POLITICIANS tend to think in cant, as the masses and the aristocracy think in slang. For the secrecy of their foreign policy cant has provided them with a specious excuse. The suggestion is that democracy is incapable of a "scientific" handling of foreign questions. The ruling class invokes science to-day in defence of its privileges, as its fathers used to invoke revelation. This apology for a close and exclusive statesmanship involves several suppositions ---that a science of foreign politics exists, that the bureaucrats of the diplomatic service are in possession of it, and further that they alone possess it, or are capable of acquiring it. To state these suppositions is to dispose of them. There is no science of foreign policy, and however much it may stand in need of careful and systematic thinking, no department of politics has received less theoretic attention. Certainly no book exists in our language which attempts in any systematic and constructive way to present a general view of foreign affairs, or of the principles which should guide their conduct. The consequence of leaving this department of public affairs to the uncontrolled conduct of a small caste, is not to promote their scientific handling, but rather to give the rein to caprices, rivalries, and personal interests. The fewer the number of persons engaged in any given transaction, the less on the average will be the chance that it will be settled by any view of general interests, and the greater the probability that the issue will turn on purely personal factors. There has unquestionably been in the last century an immense improvement in the personal morals of diplomatists, a decay even in foreign affairs of the authority of monarchs, and a diminution of the risk that individual interest will deflect national policy. Save perhaps in the Balkan States, and there only in Belgrade under the late King Alexander, one may doubt, for example, whether anything is now effected in diplomacy by the Stuart-Bourbon method of subsidising the mistresses of foreign kings. Late in the eighteenth century our ambassadors in St. Petersburg used to bribe the ministers and courtiers of the Tsar. That method is obsolete even in Russia. But the personal factor is none the less still powerful and its motives are not always respectable or even patriotic. The memoirs which deal with the foreign affairs of the nineteenth century often suggest that the ultimate problem was frequently that of handling the caprices of the few individuals, the kings, statesmen and ambassadors, on whom the fortunes of European peace too often depended. Here, for example, is the picture which Lord Aberdeen, a weak but high-minded Prime Minister, drew of the diplomatic position which was to create the Crimean War (Stanmore, Earl of Aberdeen, pp. 270-1). Writing to a colleague (Graham) he describes how he and his Foreign Secretary are consciously but miserably drifting into war, hurried along by the ambitions of two men, the one an ally, and the other a public servant, whose character they profoundly distrusted :--

"I fear I must renounce the sanguine view I have hitherto taken of the Eastern question ; for nothing can be more alarming than the present prospect. I thought that we should have been able to conquer Stratford" (Lord Stratford de Redcliffe, the bellicose but capable British Ambassador in Constantinople), "but I begin to fear that the reverse will be the case, and that he will succeed in defeating us. Although at our wits' end Clarendon (the Foreign Secretary) and I are still labouring in the cause of peace; but really to contend at once with the pride of the Emperor (Louis Napoleon, our ally), the fanaticism of the Turks, and the dishonesty of Stratford, is almost a hopeless attempt."

It was a "hopeless attempt." Lord Aberdeen saw clearly that British interests could be safeguarded without war. What could not be appeased without war was the resentment of Louis Napoleon against the Tsar Nicholas, who had affronted him by treating him as the thing he was---a parvenu and an adventurer. War was declared, and the armies of three nations starved and froze and bled before Sevastopol for the pride of Louis Napoleon and the "dishonesty" of a British ambassador. No veneration for the inner ruling caste which has made the wars of Europe, could survive a study of the memoirs which deal with the life of Bismarck, and his successor. Prince Hohenlohe. The Hohenlohe Memoirs, given to the world in 1906, expurgated though they were, remind the reader of the books in which our Puritan ancestors used to revel under such titles as Satan's Invisible World Revealed. The book is simply a dissection of the personal ambitions and intrigues of the courtiers, generals and ministers, who surrounded the German Emperor during the years when Germany exercised a species of supremacy on the Continent. One may take as typical of the mind of these persons an entry by Prince Hohenlohe regarding the policy of Germany towards France in 1889. There was at this time some serious question of provoking a war with France, and the main reason for hurrying it forward was apparently the eagerness of the German generalissimo, Count Waldersee, a most influential person at court, to reap the glory which is to be had only by leading armies in the field. There was unluckily no obvious pretext for war, but on the other hand Count Waldersee, who was growing old, was obsessed by the painful reflection, that if the inevitable war were postponed much longer he would be compelled, a superannuated veteran, to witness the triumphs of a younger rival. In the end it was found impossible to provide Count Waldersee with a European war, but to the astonishment of mankind, the Kaiser did, before he reached the age-limit, arrange a punitive expedition to China for his benefit. If he reaped no glory by it, the Chinese will not soon forget his prowess against non-combatants and movable property.

The inner history of the Russo-Japanese War is an even more instructive revelation of the working of the personal factor in foreign affairs. The facts are fully stated in the translation from the first unexpurgated draft of General Kuropatkin's Memoirs which Mr. George Kennan contributed to McClure's Magazine for September 19o8. The causes of the war were the refusal of Russia to observe her pledge to evacuate southern Manchuria, and her stealthy encroachment on the Japanese sphere of influence in Northern Korea. These memoirs show that all the Ministers of the Tsar, Count Lamsdorf (Foreign Secretary), M. Witte (Minister of Finance), and General Kuropatkin (Minister of War) were sincerely disposed to evacuate Manchuria, and no less opposed to any advance towards the Yalu river and Korea. They failed, because the timber enterprise, which was the attraction of the Yalu district, was a court venture. These wealthy forests, made over to a Russian promoter in 1896, when the Emperor of Korea was a fugitive in the Russian Legation at Seoul, had passed into the hands of a courtier named Bezobrazoff, an intimate of the Grand Dukes, the Dowager-Empress and the Tsar. The company which he formed to work his concession had several of these people among its shareholders, and there is little doubt that the Tsar himself was interested to the extent of £200,000. Admiral Alexeieff, a creature of Bezobrazoff's, sent to the Far East as Viceroy, overruled the Ministers at home, and conducted the timber enterprise as an Imperial undertaking. It was neither the Russian people nor the Russian bureaucracy which had determined to keep the Yalu district and to fight Japan for its possession. The resolution to possess it came from a little group of interested courtiers, who were using the national resources to further their private financial ends.


There can be no science of foreign politics so long as foreign affairs are in the hands of small cliques, among whom personal caprice is liable at any moment to upset calculations of national interest. What, moreover, are national interests? There is no calculus by which their relative importance is assessed, nor is there any recognised standard by which even democratic states measure the point at which a vast private interest assumes the standing of a national stake. Certain assumptions become a tradition, which is handed on from one generation of diplomatists to another. Such traditions are always plausible. They are constantly repeated, rarely questioned, and their subtle transformation under changing. circumstances is apt to go unmarked. Some of these axioms are beyond controversy. The first task of diplomacy is to preserve our national freedom and independence. Second in importance, for this country, comes the duty of preserving the freedom of the seas for our commerce, an interest which is national, not merely because our export trade is vital to us and half the world's carrying trade is in our hands, but also because our food supply depends upon it. Hardly less national is the obligation to further our trade in goods by maintaining the "open door" for our exports in neutral markets. Directly or indirectly that is the interest of the whole community. The real difficulty of distinguishing between. a private and a national interest begins when we consider the duty of our diplomacy to "protect" our subjects abroad. "Protect" is a vague word, which may mean anything from a determination to safeguard our subjects from physical outrage, up to a policy of promoting their efforts to secure concessions. The word bore its simple meaning in the eighteenth century, when we went to war with Spain because Spanish officials in the West Indies had cut off Captain Jenkins' ear. Modern Imperialism is concerned with a Jenkins whose ears are seldom in danger. It is for his investments that he demands protection. The modern extension of the principle was first enunciated by Palmerston in an historic speech in 1850. It seems to hold that a subject residing or trading abroad is entitled to call upon the whole resources of diplomacy, backed if necessary by arms, to defend not only his personal safety but his material interests, if these are threatened by the people or government of the country in which he resides or trades. Palmerston was censured by the House of Lords, violently resisted by the Queen, and opposed in the Commons by such wise Conservatives as Sir Robert Peel, but he carried popular opinion and party votes for his claim that

"as the Roman in days of old held himself free from indignity when he could say Civis Romanus sum, so also a British subject, in whatever land he may be, shall feel confident that the watchful eye and the strong arm of England will protect him against injustice and wrong."

The case which Palmerston had chosen for the establishment of this principle was painfully, even absurdly remote from any national British interest. Don Pacifico, a Portuguese Jew, resident in Athens, who in some obscure way had acquired British citizenship, had a fantastic claim for financial compensation against the Greek Government. He refused to sue in the Greek courts, called in British diplomatic aid, and so far succeeded, that a British fleet was sent to the Piraeus with a peremptory demand for a settlement. Palmerston's doctrine, looked at askance in his own day, has become the unchallenged dogma not only of our own, but of every other Great Power. In the heroic age Helen's was the face that launched a thousand ships. In our golden age the face wears more often the shrewd features of some Hebrew financier. To defend the interests of Lord Rothschild and his fellow bondholders, Egypt was first occupied, and then practically annexed by Great Britain. To avenge the murder of a missionary by a Chinese mob, the Germans annexed the town of Kiao-chau, and a district stretching one hundred miles inland---the town, it may be remarked, was noted not merely for its dislike of German missionaries, but also for the fact that it is a very valuable port. To protect investors who had speculated in its debt, a foreign financial control was imposed upon Greece. The claims of various financial adventurers, who had grievances against President Castro's Government, induced Britain and Germany to conduct a naval expedition against Venezuela.

When in Persia a civil war broke out between the Shah and his revolted subjects, Russia, with Sir Edward Grey's assent, claimed and exercised the right to send her troops into Persian territory to protect her subjects from the possible accidents that might befall them in these internal commotions. The comparatively recent history of Turkey tells of a naval expedition undertaken by France to the island of Mytilene to collect a usurious debt due by the Sultan to a pair of Levantine financiers with Italian names (MM. Lorando and Tubini). The extremest case of all is, perhaps, our own South African War. The quarrel between our subjects and Mr. Kruger's Government was extensive, but it turned mainly on two points, the objection of the mining industry to the dynamite monopoly, and the claim of the Outlander community that it should be allowed on easier terms to divest itself of its British citizenship in order to acquire a vote in the Burgher Republic. An odder application of Palmerston's doctrine could hardly be imagined. The Civis Romanus conceived it to be his interest to become a barbarian, to weaken the Empire by leaving it, and the Empire actually backed his claim. The law forbids a man to weaken the State by committing suicide, for it is supposed that the subtraction even of one broken life from the sum of its forces is somehow a loss. Here the State actually insisted that British subjects should be encouraged to withdraw their support from the Empire, and it backed its insistence by arms. What the mine-owners really at bottom desired, was cheaper labour, and their effort to acquire political power through the franchise had no other object. "Good government," as one of them reckoned, would mean two and a half millions a year in dividends. In one way or another capital which expatriates itself will desire to control the territory where it is employed. It is often content with the informal good offices of diplomacy. In graver cases it demands some form of foreign control through foreign employees or a foreign commission. In the Transvaal it thought for a moment of securing its interests by means of the votes of a foreign population composed mainly of its own employees. The same proposal has been put forward (see p. 123) by Lord Cromer as a method of reconciling the claims of foreign finance with Egyptian self-government.

Palmerston's doctrine has, in short, become a pretext which may excuse any and every act of aggression and interference. The extent to which it is carried in any given instance depends not so much on the character of the interest involved and the nature of the injury which it has suffered, as on the mood of the Imperial Power, the weakness of the State assailed, the tolerance of the other Great Powers, and the amount of influence which the interest affected can exert upon the diplomacy of the Power which protects it. The applications of this doctrine are apt to attract attention only when they happen to lead to some catastrophe involving the visible use of force. But for one overt and public application of force, most modern Empires use their strength a hundred times in less violent but equally effectual ways. If a Power coerces once, it may dictate for some years afterwards without requiring to repeat the lesson. It is the first duty of diplomacy abroad to protect the interests of its subjects, and these interests are now usually concentrated in the hands of great banks. The banks in their turn work in concert with the groups of capitalists who are seeking concessions to construct railways and ports, to instal electric plants, to open factories, to work mines, to supply armaments or to subscribe to loans. Palmerston's claim that a State should protect its subjects from "injustice and wrong," sounds plausible. But better than cure is prevention, and the real business of diplomacy is now rather to support these interests, so that no "wrong" shall be done them, than to rescue them by an angry intervention after the wrong has been done. The methods by which support is given vary indefinitely, and each Power has its own characteristic technique. Sometimes the financier is merely introduced and recommended to the notice of a foreign Government, and this process is clearly simplified when the venture has at its head some noted social or political figure. A British bank operating in Egypt chooses Lord Milner as its Chairman. A bank which aims at serving Turkey has at its head Sir Ernest Cassel, who was often King Edward's host. Lord Cowdray, battling in Latin America against the Standard Oil Trust for concessions, sends out as his ambassador the late Whip of the Liberal Party. "Protection" in such cases means often much more than support against the Government of the weak and possibly unscrupulous State in which our financiers are operating. It means also support against European rivals, who in their turn have diplomatic backing. In Turkey rival embassies compete like business houses for concessions, loans and orders, and mix inextricably their politics with their finance. The French and German ambassadors in Constantinople engage in an incessant conflict over the right to supply Turkey with armaments from the forges of Creusot or Essen. The banks take their share in the competition, and the usual procedure now is that Turkey is offered a loan by a French or German bank on condition that the proceeds are expended in buying cannon as the case may be from Schneider or Krupp. Austria has been known to make it a condition of concluding a tariff treaty with Servia that she should buy her cannon from the Austrian works at Skoda. Our recent rapprochement with Spain, which included a royal marriage, a treaty for the defence of the Spanish coasts, and some protection for Spanish interests in Morocco, was completed by the re-building of the Spanish navy by British firms.

To conduct these complicated negotiations with any prospect of success, the Great Powers are necessarily driven to take a hand in the internal politics of the country which they are assisting their financiers to exploit. We make partisans, for whose coming to power we hope and are occasionally supposed to scheme, and for whose fall we penalise the party which overthrew them. Kiamil Pasha in Turkey and Yuan-shi-kai in China were notoriously Anglophil. They were for the Times the only trustworthy reformers in their respective lands, and the disinterested opinion of the City, a nice judge in such matters, paid homage to their "Liberalism."

When they fell from power, the Times promptly despaired of the future of Turkey and China. It happened, for example, after Yuan-shi-kai's last fall from power, that a loan and railway concession in Canton, worth some £3,000,000, went to a German instead of a Franco-British syndicate. Our Ambassador at once protested against the signing of the contract, and when his protest failed, the correspondent of the Times in Peking predicted that the consequence would be to "alienate the sympathy of the British Government," on whose "support" in her various diplomatic troubles, China need no longer count. (April 9, 1909.) We expected, that is to say, to be paid in economic favours for our political support. In plain words, we sell it. How normal this official backing of the concession-hunter is now felt to be may be deduced from the quiet sentence in which the Times describes the present state of things.(4) "The field," it writes, "is thrown open to private enterprise seeking to obtain railway, industrial or similar concessions, and the Government of any country is free to support its nationals in their application for such concessions as are adjudged to have merit." There is apparently no lack of merit among British proposals, for we learn that Messrs. Pauling (represented by Lord Ffrench) have obtained a railway concession, while Messrs. Lever, Brunner Mond & Crosfield have combined to found a vast factory which will supply all China with soap. These concessions, as the Times says of the railways, must be meritorious since our Government supported them; and it must have supported them, for otherwise they could not have been obtained. Such instances as these bring us sharply back to the enquiry from which we started. What is a national interest? How in particular are the interests of the people of these islands advanced when a group of Liberal capitalists succeeds in manufacturing in China, with cheap native labour, soap which used to be produced at Warrington at Trade Union rates and exported to China in British ships? It is possible that the electors of Warrington and Port Sunlight might not feel that their taxes were advantageously employed in "protecting" such enterprises as this. But apart from this curious instance, destined in all probability to become increasingly common, the whole practice of using diplomacy (with the fleet behind it) to procure concessions for British capitalists raises questions which have never been considered by Parliament or public opinion. It is a wholly modern extension of the rights of the Civis Romanus, and an extension which usually benefits no one but the capitalist. But to what ideas of nationality have we sunk, when the people of China may be told, that they, millions of human beings struggling towards self-government reaching blindly out towards Western ideals, menaced by the aggressions of predatory empires, and in need of every kind of brotherly aid, will forfeit the good will of a Government which in its turn represents millions of quite disinterested and moderately benevolent human beings in these islands, if it does not give a concession to a British bank or a British contractor? The whole practice is a degradation of national intercourse and an offence as much to our own national self-respect as to the independence of the Chinese. It is moreover a perversion of the objects for which the State exists, that the power and prestige, for which all of us pay, should be used to win profits for private adventurers. The hunting of concessions abroad and the exploitation of the potential riches of weak states and dying empires is fast becoming an official enterprise, a national business. We are engaged in Imperial trading, with the flag as its indispensable asset, but the profits go exclusively into private pockets.

This Imperial trading has its questionable aspects from the standpoints of the British public and also of the nation with which our diplomacy deals. But it has another consequence which is no less serious. It brings us continually into conflict with the diplomacy of other Powers which are engaged in competing for the same concessions on behalf of their own financiers. It is not the rivalry of merchants engaged in selling goods which makes ill-feeling between nations. The merchant rarely invokes diplomatic aid to enable him to keep or secure a customer. The trouble arises only over concessions, loans and monopolies which bring the European financier into relations with a foreign Government. The rivalry is indeed felt to be so intolerable and so risky, that modern diplomacy now seeks wherever possible to avoid it, by mapping out exclusive areas of exploitation, "penetration," or "influence." When a claim to a national monopoly of this kind is once recognised by all the competing Powers, the result is of course to diminish the friction between them. The concord of Europe is saved at the expense of the independence of the exploited State---for a Power which holds such a monopoly is able at once to dictate to the local Government, and it usually manages to "control its finances" and to "organise" its police. The partition of Persia is the most notorious instance of this development. Our rather shadowy claim to exclusive "influence" in the Yangtse Valley, the richest area of China, has not yet been admitted by other Powers, and it may one day cost us a struggle to enforce it. In Asiatic Turkey the informal demarcation of spheres has gone further than in China. One may say vaguely that Syria is French, Anatolia German, Armenia Russian, and that Mesopotamia and Arabia are British, but there is much overlapping and no general agreement about boundaries ; and Italy, if the partition is long postponed, may be able to make good a claim to Cilicia. A new phase of this competition has just developed in Latin America, with an interpretation of the Monroe Doctrine put forward by President Wilson which seems to mean that no European capitalists may henceforward obtain concessions in the American Continent without encountering American opposition. President Wilson is an idealist, and what he personally meant was that the granting of any concessions to foreigners is a danger to the independence of the State which accords them. In practice, however, such a doctrine would probably mean opposition to European and support for American financiers. If it is to be strictly enforced, it would mean that the United States claims the whole of Latin America as its exclusive sphere of economic penetration. In that doctrine Europe is not likely to acquiesce, and America may soon be the field of a conflict as acute as any that Turkey and China have witnessed. Diplomacy in these rivalries becomes the tool of the vast aggregations of modern capital in oil trusts, steel trusts and money trusts, and wherever rival combinations of capital are competing, as British and American oil companies compete in Central America, the reaction will be felt in the relations of their Governments. The struggle for a balance of power is in effect a struggle to map out these exclusive areas of financial penetration. To this end are the working classes in all countries taxed and regimented in conscript armies ; for armies and fleets are the material arguments behind this financial diplomacy.


To a community like Russia, which is still in a primitive agricultural stage of development, actual conquest is the aim with which armies are strengthened and diplomacy conducted. To the landed class, which alone rules in these communities, broad acres and numerous serfs are the most natural expressions of wealth. It conquers and arms to acquire estates. With the development of manufactures and oversea trade, these cruder views are discarded. The landed class retains for a time its hereditary bias to think in terms of actual possession. But little by little the commercial standpoint modifies the attitude even of the aristocracy. A trading community like Early Victorian England, which can still profitably employ all its capital in its mills and ships, becomes indifferent to the acquisition of territory, and even tends to regard the colonies previously acquired as a useless encumbrance. That was the normal state of mind of our commercial classes during the middle years of last century. They dealt in goods, and in order to sell goods abroad, it was not necessary either to colonise or to conquer. To this phase belongs the typical foreign policy of Liberalism, with its watchwords of peace, non-intervention, and free trade. The third phase, the modern phase, begins when capital has accumulated in large fortunes, when the rate of interest at home begins to fall, and the discovery is made that investments abroad in unsettled countries with populations more easily exploited than our own, offer swifter and bigger returns. It is the epoch of concession hunting, of coolie labour, of chartered companies, of railway construction, of loans to semi-civilised Powers, of the "opening up" of "dying empires." At this phase the export of capital has become to the ruling class more important and more attractive than the export of goods. The Manchester School disappears, and even the Liberals accept Imperialism. It is, however, no longer the simple and barbaric Imperialism of the agricultural stage. Its prime motive is not to acquire land, though in the end it often lapses into this elementary form of conquest. It aims rather at pegging out spheres of influence and at that sort of stealthy conquest which is called "pacific penetration." The old Imperialism levied tribute; the new Imperialism lends money at interest.

The typical exponents of Liberal foreign policy, notably Cobden, were perfectly conscious of the connection between their economics and their international ideal. Their policy was primarily a statement of the relations which ought to subsist between Lancashire and its foreign markets. Lancashire had outgrown its purely predatory phase in earlier generations. It had destroyed its trade rivals in Ireland and India by means of tariffs. It could now afford to ignore the possibility of competition. It stood therefore for free trade and the open door the world over. It had nothing to gain from Imperialism or conquest. One can sell cotton to negroes or Chinamen without troubling to conquer them. To attempt to conquer, where one can trade without conquest, is a sheer squandering of national resources. Even the colonies were of no obvious use, and might, if they chose, follow the example of the United States amid the good-will and indifference of the mother country, which would still buy and sell in their ports if they became independent. Seeking no conquests for itself, this School objected to the conquests of other empires which were apt to disturb trade, to close "open doors," and to interfere with its clients. Secure in its riches and its constitutional liberties and conscious of its virtues, the Manchester School desired to see the rest of the world reorganise itself on a British model. Free Trade was a universal dogma; Parliamentary rule a cure-all for every civil mischief, and the Protestant religion a faith to be inculcated the world over by Bible Societies and missionary organisations. Its propaganda was, however, passive. Liberal England was in the main content to watch the progress of Continental movements towards national and constitutional liberty with benevolent neutrality. It felt no such impulse to liberate the world as had animated revolutionary France. Meetings were held for Garibaldi and Kossuth, but it was Louis Napoleon and not Free Trade England who used his armies to drive the Austrians out of Italy. Palmerston would assuredly have gone much beyond benevolent neutrality, but the general feeling of the middle-classes was against active intervention in the affairs of the Continent. Our fathers had their sympathies and their opinions, and it was their pride to express them boldly. But even on behalf of a "small people rightly struggling to be free," crusading had no part in the policy of a mercantile community.

It was not a heroic creed, but it made for peace, it discreetly promoted liberty, and it held in check the spirit of conquest and militarism. War it regarded as waste, and armaments as unproductive expenditure. Exchange, fairly and honestly conducted, is a reciprocal benefit, and it was the best aspect of this historic Liberalism that it cultivated no spirit of grudging or envious rivalry. If other nations prospered, the chances were that they would be for that reason better customers for our exports, and better producers of our raw material. On the basis of this enlightened selfishness there grew up a real spirit of benevolence. Interests were involved in all these calculations, but they were much more nearly national interests than those which Imperialism obeys. If a cotton-manufacturer exports his wares to Egypt, the transaction is a gain in some degree to large numbers of persons in both countries ---to the workers in Lancashire, to the seamen who carry the wares, and to the peasants in Egypt. But if a financier lends money to the Khedive of Egypt, no direct share of the profits comes to the English worker in wages, while the Egyptian peasant is heavily taxed to find the interest. In producing goods a mercantile community has constantly in its mind the existence and well-being of its clients. A bad harvest, a famine, an earthquake will have an adverse effect upon trade, and, above all, political troubles and misgovernment will in the end impoverish the foreign clients of the English mill. Such considerations as this made indirectly for freedom and for humanity. The concession-hunter who obtained the right to invest his capital in Turkey by lavishing bribes on the courtiers of Abdul Hamid, was necessarily indifferent to the welfare of the Turkish nation. Indeed it was simpler for him to have a corrupt central despotism to deal with. It cost him something in bribes, but on the other hand no free or national Government would have given its assent to the unconscionable bargains which European capitalists were able during. some thirty years to drive at Constantinople. Lancashire, trading, as it does, mainly through Armenian merchants and agents. realised very clearly that bad government meant bad trade. German finance, mainly interested in banks and railways, preferred to have the despot's goodwill. English commerce objected very strongly to the massacre of its best salesmen and customers. That is possibly a somewhat crude way of representing the influence of interest on sentiment. It would perhaps be fairer to say that commerce in goods is no obstacle to the natural play of sentiments of humanity and goodwill in international politics. Free-trading England was firmly convinced that liberty was necessary to good government and good government to prosperity. Desiring the prosperity of its customers, it wished that its diplomacy should promote their freedom so far as prudence and safety allowed. Liberalism was at both ends a popular policy. The interest of a whole nation of producers and traders was its concern. On the interest of a whole nation of foreign consumers its thoughts were naturally bent. To it peoples rather than territories or governments were the reality. Peoples buy cotton, governments only want loans.

These economic considerations were no doubt seldom consciously present to the minds of statesmen. Still less were they often stated in speeches or leading articles. Oratory preferred, of course, to take higher ground, and to assume that politics are conducted on a basis of abstract right and disinterested sentiment. Nor need we suppose that the disinterested sentiments expounded by such idealistic Liberals as Gladstone were coloured by such calculations as these. But it was these calculations which gave the sentiments their opportunity and their vogue. A prophet of the religion of humanity would have preached in vain either to a feudal caste which thought of the world overseas as so much land to conquer, or to financial groups which thought of it simply as a field for their investments. An audience of manufacturers on the other hand was probably flattered to find that its own pedestrian habits of thoughts coincided so nearly with the dictates of an elevated altruism. It was quite ready to believe that the Armenians were its suffering brethren, because it already regarded them as its customers. Napoleon called us a nation of shopkeepers. Shopkeepers have this merit, that they are bound to desire the prosperity of their clients. The usurer on the other hand is often best served by the bankruptcy of his victim---provided of course that diplomacy will help him to foreclose.

The strength of the old free-trading, anti-Imperialist Liberalism lay in this fortunate duality. It combined philanthropy with business. It believed in freedom for other races and in opportunity for its own trade. These two things, so far from being incompatible, are usually found together, and may quite honestly be sought together. The Congo Reform Movement is perhaps the aptest illustration of their consistency. The originators of this movement and its supporters in the churches and in Parliament were of course, entirely disinterested. They would undoubtedly have worked with exactly the same self-sacrificing zeal if no question of traders' rights had been involved. They were thinking solely of the miseries of the natives whom King Leopold and his financiers exploit. The movement is a survival in an epoch of Imperialism of the spirit which made an end of the slave trade. But this movement would never have attained the success which it has won, nor would it have impressed itself to such a degree upon the Foreign Office, had it confined itself to humanitarian arguments. Its devoted originator, Mr. E. D. Morel, was wise enough to lay stress on the commercial argument and to seek the support of the Chambers of Commerce. It secured the attention of the Foreign Office partly because its programme included a demand for better facilities for British trade.(5) The whole Congo affair is a perfect illustration of the main thesis of Liberal foreign policy---that free trade in goods is an interest consistent with humanity. The beginning and end of Congo misrule consisted in this---that a group of Belgian financiers, with King Leopold at its head, carved out this vast territory into domains and concession-areas. In each of these the King or the companies enjoyed a monopoly. They did not trade, for there was no exchange of goods. They spent a certain capital upon river gunboats, the building of stations and railways and the arming of savage native levies. In return they claimed as their own the land and its produce (that is to say the rubber), and under the guise of a labour tax, set the natives to collect it. This was not trade. It was high Imperialist finance in a peculiarly brutal form. Incidentally they excluded from their monopoly areas all foreign traders, and indeed there was no possibility of trade, since nothing was left for the natives to sell. The only thing which they could have sold was the rubber, and this was appropriated by the financiers in Belgium. The standpoint of the Liverpool merchant was an entirely proper one. He is a trader and a shipper. He wanted to do business with the Congo natives as he does with the natives of the Gold Coast. He would have exported cottons in return for rubber. The Belgian monopoly stood in his way, and he argued, fairly enough (1) that the monopoly was a breach of treaty rights and (2) that its consequences were hideous to the natives themselves. One need not enquire what was the relative importance of the two issues to the Foreign Office and to Liverpool. The point to note is that in pursuing a traditional free trade policy, and in backing British trading interests, the Foreign Office was really serving the cause of the natives. They could not become prosperous or free until they were delivered from this monopoly; incidentally their prosperity and freedom would benefit our West African trade. Here the essential antagonism between the financier who uses his capital to exploit native labour, and the trader who uses his capital to develop a system of exchange between natives and Europeans, stands clearly revealed. Neither the trader nor the financier is disinterested. But the interests of the one are as consistent with those of the native, as the interests of the other are inimical to them. John Stuart Mill roundly denied that one nation can ever govern another; a nation may, however keep another people as a human cattle farm. The Congo was not even a well-managed farm. It was destined eventually to become a colony of the Belgian State. While it remained the property of King Leopold, his one concern was to extract from it as rapidly as possible the millions which he invested on real estate, squandered on showy palaces and triumphal arches, or spent on the pursuit of beauty in a frankly personal form. As for the companies their shares rose while the native population declined. Lord Cromer once declared that the unwavering pursuit of interests assumed to be national is the sole object of a foreign policy, and yet he assisted the Congo movement. There was no inconsistency here. The foreign policy of a trading nation may be consistent with freedom, so long as its main interest is export and exchange of goods. It is with the export of capital that Imperialism begins. There is no transition from disinterestedness to what the Germans call "real politics" in the passage from the Manchester School to modern Imperialism. Each alike rests on a calculation of interests. What has changed is the nature of the export.

A critic belonging to the Manchester School might object that this antithesis between the export of goods and the export of capital is exaggerated and even false. The process of exporting capital, he would argue, cannot be isolated from the process of exporting goods. Lend money to the Argentine to build a railway, and what you really export is not gold but rails, while the interest comes back not as gold but as meat. This is of course as true as it is elementary, though the process is rarely so simple as this. What really takes place is a rather complicated series of transactions, carried out on an elaborate credit basis, at each stage of which the financier and the promoter makes his commissions and his additional profits. The French Périer Bank the other day lent a million pounds to the Turkish. Government, which it used to pay the first instalment of the purchase price of a Dreadnought cruiser built in Newcastle. A few days later it was announced that the same bank, obviously as a part of its commission, had obtained a concession for a railway from Smyrna. to the Dardanelles. While we must admit that the export of capital could not be carried out without some movement of goods, there is still a sharp distinction to be made between the financier's transaction and simple exchange of goods from the standpoint of the sociology of class. Commerce carried on upon an elaborate structure of credit is more profitable to the investing classes, than the simpler exchanges which take place between nations on an equal level of economic development. If we send Welsh coal to France, and receive artificial flowers in exchange, capital makes two profits---the English colliery owner's profit, and the French sweater's profit. But if we lend money to the Argentine, and with it she buys rails here, and afterwards sends out meat to be sold here so that the interest on the loan may be paid, then capital has made three profits---the English steel trade's profit, the Argentine meat trade's profit and the English banker's and investor's profit. It is this third profit which our leisured class chiefly values, and to develop the sort of commerce which requires this credit basis, that is to say commerce with weaker debtor nations, is the object of Imperialism.

There remains the question of how far or in what sense this constant acquisition of economic opportunity by political pressure which is called Imperialism can be justified by any kind of national bookkeeping, however sordid. Does the whole body of taxpayers profit by it to an extent commensurate with the sacrifices which they make to maintain the army and the fleet which are its ultimate sanctions? Sir Robert Giffen, a Conservative statistician of unrivalled authority, has brought together the figures required for the study of this question, and Mr. J. A. Hobson has analysed them fully and clearly in his masterly work on "Imperialism," one of the most notable contributions of our time to the scientific study of contemporary politics. How far then does Imperialism promote trade, in the sense of the only kind of trade which can be considered a diffused and relatively national interest, the exchange of goods. The essential facts may be set out somewhat thus, for the period of expansion with which Sir Robert Giffen deals, the last quarter of last century:---

The area of our Empire in this period was increased by about one-third.

The national income rose during this period by about one-fifth, or 20 per cent. per head of the population.

This increase of income was not due to a corresponding increase of our external trade. Measured indeed in so many pounds per head of the population of these islands, the annual value of our external trade slightly dwindled (from £19 19s. 3d. during the five years 1870-4, to £19 7s. 10d. during the four years 1895-8).

In this external trade, the colonies occupy, relatively, a slightly less important place at the end of the period, than they did at the beginning.

The colonies themselves have become less exclusively dependent on us, than they were when the period of expansion began.

The progressive element in our trade has been our exchange with foreign countries and neutral markets.

Clearly, then, in so far as Imperialism means the acquisition of territory, it does not justify itself as a means of making or keeping "trade," if trade means the exchange of goods. Trade then supplies no explanation of Imperialism.

If trade fails as an explanation of modern Imperialistic expansion, emigration has even less to do with it. Of all the territory acquired or occupied by us during the most active period of expansion, only the Boer Republics are fitted to be a permanent habitation for a white race, but even in them English labour rarely makes a home. It is not a fact that Great Britain is over-populated. Its population is less dense than that of certain areas of Germany and the Netherlands, and we are all realising that a drastic policy of land reform would enable us to "colonise England." Statistics show that emigration during this period of active Imperialism has steadily diminished, and it is still true that half of it goes, not to colonies under our own flag, but to the United States. The same phenomena may be witnessed in Germany. There also the population is increasing both by natural growth and by immigration, but emigration has diminished, and no appreciable number of emigrants goes to the new German colonies, which are all unsuitable for settlement by a white race. But it is the recent history of France which shows with luminous clearness how factitious is the growth of modem Imperialism, how small is the group which promotes it or profits by it, how purely capitalistic it is in its origins and motives. No nation ever had more clearly marked out for it, as its destiny, the happy fate of "cultivating its own garden." France has no teeming population for which she must find colonies. To her case the metaphor of the beehive and the swarm has no application. Her population is stationary, and would actually dwindle were it not maintained by the influx of alien immigration. Her "garden" is fertile, her climate various. Nor does her national genius lead her to make gross produce for which uncultured peoples offer the natural market. Her speciality is to make ingenious and beautiful things for civilised men. These wares are not bulky, and therefore she needs neither a great mercantile marine nor a great navy to protect it. But her industry and her habits of thrift cause her to accumulate capital with immense rapidity. Had she employed that capital at home, the rate of interest must have fallen to an almost nominal level. To the possessing classes foreign investment became therefore the absorbing concern. Save in Russia, the struggle to acquire land for purposes of genuine colonisation came to an end with the Napoleonic wars which gave us South Africa.

What then is the economic meaning of Imperialism? It is only when we turn from the figures of trade to the figures which measure the export of capital, that statistics begin to correspond with our expansion, and our book-keeping to bear some relation to our aggressions. Mr. Mulhall calculated for the Dictionary of Political Economy that our foreign and colonial investments grew between 1882 and 1893 at the prodigious rate of 74 per cent. per annum. Sir Robert Giffen estimated our profit on foreign and colonial investments in the year 1899 at between 90 and 100 millions sterling. The total is rising rapidly.(6) Ten years later, as Sir George Paish stated in a paper which he read to the Royal Statistical Society, our profits from foreign and colonial investments amounted to 140 millions. One no longer enquires why the unaggressive, anti-militarist, anti-Imperialist Liberalism of the free-trading England which was content to take Cobden as its guide, has given place to the expansionist, militarist, financially minded Imperialism of to-day. Regarded as a national undertaking Imperialism does not pay. Regarded as a means of assuring unearned incomes to the governing class, it emphatically does pay. It is not true that trade follows the flag. It is true that the flag follows investments. The trader is in a sense a nomad. If one market begins to fail him, he turns to another. If a country to which he used to export goods is torn by civil war of threatened with bankruptcy, he does not call for intervention. He goes elsewhere, or waits for better times. The investor on the other hand has acquired "a stake" in some foreign country, and anchored his fortunes irrevocably upon it. Unless he is prepared to lose his stake, he must, if the country in question goes bankrupt or is threatened by civil war or revolution, call in the Imperial arm to defend him. It is sometimes said that our navy is an "insurance" for our mercantile shipping, since it protects it from piracy or from capture in time of war. It would be more accurate to say that both our navy and our army overseas are an insurance, provided and maintained by the nation at large, for the capital owned abroad by our leisured class.

Here at length we have discovered the stake which an armed Imperialism watches and seeks to enlarge. The fear of war, the struggle for a balance of power, the competition in armaments which in Sir Edward Grey's phrase threatens to "submerge civilisation," the universal nightmare amid which we are "rattling into barbarism"---all this is seen to be a characteristic product of modem finance and modern capitalism. It makes the slum and it makes the Dreadnought. One may go further. It makes the Dreadnought because it made the slum. Imperialism is simply the political manifestation of the growing tendency of capital accumulated in the more civilised industrial countries to export itself to the less civilised and the less settled. To secure itself, it seeks to subdue or to "civilise" its new fields of investment---as it understands "civilisation." In crossing the seas and entering new lands, it must take with it the machinery which renders the process of capitalist exploitation profitable and secure---its laws of debtor and creditor, its police for the protection of property, its armaments and its administrators.

Why, then, is it that capital seeks to export itself? There are many cogent reasons abroad. At home the fundamental fact is the rapid accumulation of surplus capital. It grows in the hands of trust magnates, bankers, and ground landlords more rapidly than the demand for it at home. It tries continually to get itself employed at home, and the result is that periodic over-production, which shows itself in a "slump" of trade and a crisis of unemployment. Capital, like labour, has its periods of unemployment, and its favourite method of meeting them is emigration. When rates of interest fall at home, it begins to look abroad for something at once remunerative, and not too risky, and it is to diplomacy that it turns to protect it from risks. If, further, we go on to ask why capital cannot get itself profitably employed at home as fast as it is accumulated, the answer is briefly that its too rapid accumulation has stood in the way of a simultaneous development of the consumers who might have given it employment. Had a little more of the profits of a trade "boom" gone to labour, and a little less to capital, it is manifest that labour would have had more money to spend, and the new surplus capital---less considerable in amount---might have been employed in meeting this new demand. The shareholders of a Lancashire mill make their 35 per cent. in a good year---such cases occur. Had they and their fellows been content with something less than 35 per cent., and added to wages what they subtracted from dividends, the workers all over the country would have been spending more than before on the necessaries and the luxuries which these mills provide. There need then have been no slump, and the new capital might even have been used to make more cotton goods for the home market. But the shareholders insist on their 35 per cent., and the workers are foolish enough, or weak enough, to let them take it. What, then, is the too fortunate shareholder to do with his money? He spends as much as he can on motor-cars and grouse-moors, town-houses and domestic display. But even to this, unless he is a mere spendthrift, there is a limit. He, therefore, invests what he is pleased to call his "savings"---meaning by that term the money which he has saved from other people's wages, and failed to expend on his own pleasures. The home market is "glutted"---which means that the masses have nothing more to spend. He, therefore, looks abroad. An Egyptian Khedive wants money to squander on ballet-girls and palaces and operas. Japan wants money to build ironclads. Russia wants money to pay for the repression of her subjects. Or perhaps gold has been discovered in Ashanti, or the niggers of West Africa have developed a taste for gin. Into such enterprises goes the capital that cannot find employment at home. The reason for the too rapid export of capital abroad is, in short, the bad division of wealth at home. For there is "work" enough in these islands to "employ" more than all their surplus capital, if only the consuming power of the masses could be increased. Raise wages, raise with them the standard of comfort, and this restless capital need no longer wander abroad. There ought to be enough for it to do at home. It might build working-class dwellings in reclaimed slums instead of palaces for an Egyptian Khedive. It might "colonise England" instead of speculating in tropical land. It might exert itself in providing the English labourer with a more frequent change of clean shirts for his back and clean sheets for his bed, instead of enabling the Russian Government to build in Russian dockyards at an extravagant cost warships which it does not need, to be navigated by sailors whose only hope is mutiny and revolt. Capital conducts itself to-day much as the primitive agriculturist behaves. It must be for ever conquering fresh territory and bringing new fields under culture, simply because it does not know how to make a good use of the fields it already possesses. The primitive farmer---in Russia, for example---must become a conqueror, because he has never learned to apply manure. The capitalist must rush abroad, because he will not fertilise the demand for more commodities at home by the simple expedient of raising wages.

The other reason which is most potent in inducing capital to flow abroad is the elementary fact that coloured labour can be more ruthlessly exploited than white. The supposed risks of a foreign investment, moreover, enable the capitalist to charge usurious interest. It follows that on both grounds the profits to be made abroad are greater than the profits to be made at home.

In one of the classics of the Imperialist muse, Mr. Rudyard Kipling remarks that there are no ten commandments east of Suez. That may be an attraction to Tommy Atkins. The capitalist hears the East a'calling mainly because there are no Factory Acts east of Suez. That was literally true of Egypt while Lord Cromer reigned.(7) In India there is a beginning of factory legislation, badly drafted and ill-enforced. The conditions which prevail were recently investigated by a Factory Labour Commission. From the evidence collected by it, I cite the following facts:---(8)

Operatives in ginning factories have on occasion to work 17 and 18 hours a day, and in rice and flour mills 20 or even 22 hours.

In printing works men have had to work 22 hours a day for seven consecutive days.

In the cotton mills of Bombay the hours regularly worked are in some cases 13, in others 14, and others 14 1/2 a day from one end of a month to the other.

In Agra the regular hours are 15 1/4 in summer, and in winter (because light costs money) 13 3/4.

The jute mills of Calcutta work, with few exceptions, 15 hours a day.

The wages of an adult male mill operative, working 13, 14 or 15 hours a day, vary from 15 to 20 rupees a month (i.e., from £1 to £1 6s. 8d.). Labour, in other words (even if we admit that its low grade of skill balances the long hours), is therefore four or five times as cheap in Bombay and Calcutta as in Manchester and Dundee. That is one cogent reason why capital exports itself. If the labour were only more abundant and more skilled, there would be no limit to this exportation of capital.

Another great inducement is the case with which in countries like Turkey or China a nation can, in plain words, be robbed. It was while travelling on a Turkish railway that this elementary fact came home to me. It seemed as though the line had laid itself across the countryside in the track of some writhing serpent. It curled in sinuous folds, it described enormous arcs, it bent and doubled so that a passing train resembled nothing so much as a kitten in pursuit of its own tail. Yet the country was a vast level plain. There were neither mountains nor rivers to avoid. Save for the obligation of serving towns in its course, most engineers in planning such a railway would simply have taken a ruler and drawn a straight line across the map. And oddly enough this railway did not seem to serve any visible town. Indeed, a plausible theory of its gyrations and its undulations might have been that it was desperately trying to dodge the towns. Stations, indeed, there were, but they were at every conceivable distance from the centres of population---one, two, or even five miles away. The explanation was simple enough when one heard it. The railway had indeed been constructed by a private company, and was owned by this company. But the concession included what is called a kilometric guarantee. In order to induce the European financiers---who all the while were bribing and competing to obtain the favour---to perform the onerous work of "opening up Turkey," the Government agreed to guarantee to the fortunate company an assured profit, reckoned at so much on every mile or kilometre of rails which it laid down. Hence the astounding performances of the line in crossing the level plains, where rails can be laid down cheaply. Every unnecessary curve means so many miles added to the total length of the line, and so many hundreds or thousands of pounds to its annual guaranteed profits. It avoids the towns because it has no interest in catering for traffic or serving the general good. Whether it carries one passenger or a hundred, whether it runs two trains a week or several in a day, the financial result is the same---a fixed profit on every mile. The concession , of course, cost something fairly considerable in bribes, but for that modest outlay how rich is the return! Nor is this the end. In order to make certain that the Turkish Government will pay this annual tribute, the tithes of the luckless provinces through which it passes are mortgaged. Be the season good or bad, whether famine rages or massacre decimates. and whatever the deficit in Constantinople itself may be, so much of the tithes of grain are annually set aside, a first charge on the whole amount, to assure the punctual payment of this debt. And, further, since the financiers know only too well how corrupt Turkish officials are, the collection of this mortgaged revenue is placed in the hands of some European official responsible ultimately to the great Powers. Behind him are the embassies, and behind the embassies are the fleets of all Europe, which would steam at a few hours' notice to Turkish waters, if there were any delay or hesitation in paying over the revenues mortgaged to European railway companies or to the holders of Turkish bonds. Diplomacy and armaments are, in a word, employed to enforce the unconscionable and usurious bargains which Baron Hirsch and his imitators have struck, by means of bribery with Turkish Ministers whose hands no honourable man would condescend to shake. The Turkish peasant earns the tithe at one end of this international process of exploitation ; the European workman pays for the fleet which is its sanction at the other. The most ingenious aspect of the whole transaction is that the financiers extort a high rate of interest on the ground that Turkey is a disturbed and more or less insolvent country in which no investments are safe, and then contrive with the aid of diplomacy and the financial control to obtain for their enterprise a security which no investments possess in older countries. In China, in Egypt, and in Persia the same magic is repeated. Unaided capital and private enterprise could not achieve this magical transformation. It is private enterprise backed by diplomacy and armaments which works the miracle.

This is, in brief, the answer to the question why capital shows so marked a tendency to export itself abroad. On the one hand, capital accumulates in a civilised country so fast that the standard of living of the working classes, and their demands as consumers, do not keep pace with it. On the other hand it seeks abroad for labour which can be even more easily and ruthlessly exploited than that of Western lands. These are the two economic roots of Imperialism. To complete our survey of the motives of "real politics," it is necessary to glance at two powerful but secondary interests which Imperialism calls into action as it develops. There is first of all the social pressure due to the fact that Imperialism makes careers for "younger sons." Distant possessions have to be administered, and native levies must be officered. Even in James Mill's time---and few men knew India better---this was so obvious that he defined the empire as a system of out-door relief for the upper classes. A peer may hope for anything from a viceroy's almost regal glory to the decent splendours that attend the governor of some minor colony. The posts in the Army and the Civil Services have long been so numerous that they are opened to the sons of the prosperous middle classes. 1 To these people India and Egypt have acquired at last a real meaning---they are the places where a son, a brother, or at the least a cousin, is "doing well." Every demand for self-government in India or Egypt is a blow at the vested interests of that comfortable family in Kensington or Yorkshire. Every revolt threatens, it may be, the life of their nearest and dearest. There must be tens of thousands of families, all relatively wealthy, influential and well educated, to whom the sudden ending of the Empire would mean financial ruin and social extinction. The larger the Empire grows, the more numerous are the posts which it has to offer. The well-known facts about India supply some measure of this enormous force, half-social, half-economic, which makes for Imperialism. The annual drain of wealth from India, the indirect tribute which it pays to the ruling class at home, is believed to amount to about thirty millions sterling, consisting of the interest on capital sunk in India or lent to India, of pensions paid to ex-Anglo-Indians now resident at home, and of remittances sent home by Anglo-Indians resident in India. This sum is, of course, in great part a payment for real services rendered by Englishmen to India, but the rate of remuneration is high, and the services are sometimes such as Indians do not desire and often such as natives could more cheaply perform. It differs from similar payments made to capitalists, officials and officers at home chiefly in this, that it is spent not in India but in a foreign country. In that sense it is a tribute, a sum of wealth annually withdrawn from India and spent for the advantage of Englishmen in England. When Imperialists argue that our rule is providentially necessary to India, it is well to remember that their judgment on such a point is biassed by the fact that our rule in India is profitable to ourselves. Enquire why it is that, despite the eulogies on the martial virtues and the proved loyalty of Sikhs and Moslems, native Indians are not allowed to hold commissions in the Indian army above subaltern rank, and the only candid answer will be that the closing of these posts to the young men of the English upper and middle classes would not be tolerated by public opinion at home. The same influences have restricted the efforts made by reforming viceroys to admit a larger proportion of Indians to the Civil Service. The real obstacle to their employment in its higher branches is not so much the supposed weakness of Indian character, as the interest of the educated class in England.


The influence of another powerful economic factor upon the growth of Imperialism has always been suspected, and it has lately been the subject of careful study, both in our own country and in Germany. If the pressure of the armament firms can hardly drive a nation into war, it may affect the scale of preparation, and set the fashion in costly methods and engines of warfare. A spirited or apprehensive foreign policy (the two words mean in this connection the same thing) involves an increase of armaments ; this increase creates a great industry, which naturally uses the whole of its influence, in the. press, in society and in Parliament, to stimulate the demand for further armaments. The facts are now so well known, thanks to debates in the Reichstag and to three illuminating pamphlets(9) by capable writers which have lately been published in this country, that it may suffice to give here a brief summary of what is generally known. The trade in armaments has evolved along the familiar lines of capitalistic concentration. Competition has been nearly eliminated among the British firms, and what is more curious still, the relations of the chief armament firms the world over betray a certain international solidarity and some rudimentary organisation. There is not yet an armament trust, as there is a steel trust and an oil trust, but there is a measure of co-operation which serves the same end. The British firms are so closely interlocked by the common ownership of minor firms, by common directorships, and by their share in enterprises like the international Nobel Dynamite Trust and the now defunct Harvey United Steel Company, that they can be regarded only as four allied combinations---Armstrongs, Vickers, John Brown and Cammell Laird. It is a united industry which confronts the Treasury, influences the Admiralty, maintains prices, and works upon public opinion. It is a prosperous concern. In the present century Armstrongs has never paid less than 10 per cent., and its dividend often rises to 15 per cent. The great French works at Creusot (Messrs. Schneider) have paid as much as 20 per cent. The building and equipment of a Dreadnought must mean at least a quarter of a million in profits to the firm which secures the contract. Such a stake is worth an effort, and these firms are well equipped for the exercise of political and social pressure. The sharelist of Armstrongs alone includes the names of sixty noblemen or their wives, sons or daughters, fifteen baronets, twenty knights, eight Members of Parliaments, five bishops, twenty military and naval officers, and eight journalists. Among those interested in these firms there were last summer two Liberal Cabinet Ministers, a law officer of the Crown and two members of the Opposition Front Bench. There is an amusing correspondence between these share-lists and the membership rolls of the Navy League and the National Service League.

All this is natural in a capitalistic society, but one is not quite prepared for the simplicity which both the middle class parties have shown in their dealings with the firms. The naval scare of 1909 was a remarkable achievement in the manipulation of public opinion, and the whole credit of it seems to belong to Mr. Mulliner, the managing director of the Coventry Ordnance Company, of which John Brown & Co. and Cammell Laird & Co. hold between them seven-eighths of the shares. He was in close touch with the leading men of both parties. He was actually received in solemn audience by the Cabinet.

Either he or some fellow-contractor had been in consultation with Mr. Balfour and supplied him (as Mr. Balfour candidly stated) with "facts." His memoranda circulated freely in the House of Commons, but though the unique source of all the alarmist statements current about German preparations was well known, it occurred to no one to doubt the reliability of this interested witness. Mr. Mulliner claimed to have confidential knowledge of an immense secret acceleration in the German naval programme and of a vast extension in the resources and activities of Krupp's. The true facts were stated at the time by Admiral von Tirpitz in the Reichstag and also by the head of the Krupp firm. Parliament preferred to believe Mr. Mulliner. The result was that Mr. McKenna calculated that Germany would have seventeen Dreadnoughts at "the danger-point," March, 1912, and revised his own programme accordingly. Mr. Balfour even predicted for Germany twenty-one or twenty-five capital ships. The event showed that Admiral von Tirpitz had told the truth: when the time came Germany had nine. The scare cost us the price of the four "contingent" Dreadnoughts, a measurable quantity, while it added to Europe's stores of bitterness and mistrust what no figures can reckon. All this happened, largely because of that grotesque delicacy which in England forbids "respectable " newspapers and conventional politicians to say in plain words that a contractor's opinion is an interested opinion, and that a Minister who adopts it without corroboration is either a simpleton or a weakling who has allowed himself to be intimidated by newspapers which he could have routed by one straight sentence revealing the origin of the scare.

The international relations of the firms which trade in armaments offer a tempting field for satire. The inevitable comment lies on the surface of the facts, and they shall be baldly set down here. Capital has no patriotism. A leading German firm turns out to be conducted by French directors. German firms are rebuilding the rival Russian navy. British firms have branches in Italy which are building those Italian Dreadnoughts that are represented as rivals to our own. The Nobel Trust and till lately the Harvey Company were formed of all the leading armaments firms, British, French, German or American. At one time the French firm of Schneider and the German firm of Krupp united in a syndicate to develop the iron ore fields of Ouenza in Algeria. French public opinion in the end upset the partnership, but it was, while it lasted, an evidence of the ability of firms engaged in making cannon destined to destroy each other, to co-operate for their common good. If they can co-operate so far as this, there is plainly nothing to prevent them going further in joint efforts to manipulate public opinion across frontiers which do not really divide them. A German firm has been known to circulate in the French press the false news that the French Government was about to increase its purchases of machine-guns. Its object was, of course, to force the German Government to do in fact what the French Government had done only in fiction. It is unnecessary to labour this unsavoury topic further. It is enough to realise that in every country and across every border there is a powerful group of capitalists, closely allied to the fighting services, firmly entrenched in society, and well served by politicians and journalists, whose business it is to exploit the rivalries and jealousies of nations and to practice the alchemy which transmutes hatred into gold. Against them are ranged the masses with their more numerous but ill-organised votes. The relationship is well illustrated by an arrangement which came into force in Germany during the general election of 1906. The metallurgical cartels (employers' syndicates) determined to support Prince von Bülow's Liberal-Conservative Coalition which was fighting Social Democracy on the Imperialist issue. Their employees for the most part voted Socialist. The firms answered their votes by contributing to the coalition's party funds one shilling for every workman they employed. It would be interesting to learn how much our own armament contractors contribute to the secret funds of British parties.

All over the world these forces, concentrated, resolute and intelligent, are ceaselessly at work to defeat the more diffused and less easily directed forces which make for disarmament and peace. The number of persons who have anything to gain by armaments and war is relatively small, when measured against the whole population of the civilised world. But their individual stake is larger, and they work in alliance with Society, which regards Empire as a field for the careers of its sons, and with finance which treats it as a field for investment. Instinctively and by habit they support each others' claims, and the governing class opposes to the half-conscious and badly-led democracy the solid phalanx of interest and ambition. The democracy, on its side, will still accept as its leaders men who cannot emancipate themselves from the social pressure of the class to which they belong. The idealists in modern politics are a volunteer band, without a trained staff, unpaid, and above all undisciplined, pitted against a regular army of mercenary troops which follows skilled generals and acknowledges the duty of solidarity and obedience.

Chapter Three

Table of Contents