What is Coming? A Forecast of Things after the War

Conceivably the Central Powers will draw upon the resources of their Balkan and Asiatic allies, but the extent to which they can do that may very easily be over-estimated. There is a limit to the power for treason of these supposititious German monarchs that Western folly has permitted to possess these Balkan thrones-thrones which need never have been thrones at all-and none of the Balkan peoples is likely to witness with enthusiasm the complete looting of its country in the German interest by a German court. Germany will have to pay on the nail for most of her Balkan help. She will have to put more into the Balkans than she takes out.

Compared with the world behind the Allies the Turkish Empire is a country of mountains, desert and undeveloped lands. To develop these regions into a source of supplies under the strains and shortages of war-time, will be an immense and dangerous undertaking for Germany. She may open mines she may never work, build railways that others will enjoy, sow harvests for alien reaping. The people the Bulgarians want in Bulgaria are not Germans but Bulgarians; the people the Turks want in Anatolia are not Germans but Turks. And for all these tasks Germany must send men. Men?

At present, so far as any judgment is possible, Germany is feeling the pinch of the war much more even than France, which is habitually parsimonious, and instinctively cleverly economical, and Russia, which is hardy and insensitive. Great Britain has really only begun to feel the stress. She has probably suffered economically no more than have Holland or Switzerland, and Italy and Japan have certainly suffered less. All these three great countries are still full of men, of gear, of saleable futures. In every part of the globe Great Britain has colossal investments. She has still to apply the great principle of conscription not only to her sons but to the property of her overseas investors and of her landed proprietors. She has not even looked yet at the German financial expedients of a year ago. She moves reluctantly, but surely, towards such a thoroughness of mobilisation. There need be no doubt that she will completely socialise herself, completely reorganise her whole social and economic structure sooner than lose this war. She will do it clumsily and ungracefully, with much internal bickering, with much trickery on the part of her lawyers, and much baseness on the part of her landlords; but she will do it not so slowly as a logical mind might anticipate. She will get there a little late, expensively, but still in time…

The German group, I reckon, therefore, will become exhausted first. I think, too, that Germany will, as a nation, feel and be aware of what is happening to her sooner than any other of the nations that are sharing in this process of depletion. In 1914 the Germans were reaping the harvest of forty years of economic development and business enterprise. Property and plenty were new experiences, and a generation had grown up in whose world a sense of expansion and progress was normal. There existed amongst it no tradition of the great hardship of war, such as the French possessed, to steel its mind. It had none of the irrational mute toughness of the Russians and British. It was a sentimental people, making a habit of success; it rushed chanting to war against the most grimly heroic and the most stolidly enduring of races. Germany came into this war more buoyantly and confidently than any other combatant. It expected another 1871; at the utmost it anticipated a year of war.

Never were a people so disillusioned as the Germans must already be, never has a nation been called upon for so complete a mental readjustment. Neither conclusive victories nor defeats have been theirs, but only a slow, vast transition from joyful effort and an illusion of rapid triumph to hardship, loss and loss and loss of substance, the dwindling of great hopes, the realisation of ebb in the tide of national welfare. Now they must fight on against implacable, indomitable Allies. They are under stresses now as harsh at least as the stresses of France. And, compared with the French, the Germans are untempered steel.

We know little of the psychology of this new Germany that has come into being since 1871, but it is doubtful if it will accept defeat, and still more doubtful how it can evade some ending to the war that will admit the failure of all its great hopes of Paris subjugated, London humbled, Russia suppliant, Belgium conquered, the Near East a prey. Such an admission will be a day of reckoning that German Imperialism will postpone until the last hope of some breach among the Allies, some saving miracle in the old Eastern Empire, some dramatically-snatched victory at the eleventh hour, is gone.

Nor can the Pledged Allies consent to a peace that does not involve the evacuation and compensation of Belgium and Serbia, and at least the autonomy of the lost Rhine provinces of France. That is their very minimum. That, and the making of Germany so sick and weary of military adventure that the danger of German ambition will cease to overshadow European life. Those are the ends of the main war. Europe will go down through stage after stage of impoverishment and exhaustion until these ends are attained, or made for ever impossible.

But these things form only the main outline of a story with a vast amount of collateral interest. It is to these collateral issues that the amateur in prophecy must give his attention. It is here that the German will be induced by his Government to see his compensations. He will be consoled for the restoration of Serbia by the prospect of future conflicts between Italian and Jugoslav that will let him in again to the Adriatic. His attention will be directed to his newer, closer association with Bulgaria and Turkey. In those countries he will be told he may yet repeat the miracle of Hungary. And there may be also another Hungary in Poland. It will be whispered to him that he has really conquered those countries when indeed it is highly probable he has only spent his substance in setting up new assertive alien allies. The Kaiser, if he is not too afraid of the precedent of Sarajevo, may make a great entry into Constantinople, with an effect of conquering what is after all only a temporarily allied capital. The German will hope also to retain his fleet, and no peace, he will be reminded, can rob him of his hard-earned technical superiority in the air. The German air fleet of 1930 may yet be something as predominant as the British Navy of 1915, and capable of delivering a much more intimate blow. Had he not better wait for that? When such consolations as these become popular in the German Press we of the Pledged Allies may begin to talk of peace, for these will be its necessary heralds.

The concluding phase of a process of general exhaustion must almost inevitably be a game of bluff. Neither side will admit its extremity. Neither side, therefore, will make any direct proposals to its antagonists nor any open advances to a neutral. But there will be much inspired peace talk through neutral media, and the consultations of the anti-German allies will become more intimate and detailed. Suggestions will "leak out" remarkably from both sides, to journalists and neutral go-betweens. The Eastern and Western Allies will probably begin quite soon to discuss an anti-German Zollverein and the co-ordination of their military and naval organisations in the days that are to follow the war. A discussion of a Central European Zollverein is already afoot. A general idea of the possible rearrangement of the European States after the war will grow up in the common European and American mind; public men on either side will indicate concordance with this general idea, and some neutral power, Denmark or Spain or the United States or Holland, will invite representatives to an informal discussion of these possibilities.

Probably, therefore, the peace negotiations will take the extraordinary form of two simultaneous conferences-one of the Pledged Allies, sitting probably in Paris or London, and the other of representatives of all the combatants meeting in some neutral country-Holland would be the most convenient-while the war will still be going on. The Dutch conference would be in immediate contact by telephone and telegraph with the Allied conference and with Berlin…

The broad conditions of a possible peace will begin to get stated towards the end of 1916, and a certain lassitude will creep over the operations in the field… The process of exhaustion will probably have reached such a point by that time that it will be a primary fact in the consciousness of common citizens of every belligerent country. The common life of all Europe will have become-miserable. Conclusive blows will have receded out of the imagination of the contending Powers. The war will have reached its fourth and last stage as a war. The war of the great attack will have given place to the war of the military deadlock; the war of the deadlock will have gone on, and as the great combatants have become enfeebled relatively to the smaller States, there will have been a gradual shifting of the interest to the war of treasons and diplomacies in the Eastern Mediterranean.

Quickly thereafter the last phase will be developing into predominance, in which each group of nations will be most concerned, no longer about victories or conquests, but about securing for itself the best chances of rapid economic recuperation and social reconstruction. The commercial treaties, the arrangements for future associated action, made by the great Allies among themselves will appear more and more important to them, and the mere question of boundaries less and less. It will dawn upon Europe that she has already dissipated the resources that have enabled her to levy the tribute paid for her investments in every quarter of the earth, and that neither the Germans nor their antagonists will be able for many years to go on with those projects for world exploitation which lay at the root of the great war. Very jaded and anaemic nations will sit about the table on which the new map of Europe will be drawn… Each of the diplomatists will come to that business with a certain pre-occupation. Each will be thinking of his country as one thinks of a patient of doubtful patience and temper who is coming-to out of the drugged stupor of a crucial, ill-conceived, and unnecessary operation … Each will be thinking of Labour, wounded and perplexed, returning to the disorganised or nationalised factories from which Capital has gone a-fighting, and to which it may never return.

III. NATIONS IN LIQUIDATION

The war has become a war of exhaustion. One hears a great deal of the idea that "financial collapse" may bring it to an end. A number of people seem to be convinced that a war cannot be waged without money, that soldiers must be paid, munitions must be bought; that for this money is necessary and the consent of bank depositors; so that if all the wealth of the world were nominally possessed by some one man in a little office he could stop the war by saying simply, "I will lend you no more money."

Now, as a matter of fact, money is a power only in so far as people believe in it and Governments sustain it. If a State is sufficiently strong and well organised, its control over the money power is unlimited. If it can rule its people, and if it has the necessary resources of men and material within its borders, it can go on in a state of war so long as these things last, with almost any flimsy sort of substitute for money that it chooses to print. It can enrol and use the men, and seize and work the material. It can take over the land and cultivate it and distribute its products. The little man in the office is only a power because the State chooses to recognise his claim. So long as he is convenient he seems to be a power. So soon as the State is intelligent enough and strong enough it can do without him. It can take what it wants, and tell him to go and hang himself. That is the melancholy ultimate of the usurer. That is the quintessence of "finance." All credit is State-made, and what the State has made the State can alter or destroy.

The owner and the creditor have never had any other power to give or withhold credit than the credit that was given to them. They exist by sufferance or superstition and not of necessity.

It is the habit of overlooking this little flaw in the imperatives of ownership that enables people to say that this war cannot go on beyond such and such a date-the end of 1916 is much in favour just now-because we cannot pay for it. It would be about as reasonable to expect a battle to end because a landlord had ordered the soldiers off his estate. So long as there are men to fight and stuff to fight with the war can go on. There is bankruptcy, but the bankruptcy of States is not like the bankruptcy of individuals. There is no such thing among States as an undischarged bankrupt who is forbidden to carry on. A State may keep on going bankrupt indefinitely and still carry on. It will be the next step in our prophetic exercise to examine the differences between State bankruptcy and the bankruptcy of a subject of the State.

The belligerent Powers are approaching a phase when they will no longer be paying anything like twenty shillings in the pound. In a very definite sense they are not paying twenty shillings in the pound now. That is not going to stop the war, but it involves a string of consequences and possibilities of the utmost importance to our problem of what is coming when the war is over.

The exhaustion that will bring this war to its end at last is a process of destruction of men and material. The process of bankruptcy that is also going on is nothing of the sort. Bankruptcy destroys no concrete thing; it merely writes off a debt; it destroys a financial but not an economic reality. It is, in itself, a mental, not a physical fact. "A" owes "B" a debt; he goes bankrupt and pays a dividend, a fraction of his debt, and gets his discharge. "B's" feelings, as we novelists used to say, are "better imagined than described"; he does his best to satisfy himself that "A" can pay no more, and then "A" and "B" both go about their business again.

In England, if "A" is a sufficiently poor man not to be formidable, and has gone bankrupt on a small scale, he gets squeezed ferociously to extract the last farthing from him; he may find himself in jail and his home utterly smashed up. If he is a richer man, and has failed on a larger scale, our law is more sympathetic, and he gets off much more easily. Often his creditors find it advisable to arrange with him so that he will still carry on with his bankrupt concern. They find it is better to allow him to carry on than to smash him up.

There are countless men in the world living very comfortably indeed, and running businesses that were once their own property for their creditors. There are still more who have written off princely debts and do not seem to be a "ha'p'orth the worse." And their creditors have found a balm in time and philosophy. Bankruptcy is only painful and destructive to small people and helpless people; but then for them everything is painful and destructive; it can be a very light matter to big people; it may be almost painless to a State.

If England went bankrupt in the completest way to-morrow, and repudiated all its debts both as a nation and as a community of individuals, if it declared, if I may use a self-contradictory phrase, a permanent moratorium, there would be not an acre of ploughed land in the country, not a yard of cloth or a loaf of bread the less for that. There would be nothing material destroyed within the State. There would be no immediate convulsion. Use and wont would carry most people on some days before they even began to doubt whether So-and-so could pay his way, and whether there would be wages at the end of the week.

But people who lived upon rent or investments or pensions would presently be very busy thinking how they were going to get food when the butcher and baker insisted upon cash. It would be only with comparative slowness that the bulk of men would realise that a fabric of confidence and confident assumptions had vanished; that cheques and bank notes and token money and every sort of bond and scrip were worthless, that employers had nothing to pay with, shopkeepers no means of procuring stock, that metallic money was disappearing, and that a paralysis had come upon the community.

Such an establishment as a workhouse or an old-fashioned monastery, living upon the produce of its own farming and supplying all its own labour, would be least embarrassed amidst the general perplexity. For it would not be upon a credit basis, but a socialistic basis, a basis of direct reality, and its need for payments would be incidental. And land-owning peasants growing their own food would carry on, and small cultivating occupiers, who could easily fall back on barter for anything needed.

The mass of the population in such a country as England would, however, soon be standing about in hopeless perplexity and on the verge of frantic panic-although there was just as much food to be eaten, just as many houses to live in, and just as much work needing to be done. Suddenly the pots would be empty, and famine would be in the land, although the farms and butchers' shops were still well stocked. The general community would be like an automobile when the magneto fails. Everything would be there and in order, except for the spark of credit which keeps the engine working.

That is how quite a lot of people seem to imagine national bankruptcy: as a catastrophic jolt. It is a quite impossible nightmare of cessation. The reality is the completest contrast. All the belligerent countries of the world are at the present moment quietly, steadily and progressively going bankrupt, and the mass of people are not even aware of this process of insolvency.

An individual when he goes bankrupt is measured by the monetary standard of the country he is in; he pays five or ten or fifteen or so many shillings in the pound. A community in debt does something which is in effect the same, but in appearance rather different. It still pays a pound, but the purchasing power of the pound has diminished. This is what is happening all over the world to-day; there is a rise in prices. This is automatic national bankruptcy; unplanned, though perhaps not unforeseen. It is not a deliberate State act, but a consequence of the interruption of communications, the diversion of productive energy, the increased demand for many necessities by the Government and the general waste under war conditions.

At the beginning of this war England had a certain national debt; it has paid off none of that original debt; it has added to it tremendously; so far as money and bankers' records go it still owes and intends to pay that original debt; but if you translate the language of £.s.d. into realities, you will find that in loaves or iron or copper or hours of toil, or indeed in any reality except gold, it owes now, so far as that original debt goes, far less than it did at the outset. As the war goes on and the rise in prices continues, the subsequent borrowings and contracts are undergoing a similar bankrupt reduction. The attempt of the landlord of small weekly and annual properties to adjust himself to the new conditions by raising rents is being checked by legislation in Great Britain, and has been completely checked in France. The attempts of labour to readjust wages have been partially successful in spite of the eloquent protests of those great exponents of plain living, economy, abstinence, and honest, modest, underpaid toil, Messrs. Asquith, McKenna, and Runciman. It is doubtful if the rise in wages is keeping pace with the rise in prices. So far as it fails to do so the load is on the usual pack animal, the poor man.

The rest of the loss falls chiefly upon the creditor class, the people with fixed incomes and fixed salaries, the landlords, who have let at long leases, the people with pensions, endowed institutions, the Church, insurance companies, and the like. They are all being scaled down. They are all more able to stand scaling down than the proletarians.

Assuming that it is possible to bring up wages to the level of the higher prices, and that the rise in rents can be checked by legislation or captured by taxation, the rise in prices is, on the whole, a thing to the advantage of the propertyless man as against accumulated property. It writes off the past and clears the way for a fresh start in the future.

An age of cheapness is an old usurers' age. England before the war was a paradise of ancient usuries; everywhere were great houses and enclosed parks; the multitude of gentlemen's servants and golf clubs and such like excrescences of the comfort of prosperous people was perpetually increasing; it did not "pay" to build labourers' cottages, and the more expensive sort of automobile had driven the bicycle as a pleasure vehicle off the roads. Western Europe was running to fat and not to muscle, as America is to-day.

But if that old usurer's age is over, the young usurer's age may be coming. To meet such enormous demands as this war is making there are three chief courses open to the modern State.

The first is to take-to get men by conscription and material by requisition. The British Government takes more modestly than any other in the world; its tradition from Magna Charta onward, the legal training of most of its members, all make towards a reverence for private ownership and private claims, as opposed to the claims of State and commonweal, unequalled in the world's history.

The next course of a nation in need is to tax and pay for what it wants, which is a fractional and more evenly distributed method of taking. Both of these methods raise prices, the second most so, and so facilitate the automatic release of the future from the boarding of the past. So far all the belligerent Governments have taxed on the timid side.

Finally there is the loan. This mortgages the future to the present necessity, and it has so far been the predominant source of war credits. It is the method that produces least immediate friction in the State; it employs all the savings of surplus income that the unrest of civil enterprise leaves idle; it has an effect of creating property by a process that destroys the substance of the community. In Germany an enormous bulk of property has been mortgaged to supply the subscriptions to the war loans, and those holdings have again been hypothecated to subscribe to subsequent loans. The Pledged Allies with longer stockings have not yet got to this pitch of overlapping. But everywhere in Europe what is happening is a great transformation of the property owner into a rentier, and the passing of realty into the hands of the State.

At the end of the war Great Britain will probably find herself with a national debt so great that she will be committed to the payment of an annual interest greater in figures than the entire national expenditure before the war. As an optimistic lady put it the other day: "All the people who aren't killed will be living quite comfortably on War Loan for the rest of their lives."

But part, at least, of the bulk of this wealth will be imaginary rather than real because of the rise in prices, in wages, in rent, and in taxation. Most of us who are buying the British and French War Loans have no illusions on that score; we know we are buying an income of diminishing purchasing power. Yet it would be a poor creature in these days when there is scarcely a possible young man in one's circle who has not quite freely and cheerfully staked his life, who was not prepared to consider his investments as being also to an undefined extent a national subscription.

A rise in prices is not, however, the only process that will check the appearance of a new rich usurer class after the war. There is something else ahead that has happened already in Germany, that is quietly coming about among the Allies, and that is the cessation of gold payments. In Great Britain, of course, the pound note is still convertible into a golden sovereign; but Great Britain will not get through the war on those terms. There comes a point in the stress upon a Government when it must depart from the austerer line of financial rectitude-and tamper in some way with currency.

Sooner or later, and probably in all cases before 1917, all the belligerents will be forced to adopt inconvertible paper money for their internal uses. There will be British assignats or greenbacks. It will seem to many financial sentimentalists almost as though Great Britain were hauling down a flag when the sovereign, which has already disappeared into bank and Treasury coffers, is locked up there and reserved for international trade. But Great Britain has other sentiments to consider than the finer feelings of bankers and the delicacies of usury. The pound British will come out of this war like a company out of a well-shelled trench-attenuated.