American World Policies

4

For a study of these strategic considerations see "The Interest of America in Sea Power, Present and Future," by Captain (later Rear-Admiral) A. T. Mahan, a series of articles written between 1890 and 1897. Boston, 1911.

5

John A. Hobson, "Imperialism," p. 23. London, 1902.

6

Op. cit., p. 83.

7

In 1914, twenty-six years after the cession of the islands our combined import to and export from the Philippines amounted to only $51,246,128, or less than 1/75 of our entire foreign commerce. Our commerce with China, which was to have been opened by our possession of the Philippines was less than one-half of that with Brazil and less than one-twelfth of that with Great Britain.

8

"At the beginning of the war (with Spain) there was perhaps not a soul in the whole Republic who so much as thought of the possibility of this nation becoming a sovereign power in the Orient."—"World Politics," by Prof. Paul I. Reinsch, New York, 1913, p. 64.

9

This comparison is not exact, since the British statistics include articles under manufactures which we do not include, and exclude articles which we include. I cite these figures merely to show that there is a vast difference in the relative importance to the United Kingdom and the United States of their export of manufactures, but not to show exactly what that difference is. Similarly the comparison above between the total product of American manufacturing and our export of manufactures is approximate.

10

See an analysis—let us say of Argentine trade.

11

On the other hand the very extension of our home market tends to make us negligent of foreign exports of manufactures and to consider the profits from this business as a mere by-product. A large and successful foreign market can be maintained only by careful study and continuous work.

12

Hutchinson (Lincoln), "The Panama Canal and International Trade Competition," p. 105 et seq. New York, 1915.

13

Despite the fact that as yet the absolute increase is greater in the British than in the American trade with these countries.

14

Hutchinson (Lincoln), op. cit.

15

From 1914 to 1916 our exports of merchandise increased from 2365 to 4334 millions of dollars (an increase of 83 per cent.) and our balance of exports over imports rose from 471 to 2136 millions (an increase of 354 per cent.). Monthly Summary of Foreign Commerce of the United States, June, 1916. (Corrected to Aug. 9, 1916, subject to revision.)

16

"In spite of inexperience, crude methods, lack of banks and of ships we have made notable gains in South American trade. There seems to be no reason to question the probability of a continued rapid increase during the next few years.... The process of building and making more efficient our own manufacturing plants has been carried far, so that we are prepared, in the opinion of competent judges, to proceed more rapidly than ever with the production of goods for foreign markets."—William H. Lough, "Banking Opportunities in South America," Bureau of Foreign and Domestic Commerce (Dept. of Commerce), Special Agents Series No. 106, Washington, 1915, p. 7.

17

In a recent address (see date) to the American Iron and Steel Industry, Mr. Edwin W. Hurley, vice-chairman of the Federal Trade Commission, points out how during the last quarter of a century the Germans have co-ordinated their foreign trade, with the result that of the steel business 90 per cent. has been brought under a single control. The effect has been a victory for the German over the British export business. Mr. Hurley states that while a constructive programme has been worked out by the Interstate Commerce Commission for the railroads, and co-operation among the farmers has been stimulated by the Department of Agriculture, the manufacturing industries concerned in the export trade are hampered by provisions of the Anti-Trust Law. "Is it reasonable to suppose," he asks, "that Congress meant to obstruct the development of our foreign commerce by forbidding the use in export trade of methods of organisation which do not operate to the prejudice of the American public, are lawful in the countries where the trade is to be carried on, and are necessary if Americans are to meet competitors there on equal terms?"—New York Evening Sun, June 21, 1916.

18

In the last forty years the balance has been against us in only three years, 1888, 1889 and 1893. The real balance is not nearly so great as the apparent balance, but there can be little doubt that it represents a considerable repayment of the principal of our great debt to Europe.

19

According to W. Z. Ripley the American debt to Europe amounted in 1899 to $3,100,000,000 of which $2,500,000,000 was owed to England, $240,000,000 to Holland, $200,000,000 to Germany, $75,000,000 to Switzerland, $50,000,000 to France, and $35,000,000 to the rest of Europe. After 1899 there was a reduction in the amount of European holdings of American securities (mostly railroad bonds and stocks), but since 1907 there was again an increased purchase, so that by 1914 the American debt to Europe was considerably greater than it had been in 1899. See New York Journal of Commerce, Dec. 6, 1911. Also, Hobson, C. K., "The Export of Capital." New York, 1914, p. 153-5. According to a compilation made by President L. F. Loree of the Delaware and Hudson Railroad, the American railroad securities formerly held in foreign hands but which were absorbed by the American market during the eighteen months ending July 31, 1916, amounted to $1,288,773,801 par value and to $898,390,910 market value. The railroad securities remaining abroad (July 31, 1916), amounted to $1,415,628,563 par value with a market value of $1,110,099,090. In other words according to these statistics of returned securities (which Mr. Loree believes are largely underestimated) about 45 per cent. (market value) of the railroad securities held abroad on January 31, 1915, had been returned eighteen months later. (New York Times, Sept. 25, 1916.) The New York Times states that "it is high banking opinion that at the outbreak of the war, the total of industrial securities held abroad amounted to about 25 per cent. of the railroad securities, and that the liquidation of industrials since has been in about the same proportion to the total as the liquidation of rails." On this basis the foreign holdings of American railroad and industrial securities on July 31, 1916, would have amounted to only $1,375,000,000 (market value).

20

For data used as the basis of this estimate, see Hobson, C. K., "Export of Capital" (p. 153 and following), together with sources there cited.

21

"The adoption of the Federal reserve system has … released and made available for other forms of financing great sums which were formerly tied up in scattered reserves. We have only to look at the monetary history of the German Empire during the last forty years to see how powerful an influence on industry, trade, and investment is exerted by the centralisation and control of bank reserves. The London Statist has calculated the ultimate increased lending power of American banks, under the Federal reserve system, at $3,000,000,000."—Lough, op. cit., p. 8.

22

"Letters from a Chinese Official. Being an Eastern View of Western Civilisation." New York (McClure, Phillips & Co.), 1903, p. 13.

23

See "Handwörterbuch der Staatswissenschaften," II, pp. 992, 993, Third edition, Jena, 1909-1911. Western Europe here includes all of Europe except Russia, Hungary, Bosnia and Herzegovina, the Balkan States and Turkey.

24

The absolute increase in the population of western Europe is itself increasing. In the decade 1800-1810, the increase was 6.3 millions; in the nine succeeding decades it was 7.8; 13.5; 11.3; 9.6; 9.7; 11.5; 14.1; 14.5 and 19.0 millions. In the fifty years ending 1850 the population increased 48.6 millions; in the fifty years ending 1900, 68.7 millions.

25

Not all foreign investment of capital results or is intended to result in stimulating agriculture and other extractive industries. Much of it is spent unproductively on guns, ships and royal and presidential luxuries, and much in stimulating manufacturing in agricultural nations, thus narrowing instead of widening the agricultural base of the capital-exporting countries.

26

See Hobson, "Export of Capital."

27

Moreover this investment, until the outbreak of the war, was rapidly increasing, amounting to no less than $1,500,000,000 a year.

28

"White Capital and Coloured Labour," pp. 80, 81. London, 1910.

29

The case for tropical imperialism is argued by Dr. J. C. Willis (Director of the Royal Botanic Gardens at Ceylon) as follows: "In the present condition of the world the temperate zones cannot get on without the products of the tropics. The latter provide many things, such as rubber, tea, coffee, cinchona, jute, cane-sugar, spices, etc., which are among the necessaries of modern civilised life. The need for these has led to the settlement of Europeans at trading stations in the tropics, at Calcutta, Malacca, Calabar and many other places. Once settled there, the insecurity of the traders and the inefficiency of the natives have led to the conquest of adjacent territories, until now most of the valuable areas in the tropics are in European or American hands." The conquering nations "work on the principle of governing the country for the benefit of the governed; but they must also so arrange matters that the tropical countries shall take their share in the progress of the world at large, and produce and export certain commodities for the benefit of that world which cannot get along properly without them. If the countries of the tropics can be made to progress so far that they shall themselves, with their own population, produce these things, so much the better; but the things must be produced."—"Agricultural Progress in the Tropics,"—Science, London, Vol. V, pp. 48, 49. (My italics.)

30

"White Capital and Black Labour," pp. 82-83.

31

In 1911 the exports for Haiti amounted to a little over $3 and in 1912 to a little under $7 per capita; the exports of Porto Rico (to the United States and foreign countries) amounted to almost $40 per capita.

32

Historically, of course, this theory was not the real motive behind the Doctrine. That motive was the unwillingness of the United States to have strong, military nations in its immediate vicinity.

33

A failure to meet the requirements of the industrial nations does not necessarily involve a complete extinction of political independence. Any measure of control, any merely reserved right, such as the United States retains in Cuba, may suffice for the purpose.

34

"Food, drink, tobacco, raw materials and produce and articles mainly unmanufactured."

35

Owing to differences in method of classification, these comparisons are only approximate.

36

The Independent, Oct. 11, 1915.

37

For a brilliant statement of the growing significance of tropical products, see Benjamin Kidd, "The Control of the Tropics," New York, 1898, especially Part I.

38

"Tropical Agriculture," New York and London, 1916, p. 33.

39

The case is analogous to that of the operation of cotton mills in the South. Despite low wages and brutal exploitation of children, the introduction of these mills has automatically raised the standard of living, but the goal desired was not this but the quickest possible making of profits.

40

"No false philanthropy or race-theory," writes Prof. Paul Rohrbach, one of the more humane of the German imperialists, "can prove to reasonable people that the preservation of any tribe of nomadic South African Kaffirs or their primitive cousins on the shores of Lakes Kiwu or Victoria is more important for the future of mankind than the expansion of the great European nations, or the white races as a whole. Should the German people renounce the chance of growing stronger and more serviceable, and of securing elbow room for their sons and daughters, because fifty or three hundred years ago some tribe of negroes exterminated its predecessors or expelled them or sold them into slavery, and has since lived its useless existence on a strip of land where ten thousand German families may have a flourishing existence, and thus strengthen the very sap and force of our people?"—Rohrbach, "German World Policies" ("Der deutsche Gedanke in der Welt.") Translated by Edmund von Mach. New York (Macmillan), 1915 (pp. 141-2.)

41

Prof. Paul S. Reinsch, from whose admirable books I have drawn extensively in this description of colonial labour, rescues from undeserved oblivion an article by the Rev. C. Usher Wilson on "The Native Question and Irrigation in South Africa," published in the Fortnightly for August, 1903. "A careful study of educated natives," writes this pious gentleman, "has almost persuaded me that secular education is not a progressive factor in social evolution. The salvation of a primitive people depends upon the force of Christianity alone, special attention being paid to its all-important rule 'six days shalt thou labour.' … In the education of the world it has ever been true that slavery has been a necessary step in the social progress of primitive peoples."—Reinsch, "Colonial Administration," New York, 1912, p. 383.

42

The Saturday Review, Volume LXXXIV, Sept. 11, 1897.

43

Our exports to Canada in that year amounted to $410,786,000; those of the United Kingdom, $132,071,000. Our imports from Canada were $176,948,000; the imports of the United Kingdom, $222,322,000 (Canadian figures). Statesman's Year Book, 1915, p. 285.

44

Jamaican imports (1913-14). From the U. S., £1,326,723; from the U. K., 1,088,309. Exports: to the U. S., £1,396,086; to the U. K., £424,491 (Jamaican figures). Statesman's Year Book, 1915, p. 327.

45

Naturally our proportion of the trade would be still greater if Canada and Jamaica were within the American customs union.

46

Statesman's Year Book, 1915, p. 149.

47

In 1913 the trade of the United Kingdom with British possessions was still greater, though it formed in that year a smaller percentage of the entire trade of the country. Statesman's Year Book, 1915, p. 77. The trade of the United Kingdom with foreign countries was considerably less (in 1913) than was that of Germany.

48

"Colonial Administration," pp. 210-11.

49

Op. cit. "It has further been shown that in the foreign trade of Great Britain the export of manufactured goods is declining while that of raw material and machinery is increasing."

50

"Germany's Colonial Policy," in "Modern Germany in Relation to the Great War." New York, Mitchell Kennerley, 1916, p. 152. See also "British White Book," a report on Colonial Preferences given in various countries. Oct. 21, 1909, No. 296. For an able analysis of the results of the open and the closed door in colonies see Jöhlinger (Otto), "Die Koloniale Handelspolitik der Weltmachte," (Volkswirtschaftliche Zeitfragen) Vol. XXXV, Berlin, 1914.

51

Statesman's Year Book, 1915, pp. 893-94.

52

Statesman's Year Book, 1915, p. 882.

53

But the whole trade was small, amounting to less than 1 per cent. of the entire foreign trade (in 1909) of Germany.

54

In his defence of German Colonial policy, Dr. Solf makes much of the fact that of the total sum of 500,000,000 marks invested in German colonies, no less than 89,000,000 marks belongs to foreigners. But this means that Germany which has little capital to export has invested over 82 per cent. and all the other countries of the world less than 18 per cent. Moreover the character of the investment, not the absolute amount, is significant. Competitive investment, as in a brewery or cotton factory, does not bring the same profit as does a concession for a railroad, tramway or bank.

55

Paul Arndt. "Grundzüge der auswärtigen Politik Deutschlands," quoted by Ludwig Quessel, Sozialistische Monatshefte, Vol. 19, II, June 12, 1913.

56

Fr. Naumann. Die Hilfe, Nov. 16, 1911. Quoted by Ludwig Quessel. "Auf dem Weg zum Weltreich." Sozialistische Monatshefte, Vol. 19, 1913.

57

Ruedorffer, J. J., "Grundzüge der Weltpolitik in der Gegenwart," Stuttgart und Berlin, 1914, quoted by Paul Rohrbach, "Germany's Isolation" ("Der Krieg und die deutsche Politik"). Chicago, 1915.

58

"The Ruling Caste and Frenzied Finance in Germany." Boston, 1916, p. 104.

59

See in the first instance Milloud, op. cit., and Prof. Henri Hauser, "Les Méthodes Allemandes d'expansion Economique," Paris, 1916. also G. Preziosi, "La Germania alia conquista dell' Italia," Florence, 1915.

60

Op. cit., pp. 104-5. His italics.

61

Milloud, op. cit., p. 110.

62

Revue économique Internationale, 1914, II, p. 259, quoted from Hauser (H.) "Les méthodes allemandes d'expansion économique," p. 106.

63

Hauser, H., op. cit., p. 128.

64

The goods exported to foreign countries may show a profit if they are sold at a price less than the average cost of production but greater than the marginal cost. If it costs $100 a unit to produce a million units of a given product for the home market and only $70 a unit to produce an additional 100,000 units then there is a profit in permanently selling this extra amount at any price above $70. To break down a foreign competition it may pay temporarily to sell at 60 or even 30 dollars, in order to raise prices again after competition is destroyed.

65

Prof. Milloud's argument based upon the relative growth of British and German exports is far from conclusive. He shows that in the period from 1890-1903 to 1904-08 the German export trade increased only 75 per cent while the British export trade increased 79 per cent. If we consider the statistics for the subsequent period, 1909 to 1913 (which figures were quite accessible to Prof. Milloud), we find that the German export industry increased much more rapidly than did that of Britain.

66

In the Philippines in 1914, out of a total population of almost nine millions (8,937,597), less than 20,000 were Europeans and Americans, including troops. The density of the native population is greater than that of Indiana and over three times that of the United States as a whole.

67

"Imperialism," p. 35. A survey of more recent figures somewhat modifies these conclusions of Mr. Hobson. The statistics of 1913 prove that British commerce with British colonies has not only greatly increased but has increased faster than British commerce with foreign countries. Trade with Canada, Australia, India, Egypt, New Zealand and the Straits has grown steadily and rapidly.

68

This argument, however, is not entirely conclusive, since it concerns itself with the present trade exclusively. The profits in 1755 on the trade with Canada would not have justified Great Britain in seeking to acquire it.

69

"Britischer Imperialisms und Freihandel."

70

In the chief industries there were 4,074,000 out of a population of 17,928,000 in 1851 and 4,966,000 out of a population of 32,526,000 in 1901.

71

No such criticism can apply to the relative British decline of such crude industries as the production of coal and raw iron, since it is natural and desirable for more highly developed industrial nations to go over increasingly from the cruder to the more refined and differentiated forms of production.

72

"As we look back, we survey the long road which England has traversed in a century. Towards the end of the eighteenth century the leading man was the landlord and behind him the breitspurig comfortable farmer; towards the middle of the nineteenth century it was the manufacturer and behind him the industrial workers, ripening into trade unionists and members of co-operative societies; to-day it is the financier and behind him the broad masses of the rentiérs." Op. cit., p. 322.

73

There may, however, be regulation, although this is, for any one nation, a difficult operation.

74

See Burgess' "Homeland."

75

In his celebrated book, "The Nation in Arms," the late Field-Marshall von der Goltz shows how necessary is the sense of the imminence of war to the maintenance of the prestige of the officer class, which, as he states, is "chosen from the German aristocracy." He quotes approvingly the words of Decken: "Now, when in consequence of a long peace the memories of past services have become completely obliterated, and there is no immediate prospect of a war, the citizens take more and more note of the burden of the upkeep of an army, and attempt to convince themselves of the uselessness of this institution." To which Von der Goltz adds: "The present day (1883), especially in Germany is favourable in this respect to the officer class. Great and successful wars have enhanced its renown, and have moderated the envy of others. But should peace endure for several decades to come, it may again become necessary to remind the people that external favours may, without harm, be extended to the military profession, and especially to the officers."—Popular edition, London, 1914, p. 25.

76

The profits from imperialism are only a part of the profits from foreign investment. In an economic sense, England, France, Germany, Holland and Belgium own parts of the United States, and the profits of the Pennsylvania Railroad go largely to Europe as do the profits of Egyptian railways. There is this difference: the United States retains control of the physical property, and can, if it wishes, tax these incomes out of existence, while Egypt can not.

77

"'If social democracy is not yet in power, it has already a position of influence which carries certain obligations. Its word weighs very heavily in the scale.'"—Edward Bernstein, "Die Voraussetzungen des Sozialismus," p. 145, quoted by Jane T. Stoddart. "The New Socialism," New York and London, p. 156.

78

Quoted by William English Walling, "The Socialists and the War," New York, 1915, p. 19.

79

"The improvement of the lot of the workers has as a necessary condition the prosperity of the industrial development; the ruin of commerce and industry would encompass their own ruin. In a speech delivered at Stuttgart, Mr. Wolfgang Heine, a socialist member of the Reichstag, declared that 'the economic solidarity of the nation exists despite all antagonism of interest between the classes, and that if the German fatherland were conquered, the workers would suffer like the employers and even more than these.'" "The alliance between trade union socialism and military imperialism was manifested for the first time at the Stuttgart (International Socialist) Congress in 1907. The majority of German delegates, composed above all of trade union representatives, were opposed to the Marxist resolution condemning colonial wars."—"L'imperialisme des socialistes allemands," La Révue, vol. cxii. Paris, 1915.