THE ECONOMIC CAUSES OF WAR

60 THE ECONOMIC CAUSES OF WAR probably be most realistically summarized. There is no need to marshal detailed evidence. The whole body of diplomatic literature - state papers, ambassadors' dis patches, general staff memoranda - are couched in a language of which this is, so to speak, the permanent implicit major premise. Our object is to conserve (or in crease) our power. Such and such an action will affect our power in such and such a way. This action is therefore to be commended (or rejected) . It should be clear that, in such considerations, economic factors are almost necessarily involved. The attainment of military power in the .narrowest sense iI?-volves the control of scarce resources.. The attainment of any kind of power, save perhaps the power of the spirit, is similarly conditioned. This is so whatever the social system of the state in question. Under socialism, as much as under capitalism, national power rests on .economic factors.

Thus national power involves command of raw mater ials. If raw materials essential for the prosecution of war or for the general functioning of the economic system are situated in territories liable to be inaccessible in time of war, national power is substantially limited. It is all very well to argue that, given peace, the raw material problem is only a matter of tariffs and other barriers to trade;· and that, given an absence of restriction, it does not exist at all. This is true enough. .But the fact i~ that peace is not given and an absence of restriction cannot be assumed. The given fact of the world situation, as we have known it hitherto, is not peace but war and the danger of war; and, if raw material supplies are in the hands of powers with whom the state is likely to be at war, or from whose territories it may be cut off, then the preservation of national power must necessarily involve 61 THE ECONOMIC CAUSES OF WAR concern with the securing of adequate provisions. 1 This, of course, is the main explanation of the continual pre occupation of certain modern powers, with the ownership or control of territories in which oil is situated. To the eye sophisticated by Marxian theory it seems to appear that the various manceuvres in this respect have been inspired solely by sinister interest. But this is most improbable.

We do not know with any certainty how much sinister interest has been operative here; the material for sound judgment is not available. It is quite possible that there may have been most substantial rake-offs in particular cases. But, having regard to the importance of oil in naval and aerial warfare, to suppose that independent socialist states having to take account of the danger of war, would have manceuvred very differently, is to lack all sense of proportion. In the same way, considerations of national power involve concern with command over communications. To safeguard supplies and to facilitate naval and military operations, ownership by the citizens of the state of certain important canals or railways may be regarded as funda mental. We have seen already, in the case of the Bagdad railway, how considerations of this sort resulted in inlpedi ments being placed on the agreement of financial syndi cates. In spite of the not infrequent operation of sinister interest in this region, it is probable that similar considera tions have played a large part in determining the long run tendencies of United States policy in Central America. 2 Less obvious, but no less important in this respect, is 1 It is no accident that it is the powers who have most consciously regarded war as a permanent and justifiable instrument of national policy, who have always insisted that the raw material problem is not merely a problem of trade restrictions and monetary policy. The silence of the so-called permanently neutral states on this point is a most sig nificant contrast.

2 See ANGELL, Foreign Economic Policy of the United States, passim. 62 THE ECONOMIC CAUSES OF WAR the role of other types of foreign investments. It is a great source of strength in war, and hence in diplomacy in volving appeal to war, to have available extensive supplies of realizable foreign assets. The enormous strength of Great Britain in the Great War of 1914-18 owed much to the foreign investments of her citizens. To have an inter national money market within the borders of the state may have technical advantages of no small importance in the conduct of war and diplomacy. We have seen how such powers were exploited by France and Germany in the balance-of-power struggle between 1870 and 1914. Moreover, particular types of foreign assets may provide apt instruments· for exercising particular kinds of diplo matic control and pressure. Disraeli's investment in Suez Canal shares is a classical instance of this kind; 1 and the great solicitude of British policy for Egyptian in vestments in general is probably to be explained in a similar manner.

All this is so important, if we are to understand what goes on in the foreground of diplomatic consciousness, that Mr. R. G. Hawtrey has been led to argue that it is futile to attempt to disentangle economic from other causes. 'The distinction between economic and political causes is an unreal one,' he says. 'Every conflict is one of power 1 It is often said that the whole episode of British intervention in Egypt was dictated by the interests of British Bondholders; and advocates of a more or less Marxian interpretation of diplomacy (e.g. H. N. BRAILSFORD, The War of Steel and Gold) seem to regard the whole Egyptian episode as a classic case of aggressive economic imperialism. This is very unplausible. Nobody would wish to deny that some part was played by regard for the interests of investors. But it is very doubtful whether a succession of both liberal and conservative cabinets would have main tained a position of such extreme diplomatic embarrassment if it had not been for the overriding strategic considerations involved. The idea of Mr. Gladstone as the agent of Rothschilds and Barings can only be regarded as comic. On the history of the occupation of Egypt, probably the most solid and reliable account is to be found in LANGER, European Alliances and Alignments, chap. viii.

63 THE ECONOMIC CAUSES OF WAR and power depends on resources.'l Power in Mr. Haw trey's view is something ultimate; he even goes so far as to deny the possibility of interpreting the wars of nationalism in terms other than those of the struggle for power. Now, as we have seen already, there is a plane of analysis on which power may very well be regarded as the objective most clearly aimed at. No one can study the detailed literature of diplomatic intercourse without coming to feel that, for many of the participants involved, the mere preservation or increase of power has become the only objective. The diplomatic game acquires a sort of in dependent status; and the wider forces involved may them selves be deflected by the skill, the mistakes or the idiosyn crasies of the participants. How much of the history of the world has been determined by influences of this sort is a question about which wise men may well differ. But no one who has attentively studied the facts ,,yillbe inclined to minimize their significance. There is a real profundity in Mr. Hawtrey's remark that the principal cause of war is waritsel£ In the absence of the rule oflaw in international relations, a situation is created in which the maintenance or increase of power in the military sense is an almost inevitable objective of the conduct of independent govern ments.

Nevertheless, it is surely too drastic a simplification to regard the desire for power as being always a final ob jective. The foreign ministers and ambassadors who are the immediate agents in the detailed manceuvres of inter- " national relations, may from day to day think only in such undifferentiated terms; but the leaders of opinion, the representatives of various interests, not to mention the 1 The Economic Aspects of Sovereignty, p. 120. I hope that my disagree ment with Mr. Hawtrey on this particular point will not be thought to indicate an undervaluation of this brilliant and illuminating essay which must be a stimulus to all who read it. 64 THE ECONOMIC CAUSES OF WAR introspective citizen, will certainly from time to time con ceive the issues in terms of something more ultimate. Power as such may indeed be an ultimate attraction; we must never underestimate the extent of sheer irration ality which is operative in these large affairs. In the case of a monomaniac like Hitler, it is obviously the governing consideration. But sometimes, at least, somebody will pause to ask what it is all abo,ut. Somebody will indicate the further objectives for the realization of which national power is essential. It is indeed extraordinarily difficult to' get a right sense of proportion here. But it is surely wrong to suppose that such ultimate objectives are not often very important. And it is surely wrong to argue that, because the achievement of any kind of objective involves the use of scarce resources, it is impossible to distinguish between the economic motive, which is concerned with the enhance ment of command of resources in general, and other motives which are more specific in character. 1 We may agree that the diplomatic struggle is a struggle for power. We may agree that all struggles for power involve the control of scarce resources. But this does not relieve us from proceeding to ask the questions: for what purpose is national power wanted? Are these purposes economic or non-economic in character?

2 Non-economicMotives and War It is no object of the present analysis to deny the im.portance of motives which are non-economic. ~ .There does not seem the shghtest reason to suppose that motives of this sort have not often been very powerful. Lust for personal aggrandizement, desire for liberation from a foreign yoke, zeal for the principles of particular religions, violent manifestations of mass hatred - what 1 See Appendix, sect. 4, below. 65 THE ECONOMIC CAUSES OF WAR serious student of history would wish to minimize the part which has been played by such factors in causing conflict through the ages? Of course it is very silly always to believe the apologia of official and other sources; the more sinister the cause, the greater the necessity for appeal to moral principles. But it is equally silly to postulate in advance that no declaration of purpose which does not con form to a certain preconceived pattern, the desire for wea~th in general, can ever possibly be true. It is childish to believe that we are always told the truth. But it is equally childish to believe that we are always told lies. If we look can didly at our own experience, we must surely realize that conflict between the men and the groups we have known is often concerned with matters not remotely connected with wealth, that it is simply fantastic to assert that motives are always economic or spring always from economic influences. What possible reason is there to assume that things become entirely different when the relations of historic persons and historic groups are in question?

It is probable, I think, that the fashion for interpreting everything in terms of economic causes has already become a little demode. To the frustrated idealism of the dog days after the Great War of 1914-18 it was perhaps a perverse satisfaction to trace everything in a base world to 'merely' economic influences; to accept the analysis which purported to do so seemed a sign of superior sensitiveness. But it was never very sensible to do so; and events since those days have done much to remind us that many things other than the desire for wealth may move men to violent action. There are, of course, all sorts of motives mixed up in the present European struggle. As we shall see later on, there are economic motives involved which must not 'be under rated. But to regard the Nazi madness as being principally economic in nature is surely to invert the perspective. 66 THE ECONOMIC CAUSES OF WAR There are, no doubt, decent and sincere people who still believe the whole Hitlerian upheaval to be a gigantic plot of the German heavy industries - yet another manifesta tion of 'the dying struggles of monopoly capitalism'. But this belief has been always rather a prioriin character, and, as time goes on, it becomes more and more in contradic tion with obvious facts.

But for all. this, economic motives do play an important part in everyday human relations; and, as we shall see, there is every reason to suppose that they have often played an important and perhaps even a predominant part in the causation of certain historical conflicts. In providing explanations of how they may act and how in fact they have acted, we are not denying the role of other motives. Weare not making any claims concerning their relative importance in 'history as a whole' - an absurd and impossible concept. We claim only that there are certain possible causes of conflict which are best conceived in terms of economic motives and important cases in history in whose explanation such conceptions seem to play an essential part. 3 SectionalInterestsand War Let us begin with the simplest examples. In the course of our examination of Marxian theory, we have observed cases in which war has been waged on behalf of particular private interests. It is not correct to infer from this, as the Marxians do, that they were waged in the interests of whole categories of economic factors - investment capital, trading capital or the like. It is not in the least clear, for instance, that investment capital in general, or even in Great Britain, had any direct material' interest in the prosecution of the Boer War. What benefits one group of investors is not necessarily beneficial at all to others; and 67 THE ECONOMIC CAUSES OF WAR there is indeed reason to suppose that, where special groups of property owners (or, for that matter, workers) are given monopolistic privilege, the interests of the rest are directly damaged. What we need here is; not a con cept of class interest in the sociological sense, but a concept of group interest in the sense of the theory of markets or the general theory of taxation. If we can find groups with similar interests of this kind, we are entitled to suspect a certain solidarity and to attribute to the group, as such, a pivotal position in the causal mechanism. 1 The common interest is obvious and tangible.

The best examples of the operation of this Rind of influence are to be found in the history of the illiberal societies of earlier times. In the times of the absolute princes, for example, the prince himself and his imn1ediate entourage had often a direct economic interest in the extension of territory. Not only did such extensions bring more glory - a non -economic consideration - they also brought more taxes, more dues, more lands - considera tions which were decidedly economic. There can be no doubt, for instance, that William of Normandy had much to gain in this way by the conquest of England. There is no need to multiply examples; the history of such times is one continuous demonstration of the importance of this kind of thing. Similarly, and perhaps even more significant, in the so-called mercantilist period, when the national states had emerged from the exclusive control of the monarch, the conduct of foreign relations was continually influenced by powerful groups of merchants having common interests in the monopoly of certain n1arkets and opportunities of 1 For a fuller treatment of the distinction between groups as constituted by market interest and statistical or sociological classes see my Economi( Basis of Class Conflict, pp. 1-28.

68 THE ECONOMIC CAUSES OF WAR plunder. \\Tho can deny the economic motive operative in the conquest of British India - t~e rape of the Begums of Dude, the general policy of the East India Company? Again and again the great statutory monopolies of those days exercise an influence on policy which in fact conforms more or less to the model set up by the Marxians for the explanation of the history of a later period. It was of this period that Adam Smith wrote that 'commerce which ought naturally to be, among nations, as among indivi duals, a bond of union and friendship, has become the ' most fertile source of discord and animosity. The capri cious ambition of kings and ministers has not, during the present and the preceding century, been more fatal to the repose of Europe, than the impertinent jealousy of merchants and manufacturers'. 1 When we corne to modern times, however, the impor tance of this kind of crude mechanism in the causation of actual war is a matter of much greater dubiety. We have seen already that cases of this sort are to be found.

Moreover, there was an influential school of thought in Germany which idealized the policies of the mercantilist period and created an atmosphere in which the operations of sinister interest, never more at home than under the institutions of mercantilism, were clothed with an air of respectability. There can be no doubt that this intellectual influence, which ranged far beyond the frontiers of the Bismarckian Reich, did much to promote national policies which, in indirect ways which we shall be describing later on, were extremely conducive to conflict. But of direct manipulation of diplomacy by predatory traders and financiers there was much less than in earlier times .. We must not underestimate the absolute amount of misery caused by those minor colonial expeditions where traders 1 Wealth of Nations, Cannan's ed., vol. I, p. 457. 69 THE ECONOMIC CAUSES OF WAR and governments worked hand in hand. But in the broad perspective of the general history of the age, their com parative significance is not great. To explain recent his tory largely in terms of the direct influence of aggressive sinister influence does not seem to be warranted by the facts.

4 National Interestsand liVar We have not by any means finished with the influence of sinister interest: it proves in the end to playa larger part than might appear at this stage of the argument. 1 . But before developing this part of our theme any further, it will be found more convenient to pass on to consider the wider question of the influence of the economic interests of whole nations. We have noted ways in which the interests of industrial or commercial groups may lead to inter national conflict. Are there not ways in which the interests of whole geographical groups may be conceived to lead in the same direction? Now, of course, interest has a subjective aspect. We may be able to make a rough guess in pounds, shillings and pence of the amount which may be gained or lost by a certain course of action. But whether such gains and losses will be considered worth the cost of the ardours and miseries of war depends upon the individuals concerned; and obviously their estimates may vary greatly. To the wretched neurotic who has just released chaos on Europe, the value of human life as compared with the achieve ment of his diseased aims is obviously very little. To some men of more sensitive conscience, almost any sacrifice may be better than the shedding of blood. Fortunately we are not called upon here to decide these nice moral issues. All that we need to ask is whether for nations as a whole there can be said to be objective gains or losses 1 See chap. v, sect. 3, below.

70 THE ECONOMIC CAUSES OF WAR which it is possible to conceive being balanced against whatever estimate is made of the cost, and whether it is plausible to suppose that such considerations have ever had historical importance. We are concerned, not with the question whether, in the ultimate sense, fighting is ever worth while, but simply with the question whether there can be shown to exist economic interests affecting the majority of national groups about which they may think it worth while to fight. In earlier times and under primitive conditions there are plenty of examples of this sort of thing. We do not know exacJly the origin of the barbarian invasions of the Roman Empire, ~hether it was the drying up of Asia, or pressure of population, or a mere continuation of ancient habits. But we can be fairly sure that the main purpose of the invading hordes was to better their con dition. The children of Israel may have left Egypt because of the persecution of Pharaoh. But they invaded Palestine because itwas a land which was flowingwith milk and honey.

And, speaking generally, we may say that, wherever the extension of territory offers the opportunity of the appropriation of material factors of production or the enslavement of the inhabitants, it is possible that there may exist a national interest of this kind. This possibility has two forms. Either the members of the invading group may have the expectation of themselves individually obtaining land and booty. The wars of the early American settlers against the Indians are an obvious example of this. Or they may hope collectivelyto enjoy the ownership and usufruct of resources in the new possessions. The Romans, who exacted tribute from conquered territories, had an interest of this sort; and it is ea~y to see that, under totalitarian collectivism, similar interests may arise. In recent history, however - and it is always recent 71 THE ECONOMIC CAUSES OF WAR history which is the main focus of our attention - the annexation of territory has not usually carried with it, either the imposition of permanent tribute or the appro priation (either individual or collective) of human or material factors of production. In consequence, at first sight, it is more difficult to see how a nation as a whole can ever be conceived to have an economic interest in the extension of its existing territorial boundaries.

Professor Schumpeter indeed has argued that war for this purpose can never be in the interests of the majority of the members of capitalistic societies. 1 In such societies, he thinks, the urge to war, in so far as it is at all general, is a sort of psychological atavism - a reversion to the ways of thought of the times of the absolute princes when the economic interests of the narro\v class of rulers were clearly favoured by expansion. There is much weight in this contention. The history of modern times shows many instances in which whole peoples have apparently been willing and sometimes even anxious to go to war in cases where there could be no gain in the economic sense for any but a tiny minority. The Italian wars for Tripoli and Abyssinia are obvious examples of this. The urge to destruction which seems to be so deep rooted a constituent of the unconscious mind is rationalized in childish and atavistic terms. 2 When we think of 'our country' conquering new 'possessions', unless we have been greatly sophisticated by the study of economics, we tend to· think of some vast accretion to our own personal wealth and happiness quite disproportionate to the total resources involved. It is unfortunately only a very sophisticated man who \vould not feel that his 1 Zur Soziologie der Imperialismen, 'Archiv fUr Sozialwissenschaft und Politik', XLVII, 1918-19, pp. 1-39,275-310.

2 An interesting study of these mechanisms is to be found in DURBIN and BOWLBY, Personal Aggressi'lleneSSand War. 72 THE ECONOMIC CAUSES OF WAR country was materially better off if he read that it had annexed the North Pole. Moreover, it is also to be remembered that the thinkers who provided the main rationalization for the new imperialism of the eighties and the nineties, were men who had grown up in an atmosphere in which the intel lectual habits of the absolut Fiirstentum had never been shaken off. The main school of German economists of that period, who unquestionably were the originators of the whole movement, were the lineal descendants of the old cameralists whose whole object in life was to instruct the prince how to increase the revenues of his estate.! To 1 The importance in recent European history of the reactionary litera ture of the German social sciences is so considerable that any attempt to explain the general evolution of policy which fails to take account of it, is bound to be out of proportion. In English-speaking countries, our natural aversion from the pretentious and our ingrained unwillingness to read the less elegant of the 'foreign tongues has resulted in an ignorance of the German intellectual atmosphere of the last seventy years which has distorted our view of history and which even prevented us understanding Hitler until it was too late to avoid catastrophe. It is significant that, in PROFESSOR LANGER'S Diplomacy of Imperialism, the most extensive and reliable work on the important diplomatic developments of the nineties, the chapter which deals with the intellectual foundations of imperialism is devoted to an account of the essentially derivative English movement; the German literature is only touched upon incidentally in other chapters.

This seems to show as apt a sense of proportion as a work which, pur porting to explain the art of the high Renaissance, devoted its main analysis to the works of Italianate French painters. It would be easy to show in detail the personal connection with Germany of the intellectual leaders of English Imperialism. But Professor Langer is only representa tive of most of the members of his craft in Anglo-Saxon countries, who have nearly burst blood vessels in the honourable attempt to judge impartially the detailed diplomatic documents, while remaining almost completely anaesthetic to the differences of intellectual atmosphere amid which they were written. A distinguished exception to all this is PROFESSOR SONTAG'S admirable Germany and England. But even Professor Sontag does not· seem to me quite to have realized the significance for inter national relations of the difference between English liberalism and German neo-mercantilism. English liberalism, with all its deficiencies, envisaged a world in which it was conceivable that all nations might live peacefully together. The world of German neo-mercantilism was a world in which such relations were necessarily excluded. Only the domination of the world by one power could bring peace under such a system.

73 THE ECONOMIC CAUSES OFWAR such men the very idea of the liberal society with its strict distinctions between territory and property was something which was essentially alien. They never understood liberalism and they never wanted to under stand it. The concept of the 'dominions' of the Emperor, which, to the cultivated minds of the western world, had become a ceremonial fiction symbolizing chiefly a certain spiritual unity, for them stood for what they conceived as the most important concrete reality; and to this frame of mind, the necessity for territorial expansion seemed one of the main requisites of policy. Professor Schumpeter, who of course knew these people well, is quite right in insisting upon the great importance of such ideas upon public opinion and policy. The atavistic delusions of the German cleres bear a heavy responsibility before history. Nevertheless, it does not seem correct to contend that for the government of any particular state, sincerely anxious to forward the welfare of the citizens, the idea of a national economic interest in the maintenance and en largement of the area of sovereignty is necessarily. at all a delusion. On the contrary, in certain cases at least, it can be shown to be an interest which may be regarded as absolutely fundamental. Both in regard to trade and in regard to migration there may be very real national interests in the actual position of the boundaries. ' Let us look first at trade; for, in the period before the Great War, this probably was the more important con sideration.

It is not impossible to gain directly from aggression, even though no confiscation of property or imposition of tribute is involved. If the inhabitants of the conquered territories are prevented from selling their goods in markets other than those of the conquerors and if at the same time they are prevented from buying save in 74 THE ECONOMIC CAUSES OF WAR imperial markets, it is quite conceivable that the inhabi tants of the dominant area may get advantages in the terms of trade. That is to say, they may get imports on cheaper terms. There is no doubt about this possibility. The free trade analysis which shows that, for the inhabi tants of the imperial area as a whole, impediments to trade are likely to be disadvantageous, is not relevant here; for not all the inhabitants of that area are con sidered. It may well be that, in an empire practising this kind of colonial exploitation, all the inhabitants taken together can be regarded as being less well off than they would be in the absence of restriction. But this does not prevent the inhabitants of the metropolitan area making gains at the expense of the inhabitants of subordinate areas. It is not a question whether the total imperial income is likely to be raised by such measures. It is only a question whether the income of the dominant group can be so raised; and there is nothing in the economic theory underlying the general free trade position, which .would lead us to regard this as impossible. For the last hundred years English-speaking economists have not speculated extensively upon this possibility. For, since the breakdown of the old colonial system and the emergence of the policy of free trade, the idea of exploiting the inhabitants of colonial territories in this way for the benefit of the inhabitants of the metropolitan area has become increasingly antipathetic. 1 But l among the less squeamish political philosophers of Central Europe, it is this type of policy which has always been envisaged, when colonies were being demanded. What GenTIan colonial enthusiast· ever contemplated that the inhabitants of 1 Since the abaqdonment of the free trade system and the imposition in certain parts of the empire of virtual prohibition on trade with Japan there has been some backsliding here ..

75 THE ECONOMIC CAUSES OF WAR subject areas should be free to trade with other empires?! But while there undoubtedly exists the possibility of this kind of gain from aggression, there are many reasons for believing that, in fact, the extent to which it would be likely to be realized is much more limited than has often been supposed. Unless the subjection of the colonies is to be absolut~ly rigid, there will be a tendency to ease their situation by compensating advantages in the metro politan area. The inhabitants of the metropolitan area will be tied to the colonies as the inhabitants of the colonial area are tied to them. And, in such a case, the gener~l free trade analysis begins to become more and more relevant. The more restrictions are imposed, the more both areas tend to lose. The history of the old colonial system, which was supposed to be run on these mutual benefit lines, does not lead to high hopes concerning the eventual benefit to the inhabitants of a metropolitan area of any closed colonial system where the inhabitants of the colonies are not virtually enslaved. Moreover, even if the economic limitations are all on one side, that is to say, if the metropolitan area ~mposes a completely selfish will on the colonies, it must be remembered that the financial costs of enforcing such a policy may very easily more than 1 It is this difference of political assumption which has led to such complete failure of English and German economists to understand each other on this matter. The English, never dreaming that among civilized peoples, it would be thought respectable to regard the inhabitants of colonial territories merely as instruments, and, knowing from general analysis that, for the Empire as a whole, the effect of such measures would probably be adverse, have been apt to regard the Germans as deficient in analytical insight. The Germans, suffering from no such inhibitions and scenting the prospect of sectional gains of the kind to which their Kartell politik had made them well accustomed, could not understan<J why the English should be concerned to deny their possibility. If one under stands the difference of assumption, the logical contradictions disappear.

But it does not seem as though such differences would be very susceptible of settlement after 'full and frank discussion at an international conference' .

THE ECONOMIC CAUSES OF WAR offset any general gains through the terms of trade. If the costs of administration are high, then particular industrial and commercial groups within the metropolitan area may continue to benefit. But the main body of the people are unlikely to be better off. For these reasons it does not seem as though there can be said to exist for the majority of geographical groups a very strong objective interest of this kind in the gains of aggression. It is possible that the belief that such an interest exists may have often influenced policy. But, given the assumptions of civilized people concerning what is legitimate in the treatment of dependencies, and given the disposition of the dependencies to make trouble if they are exploited, it can legitimately be argued that the possible gains of aggression are not often such as to be likely to be thought worth the candle. They are not analytically impossible. They are not impossible to completely ruthless conquerors. But, in the world in which we lived before the advent of Hitler, it is doubtful whether they were practically very significant.

On quite a different footing, however, is what may be called the defensive interest. There may not 'be much to be gained directly by a restrictionist imperialism. But there may be much to lose from the restrictionist policies of other powers. A very simple contrast will make this abundantly plain. Let us suppose in the first place that as a part ofa general world settlement, Great Britain were to hand over her existing colonial' empire to an international authority, which proceeded thereafter to administer these territories on free trade open door lines. On such an assumption, it is hard to believe that many Britishers would be econo mically damaged. There might be some slight loss to the educated classes due to the widening of the competition 77 THE ECONOMIC CAUSES OF WAR for openings in the colonial service. There might be some loss to contractors who, under British jurisdiction, enjoyed advantages as regards government business. 1 Speaking generally, however, on the assumption of the maintenance in perpetuity of these principles of inter national administration, it is highly improbable that the average man or woman would be any worse off. It is probable indeed, if a similar sacrifice were to be made by other nations that, in the end, the general standard would be raised.

But curtailments of territory are not usually of this nature. Hitherto in the history of the world, they have usually involved transfers, not to impartial international authorities, but to powers practising restriction of trade. If this is the case, then the outcome may be very different. Let us suppose that Great Britain were defeated in war and stripped of her colonial possessions by a power which proceeded to surround these territories with restrictions on trade with other areas. That surely would be a catas trophe of the first order of magnitude, a catastrophe affecting not merely the incomes of particular groups of property owners and workers but the income of the nation as a whole. 2 Markets which before were open to us, would now be closed. We should sell our goods, and hence the services of our factors of production, on terms 1 It is possible that the abolition of the recently imposed preferential system might mean some slight adverse turn in the general terms of trade. But I think this is highly improbable.

2 It is a curious thing that such a possibility does not appear to have entered the minds of Marxian writers. Marxian writers have indeed made much of the possibility of aggressive colonization. They have shown - it is one of the most valuable and courageous parts of their analysis - the possibility that 'aristocracies' of labour may share \\lith capital the gains of colonial exploitation. But they have not seen the common interests of national groups in resisting the curtaihnent of markets. Here, as else where, their failure to realize the sociological significance of immobility of labour has blinded them completely to causes of conflict cutting right across the horizontal class divisions of society. 78 THE ECONOMIC CAUSES OF WAR less favourable than before. A general reduction of the standard of living would be inevitable. Such dangers are not imaginary. The inhabitants of Great Britain have for tunately not yet been called upon to suffer such great calamities. But elsewhere in recent history we can find most conspicuous examples. The economic organization of pre-war Austria, especially Vienna, was keyed up to supply the needs of the vast area of the old Austrian Empire. Suddenly, as it were overnight, the greater part of this market was cut off by almost prohibitive tariffs.

The territorial division of labour of the Danube basin was destroyed by nationalist particularism; and the unfortunate Austrians, in particular the inhabitants of Vienna, had to accommodate themselves to a market which could only absorb their products at a reduction of values (and hence real incomes) which was catastrophic. We all know the results for that gracious and elegant civilization of this process of strangulation. It is not difficult to understand that, if successful war could have prevented it, that might easily have been regarded as a price well worth the paying. 1 Much the same sort of considerations apply in regard to migration. So long as there are no restrictions on migra tion into other areas, the inhabitants of any particular ·area are not poorer because the territories ruled over by their government are not larger. They may think it is a hardship that, in order to improve their position, they have to move into areas under other flags. But this is 1 By this I do not wish to say anything to extenuate the course which was actually followed by the diplomacy of pre-war Austria. The remedy was not Conrad's preventive war, but some form of federal constitution which would have averted the threatened disintegration. But I think that it has been a dim perception of the essentially defensive foundations of Austrian aggression which, even during the worst periods of war-time hatred, made our attitude to old Austria essentially different from our attitude to Wilhelmian Prus~ia.

79 THE ECONOMIC CAUSES OF WAR not an economic interest in the sense in which we have defined it; and it is not an interest which prevented millions of Europeans in the times of freedom of movemen t from moving to more spacious horizons. But if migration is blocked, if the inhabitants of the less congested national areas refuse to admit immigrants from more congested parts, then there may be a real conflict of national interests. The plea for Lebensraum has often been the disguise for other more sinister intentions. But no candid person can deny that, when freedom of movement is suspended, the problem is real and urgent. 5 HistoricalObservations:Englandand Germany Here surely we have the outlines of a theory which affords a much more plausible explanation of the economic causes of the diplomatic struggles of the modern period than any other we have yet examined. Whether or not foreign ministers and ambassadors often thought in these terms, here, if they had reflected, there was a per manent justification for maintaining and increasing national power. It was a justification, too, which could vindicate insistence on petty points which in themselves involved no grave economic injury. If, by a series of small losses, the general standing of the nation were weakened, then there was danger of the 'catastrophe' so often vaguely alluded to, the substantial loss of prestige and influence which might carry with it the danger of exclusion and impoverishment. So long as other powers practised exclusion, so long there was danger of substan tial damage from alterations of national boundaries.

It is unlikely that the rationale of policy was frequently stated in these particular terms; public apologia were more apt to rely on the more grandiose imagery of power. But if a cross-examiner had pressed sufficiently persis80 THE ECONOMIC CAUSES OF WAR tently the naive question 'Why do we want to maintain our power?' it is probable that, sooner or later, such an explana tion would have been forthcoming. It is an explanation furthermore which, better than any other, fits the facts of the scramble for colonies. During the period in which this took place Great Britain was the only great power which did not practise a policy of commercial restriction. The British colonial empire was run on free trade principles. But the other powers pursued other policies. It followed therefore that, for anyone power, if any of the others, save great Britain, 'got there first', there was a loss of potential markets; and of course there was always the danger, more feared at that time than was necessary, that British policy might turn restrictionist. Hence there was a real national interest in expansion; an interest, be it noted, not confined to the propertied classes. Working people, equally with capital ists, stood to lose from the narrowing of potential markets: 1 With the recrudescence of protectionism in the seventies, the division of the world's surface between the different nations, which in the period of Cobdenism had seemed likely to become a matter of smaller and smaller impor tance, once more became a matter of real concern to responsible national leaders.

This is plain enough in the history of British colonial expansion. Undoubtedly, from time to time, particular annexations were supported by particular groups of interests. But the main object of the policy of successive governments was to prevent a curtailment of the market. Committed, as they were, to the principles of free trade, they had no desire to exclude other people. But they had every reason to fear that, if other people were in first, 1 Indeed they stood to lose more, for capital was more mobile than labour. 81 THE ECONOMIC CAUSES OF WAR they themselves would be found shut out. 1 Even an historian, so obviously unsympathetic to the British position as Professor Langer, admits this. 'With the setting aside of large parts of the unclaimed world as French and German Colonies', he says, 'there was an obvious danger that the British Market would be steadily restricted. Hence the emergence and sudden flowering of the movement for expansion. The English felt that they had to take over large blocks of territory if only to prevent them falling into the hands of exclusive rivals.' 2 And again, 'It was the embarkation of France, Germany and other countries on the course of Empire that brought the British to the conviction that only political control could adequately safeguard markets'. 3 Even in the case of Germany, this explanation probably 1 Probably the most instructive episode here is the struggle regarding China. The British were only very reluctantly converted to the principle of 'spheres of influence'. But they continually used their diplomatic machinery to press for the policy of the open door.

2 The Diplomacy of Imperialism, p. 75. 3 Ibid., p. 95. After these eminently sensible pronouncements it is something of a shock to find that, in his summing up of the whole period, at the end of the book, Professor Langer says that the Germans 'with some justice felt that John Bull, already bloated with colonial spoils, wanted the whole world for his private preserve' (p. 794, my italics). Private preserve is precisely the term which cannot be applied to a free trade empire. Whatever we may say about British policy in general and the present writer has never been a silent critic of its obvious de ficiencies - we must surely admit that until the introduction of the notorious Ottawa system, British trade policy was immune from the charge of sectional exclusiveness. Professor Langer goes on to say that 'it would be hopeless to try to understand the Anglo-German problem without taking account of this clash of economic forces'. It is perhaps hopeless to expect that students of diplomacy will try to understand economic theory. But before committing himself to so weighty a pro nouncement, it would surely have been well for the foremost diplomatic historian of our day to have considered a little further the testimony of Prince Lichnowsky. 'England', said this candid man, 'would no more have drawn the sword against us on account of our Navy alone than she would have done so on account of our trade, which is supposed to have called forth envy and finally the war ... The theory of England's trade envy of which there has been so much talk, is based upon faulty judgment'.

Auf dem Wege zum Abgrund I, pp. 116-118. 82 THE ECONOMIC CAUSES OF WAR fits the facts more often than any other. It is true that owing to the cartel policy which was fostered by the German government, there was a contact between certain groups of German industrialists and the German government probably. closer than existed in any other country; and it is possible that some at least of the German expansion was initiated in such circles - not, be it noted, the circles of high finance. It is true, moreover, that the writings of the ruling school of German economists went far to justify a policy of aggressive trade expansion. But although these had some influence at the time, it is probable that the main lines of Bismarckian policy were dictated by defensive considerations. The change in Bismarck's attitude to the colonial question coincided with the general return to protectionism, of which of course he was so largely the architect; and, taking into account what we know of the man and his conception of his mission, it is plausible to argue that the' hypothesis that he was fearful of exclusion does less injustice to the facts than the hypothesis of more active aggressiveness.

The aggressive economic philosophy had more influence on Bismarck's successors and on their military and naval staffs than it had on the Iron Chancellor. But for the full . fruition of such teaching we have had to wait for the practice of the Third Reich. Fear of exclusion was probably the dominating motive of the earlier period. In the years since the Great War of 1914-18, such fears have been increasingly justified. Beside the gigantic restrictionist apparatus of the 'post-war' period, the earlier tariff walls are mere pigmies. If the statesmen of the times of our fathers had reason to fear the exclusive ness of their neighbours, justification for such fears has been afforded to us in double measure. It is no accident that this age affords a classic example of an expansionist 83 THE ECONOMIC CAUSES OF WAR \var designed to relieve such restrictions. Whatever we may think of the justice of the Japanese attack on China, there can be no doubt of its connection with the restric tion of the Japanese market. In 1929, with the advent of the Great Depression, the market for Japanese silk in the United States and elsewhere collapsed. Now silk was the chief item of Japanese export. The collapse was a major catastrophe. It was only to be expected, therefore, that the Japanese would turn as rapidly as possible to other forms of export. This they did; and immediately the markets elsewhere Were effectively closed against them.

In Ceylon, for instance, in one year the import of a certain kind of Japanese cloth was reduced to one-tenth of its former dimensions. The connection between such events and the invasion of China is so obvious as to need no elaboration. It is not only restrictions on trade which have become more menacing in the most recent period; there has emerged also a type of policy from which the earlier period was almost entirely free, the policy of restriction of migration. In the years before the Great War it was possible to travel from one end of Europe to the other without a passport; and the enterprising youth of the more congested areas had no difficulty in transferring their efforts to areas offering greater scope. We have changed all that nowadays. The political exile crouches in ditches between frontiers and the youth of impoverished Europe, denied access to the open spaces, dons a shirt and prepares for the "vars. The present generation of Englishmen, to whom the obligation to carry a passport has rapidly become part of the natural order of things, have never paid much attention to the effects of the stoppage of migration. But there can be little doubt that, in a world perspective, it has been one of the most potent factors 84 THE ECONOMIC CAUSES OF WAR making for conflict. It is very difficult to take seriously the complaints of dictators who impede emigration and encourage the birth rate. But their subjects nevertheless have a real and legitimate grievance.

It would be a great mistake, however, to regard the tensions of this period as springing merely from fear of economic exclusion. Enough has been said earlier to make it clear that there is no intention here to ascribe the spiritual disease, the collective schizophrenia of Europe, to purely economic factors. But it is worth noting that, with the rise of the totalitarian systems, the aggres sive economic motive has become more and more in evidence. In the Nazi literature, the desire for expansion is not merely a desire to escape the effects of other peoples' restrictions; it is much more a desire positively to exploit subject races and to dominate the world. We are no longer moving within the intellectual limits of the assumptions of nineteenth-century diplomacy. In the ideology of pre-war Europe, the exploitation of even the most backward people by non-reciprocal trade restrictions was becoming slightly discredited. In the practice of totalitarian Germany, not only is the concept of subject peoples enlarged to include, for instance, Czechs and Jews, but the admissibility of forced labour, that is the virtual restoration of slavery, is also taken more or less for granted. The economic motives of the powers who became involved in the catastrophe of the Great War of 1914-I 8, were the motives of distrustful and irascible but, for the most part, fairly civilized men. The economic motives of the totalitarian powers are the motives of barbarian hordes.