Economic Aspects of Disarmament

AUGUST, 1921


IN 1910 David Lloyd George, then Chancellor of the Exchequer in the Asquith Cabinet, estimated that the direct war expenditures of ‘the countries of the world’ were at that time no less than $2,250,000,000 a year, and were increasing at a rate that would double this sum by 1920. He then predicted that the economic life of the nations could not long endure the strain; and it did not long endure the strain. Within four years Europe was in the midst of the most disastrous war yet recorded in the annals of the human race.

By common consent Germany has been held responsible for this conflict, and this responsibility is formally acknowledged in the Treaty of Versailles. But when we say that Germany was responsible, we do not. mean that Germany alone created the conditions that brought about the war, and that Germany alone shaped the issues that inspired the appeal to arms. The record of Germany’s guilt is, in the main, the record of the Imperial Government in the latter part of July, 1914, after Lord Grey, then Sir Edward Grey, the British Secretary of State for Foreign Affairs, had made an appeal for a four-power conference, to adjust the situation that had grown out of the assassinations at Serajevo.

Speaking recently in the House of Commons, the British Prime Minister, in referring to the origin of the war, said, —

‘The more one reads the memoirs and books written in the different countries upon what happened before August 1, 1914, the more one realizes that no one at the head of affairs quite meant war at that stage. It was something towards which they glided, or rather staggered and stumbled, perhaps through folly.’

President Wilson was savagely censured in 1916 for a speech in which he said that he did not know just what the war was about, and had never been able to find anybody who could tell him. To his exasperated critics there was no mystery whatever about it. Europe was at war because the Germans were a wicked and depraved folk, who had taken diabolical advantage of the unsuspecting innocence of the Russians, the French, and the British. An opinion of that sort does well enough for the temporary purposes of propaganda, but it hardly serves the ends of history; and curiously enough we are still without authentic information as to the final argument that swung the Imperial Government to one of the most reckless and disastrous decisions in all history. All the German war memoirs, biographies, and recollections that have appeared since the war are strangely vague when they arrive at that fateful moment when the sword was thrown into the balance. They do not tell us precisely who was in favor of and who was opposed to war, and what the final argument; was that determined the course of the Government.

Yet it is possible to piece together certain scraps of information that are available, and arrive at a fairly satisfactory conclusion. In order to sustain its enlarged military establishment, the German Government had been compelled to impose what was equivalent to a tax on capital. This tax was most burdensome to German commerce and industry under the intensive competition to which they were subjected. Not only were the Social Democrats, the most numerous party in the Empire, preparing to resist the renewal of the military estimates, but German business was increasingly restive under its load of taxation. To the Junker mind, there was no solution of the problem short of war. To diminish the military establishment was unthinkable. To make the political concessions necessary to appease the Social Democrats and obtain their support for the army programme was likewise unthinkable. The overhead had become too great for the Imperial system. Then came the murder of the heir-apparent to the throne of Austria-Hungary, and the General Staff instantly reverted to the ancient precept of imperialism, — not merely German imperialism, but all imperialism, — which is that a successful foreign war is the best means of averting a domestic crisis. And so Europe was plunged in blood in consequence of a military panic that had its origin in an economic emergency, which in turn was produced by competitive armament. The Lloyd George prediction of 1920 was fulfilled.

When the Chancellor of the Exchequer made the speech referred to, the $2,250,000,000 which the nations were spending every year for past and future wars represented $50,000,000,000 of wealth, on a basis of five per cent. In other words, $50,000,000,000 of the world’s assets were for all practical purposes segregated and devoted to the task of earning income to be devoted exclusively to supporting military adventures of one kind or another.

After a war that, cost approximately $348,000,000,000 in property and production, nobody quite knows the aggregate war budget of the nations. It has been variously estimated at from eight to ten billion dollars a year. If we take the smaller figure and capitalize it at the modest rate of five percent, the amount is $160,000,000,000 — which means that, after extinguishing $348,000,000,000 of the world’s wealth, $160,000,000,000 of what is left is now set aside to pay the reckoning and make ready for new wars.

It is needless to say that labor and industry cannot carry that burden, and when government attempts to sweat them to that extent, it is defeating the very ends of national defense which it professes to serve. War is no longer a conflict between uniformed forces of professional combatants. It is a conflict of all the resources of the belligerents, of whatsoever kind and nature. What ended this war was the overwhelming economic force of the United States. What enabled Germany to fight all Europe to a standstill on two fronts was, not its superior military establishment, but its superior economic system.

The German army was undoubtedly the most perfect military machine ever constructed by the genius of man, but it ditched itself within six weeks after the beginning of the war. All the elaborately contrived plans of the General Staff were frustrated at the battle of the Marne, after von Kluck had out-marched his communications. The remainder of the war was a series of desperate attempts on the part of the German high command to adjust itself to conditions that it had never contemplated; and in the end it was the economic collapse of internal Germany which left Ludendorff’s armies a defenseless shell. So much for military preparedness at its best and its worst.

While military experts are acrimoniously discussing the lessons of the war, the most important lesson attracts practically no attention on their part. It is the lesson that was demonstrated in its most dramatic form by the American intervention — that is, that economic resources can be easily and quickly translated into military resources; that a sound economic system is the essential element in any extensive military undertaking. But these resources are not interchangeable. Economic energy can be speedily converted into military energy, but military energy is not re-controvertible into economic energy. Like the radiated heat of the sun, it is lost. It can never be reassembled and welded into another sun.

The white man’s civilization is an economic civilization. It is sustained by economic supremacy, and by that alone. It is that which has given to the so-called Nordic races their dominion over land and sea. In point of numbers they are inferior to the brown and yellow races. In point of physical courage they are likewise inferior, for the Oriental faces both torture and death with a resignation and a fatalism that the white man either had never attained or has long ago lost. In ability to endure hardship, to exist on a minimum of nourishment, and to survive in the midst of an evil environment, the swarming millions of Asia are superior to the European or the American. As for intellectual power, dismissing the uses to which that power is applied, the Eastern mind has attained a discipline and a subtlety of reasoning that the Western mind has never yet achieved. It is the white man’s economic accomplishments which have been the magic carpet that transported him everywhere, and the armor that none could penetrate. While this economic supremacy exists, no other race can challenge the white man’s civilization. Whenever that supremacy has been weakened, the white man’s civilization has been menaced. It is again in peril.

Three great military empires were extinguished in the war, but three great economic empires were wrecked, as well. Russia has been rightly described as an ‘economic vacuum.’ AustriaHungary is practically in ruins; and whether the great German economic machine will ever be permitted to function freely again is still a matter of speculation. We are only beginning to comprehend the terrific impact of the blow that the war dealt to the economic structure of Europe; and from the day the Armistice was signed, conditions have grown steadily worse. It. must be apparent to anybody who will examine the situation dispassionately that, unless this economic fabric can be speedily restored, modern civilization may slowly disintegrate, to its utter ruin, as preceding civilizations have disintegrated.

Obviously the place to begin the work of reconstruction, so far as the government is concerned, is with the burden of taxation under which all the great nations are groaning. The one point at which an extensive reduction of taxation can be made, which reduction will have an instantaneous economic effect, is military expenditure.

The United States is spending on future wars alone more than the entire net expenses of the Federal government five years ago. It is spending as much as the aggregate net earnings of all the railroads of the country in their most prosperous year. Nobody has yet shown wherein there is a shadow of an excuse for this exhausting strain on the nation’s economic resources, or what peril or policy of government can warrant such expenditure. To say that it is done for the national defense is silly. The national defense is weakened, not strengthened, by this excessive drain.

Of all the nonsense that is talked about preparedness, no other nonsense quite touches the depths of imbecility which are reached by the prattle about nations that are ‘rich but defenseless.’ Nations that are rich are not defenseless. They contain in themselves all the elements for defense. They may have been defenseless in times when war was the exclusive business of professional soldiers, but all that has been changed. The elements of national defense are now the sum total of all the economic resources of the country plus all the man power. In time of imminent danger, the mobilization of a thousand chemists might be infinitely more important than the mobilization of a million troops.

The conventional argument that armament is a form of national insurance is one that is not highly impressive in the circumstances. Insurance does not run parallel with competitive armament, and it is with competitive armament that the world is dealing. No property-owner feels compelled to take out new policies because a business rival has increased his insurance. Nor does he ever feel impelled to establish a two-policy or three-policy standard in respect to other property owners, or solemnly to announce as a measure of life or death that, come what may, his insurance must equal that of any of his competitors, whether he occupies a fireproof building or not.

Moreover, if a manufacturer devoted eighty per cent of his total income, as the United States government is doing, to paying insurance premiums, his creditors would soon intervene, and his case would also receive the careful attention of an expert alienist. He might be solvent, and he might be sane, but neither his solvency nor his sanity would be taken for granted. What an individual could not do without subjecting himself to court proceeding is what every government is doing in the name of national defense.

No nation can be asked to strip itself of all defense — that is beyond the bounds of reason; but the system of competitive armament has nothing to sustain it except the incompetency of statesmanship. Most wars are made by politicians engaged in capitalizing race-prejudices and international rivalries for their own advantage. Wars that spring from the people themselves are few, indeed; and most of the money that is now spent in preparing for another war among the white races is doubly Wasted. If there is such a war during the lifetime of the next generation, on a scale equal to that of the recent war, it makes no difference who triumphs or who is defeated. Victor and vanquished alike will perish in the ruins of the civilization that they have destroyed.

Spending money on competitive armament at this time, under the pretext of providing for national defense, is like drawing blood from a patient who is suffering from pernicious anæmia. The disease may not be fatal in itself, but the remedy is sure to be. Whether Europe can recover from the effects of this inconceivably disastrous war is still a debatable question. No person even reasonably familiar with the situation in which mankind finds itself would venture to predict the general state of civilization five years hence. The issue is still hanging in the balance.

The old Prussian doctrine of Weltmacht oder Niedergang has taken on aspects that were never dreamed of by Bernhardi or the General Staff. It has extended itself to all Western civilization — the Weltmacht that comes from continued economic development, or the Niedergang that must result from economic exhaustion. Collapse is inevitable if the impaired resources of the world are to be steadily depleted by the competition of armament that has been stimulated beyond the wildest dreams of ante-bellum imperialism. Unless the statesmanship of the world can be brought to a realization of the imperative necessity of economic rehabilitation and of the immediate need of sacrificing everything that stands in the way of that rehabilitation, then indeed was this war the Götterdämmerung — the twilight of the white man’s gods.