Chapter One

1. P.S.---The refusal to sanction the Tunnel was maintained. Our experience of submarine warfare suggests that even from the purely military standpoint, it might have been wiser to construct it.

2. P.S.---The experience of this war may have revived the wish for a return to France. German Poland, the Trentino, and Danish Schleswig are also exceptions to this generalisation. I question whether Germany aimed at the actual annexation of Belgium.


P.S.---This chapter will seem to anyone who reads it during this war, to minimise the issues which underlay the struggle for a Balance of Power. Surely, it will be objected. the military power of Germany did threaten the liberty and even the territories of her European neighbours? I still think that this view involves a misreading of Prussian "Real Politik." Violent, non-moral and predatory it doubtless was, but its aim was not conquest in Europe, but expansion beyond Europe by means of a victory in Europe. So far as I can gather from good neutral observers who have visited Germany during the war, there was no serious thought of annexing Belgium; it was regarded as a hostage to be bartered at the settlement. At the most, it was to be included in the German Customs Union, or Antwerp was to be made a free port. Herr Dernburg has insisted that in the event of victory Germany aimed mainly at two acquisitions, Morocco, and the recognition of Turkey as a German sphere of influence. It may seem cold-blooded amid the terrors of this war, to insist that it would never have come about save for these sordid colonial and economic issues. But the point is vital for the understanding of modern world politics. The long Moroccan struggle still seems to me typical. Like the Boer and Manchurian wars it turned on colonial ambitions. Nor can anyone who has read the brilliant despatches of the French Yellow Book (especially No. 5) doubt that it prepared the present war. German Imperialists meant to retrieve their diplomatic defeat over Morocco, preferably by a bluffing diplomatic victory against Russia, but, if necessary, by actual war.

Germany unquestionably pursued economic and Imperialistic aims. The other Powers were also influenced in some degree by similar ambitions. If the German Powers sought, by crushing Serbia, at once to free Austria from the risk of disintegration, and to open their way to the economic control of Turkey, it is equally true that Russia was bent on obtaining mastery over the Straits, not to mention Constantinople itself and Armenia. Russia was obliged to support Serbia, not merely for reasons of sentiment and sympathy, but even more because Serbia was the necessary barrier to German expansion in the Near East. The war began in a struggle for the hegemony of the Near East. Italy entered it largely because she claims a share in the partition of Turkey, and meditates acquisitions in Dalmatia; most of her claims based on nationality could have been met without war. France is defending her colonies and especially Morocco. Germany is attacking and the Allies are maintaining the present distribution of colonies and dependencies. The stakes lie outside Europe, though the war is waged on its soil.

Chapter Two

4. P.S.---Since this chapter was written, the whole system of diplomatic support for concession-hunters has been avowed by Sir Edward Grey. Speaking in the Foreign Office debate (July 10, 1914), he said : ' 1 regard it as our duty, wherever bona fide British capital is forthcoming in any part of the world, and is applying for concessions to which there are no valid political objections, that we should give it the utmost support we can, and endeavour to convince the foreign Government concerned that it is to its interest as well as to our own to give the concessions for railways, and so forth, to British firms, who carry them out at reasonable prices and in the best possible way."

5. See Mr. E. D. Morel's King Leopold's Rule in Africa (Heinemann, 1904), pp. x., xi., and his Red Rubber (Unwin, 1906), p. 205.

6. P.S.---Since this book was written, an elaborate technical study has appeared by Mr. C. K. Hobson (The Export of Capital, Constable) which supplies invaluable statistical and historical material. Taken over a wide stretch of time, some part of this export may admit of a certain economic defence (see P. 233), but this defence ignores its reaction on international relations.

In his Budget speech (1915) Mr. Lloyd George estimated the total of our capital invested outside these islands as £4,000,000,000. The annual interest is about £200,000,000. This amounts to about one-twelfth of our whole national income (£2,400,000,000). It cannot be much less than a fourth of the income of the middle and upper classes, for the total income subject to tax is £900,000,000.

7. See page 114.

8. See especially the able report of the medical member, Dr. T. M. Nair, dated Simla, May, 1908.

9. The War Trust Exposed, by J. T. Walton Newbold, M.A. (The National Labour Press, Manchester. id.), deals chiefly with the inter-relation of the British armaments firms. Armaments and Patriotism, by P. W. W. (The Daily News. id.) deals fully with Mr. Mulliner's share in creating the naval scare of 1909. The War Traders, by G. H. Perris (National Peace Council, 167, St. Stephen's House, Westminster. 2d.), contains most of the facts given in the other two pamphlets with some further matter. All of them are based on material which is official and undeniable.

Chapter Three

10. For these and many other facts in this chapter I am indebted to an acute and brilliant little study of the history of the Occupation based mainly on our blue books, Egypt's Ruin, by Theodore Rothstein.

11. See Lord Cromer's Modern Egypt, p. 35.

12. Modern Egypt, p. 74 and 78.

13. The full story is told in an admirable study by M. Charles Lesage, L'Achat des Actions de Suez. Paris. Plon. 1906.

14. See Seignobos, Political History of Contemporary Europe, p. 827.

15. See Edmond Théry, L'Egypte Nouvelle au Point de vue économique et financier, pp. 164-6.

16. See The Situation in Egypt, an address by Lord Cromer to the Eighty Club, published by Messrs. Macmillan in 1908, pp. 17 and 27.

Chapter Four

17. P.S.---The disclosures in Sir Edward Grey's speech on the eve of the war have a bearing on this chapter. He stated that in 1906 he conveyed both to France and Germany an intimation, which was something less than a promise or threat, that we should support France in a war over Morocco. This action was taken after consultation with Sir Henry Campbell-Bannerman, Mr. Asquith and Lord Haldane, and the practice of regular military conversations with France was thereupon adopted. The Cabinet was not consulted, because an election was in progress. Owing to this accident, the fundamental basis of our foreign policy was not reviewed by the Cabinet, until "much later on" (November, 1912). That so long a delay could have occurred in reviewing our military relations with France, is a proof that the Cabinet was not the body which controlled our external policy. This work has passed to its inner ring. The most serious result of these secret "conversations" was that the French fleet was concentrated in the Mediterranean, since our fleet was expected to defend the northern coasts of France. That arrangement in itself forbade our neutrality in the present war. An open alliance would have been less dangerous than this incalculable commitment.

Chapter Six

18. P.S.---The failure of international Socialism to affect the outbreak of this war is only less depressing than the failure of the Christian Churches. The moral is that diplomacy is much more astute in concealing aggression than are the masses in detecting it. The German Socialists had agitated on the eve of war for peace, and when war came they officially condemned the diplomacy which had made it, as, later on, they condemned the violation of Belgian neutrality. But they allowed themselves to be obsessed by the fact that Germany had to defend herself against Russia, in whose hasty mobilisation they saw a provocation. Democratic forces must dismiss the illusion that they can circumvent diplomacy by a sudden rally in the hour of crisis. One must recognise that the sense of an international solidarity in the proletariat, feeble and abstract at the best, will always vanish when the tread of an invading army approaches the frontier. The very man, Hervé, who pushed anti-patriotism to its furthest excesses before the war, has during the war carried a chauvinistic patriotism to the wildest extravagance. The best hope for the future lies in making the procedure of a League of Nations for the pacific settlement of disputes so clear and intelligible, that the simplest democracy can understand it, and so reasonable that every democracy will insist that it shall be followed. The universal moral condemnation of aggression has hitherto been wasted, because the vague distinction between aggression and defence is always exposed to sophistry. If once a pacific procedure can be defined by treaty, and recognised as the law of civilisation, the task of democracy will be simplified. It need no longer concern itself with the doubtful merits of the dispute. It need only insist that the prescribed procedure shall be followed.

Chapter Eight

19. P.S.---Since this book was first published the Government has actually assumed the control, and even the direction of, foreign investments. It has even decided, for reasons of policy, to promote British investment in Italy by guaranteeing the profits of a privileged Bank. Clearly these emergency measures must lead after the war to some more regular methods of control. Exported capital is now frankly recognised as an instrument of policy, and the obstacle of mere inertia to avowed regulation has disappeared.,

Chapter Nine

20. P.S.---Employment of the submarine has made it inevitable that the whole question of capture at sea should be reconsidered. The use of these craft has been rather an outrage to humanity than a decisive challenge to our power. But some further development of the submarine might easily reverse all our calculations and render a supremacy in surface-ships useless to the stronger naval Power. Herr Dernburg's declarations in America suggest that Germany has returned to her original position, and once more desires the abolition of the right of capture.

21. P.S.---The trend of this war has made it doubtful whether a solution of the problem of naval armaments is to be sought in the abolition of capture at sea. The really contentious method is no longer the capture of the enemy's merchant ships, but the embargo, an extension of the old blockade by which we seek to forbid all trading even in neutral ships and through neutral ports with the enemy. Against this embargo America and other neutrals have protested. But in modern war, is any merchant any longer a "private trader"? A nation's power of resistance depends on its commerce and credit. Is it possible to contend that these should be exempt from hostile interference? The embargo assails the rights and interests of neutrals, but can any people hope in a future world-war to maintain neutrality without a dereliction of duty? These extremer uses of sea-power clearly ought not to be left to the uncontrolled discretion of any individual government. But if any League of Nations can be created, it ought to be armed with the power to apply the boycott, the blockade and the embargo against an aggressive or lawless Power. The solution may be found by distinguishing wars conducted by the whole League, for the enforcement of its authority, from unauthorised private wars between single Powers which have ignored its procedure, or rejected its mediation. In the former class of wars alone the embargo would be applied. In the latter class of wars, the League would maintain armed neutrality, and enforce the strictest reading of neutral rights.

Chapter Ten

22. P.S.---These speculations on the prospect of a reconciliation between Britain, France and Germany may seem ironically absurd to-day. They did none the less fairly represent the facts on the eve of the war. In his last interview with our Ambassador the German Foreign Secretary said that the Chancellor's aim had been "to make friends with Great Britain, and then through Great Britain, to get closer to France." Our Ambassador agreed that our relations with Germany were "more friendly and cordial than they had been for years." (White Paper No. 160.) I have left these pages unaltered, because I believe that the hope of a permanent peace in Europe still depends mainly on a reconciliation among the three Western Powers. It seems difficult to hope for this, unless there is an internal change in Prussia. The surest way to prevent such a change would be to impose harsh or penal terms on Germany, which would cause the whole people to rally round the military caste for the organization of revenge.

23. P.S.---An indefensible sea law and the question of Alsace-Lorraine are still the main obstacles to disarmament. Both may with good fortune be removed by this war. But the case for a plébicite in Alsace is overwhelming. So long as territory can be transferred by the mere right of conquest, militarists will always argue that force may undo the work of force.

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