineland, secured a reaffirmation of the British guarantee to assist in repelling unprovoked aggression by Germany on France or Belgium, to be made more effective by military "staff talks." The Schuschnigg-Hitler arrangement about Austria acquiesced in by Mussolini; the challenge of Herr Greiser to the League's authority in Danzig; and the Anglo-French invitation to Germany and Italy to take part in negotiations for a new Locarno treaty without any reference to past breaches in the Treaty of Versailles, mark the final end of the Versailles "system" of inequality in Europe. And it has been ended, not by the voluntary action of the League, but as the inexorable consequence of the gigantic increase in German military and air power in the last two years. The League has failed as a system for revision of treaties.
There is a Far Eastern parallel to this history. In 1921-22 was held the successful Washington Conference. Great Britain and the United States were still in the full plenitude of their authority and naval power. Faced by this combination, Japan agreed to restore complete sovereignty to China, to accept a naval ratio of 3 to 5 in return for an all-round limitation of armaments and the non-fortification of the Pacific bases, and to substitute the Four Power and Nine Power Treaties for the old Anglo-Japanese Alliance. But as the interest of the United States in world affairs waned after the American rejection of the League of Nations, as Great Britain became more engrossed in Europe, as both allowed their armaments to decline, and as both became preoccupied with their internal economic wounds after the great depression of 1929, Japan felt that nobody would interfere if she set out to solve her own difficulties by realizing her long cherished ambition to absorb the whole of Eastern Asia into her own political and economic system. Her judgment proved right. While the United States and the League Powers blustered and protested, none of them was prepared to risk that war with Japan which alone could have prevented her embarking on the process of altering the status quo by force in violation of the treaties. The United States was not ready to face war, while Great Britain, with no naval force stationed in the Pacific, was not prepared to consider action which might lead to war unless it knew that the American navy would also be engaged. So the power politics inherent in international anarchy have undermined the Washington settlement of the Far East, including the naval treaties, just as it has undermined the League system in Europe.
There is one more episode to be examined -- the Abyssinian crisis. It is revealing of realities.
Nobody can yet tell the exact origins of Mussolini's Abyssinian venture. Some say that as part of the Franco-Italian common front against Germany, especially in Austria, M. Laval promised him a free hand to find natural resources and land for settlement in Abyssinia. Others think that it is only the first move towards the restoration of a Roman Empire in the Eastern Mediterranean, because Mussolini believes that when he has an army in Abyssinia as well as in Libya and an adequate fleet and air force in the Central Mediterranean he has only to wait until Great Britain is compelled to station her main fleet in the North Sea or the Far East for Egypt, Palestine and the Sudan to drop like ripe fruit into his resolute grasp.
However that may be, the more Mussolini became committed to his Abyssinian adventure, the more British public opinion became determined to stand up for the League. There were many reasons for this. There was the feeling that this was the last chance for making the collective peace system effective. There was the so-called Peace Ballot in which 10,000,000 adults voted in favor of the application of economic sanctions against any Power declared an aggressor by the League. There was a General Election looming ahead, which made the Government hesitate to offend this tremendous vote. It is certainly true that consideration of the consequences of Italian penetration of Abyssinia on British interests in the Suez Canal region, however much it may have influenced the professionals in the defense and diplomatic services, played at first hardly any part in determining public opinion. The dominant factor was a wave of public sentiment generated by League of Nations societies, both in the British Isles and overseas in Canada, Australia and South Africa, demanding that the failure in Manchuria should not be repeated and that the Covenant as a system of defense against aggression should be resolutely put to the test as the last hope of stopping the general drift towards war.
So there ensued Sir Samuel Hoare's speech at Geneva on September 11, in which he promised that Great Britain would fulfil its obligation to offer steady resistance to unprovoked aggression in violation of the Covenant; the inauguration of economic sanctions against Italy by fifty nations after Mussolini had invaded Abyssinia; the gradual realization that if oil sanctions or the closing of the Suez Canal were added to the rest, it probably meant war with Italy; the General Election on the government cry "Support the League but without war;" the Hoare-Laval plan, designed partly to bring the conflict to an end before the risk of war with Italy became acute, but put forward in part, perhaps, because the inside people realized the fundamental weakness of Abyssinia; the outburst of public indignation which led to the fall of Sir Samuel Hoare; the paralysis of any extended sanctions policy caused partly by the confusion following the Hoare-Laval episode and partly by fear of war; and then the unexpected but triumphant series of Italian victories and the flight of the Ethiopian Emperor.
The failure of the League to save Abyssinia has been a shattering blow to those who had hoped that while its worldwide power had clearly waned it might still be a system of peace for Europe. For the Abyssinian episode has made certain things quite clear. The economic sanctions provided for in the Covenant were intended to be a system of coercion which would be effective without war. It is now quite clear that, as against a Great Power, economic sanctions applied by a League which does not contain all the other Great Powers are either ineffective or lead to war. Italy was a Power singularly dependent on foreign supplies and by embarking on an expedition on the other side of the Suez Canal had put her head through a fatal noose if the League or Great Britain had had the resolution to close it. But at no time was any member of the League prepared to risk war, either for Abyssinia or for the Covenant. At the outset, as M. Laval told the French Chamber of Deputies on December 28, 1935, he agreed with Sir Samuel Hoare "to avoid military sanctions, to adopt no measure of naval blockade, never to consider the closing of the Suez Canal, in a word to reject everything that might lead to war. We then considered what financial or economic sanctions we could adopt." That was, in essence, the view of every other member of the League. But once it had become clear that the League members, for the very good reason that a war with Italy over Abyssinia might easily have set Europe and the world afire, would not press their resistance to this point of war, Mussolini had a clear path. If he could conquer Abyssinia before economic sanctions compelled him to come to terms he had victory in his hands. The air force, poison gas and the impetuosity of the Rasses did the rest. They gave him a victory more complete than he desired and have left him with a problem in government and settlement which it will take Italy years to solve. It is probable that if the British Government had been more resolute last autumn and had been willing to take the risk of telling Mussolini that it would ask the authority of the League to close the Canal unless he would accept a compromise acceptable to the League, Mussolini would have come to terms rather than risk a war. But its own determination not to risk war coupled with the almost insuperable difficulty of getting fifty nations, including France, to agree to such a policy, ended in that diplomatic defeat which was the almost inevitable consequence of taking up the position adopted by Sir Samuel Hoare last December, with the reservation that in no case would it be pressed to the point of war.
What is likely to be the effect of this history of disillusionment on the policy of the nations? At the moment, discussion in Europe centers about two international questions. The first is whether the League of Nations should have its coercive sanctions strengthened or should have its teeth drawn by the elimination of the sanctions Articles, 10 and 16. The second is the problem created by the rapid rearmament of Germany and the struggle between communism and fascism in Spain.
The pro-sanctions party declare that there is nothing wrong with the Covenant of the League and that it has failed only because of a want of resolution on the part of its members. They demand that the system of "collective security," which it embodies, should be strengthened by a clear-cut engagement, at any rate on the part of all its European members, that they will resort to war against an aggressor. They believe that if only the League can be based on the system that a war on one is a war on all, the world, or at least Europe, will be safe from aggressive war, for a would-be aggressor will never risk the certain defeat that would be involved. The anti-sanctions party reply that no peace system can be based on an automatic obligation to go to war, that inasmuch as the League has no power to alter any treaty except with the consent of all concerned such a system would be no more than a military alliance to maintain the status quo, and that in any case it will not work for the reason, so abundantly proved in the Manchurian and Abyssinian cases, that no nation will, in practice, incur the terrific risks and cost of modern war except where its own vital interests are involved. They believe that in the present state of the world the only practical course is to abandon the sanctions Articles. Once that is done and security is treated as a matter for regional arrangements outside the League, the League itself might begin to recover that universal membership which is necessary to its moral authority and its social work.
This argument will come to a head at the impending meeting of the Assembly of the League of Nations. But more and more this somewhat theoretic argument is likely to be thrust aside by the harsh realities which are emerging as a consequence of German rearmament and of the civil war in Spain. Germany will shortly have the most powerful military force in the world. It is stated that it will consist of 35 first-line divisions and at least as many more in reserve; an air force of between 2,000 and 4,000 first-line aëroplanes; and a navy one-third of that of Great Britain. What is she going to use it for? There are many conflicting views. Will she be content, once she has thus recovered equality and power, to help to organize Europe for peace through the League and to discuss in a reasonable manner round a table those economic questions, such as the stabilization of currencies, the lowering of tariffs and access to raw materials, including the very difficult colonial question, which must be the first step towards general recovery? Or will she use her military strength as the instrument with which to establish a hegemony in Central Europe and to obtain concessions from others by the traditional methods of Macht politik? Or will she prepare to thrust the Bolshevik dragon back into Asia by war? Or will she try to reverse the verdict of 1918 by a renewed war on the West? Perhaps the answer will become clear at the Locarno discussions which are to take place some time this year. All that can be said with certainty is that the era of compulsory inequality has come to an end and that Germany is once more a world Power.
The Spanish civil war raises questions not less serious. It may well transform the political alignment of the globe. At the time of writing it seems doubtful whether democracy can survive in Spain. Whichever side wins will almost inevitably establish a dictatorship in order to suppress its opponents by force. Yet Europe can hardly be indifferent to the result. If Spain ends by going communist the Soviet system will have secured an outpost at the other end of Europe. If it goes fascist it is likely to lean towards Germany and Italy rather than towards semi-Socialist France. The world, indeed, may gradually form into three groups -- the communist, the fascist, and the democratic groups.
There is little use in trying to prophesy about even the immediate future. But one thing is perfectly clear. The Wilsonian world created by the victory of the Allies is rapidly disappearing, including the League of Nations as originally conceived. It might have lasted much longer if Wilson's full program, with its universal democracy, its low tariffs, its disarmament and its three victorious democracies standing together and united by the Treaty of Guarantee to France at the heart of the League, had prevailed. But the writers of The Federalist have been proved right in their view that a League of sovereign states must either move forward to a true federation of nations or national sovereignty will drive them back into an anarchy of economic nationalism, competitive armaments and war. The dream of 1918 has now disappeared beyond recall. To paraphrase Smuts' famous saying, humanity, after a short rest in the tents of the League, is once more on the march into an unknown world.
In my view, the movement in Britain for strengthening the League will fail, and Great Britain, after a period of controversy, will resume her traditional semi-detachment from Europe. She will give to France and Belgium a guarantee, possibly on mutual basis, against unprovoked aggression; but she will refuse any commitment, through the League or otherwise, which can involve her automatically in economic sanctions or in war in Central or Southern Europe. There she will keep a free hand. The gigantic armaments of Germany, the immense and rapidly increasing forces now at the disposal of Russia, the armaments of Italy and France, to say nothing of the lesser nations of Europe, reduce to relative impotence the power of a non-conscript Britain to intervene on the Continent. She will therefore endeavor to stand outside the new balance of power in Europe which is likely to replace the recent preponderance of France, and she will inevitably be drawn nearer to the American position by the Dominions. It may be that she will be unable to adopt this position of detachment because Germany, possibly with allies, would then be in a position to establish a hegemony over all Europe. If this situation were to arise a fateful decision would arise for Britain, and in the long run for the United States also, as it did in 1914-16. But that time does not seem to have come yet. For the moment all parties are agreed that Great Britain must recover her strength on the sea and in the air, if she is to defend the Commonwealth and restore her influence in world affairs.
Moreover, it may well never arise. If Europe and Northern Asia become more and more divided between the two new aggressive political religions, fascism and communism, the democracies, if they are to survive, may have to endeavor to stand together outside the conflict. They will not try to impose peace on a world which is clearly not ready for it, but they may have to act together in order to prevent the area in which free institutions still exist from being narrowed, bit by bit, by dictatorial aggression.
This problem will come up for consideration first by Great Britain and the Dominions of Canada, Australia, South Africa and New Zealand. They can hardly postpone a decision as to the common policy they are to pursue in the new world of force and power politics which is arising all about them beyond the Imperial Conference which is to assemble next year for the Coronation. But tomorrow it may confront the United States also. The United States by its Monroe Doctrine has cast its mantle over all North and South America. In doing so, especially now that practically all the American nations have stopped immigration and put on high tariffs, it has said in effect to the 1,500,000,000 inhabitants of overcrowded Europe and Asia that the relatively empty continents of North and South America are to be kept for the exclusive use of their present inhabitants. Yet the Americas, and especially South America with its 75,000,000 inhabitants, form an infinitely more important field for settlement and economic development than Africa (containing immense deserts and already peopled by 100,000,000 people, mostly black), or Australia (a mere habitable fringe round an immense arid interior).
Further, ever since Canning prompted the Monroe Doctrine a little more than one hundred years ago, the British Commonwealth has been the outer ring of protection for the United States. Indeed, until the era of "parity" it was the British Navy rather than the American which was the effective guarantee of the Monroe Doctrine. Indeed, the Kaiser once proposed to a British Minister that Germany and Great Britain together should call the bluff of the Monroe Doctrine and solve the European problem by taking for Germany a large slice of Brazil. So long as the British Commonwealth exists, the United States is secure. But suppose that in another world war it seemed likely that she would be defeated, and suppose totalitarian dictatorships seemed likely to become the heirs of British and French possessions bordering on the Atlantic (including South and Central American territory) and in the Pacific, could the United States remain indifferent to the outcome? These questions are not a mirage. They were presented in 1916. They may be presented again.
Even if they are not, and the new world alignment centers about communism, fascism and democracy, is it not possible that the United States might best preserve its own peace by using its immense power to maintain, in association with the British Commonwealth and the Pan-American Union, command of the oceans of the world as security that democracy and free institutions shall continue to exist over nearly one half of the globe? Mr. Walter Lippmann in a brilliant Armistice Day address delivered in 1934 pointed out that while during the seventeenth and eighteenth centuries there had been constant world wars, during the nineteenth there had been none. This he attributed mainly to the fact that once Great Britain, after Trafalgar, had established a supreme navy and Europe had reached a balance within itself, Britain could keep in that relative detachment from the continent which, except for the treaty of guarantee to Belgium, she maintained till she made the entente with France in 1904, and that there could be no world war so long as England respected the Monroe Doctrine and no European Power had a navy with which to challenge her. There might be local wars, but unless Great Britain were attacked or chose to intervene it would not be a world war. And, in fact, there was no world war after 1815 until Germany set out to create a navy capable of challenging the British. But when Great Britain became involved, the war became a world war, because her possessions were scattered all over the world, and the question of the involvement of the United States also inevitably arose.
The situation of the last century cannot be recreated by Great Britain alone. She is not strong enough. But the United States, the South American Republics and the nations of the modern British Commonwealth could together recreate it. They have among them immense superiority in industrial and financial resources, in naval and air power, in commercial shipping; and they control all the world's naval bases and narrow channels, like Suez, Panama and Singapore. No power or combination of powers could dare to attack them in their own area with the slightest chance of success. They also are both democratic and territorially satisfied. If they should act together, they have it in their power to end world war, though not, as the League has tried to do, to end all war.
The New President Can Win Friends and Weaken Terrorists at the Same Time