The World in Chains
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John Mavrogordato >> The World in Chains
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[Footnote 34: See Appendix I.]
[Footnote 35: Quoted in the _New Age_, March 16, 1916.]
[Footnote 36: April 8, 1916, from the "City" article by Emil Davies.]
[Footnote 37: My italics.]
[Footnote 38: The rise in freights is a good example of the way in which
abnormal profits are extorted from the public as soon as any scarcity
puts them at the mercy of the trader. (See above, p. 45.) The rise in
freights is unalloyed profit, for the shipping companies have no
increased risk, since the Insurance Companies are guaranteed by the
State.]
[Footnote 39: Which was first drafted in a letter to _The Garton
Foundation_ more than a year ago.]
[Footnote 40: April 29, 1916. One might also mention for its
verisimilitude the situation described at the end of Mr. F. Brett
Young's novel _The Iron Age_ (Secker, 1916), in which the insolvent
ironworks of Mawne are saved in the nick of time by the declaration of
war.]
Sec. 2
Trade lives on Increasing Demand
All war, whatever temporary dislocation of business it may involve, must
ultimately, as a principal form of destruction, assist the intensive
cultivation of demand which constitutes nearly the whole of modern
trade. The industrial revolution of the nineteenth century with all its
labour-saving machines was originally an economy of necessary
production; by the middle of the century it overshot its mark, and
hastened the world to the brink of the opposite disaster of
over-production. In the present commercial era we are still suspended
over that dreadful brink. Nothing can stop the accelerated flux of
mechanical production; and we are saved from falling into the abyss only
by the unnatural increase of ordinary consumption. The consumption of
the ordinary markets, even when stimulated by the most violent tonics of
advertisement, is strictly limited, and the limits have long been
overtaken. The accelerated consumption could only be maintained by the
discovery of new markets, which was undertaken by means of the political
catch-words of Imperialism and Colonial Expansion;[41] or else by the
wholesale destruction of existing supplies. As the number of new markets
and their capacity for consuming things they don't want is ultimately
just as limited as the number and capacity of home markets (for
obviously the time must come when all the Chinamen and Koutso-Vlachs and
South Sea Islanders have already been supplied with ready-made brown
boots and tinned salmon), only one method remained by which Commerce and
Industry might escape, or at least postpone, the penalty of half a
century of over-production. This was by the partial destruction of the
world's existing supplies. If this could be arranged, there might be a
genuine demand for them to be replaced.
Sec. 3
War a form of Destruction
Now as a form of destruction war is easily first. Quite apart from the
obvious destruction of commodities that takes place when a country is
ravaged and invaded, as in the case of Belgium and Northern France, it
should be remembered that the methods of supplying an army in the field
involve the sheer waste or destruction of very nearly half the food and
equipment provided.[42] This is not necessarily the result, as might be
expected, of official incompetence. It may on the contrary be the result
of official foresight, which must allow in warfare for all the changes
and chances of communication, and knows that it is better to waste a
million tons of beef than to risk the starvation of a single regiment.
Such waste, in other words, is a condition of warfare. Add to this the
preventive destruction of stores and baggage which takes place whenever
troops are compelled to retreat: in this way about a million pounds'
worth of stores were carefully burned before the evacuation of
Gallipoli; and not a hundred yards of trench is ever abandoned without
the jettison of about a hundred pounds' worth of equipment. Add to this
the fact that every shot fired, from the mere rifle bullet to the
largest shell, does a proportionate amount of material damage when it
finds its billet: the bursting of a six-inch shell will do, I suppose,
on an average, as much damage in half a second as an ordinary fire can
do in twenty-four hours. Add to this again the fact that the very force
which propels every bullet and every shell is released by destroying by
instantaneous combustion a certain amount of valuable chemical products.
Then, besides all this direct destruction of commodities which must
ultimately be replaced, or which at least some kind contractor may
plausibly offer to replace, consider for a moment the increased wear and
tear of every sort of equipment both civil and military, from
steam-rollers and rolling-stock to boots and bandages and
walking-sticks, which a state of war must involve. Or consider again
that the mere mobilisation of an army implies that several hundred
thousand men, whose annual income before was less than L100 a year, are
now living at the rate of L400 a year.[43]
Anyone who cares to examine in detail all these forms of waste and
destruction, and all these forms of unnatural and feverish consumption,
will begin to understand to what an extent war stimulates the demand by
which alone Trade can survive.
FOOTNOTES:
[Footnote 41: Also, of course, by the campaign for Preferential Tariffs,
which, it was hoped, would have increased consumption by excluding a few
foreign competitors from colonial markets.]
[Footnote 42: Cf. the many stories of beef and other rations being
supplied to troops in such quantities that the units responsible for
their consumption were obliged to bury them. These stories come mostly
from Flanders. At home the same superabundance may have been the undoing
of many a Quartermaster-Sergeant, who, not knowing what to do with such
a plethora of beef, and having a proper superstition against throwing
away good food, was tempted to sell it for about a penny a pound to the
local butcher.]
[Footnote 43: And the fact that they are doing so at the public expense
is, of course, only an additional advantage to the traders who supply
their needs; as they do not risk losing any of their money through bad
debts.]
Sec. 4
War stands to benefit Neutral as well as Belligerent Nations but not to
the same extent
In Western Europe at least all markets are practically open markets. No
tariff however scientifically graduated will really divert the natural
flow of trade to any considerable extent.[44] Consequently it might
appear that all nations stand to benefit in the same way, but in varying
degrees, from the intense local demand set up in the nation at war. Thus
British Trade was exhorted in a sincerely rapacious article by Captain
Dixon-Johnson[45] to snatch the opportunity presented by the Balkan War;
and the unparalleled boom in American trade during the present war is
another obvious example. This suggests at once that the benefit
occasioned by war is not a national benefit, diffused vertically through
every class of the belligerent nation; but a class benefit diffused as
it were horizontally through the commercial strata of all nations within
supplying distance of the centre of disturbance. On the other hand, of
course, the immediate local demand is stronger than the demand
communicated to remoter markets and more easily supplied; in other words
the commercial class of the belligerent nation are more immediately and
more intensely benefited by the state of war than the same classes of
neighbouring nations, although in war as in peace the commercial classes
of every nation are one.[46] Also the outbreak of war, even if it does
not entirely sever a country from foreign sources of supply, is bound to
cause a certain dislocation; if communications are not altogether
interrupted they are more difficult and uncertain than in normal times;
so that the trade of the belligerent country is always given a greater
impetus than that of its neutral neighbours, and in such cases a
particular industry which has been threatened by the competition of
foreign imports may be actually rescued from extinction. Even the
temporary dislocation of trade is a benefit to trade in the nation at
war; for it enables existing stocks to be sold at exaggerated
prices.[47]
FOOTNOTES:
[Footnote 44: From this it follows incidentally that a high tariff is of
no advantage to the community as a whole, but only to a particular
section of the community. For the idea that it will benefit the whole
community is based on the assumption that it is possible to divert a
particular sort of foreign import; actually the tariff will not exclude
the import if there is a natural demand for it, but it will provide an
excuse for every dealer wholesale or retail to increase his profit on
the article taxed by about double the amount of the tax; i.e. if an
imported article pays a duty of sixpence, the price to the consumer of
all such articles whether imported or home-made will be raised a
shilling.]
[Footnote 45: In the July, 1914, issue of the _Asiatic Review_, to which
I have already referred.]
[Footnote 46: I need hardly say that in speaking of the commercial class
I do not include its instrument the workers. The international Socialist
movement has not yet succeeded in uniting _them_; but the exhortation
addressed to them by Marx has been obeyed instead by the capitalists.]
Sec. 5
The greater the Capital, the greater the War Profit?
The over-production in modern industrial states, from which Trade can
only be saved by some such catastrophic remedy as war, may be attributed
not only to the tyranny of machines, but also to the financial jugglery
known as over-capitalisation. If it could be shown that
over-capitalisation were a consequence of national wealth it would
follow that the richer nations would enjoy a greater benefit from war
than their poorer neighbours. But this will only be true if we do not
measure national wealth by the average wealth of every citizen; if we
speak in this case of national wealth quite apart from any question of
its equitable distribution, and are careful to distinguish it from
national welfare; a wealthy nation in this case would have to mean a
nation blessed with a class of wealthy capitalists, or supporting a
large parasitic colony of the persons described as financiers; and such
a nation would have as a corollary to be blessed with a class of workers
disproportionately large and disproportionately poor. For if industrial
conditions are fair over-production is impossible.
FOOTNOTES:
[Footnote 47: Here, for instance, is an illuminating sentence from a
private report on Greek trade during the Balkan Wars: "I commercianti
Greci hanno guadagnato molto durante la guerra, perche hanno venduto
tutte le merci che avevano in deposito a prezzi molto piu alti, che la
gente era obbligata di comperare a cagione che non potevano importare
merci straniere."]
Sec. 6
The Blessings of Invasion
If war is regarded primarily as a commercial stimulant, we might carry
the argument farther and conclude that invasion and even ravage are
actually beneficial to the trade of a country that suffers them; for
ultimately they must make way for a direct demand on the spot for the
primary commodities of life. Houses, fences, roads, factories will all
have to be replaced. It is obvious that the war will have to be followed
by a time of rebuilding.[48] It might be urged that such a phase of
convalescence would be retarded or altogether prevented by the lack of
private capital for such an enormous enterprise. But private capital,
thanks to the credit system, is practically inexhaustible so long as it
is required for a genuinely productive purpose: and even if it failed in
this case to come forward, the money required would certainly be
advanced out of the indemnity which will have to be provided for the
invaded provinces, or would be guaranteed in some other way by the
Government concerned. In which case Trade, even after the conclusion of
peace, would rejoice in another period of Government contracts. If it be
admitted, however, that we have not sufficient data to make this
suggestion more than probable, we can at any rate be certain of the
effect produced by the mere numbers of an invading army or a defensive
garrison. The Jewish traders of Salonica enjoyed a time of unexampled
prosperity in 1912 and 1913, owing to the mere presence of the Turkish,
the Greek and the Bulgarian armies, to whom they sold out at their own
prices.[49] They are now repeating the process with the English and
French armies; and in the interval they were kept busy restocking the
Macedonian villages depleted or destroyed during the campaign of 1912.
As for the small shopkeepers of Flanders any member of the British
Expeditionary Force will tell you that they are at present so prosperous
that even a German bombardment will hardly drive them from their
counters.
FOOTNOTES:
[Footnote 48: Since this chapter was written I have seen a pamphlet with
the following title: "The Chance for British Firms in the Rebuilding of
Belgium, by a Belgian Contractor. London, Technical Journals, Limited,
27-29 Tothill Street, Westminster."]
Sec. 7
The Luxury Trades don't do so badly
The most obvious if not the only exception to our tale of war profits is
to be found in the case of the parasitic industries which specialise in
the production of the unnecessary. It is not easy rigidly to define the
luxury trade, for the luxury of one generation is the necessity of the
next; but it is enough to suggest a broad idea of the industries that
fall under this heading. "The income-tax assessments show," says _The
Times_,[50] speaking of Berlin after nine months of war, "that among the
trades which have suffered most are fruiterers, breweries,
public-houses, bars, cafes, chemists and perfumers, goldsmiths and
silversmiths, jewellers, milliners, furniture and piano dealers, and
music and booksellers. Landowners, land speculators, builders and the
carrying trade have also suffered." We may also notice that in the early
months of the war Florence, the great market of the shoddy "souvenir"
and the "tourist's delight," suffered a good deal more than London,
although Italy still remained neutral. In London itself a good example
of the parasitic industry are the firms which make ingeniously useless
silver toys for rich people to give each other at Christmas.[51]
Many such industries may indeed have suffered in England, although many
of the trades mentioned in the Berlin list have not been affected in
London, and at least two of them have made conspicuous profits. But in
any case it is probable that they suffered if at all only during the
first period of the war, when the general feeling of strangeness and
insecurity was strong enough to inhibit the shopping instinct of the
wealthier classes. As soon as these became accustomed to the state of
war they reverted with even greater energy to their old pastime of
spending money: and meanwhile the luxury trades had acquired an entirely
new set of customers, for a large part of the profits accumulated in
other trades were now being spent by a newly enriched class who were
unaccustomed to save, for the simple reason that they had never before
been in a position to do so. Consequently the luxury trades after a year
of war had not only recouped their temporary losses but were doing a
bigger business than ever. The natural adaptability of the trades which
pander to fashion must also be taken into account. A number of them
after the first panic recaptured the failing demand by advertising very
simple modifications of their ordinary supply. Some, for instance,
turned to the manufacture of equally plausible superfluities of military
equipment--such as silver and gold identity disks and watches with
luminous dials and queer little hieroglyphs in place of the ordinary
figures. Trades already so well organised for exploitation could easily
defeat any general attempt at social economy. Thus for women of the
upper middle class the most obvious form of war economy was to carry on
with only a slight alteration of last year's dresses; and such was their
declared intention when their hands were forced by the Dressmakers'
revolutionary change in the fashion which substituted the full skirt for
the tight skirt of 1913-14. The extraordinary ingenuity of this move
was, not only that it thwarted any good intention of not buying a new
dress this year, it being manifestly impossible to "alter" a tight skirt
into a crinoline, but also that the extra cloth required for the
unusually full skirts more than compensated the trade for the continued
abstention of a few unfashionable obstinates, as well as for the extra
cost of labour.[52]
FOOTNOTES:
[Footnote 49: One Jewish contractor supplied corn and fodder to all
three armies. As soon as his Turkish customers had capitulated, he
tendered for the supply of the victorious Greeks, and he still had
enough to spare for the Bulgarians when they entered the town.]
[Footnote 50: May 17, 1915.]
[Footnote 51: Such "labour-saving devices," for instance, as "poached
egg servers."]
Sec. 8
Trade Profits in war not shared by the Nation but confined to Employers
The trade profits which are thus directly stimulated by the conditions
of war, do not imply the prosperity of the Trade as a whole, if a Trade
is understood to mean a certain section of the nation including in a
sort of guild or hierarchy representatives of every class engaged in a
particular Trade. They do imply the prosperity of a particular class,
for they are all employers' profits, profits on the capital involved.
Unfortunately the profits of the Capitalists do not involve the profits
of the Labourers, and cannot therefore be tested by statistics of
unemployment. But of course the fluctuations of unemployment do very
materially affect the opportunities of Trade, and it might reasonably be
argued that the apparent profits created by War are really modified by
the conditions of the Labour market or otherwise equitably distributed
among the general population. Unfortunately it is quite easy to show
that the one policy of employers during the present war has been to
maintain their profits without any concern for the general population,
and that the effect of war has been to increase the profits of Capital
not only by increasing the demand but also by making the Employers
increasingly independent of the labourers' claims.
At the beginning of War the Employer, on the grounds of general
insecurity and "not knowing what was going to happen next," cut down
wages and raised the cry of "Business as Usual"; which meant that
business was so much better than usual that he was afraid it could not
possibly last. So he cut down wages, laughed at buyers who offered him
the usual prices, and charged L48 a ton for hides and 6s. 10d. for a
yard of cloth that usually cost half a crown. If the private buyer would
not pay his prices the Government would. It was indeed too good to last,
for such prosperity became impossible to conceal:[53] it also reduced
the margin of unemployment on which he had always depended, and he soon
found himself obliged to return to the normal rate of wages which he had
paid before the war. He was disappointed to find that "Business as
Usual" meant wages as usual, but he struggled on, imploring the
assistance of the Government in order to "capture Germany's Trade."
Worse was to follow: after nine months of war recruiting for the army
had begun in earnest, and "there was on the whole less unemployment in
Great Britain than at any previous moment in the present century."[54]
But he was determined to "carry on," and for the sake of the Government
introduced child labour into his workshops.[55] Meanwhile, however, the
cost of living was steadily rising, and after a year of war, and of
profits, the labourers' demand for an increase of wages could not be
altogether ignored. The employer decided to carry the war into the
enemy's country. The nation must hang together, he said, and all work
was practically national work. So he boldly accused his workmen of lack
of patriotism, and roundly declared that "but for the trade unions the
war would probably have been over by this time, with a victory for the
Allies.... Organised labour is the rotten limb of the body politic,
which must be cut off if health is to be restored to the system."[56] It
was hard work, but in spite of the shortage of labour and in spite of
the rise in the cost of living, he managed to hold wages down by
repeating that any demand for a rise in wages was unpatriotic.[57] One
by one, on the plea of urgent Government work, he obtained the
suspension of all Trade Union rules and thus deprived his workmen of
even the natural rights of negotiation; and when after fifteen months of
war they again ventured to raise their voices on the Clyde, he openly
accused them of being paid by German agitators.[58] On the whole
therefore he has been extraordinarily successful in keeping his profits
to himself, and as the present demand is likely to continue for some
time after the war, his chief anxiety at present is to maintain after
the war the compulsory relaxation of Trade Union rules which nothing
less than war could accomplish. The slight danger that a prolonged war
may kill off a considerable part of his margin of unemployment is more
than balanced by his successful introduction of women's labour: and he
means that War, in addition to the actual profits of his Trade, shall
give him the enormous potential advantage of having broken the Trade
Unions.[59]
FOOTNOTES:
[Footnote 52: As a matter of fact, nearly all the luxury trades cut down
their scale of wages during the first year of the war; and many of these
ostentatiously gave to some War Charity a fraction of the sum thus
extracted from their employees. I suppose it would be libellous to give
examples.]
[Footnote 53: Though frantic attempts to conceal it have been made since
the Tax on War Profits was introduced.]
[Footnote 54: The _New Statesman_, May 22, 1915.]
[Footnote 55: See above, p. 47, note 4. Some illuminating details are
given in the _Nation_, May 22, 1915, concerning the unscrupulous plea of
Government work in order to excuse the employment of children.]
[Footnote 56: The _Saturday Review_, September 18, 1915.]
[Footnote 57: "The shortage" too was a permanent excuse just as good for
holding prices up as for holding wages down. Cf. a correspondent in _The
Times_, May 17, 1916: "This position of affairs makes one doubt if the
shortage in these articles (bottles, jars, tins, boxes, etc.) is as
stated, or that the shortage pays better and the various trades do not
wish the tension to be in any way relieved."]
[Footnote 58: I hope it will not soon be forgotten that _Punch_ was not
ashamed to endorse this charge.]
[Footnote 59: Cf. Mr. Emil Davies in the _New Statesman_, April 8, 1916:
"My impression is that the annoyance of Clyde manufacturers at the
present labour troubles is not wholly free from a certain grim
satisfaction. They are not anxious to see carried out the pledge that
shop conditions should go back to the pre-war basis, and, they argue, if
the men are discredited with the public, it will be all to the good of
the employers in the big industrial struggle they look upon as
inevitable after the war. They regard this struggle without anxiety and
are accumulating funds; some of them talk of special funds being created
for the purpose by the employers in association. These are the
impressions gained from conversations with prominent members of the
Glasgow business world."]
Sec. 9
Trade Profit and National Loss
It need not therefore be supposed that the War Profits, of which there
is such abundant evidence, conflict at all with Mr. Norman Angell's
contention[60] that all modern war, even if the military operations end
in a military success, is futile and unprofitable from the national
point of view. The general truth seems to be that War, whether it be
apparently victorious or apparently unsuccessful, is always profitable
for a small commercial class in each belligerent nation.[61]
Unfortunately the profits thus earned by the economic effects of war are
not diffused vertically throughout the whole nation from top to bottom,
but rather horizontally along a shallow commercial stratum in every
nation. In every nation war diminishes the national wealth, but
concentrates the residue with greater inequality in one particular
class. The representative of this class, commonly called the Capitalist,
is the real cosmopolitan, because his interests in each belligerent
nation are identical, and the war, successful or not, contributes to his
financial advantage. It is an illuminating coincidence that the classes
in every nation which most enthusiastically demand the violent
prosecution of the war seem to be proportionately anxious to annul the
hardly-won privileges of democracy. Thus the _Saturday Review_, in a
passage already quoted, solemnly, openly and unforgettably declares the
secret wishes of the militarists; and we may be surprised to consider
how many safeguards of democracy, how many rights of free thought and
free speech, how many of the precarious limitations of sweating and
child-labour and wage-slavery have been quietly suppressed since the
beginning of the war. But if war is ultimately unprofitable for the
nation as a whole, it might be argued that Trade itself must ultimately
be involved in the national loss. The answer is that even if the
Trader's interests were identical with those of the nation and were
ultimately bound to suffer with the nation as a whole, he would
undoubtedly ignore the possibility of a loss so much remoter than his
immediate and obvious profits; especially as he is certainly ignorant of
the economic fact that in modern times military victory and military
defeat are equally unprofitable, and if he ever did pause to consider
the results for the whole nation he would certainly, perhaps in good
faith, identify the national interest with his own, and assume, for
psychological rather than economic reasons, that his own interests
demanded a military victory; real ignorance and emotional excitement
sufficing to explain his apparently hypocritical professions of
patriotism. As a matter of fact however his private interests are not
dependent on those of the whole nation; for commercial wealth is not the
same as national wealth, and prosperous Trade is quite consistent with
national unhappiness. The average citizen of Switzerland is more
contented than the average citizen of any of the great commercial powers
of the world; and some of the causes that make for commercial
prosperity, causes of which War is not the least effective, actually
decrease the civic efficiency of the greater number of the population,
and reduce their chances of happiness. "If an expanding trade," writes
Mr. R. B. Cunninghame Graham,[62] "is the sure sign of national
happiness clearly the four countries, the figures of whose trade are
tabulated (Chile, Peru, Brazil and Argentine) should be amongst the
happiest in the world. Yet still a doubt creeps in whether expanding
Trade is the sure test of happiness; for recently I have revisited some
of the countries of the River Plate that I knew thirty years ago, and it
appears to me that they were happier then. True, they were not so
rich.... Wealth has increased, but so has poverty...."
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