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PROBLEMS OF 
 READJUSTMENT 
 AFTER THE WAR 
 
PROBLEMS OF 
 READJUSTMENT 
 AFTER THE WAR 
 
 D. APPLETON AND COMPANY 
 
 NEW YORK :: :: LONDON 
 
 1915 
 
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 f\\ 
 
 Copyright, 1915, by 
 D. APPLETON AND COMPANY 
 
 4/ 
 
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 Printed in the United States of America 
 
 ©CI.A410056 
 
 AUG i2idi5 
 Ho. t . 
 
CONTENTS 
 
 I. The War and Democracy 
 
 PAGE 
 
 1 i^ 
 
 Albert Bushnell Hart, Ph.D., LL.D., 
 Litt.D. Professor of the Science of Gov- 
 ernment, Harvard University. 
 
 II. An Economic Interpretation of the War . 37 v 
 
 Edwin R A. Seligman, LL.B., Ph.D., 
 LL.D., Professor of Political Economy, 
 Columbia University. 
 
 III. The Crisis In Social Evolution ... 73 
 
 Franklin H. Giddings, Ph.D., LL.D., Pro- 
 fessor of Sociology and the History of 
 Civilization, Columbia University. 
 
 IV. The Eelation of the Individual to the 
 
 State 98 
 
 Westel W. Willoughby, Ph.D., Professor 
 of Political Science, Johns Hopkins Uni- 
 versity. 
 
 V. The War and International Law . . . 129 
 
 George Grafton Wilson, Ph.D., LL.D., Pro- 
 fessor of International Law, Harvard Uni- 
 versity. 
 
 v 
 
 y 
 
CONTENTS 
 
 PAGE 
 
 VI. The War and International Commerce and 
 
 Finance 150 
 
 Emory R. Johnson, Ph.D., Sc.D., Pro- 
 fessor of Transportation and Commerce, 
 University of Pennsylvania. 
 
 VII. The Conduct of Military and Naval War- 
 fare 179 
 
 Caspar F. Goodrich, Rear-Admiral United 
 States Navy, Retired. 
 
 VI 
 
PROBLEMS OF READJUST 
 MENT AFTER THE WAR 
 
 THE WAR AND DEMOCRACY 
 
 Al^BEKT BlJSHNELL. HART 
 
 "The proof of democracy/ ' says an Ameri- 
 can sage, "is, does it democf " Jnst now that 
 question comes/ home to all civilized mankind. 
 Up to the twenty-third of July, 1914, every sig- 
 nificant nation in the world from Montenegro 
 to British Columbia had at least the appearance 
 of the admission of the people to a share in 
 their own government. Democracy was consid- 
 ered the ripest flower of the highest civilization. 
 Out of the nine great powers of the world, three 
 — the United States, France, and China — were 
 republics in form; and in each of the other six 
 — Great Britain, Germany, Austro-Hungary, 
 
 1 
 
PROBLEMS OF READJUSTMENT 
 
 Russia, Italy, and Japan — the representatives 
 of the people had established their right to 
 share the government with the personal sover- 
 eign. 
 
 Today seven of those nine powers are plunged 
 into the heat of the fray; and in every one 
 democracy seems, for the time being, sub- 
 merged. In not one of those countries are the 
 people or their representatives now legislat- 
 ing for the crisis or keeping the ministerial ex- 
 ecutives in control by questions and criticisms 
 upon military affairs. Nor does it appear that 
 the people at large or the voters in any country 
 resent this exclusion from a part in the great 
 decisions that are being made. We hear 
 vaguely of bread riots; but the only constitu- 
 tional crisis that has come about in the eight 
 months of the war has been the change of for- 
 eign minister in Austro-Hungary from an Aus- 
 trian to an Hungarian. In England a few criti- 
 cisms of the government are made in the public 
 press ; most of which are received by the public 
 as disloyal utterances; none appears in Ger- 
 many except a rare complaint by Socialist mem- 
 bers of the Reichstag. There is no public opin- 
 ion — or rather public opinion compels every one 
 not only to support the war but to support it 
 
 2 
 
THE WAR AND DEMOCRACY 
 
 with vehemence. Unhappy subjects of hostile 
 countries are treated all over Europe as though 
 they were escaped convicts. 
 
 In the strongly monarchical countries of Rus- 
 sia, Germany and Austro-Hungary the author- 
 ity was naturally retained by the emperor and 
 his immediate group of councilors and officers. 
 In all three countries the army and navy are 
 closely centralized, and parliaments have never 
 had much to do with them except to vote upon / 
 the terms of service and the money credits. It 
 is only about a year and a half since the Ger- 
 man Reichstag by a vote of 293 to 54, expressed j 
 its discontent at the ill-treatment of the civil- / 
 ians of Zabern by military officers ; nevertheless, / 
 Chancellor Bethmann-Hollweg refused to re- j\ 
 sign and allowed the officers to be acquitted by 
 court-martial. In France and England the leg- 
 islative bodies have for many years been accus- 
 tomed to take a lively part in government while 
 war was going on. Not even in the Boer War of 
 1899-1900, nor in the serious likelihood of wars 
 involving France in 1905 and 1911, did those 
 bodies abdicate their functions. They have 
 done so now. For when the representatives of 
 the people are silent, the necessary decisions 
 are not postponed, they are simply made by 
 
 3 
 
PROBLEMS OF READJUSTMENT 
 
 the executive. In this war the civil authori- 
 ties have either given carte blanche to the mili- 
 tary or have accepted and carried out their 
 will. 
 
 Is this the end of European democracy? 
 Will example and military pressure cause the 
 end of American democracy? Are the people 
 of the world giving over their destinies to the 
 judgment of a handful of statesmen and war- 
 riors, practically designated by themselves? 
 Have the peoples as a whole no wisdom left? 
 Is there a difference in the makeup of the hu- 
 man mind between times of war and times of 
 peace? Or when the cyclone is past, will the 
 owners of the various ships of state again claim 
 their right to their own property? These crit- 
 ical questions come home with peculiar force 
 to the people of the United States ; for popular 
 government in America depends upon the 
 power of democracy to repel the shock of mili- 
 tarism. 
 
 One reason for the atrophy of parliaments is 
 that in every belligerent country the people 
 accepted the war when it broke out, took it up, 
 made it their own, and are carrying it on as a 
 national duty. In every country the thinking 
 people as well as the unthinking were convinced 
 
 4 
 
THE WAR AND DEMOCRACY 
 
 that their country had been unjustly and mali- 
 ciously attacked and would be destroyed unless 
 the population rallied to the support of the 
 government. The way for this conviction was 
 prepared by a long propaganda in newspapers, 
 periodicals, and books, especially in Germany, 
 Great Britain, and France. For more than ten 
 years, writers in all three countries have tried 
 to arouse their countrymen to a belief that they 
 were in imminent danger of invasion by im- 
 placable enemies. 
 
 For example, in 1897 an English admiral in 
 the Fortnightly Review declared that "if Ger- 
 many were extinguished tomorrow, there is not 
 an Englishman in the world who would not be 
 richer. ' ' In 1912 Bernhardi 's book stated more 
 clearly than previous writers the aspirations 
 and dangers of Germany and demanded for her 
 "world-power or downfall." .Cartoons, pam- 
 phlets, and elaborate books have set forth the 
 grievances of various countries and have sug- 
 gested methods of carrying on * ' the next war. ' ' 
 In Eastern Europe a campaign of hate has been 
 going on ever since the Turkish Revolution of 
 1908. The Austrians and the Hungarians had 
 been gradually accumulating a reservoir of 
 wrath against the Servians, because of their 
 
 5 
 
PROBLEMS OF READJUSTMENT 
 
 manifest hope to split off the Serb provinces 
 from Austro-Hungary. The Russians have 
 been nursing resentment ever since 1908, when 
 they had not the military strength to resist the 
 annexation of Bosnia and Herzegovina by 
 Austria. 
 
 In the French school geographies, Alsace- 
 Lorraine has for years been shown in a differ- 
 ent color from the rest of Germany. Treitschke 
 long ago taught his countrymen that ' ' England 
 is today the shameless representative of bar- 
 barism in international law." Before the war 
 broke out thousands of respectable people who 
 could not bring themselves to believe unproved 
 evil of their own friends and neighbors, the 
 people whom they knew best, were convinced 
 that unknown Englishmen and Englishwomen, 
 Russians, Germans or Servians, were sodden 
 with crime and thirsting for other people's 
 blood. 
 
 All this in spite of decades of efforts to bring 
 people into a better understanding with each 
 other, and a conscious effort to found a kind 
 of world democracy of men of science, letters, 
 and business. Students have traveled from 
 country to country; fellowships have been 
 founded for foreigners; professors have been 
 
 6 
 
THE WAR AND DEMOCRACY 
 
 exchanged; addresses delivered by men from 
 other countries. There has been an era of world- 
 congresses of physicians, of historians, of elec- 
 tricians, of engineers. Considerable groups of 
 business men have traveled about to make them- 
 selves acquainted with the spirit of foreign 
 countries. When the crisis came, of course 
 every man adhered to his own country: one 
 cannot serve two masters. Was it also neces- 
 sary for every man to deny his own experience 
 of the character, courtesy, and high-minded- 
 ness of his foreign friends ? Philosophic Eucken 
 rolls under his tongue as a sweet morsel a de- 
 nunciation of "Servian accessories to murder, 
 Russian lust for conquest, English perfidious- 
 ness, and at last, Japanese scoundrelism, all 
 united.' ' On the other side the Catholic Arch- 
 bishop of Glasgow declares the war to be, 
 "Christianity against paganism, the Cross and 
 its civilization against the crescent and its bar- 
 barism ; against the even worse — because delib- 
 erate and calculated — barbarism of the War 
 Lord." 
 
 It is a fair question whether most of these 
 good people who enjoy bad language would not 
 have been just as sure of the greatness of 
 their respective nations and the wisdom of 
 
 7 
 
PROBLEMS OF READJUSTMENT 
 
 their leaders if they had been told that all the 
 monarchs and all the ministers were convinced 
 that there was no sufficient cause for war. The 
 trouble in such crises is that it is impossible for 
 the people to form a judgment as to the danger, 
 because they have not the facts. They must 
 rely on somebody to judge of the crisis as a 
 whole. In the United States we should expect 
 the Senators and Representatives of the na- 
 tional Congress in such a crisis to be the peo- 
 ple's eyes and lips. Congress might be more 
 belligerent than the President, as it was at the 
 beginning of the Spanish War in 1898 ; but Con- 
 gress then believed that its constituents ex- 
 pected the action they took, and that was why 
 only one member of the House ventured to 
 suggest even a brief delay. Let the name of 
 Boutelle of Maine be remembered as that 
 of a brave and honest man who wished at 
 least to give public opinion an opportunity to 
 form. 
 
 When the pinch came in Europe not a single 
 one of the national legislatures, based on popu- 
 lar representation, did its duty. The facts are 
 obvious and dangerous. At the time the war 
 broke out four of these bodies were actually in 
 session or could be immediately summoned. 
 
 8 
 
THE WAR AND DEMOCRACY 
 
 The Parliament of Great Britain, the Reich- 
 stag of Germany, the Senate and Chambre of 
 France, and the Russian Duma were in exist- 
 ence, filled with national concern, ready to give 
 their wisdom toward the great decisions that 
 had to be made. Not one of them was consulted 
 till after war had actually broken out. Sir Ed- 
 ward Grey's first definite statement to Parlia- 
 ment was on the third of August, a day after 
 he had committed his nation to the protection 
 of the French coast. The Reichstag was con- 
 sulted on August 4 when Germany was already 
 at war both with Russia and with France. Pre- 
 mier Viviani made an imperfect statement to 
 the. Chambre on August 3 and not till August 5 
 did he fully explain the situation. The Rus- 
 sian Duma was called in special session August 
 8, seven days after war had broken out with 
 Germany. The Japanese Diet was in session 
 and acquiesced in the war; but when later it 
 would not vote the military measures which the 
 Prime Minister thought necessary it was dis- 
 solved and a new election ordered. In Austro- 
 Hungary there is no federal parliament; but 
 neither the Austrian nor Hungarian parliament 
 was consulted either as to the ultimatum sent 
 to Servia July 23, or on the attitude of the Im- 
 
 9 
 
PROBLEMS OF READJUSTMENT 
 
 perial Government toward the various proposi- 
 tions for mediation or toward a direct under- 
 standing with Russia. 
 
 When summoned, every parliament practi- 
 cally abdicated; and probably would not have 
 been allowed to remain in session if it had not 
 been expected to abdicate. Representative de- 
 mocracy in Europe seems almost to have dis- 
 appeared for the time being. In not one of 
 those countries are the people through their 
 representatives now legislating for their ex- 
 traordinary needs, or keeping track of the man- 
 ner in which their affairs are carried out by 
 ministerial executives. Only in London are 
 questions put which might imply a lack of con- 
 fidence in any military man or action. All the 
 parliaments vote prodigious measures without 
 assuming the right to alter a hair's breadth. 
 The British 'Parliament strove for nearly two 
 centuries to acquire control over the purse ; and 
 is now ready to vote a thousand million dollars 
 in a paragraph without so much as a suggestion 
 as to the destination and use of the money. 
 Enough that it is to be spent by the military 
 men in carrying on the war. The German Diet 
 voted the supply asked for by the government 
 with only one negative vote. Numerous stat- 
 
 10 
 
THE WAR AND DEMOCRACY 
 
 utes solemnly enacted after long and careful 
 discussion by the legislative authority are now 
 superseded or ignored by votes of the Bundes- 
 rath in Germany, or by Orders in Council is- 
 sued by the British Ministry under a general 
 authority from Parliament. That conquered 
 provinces should be governed by military com- 
 manders who levy contributions, assess fines on 
 the cities, and exercise the power of life and 
 death, is not remarkable. So much was done 
 in the Philippines by the American military au- 
 thorities. It is, however, an amazing spectacle 
 to see the interior of lands which have hardly 
 as yet seen an enemy — England, Scotland, 
 Ireland, Brandenburg, Bavaria, and South- 
 ern France — practically governed by martial 
 law. 
 
 One of the triumphs and protections of demo- 
 cratic government is the liberty of the press. 
 It has been won by sheer determination in the 
 teeth of the fundamental belief of despotic and 
 dull governments that it is hurtful to them to 
 have people discuss what is going on. In Rus- 
 sia there is still a pig-headed censor system in 
 times of peace, with its blacking-brush obliter- 
 ation of what the censor does not like. Yet even 
 there, since the establishment of the Duma, 
 
 11 
 
PROBLEMS OF READJUSTMENT 
 
 there lias been an approach to common-sense. 
 In Austria and Germany the journalists have 
 been more or less tied up by official deposits of 
 money which can be drawn upon in case of fines 
 or verdicts against them. They have even had 
 the droll institution of the " jail editor" ! Every 
 journal has been required to file the name of 
 its responsible editor; in many cases he is a 
 man whose sole "responsibility" is to take his 
 sentence and go to jail whenever his paper has 
 been too bold. In France there was a reckless 
 freedom of the press, restrained by occasional 
 shootings. Germany has for years had, along- 
 side many free and fearless newspapers, the 
 institution of the reptile press, which crawls at 
 the feet of the government functionaries who 
 feed it with official information and subsidies. 
 Nevertheless editors and journalists like Maxi- 
 milian Harden of Berlin and Emile Zola have 
 rendered a magnificent service to civilization by 
 focusing the attention of the voters upon a case 
 of oppression or corruption. As recently as 
 1911, almost the whole press of Germany de- 
 nounced the slashing of the lame schoolmaster 
 of Zabern by the undaunted Lieutenant von 
 Forstner. In England every newspaper has 
 been free to say anything it chose about any 
 
 12 
 
THE WAR AND DEMOCRACY 
 
 public official, though liable to be cast in heavy 
 damages if it assailed a private reputation. 
 
 How is it today? Even in England there is 
 no such thing as a free press. Among the bel- 
 ligerent powers no criticisms are allowed on 
 military movements or commanders, and the of- 
 fense of printing the truth about things already 
 known and published in other countries may 
 lead to severe punishment. The government 
 was so childish as to conceal the loss of the 
 Audacious, which was known to hundreds of 
 people. People expect censors in Austria, but 
 it seems ridiculous for the London newspapers 
 to be deprived of dispatches which go freely 
 to America. Bernard Shaw and Vernon Lee 
 tell John Bull that he is vain, stupid, and no 
 better than his neighbors, and that is allowed 
 to pass. Otherwise the military censors every- 
 where employ the blue pencil and scissors. 
 Partly because of this lack of common-sense 
 news, in all countries there is a rage and fury 
 against the unhappy citizens of enemy coun- 
 tries who have been stranded away from home. 
 The fear of spies is very like the fear of witches 
 in colonial times, not founded on reason or af- 
 fected by the lack of evidence. The possession 
 of a German name, doing business behind a 
 
 13 
 
PROBLEMS OF READJUSTMENT 
 
 German sign, speaking a German sentence, may 
 draw a mob upon an innocent person in a non- 
 German- speaking country. Free thought, pub- 
 lic discussion, the will of the people, seem to 
 have lost their meaning. 
 
 One of the main arguments for universal mili- 
 tary service is that, since every able-bodied 
 military man is a soldier and in most coun- 
 tries also a voter, the representatives of the 
 people will never sanction a war that is not 
 absolutely unavoidable. In the present great 
 struggle not one country was held back for five 
 minutes by the pressure of its citizen soldiery. 
 In fact, the breaking out of the war is a con- 
 clusive proof that universal service brings about 
 a habit of mind which is very unfavorable to 
 democracy. The citizen may oppose war, 
 speak against it, write against it, ask his rep- 
 resentative to vote against it. The same man 
 as a soldier is taught that to oppose war is 
 cowardly, a breach of discipline, contrary to the 
 spirit of the service. On one side a man is an 
 independent unit in a great aggregation and he 
 may join with other units in peaceable remon- 
 strance. On the other side, he is an undivided 
 part of a military community in which argu- 
 ment, hesitation, and discussion are traitorous. 
 
 14 
 
THE WAR AND DEMOCRACY 
 
 An army made up of democrats is not a demo- 
 cratic army, least of all in services like those 
 of Germany and Austria ; there, the officers are 
 of a different social class from the men, and 
 have no conception of accepting the decision of 
 men in the ranks as a restraint upon their 
 own action. 
 
 Here is the evidence that even a mild mili- 
 tarism has very unfavorable effects upon 
 democracy, even where it consists only in giv- 
 ing a favored position to military men, exalt- 
 ing military courage and preaching the gospel 
 of obedience to one's superior officer. The goal 
 of Americans is freedom. The joy of American 
 living is the right to have one 's own way. The 
 child looks forward to the day when he will be- 
 come a man and can play a man's independent 
 part. The sculptor searches for inspiration in 
 the picturesque life of his own country and 
 molds the frontiersman, the Indian, the cow- 
 boy. The triumph of American education is 
 the right of the professor to speak his mind. 
 As a nation we go to an excess in freedom. The 
 tramp follows his instinct to wander and to be 
 fed by strangers. The yellow journal pushes 
 the right of a free press to the point of scur- 
 rilousness. Children select their schools and 
 
 15 
 
PROBLEMS OF READJUSTMENT 
 
 colleges, their friends and amusements. The 
 trade in poisonous drugs is just now coming 
 under regulation. Yet there is no genuine and 
 wholesome American who does not feel that 
 these extravagances are to be endured, if neces- 
 sary, to keep the two pearls of great price — 
 freedom of body from the control of another 
 person, and the freedom of the soul to see and 
 to describe things as they are. 
 
 War is the negative and denial of freedom. 
 All modern wars rest upon the universal legal 
 principle that it is the right of the state to 
 command the service of any or all of its sons. 
 The free American may be, indeed ought to be, 
 compelled to undergo some military training. 
 If he formally enrolls himself in the militia, he 
 must obey orders to turn out for drill, camp, 
 maneuvers, or riot service. The recruited man, 
 the militiaman, and the drafted man may all 
 be forced into the army in case of actual war. 
 Once a man puts on the knapsack and takes 
 hold of the rifle, he becomes the servant of his 
 officers and the bondman of the state. "Obey 
 orders,' ' is the first and last letter of the sol- 
 dier's alphabet. That means to march for ap- 
 parently unending days, to carry heavy bur- 
 dens, to perform repulsive tasks, to live on 
 
 16 
 
THE WAR AND DEMOCRACY 
 
 scanty food, to drink noxious water, to sleep 
 in the mud and wake to a miserable meal. The 
 better organized the army, the more thoroughly 
 does the once free man become a machine, or 
 rather a cog in a machine. If his orders are to 
 fire at the enemy, he sends his bullet in the air 
 and it descends to kill a man whom he has never 
 seen and who, if he could have known it, might 
 have been a heart friend. He must obey orders 
 if they bid him throw his living body into the 
 cracking, hissing zone of death. He must obey 
 orders if he is directed to fire on non-com- 
 batants, or to drop bombs on nursemaids and 
 babies in perambulators, or to sink a ship full 
 of helpless women and children. Disobedience, 
 even under such circumstances, is the heaviest 
 of sins, to be atoned for by a disgraceful court- 
 martial and a shameful traitor's death. 
 
 This is the contrast between freedom and 
 war, the one aiming to make men rational, think- 
 ing, considering beings; the other depending 
 on the expectation that men will abdicate their 
 own souls and do just what they are told. 
 Hence, war has been the enemy of republics in 
 all ages. The Greek, the Roman, and the medi- 
 eval democracies all went down in blood at 
 last. What is the hope for mankind, the safety 
 
 17 
 
PROBLEMS OF READJUSTMENT 
 
 of civilization, if Mars is to lay his mailed hand 
 upon the shoulder of every able-bodied man and 
 say, " Think no more; only shoot"? On one 
 side, democracy, on the other, militarism, con- 
 tend for the dominion of the world. 
 
 In the last quarter-century the organized 
 Socialists have been a power in the affairs of 
 government ; in some countries they express the 
 purposes of the working classes. In Germany 
 the so-called Social Democratic party is the only 
 party of protest, and its candidates receive the 
 votes of hundreds of thousands of those who 
 are discontented with what they think the arbi- 
 trariness of the government. In the United 
 States the avowed Socialists polled 900,000 
 votes in the presidential election of 1912. They 
 are in most countries well organized and are 
 strong advocates of an international under- 
 standing between the working classes. Previ- 
 ous to the war they were expected to defend 
 ultra-democratic principles. What have they 
 done in the present crisis? As an organization 
 they have in all countries simply abdicated for 
 the time being. 
 
 When the pinch came it was natural that the 
 English Socialist should be an Englishman first, 
 and a Socialist after the war shall be over. But 
 
 18 
 
THE WAR AND DEMOCRACY 
 
 in the militaristic countries there is a stronger 
 reason for joining in the war with heart and 
 soul. In Germany, for example, the aim of the 
 Socialists is to show that they are not the dan- 
 gerous and destructive class that has been pic- 
 tured by high authority. They expect eventu- 
 ally to lead the majority of their countrymen 
 to their way of thinking, and their influence 
 would be absolutely destroyed for decades to 
 come, if after the war they should be held up as 
 the sole body of Germans who would not defend 
 the Fatherland. The Socialists at the front 
 are earning the right to say, ' ' We have not only 
 lived with you ; we have died with you. And you 
 can no longer hold that our doctrines are con- 
 trary to patriotism and to self-defense. ' ' John 
 Burns, the labor leader, resigned from the min- 
 istry in England, but that was not because he 
 was a Socialist, but because he felt with justice 
 that he and his friends had not been consulted 
 like other members of the Cabinet; that the 
 aristocracy had made a capital decision with- 
 out them. 
 
 Yet though Socialism as a principle is para- 
 lyzed in the great war, Socialism as a principle 
 has never in the history of mankind won such 
 a victory. The method of the war has given 
 
 19 
 
PROBLEMS OF READJUSTMENT 
 
 the Socialists ammunition for half a century to 
 come ; it proves their contention that the com- 
 munity can work more efficiently through col- 
 lective effort than through individual effort. 
 Never has state Socialism been practiced on 
 such a scale and over such an area. For the 
 transportation and supply of armies, all the 
 governments have taken whatever they wanted. 
 They have for the time being nationalized the 
 railroads, the food supply, the manufacture of 
 arms, and will apply the same principles to the 
 putting in and harvesting of crops, the produc- 
 tion of mines, and the output of factories. 
 What an uplift of the world would come about, 
 if the nations could apply to such matters as 
 education and social welfare the same terrific 
 energy, the same abnegation of individual profit 
 and interest and direction! Unfortunately, or 
 perhaps fortunately, this tremendous single- 
 minded national devotion is possible only be- 
 cause it is unusual. A horse can be urged to 
 put forth for a few minutes four or five times 
 the muscular strength which he usually employs 
 for drawing a load, but nothing will compel 
 him to keep up that effort for a day or an hour. 
 The screws of a monster ship will work steadily 
 when they are submerged, but when the ship 
 
 20 
 
THE WAR AND DEMOCRACY 
 
 pitches, and the screws come out of the water, 
 they may rack the machinery to pieces. 
 
 Nevertheless the state Socialism thus em- 
 ployed is not of a kind that commends itself 
 to the Socialist. It accords with the maxim, 
 ' l from everybody according to his ability, ' ' but 
 does not accept ' l to everybody according to his 
 needs.' ' The army comes first, second, third 
 and fourth in the scale of thought and expendi- 
 ture. To keep the army going, men must work ; 
 and a strike in the arms factory is looked upon 
 as hardly less than treason. All the great coun- 
 tries involved, except England, have the un- 
 questioned right to call out every man physic- 
 ally able to take part in a campaign, and proba- 
 bly millions who are not physically able. Eng- 
 land will eventually come to conscription if the 
 war lasts long enough; because the "thin red 
 line of , eroes ,J will not be numerous enough for 
 the crisis of attack or defense. 
 
 It is going beyond orthodox Socialism to 
 compel men to work under military guard, and 
 that is what every European country will do 
 if it cannot otherwise keep up the supply of food 
 and munitions. The commandeering of metals 
 and food already practiced by Germany and 
 Austria will be adopted by other nations if that 
 
 21 
 
PROBLEMS OF READJUSTMENT 
 
 is the only way to keep the populations alive 
 and to supply the armies. 
 
 That is indeed the statecraft of our In- 
 ternational Workers of the World; but the 
 I. W. W. expect to control supply and trans- 
 portation through their own chosen leaders, and 
 not through any sort of hereditary or military 
 officials. Socialists may enter the army to fight 
 a foreign enemy; yet when it comes to the point 
 of shooting down fellow Socialists because they 
 question the authority of the government, state 
 Socialism runs on a rock. It is hard to see how 
 this new Socialistic state differs from the old- 
 fashioned despotisms which assumed the right 
 to seize any or all of the property in their coun- 
 try in order to use it for what they assumed 
 to be national purposes. What is the difference 
 in theory of government between a state in 
 which Lord Kitchener calls out men and directs 
 the distribution of food, and one in which Louis 
 XIV did the same thing? 
 
 For many years the advocates of peace have 
 been banking upon the self-interests of the busi- 
 ness men, both large and small. Have they not 
 a strong influence upon government in every 
 country? The great money-lenders were sup- 
 posed to form anti-war syndicates, looking after 
 
 22 
 
THE WAR AND DEMOCRACY 
 
 their interest and their coupons, and their ex- 
 pirations and the drawings of their bonds for 
 payment. The world had almost come to be- 
 lieve that the power of commercial and finan- 
 cial syndicates was the greatest in the state. 
 Inasmuch as they have financed the wars of the 
 past half -century, they thought they were in a 
 steel fortress ; they believed apparently that no- 
 body could make war without their lead. Was it 
 not the money-lenders or rather the no-money- 
 lenders, who made necessary the Peace of Ports- 
 mouth in 1905 between Japan and Russia? Was 
 it not the bankers who by withdrawing the 
 French funds in 1911 nearly brought about a 
 panic on the Berlin Bourse, and proved to the 
 Germans that they could not afford to go to 
 war on the Agadir incident? On the contrary, 
 so far as the great capitalists work through 
 their ramifying influences on the electorate or 
 by direct contact with the executives, they have 
 absolutely failed to delay the war by a single 
 twenty-four hours. During the last twelve 
 months they have acted as reservoirs of capital, 
 and have remarkably supported the operations 
 of their governments. The popular subscrip- 
 tions to the German and English loans are un- 
 deniable proofs of the strength and flexibility of 
 
 23 
 
PROBLEMS OF READJUSTMENT 
 
 the modern financial system. Nevertheless the 
 capitalists accept the doctrine that it is their 
 business to lend and not to consult. The power, 
 weight, and authority of the men of business 
 have for the time being ceased to control their 
 governments. 
 
 Another class of business men is that of the 
 small dealers, manufacturers and traders who 
 up to this time in all countries have kept up 
 profitable business, notwithstanding the ten- 
 dency to bring industries together into large 
 units. Whatever the limitations on the suf- 
 frage, this class everywhere possesses it; and it 
 is as much interested as any class in politics, 
 elections and popular government. Here, if 
 anywhere, ought to be found a solid wall of re- 
 sistance against an unnecessary war, and an un- 
 breakable determination to take part by dis- 
 cussion and through representatives in the 
 management of affairs. Yet that class has 
 shown no more resisting power or directing 
 power than the laborers or the capitalists. Ger- 
 many has always been interested in and pro- 
 tective of der kleine Mann. In England the 
 small shopkeeper is still a pillar of the state, 
 and in France the family business and indus- 
 tries are the admiration of all investigators. 
 
 24 
 
THE WAR AND DEMOCRACY 
 
 Could not those people rally to defend their 
 obvious interests'? They stand to lose more 
 than anybody else. The workman who survives 
 the war will find employment, perhaps on more 
 favorable terms than before. The great cap- 
 italist will come out the creditor of his country, 
 and his children and grandchildren will draw 
 the interest. The small men stand to lose more 
 than their proportion of lives, all their savings, 
 and very likely their business. 
 
 With the small business man is closely asso- 
 ciated the farmer, whether land-owning or rent- 
 ing; and that includes a considerable part of 
 the peasants in all the European countries. 
 Those people ought to be depended upon to 
 look after their own interests. All representa- 
 tive democracies consider them the safest class 
 in the state. Yet in not a single country has 
 that class asserted itself ! Higher taxes, expro- 
 priation of crops and stocks of goods by the 
 state, the draining of their savings, the stop- 
 page of their little trade, any one of these 
 things would cause an overturn at the next elec- 
 tions in ordinary times; yet they are all ac- 
 cepted without a quaver. What is the matter? 
 Have men lost their interest in their own af- 
 fairs, their farms, their gardens, their crops, 
 
 25 
 
PROBLEMS OF READJUSTMENT 
 
 their workshops, their offices? Has the desire 
 to make one's children safe and comfortable 
 ceased to be a motive in the human mind? 
 Above all, has the democracy which has been 
 growing steadily for a hundred and fifty years, 
 suddenly lost its vitality? 
 
 The picture of the apparent abdication of 
 popular government in Europe has been de- 
 liberately drawn in strong colors, because it is 
 a part of a problem to which the people of the 
 United States are now directing their minds. 
 In not a single European country have the peo- 
 ple any intention of giving up the hard-earned 
 right to share in their own government. There 
 is no reason to doubt that the German Social- 
 ists, for instance, will continue to send to the 
 Reichstag a large number of their representa- 
 tives. Some of the oppressed classes at the bot- 
 tom of the social and political scale may come 
 to their own. If Jews in Poland and Gypsies 
 in Roumania can die for their country, have 
 they not earned the right to live in it on equal 
 terms? The confidence of the various peoples, 
 their sacrifices, their heroism, ought to be a liv- 
 ing lesson that they are capable of helping to 
 direct the destinies of their land. The Duma 
 which has stood by the Czar and the aristoc- 
 
 26 
 
THE WAR AND DEMOCRACY 
 
 racy of Russia can hardly be treated in this 
 furnace flame as a set of visionary radicals. 
 The war ought to draw the social classes of 
 every country closer together. 
 
 The real reason for the present state of de- 
 mocracy is pbviously that the people of every 
 nation believe that their only hope of victory 
 is in concentration of their force. What they 
 have actually done is to constitute groups of 
 dictators for the time being. Never was there 
 a greater mistake than to suppose that the Em- 
 peror Francis Joseph and Kaiser Wilhelm II 
 are tyrants who have usurped power. Author- 
 ity has been deposited in their hands because 
 national armies, directed by a single impulse, 
 are doubly as effective as armies acting sepa- 
 rately. We of the United States know that full 
 well, because General Grant in 1864 was the 
 first man to insist that the Eastern and Western 
 armies should move at the same time and with 
 a common purpose ; and that is why Grant and 
 Sherman and Thomas and Farragut finished up 
 the war. Even in our war the legal authority 
 was concentrated in the hands of President Lin- 
 coln. No military critic would admit that the 
 Senate and House at that time contributed much 
 to military efficiency. The main service of Con- 
 
 27 
 
PROBLEMS OF READJUSTMENT 
 
 gress was to keep the government in touch with 
 the people at large, and to maintain enthusiasm 
 through four dragging years. The Germans 
 are right and the English are right in their 
 feeling that the whole country must pool its 
 issues, must concentrate its confidence, must 
 accept great decisions made by a few self -chosen 
 people. 
 
 For the national dangers are terrific. Every 
 belligerent except Russia has thrown into the 
 fray its existence on the scale which it deems 
 respectable. If Great Britain is defeated, she 
 will lose a great part of her colonies and the 
 naval prestige accumulated during three cen- 
 turies. If Austria is defeated, she may be dis- 
 membered. If Servia is defeated, she becomes 
 a province of Austria, which to the Servians is 
 a repulsive Nirvana. The Belgians have been 
 defeated and for the time being have gone off 
 the map of Europe. The midst of such danger 
 is no time to stickle on a vote or a parliamentary 
 inquiry. 
 
 All the European countries are much more 
 familiar than we are in the United States with 
 capital decisions made by others than legisla- 
 tors. They have a tradition of royal preroga- 
 tive enhanced by the titles, distinctions, re- 
 
 28 
 
THE WAR AND DEMOCRACY 
 
 wards, and promotions which are at the dis- 
 posal of the sovereign. In England treaties are 
 made by the ministry and submitted to Parlia- 
 ment for discussion after they have gone into 
 effect. In France, the ministry and the indi- 
 vidual ministers use large authority to bind the 
 individual even in time of peace. Imperial re- 
 scripts, royal orders, and ministerial minutes 
 have the force of law ; and, so far forth, Euro- 
 peans do not feel the sense of usurpation that 
 would be roused by similar action in this 
 country. 
 
 Hence it is idle to suppose that the war may 
 result in the overthrow of European thrones 
 except perhaps in the Balkans. King George 
 and perhaps Victor Emmanuel of Italy are the 
 only royal sovereigns whose jobs might be en- 
 dangered ; because the difference between their 
 being kings and being simply an Englishman 
 or an Italian is already small. The Russians, 
 the Austrians, and the Germans have no na- 
 tional conception of a government without a 
 crown. The out-and-out Republicans in those 
 countries are few, though those who desire 
 democratic government are many. Whatever 
 the result in any of the European countries, it is 
 likely that either misfortune or victory will bind 
 
 29 
 
PROBLEMS OF READJUSTMENT 
 
 closer together the sovereign and the people 
 who have labored and suffered together. 
 
 Will the war also enhance the representative 
 part of the various governments? That de- 
 pends in large degree upon the success of re- 
 publican France and essentially democratic 
 England. The world is bound to take notice of 
 the relative efficiency of popular and aristo- 
 cratic governments. The ordinary voter is not 
 a political philosopher, and if England and 
 France win, even by dispensing with the parlia- 
 mentary regime for the time being, the people 
 will feel that democracy has triumphed. They 
 will feel so rightly, because it will be a proof 
 that countries brought up under popular gov- 
 ernment, in which the military and naval sys- 
 tems and preparations are subject to parlia- 
 mentary control, can hold their own against 
 armies officered, trained and directed by a more 
 nearly absolute system. Rome was no less a 
 republic after Cincinnatus returned to his plow. 
 Some republics have perished in similar crises, 
 because the commanders of the army and navy 
 have turned upon their creators; but nobody 
 has the slightest dread of a King Kitchener the 
 First or an Empereur Joffre Premier, or a 
 Kaiser Hindenburg. It is a fine tribute to de- 
 
 30 
 
THE WAR AND DEMOCRACY 
 
 mocracy that nobody dreads the Man on Horse- 
 back. 
 
 The success of the combination of Germany, 
 Austria-Hungary and Turkey would reaffirm 
 the Oriental type of government in the Turkish 
 Empire, in which the Young Turks, with all 
 their efforts, have not been able to establish an 
 actual parliamentary government, and are ruled 
 by a self -perpetuated cabal. Thereafter Tur- 
 key would stand toward Germany in the rela- 
 tion that Egypt occupied toward Great Britain 
 down to the present war — a nominally inde- 
 pendent nation, while actually in complete de- 
 pendence on its sponsor. 
 
 As for Austria-Hungary, it seems impossible 
 that the Slav elements in a reconstituted em- 
 pire should not gain more liberty and right of 
 self-expression than in times past. They de- 
 serve something, for they have inflicted a big 
 scare on the monarchy, yet have not revolted. 
 The present forms of democracy may be ex- 
 pected to continue in Germany ; for the German 
 Reichstag with its manhood suffrage was or- 
 ganized by Bismarck so as to give to the smaller 
 states substantial representation in the empire. 
 Doubtless success in war would somewhat exalt 
 Prussianism, militarism, distinctions of classes 
 
 31 
 
PROBLEMS OF READJUSTMENT 
 
 and military methods of government, which 
 seem to outsiders so contrary to the genuine 
 spirit of democracy. In any case no European 
 country is likely to change either from democ- 
 racy to monarchy or from monarchy to democ- 
 racy. The future trend from or towards democ- 
 racy will depend on who is the victor. 
 
 Although the United States of America seems 
 to be quite outside the danger zone, we have 
 something to learn from the experience of our 
 democratic neighbors abroad. First of all are 
 we wise in putting the immediate control of 
 our armies and navies into the hands of civil- 
 ians ? In our four external wars since 1789 and 
 in our Civil War, the commander-in-chief of the 
 armies and navies was in every case a civilian. 
 We have had several presidents who were 
 chosen because of their military reputation — 
 Jackson, Harrison, Taylor, Grant — but not one 
 of them took the conduct of a war upon his 
 hands. Perhaps the American suspicion of 
 military men as more likely to make themselves 
 despots has no foundation; but civilian presi- 
 dents ought to have military and naval experts 
 upon whom they can throw direct responsibility. 
 
 Military experts have their failings, but it is 
 the business of their lives to study the military 
 
 32 
 
THE WAR AND DEMOCRACY 
 
 needs of their country and to keep abreast of 
 the advance in military science and machinery. 
 The United States might well follow the exam- 
 ple of military countries like France and Eng- 
 land in frequently putting at the head of the 
 departments of war and navy men who are 
 trained in that specialty. In the long list of 
 secretaries of the navy since 1798, the only well- 
 known name of a naval commander is John 
 Rogers, who was ad interim for a few days in 
 1823. The first secretary of war, General Knox, 
 was appointed because he was a trained mili- 
 tary administrator; and Pickering, McHenry, 
 and Armstrong were military men. Winfield 
 Scott served about three weeks ad interim; but 
 Jefferson Davis was the only experienced sol- 
 dier to be appointed to the office except during 
 the troubled period of reconstruction when 
 (xrant, Schofield and Sherman served for a few 
 weeks. 
 
 If the country absolutely cannot trust its 
 army to a soldier and its navy to a sailor, it 
 absolutely must put military men in places of 
 recognized responsibility. With great difficulty 
 the army has secured a general staff, the chief 
 of which, however, is supposed not to be in the 
 confidence of the administration. Congress has 
 
 33 
 
PROBLEMS OF READJUSTMENT 
 
 refused the similar naval staff which, is essen- 
 tial. Congress is not stingy. In the year pre- 
 vious to the present war, the United States 
 government spent more money for military and 
 naval purposes than any European power. 
 "We may as well do in advance what Great 
 Britain has been compelled to do by the danger 
 of national ruin — we may as well select a man 
 of brains and intrust him with the task of reor- 
 ganizing the army, which sorely needs it. The 
 United States is protected by three thousand 
 miles of water and besides that, by the naval 
 first line of defense; after that by the use of 
 mines such as are protecting the coasts of Eng- 
 land, France and Germany from a landing of 
 enemies. Still those three countries have more 
 than twenty thousand men available to resist 
 an attack if the first and second lines were 
 broken ! France and Great Britain have far ex- 
 ceeded the United States in preparations, and 
 yet both were caught without a sufficient amount 
 of material and a clear knowledge of where the 
 human units were to come from. It was not 
 creditable to the kingdom of Great Britain and 
 the empire of India that 324,000,000 human be- 
 ings should have had at their disposal in a mo- 
 ment of supreme danger — leaving out of ac- 
 
 34 
 
THE WAR AND DEMOCRACY 
 
 count the garrisons in Africa and Asia — less 
 than 100,000 troops available for immediate 
 service. It is still less creditable to the United 
 States that 100,000,000 human beings should 
 rely upon a net effective force capable of being 
 thrown at any point on our eastern coast of less 
 than 25,000. "We have the keenest desire to 
 maintain democracy in the western world, but 
 there can be no democracy of the United States 
 unless there is a United States capable of keep- 
 ing out hostile armies. 
 
 Above all American democracy must recog- 
 nize that armies are made up of soldiers. The 
 English territorials and colonial levies have 
 been molded in from four to six months into 
 good troops ; but if the Germans had been able, 
 as seemed not impossible, to land an army in 
 England, the United Kingdom would have col- 
 lapsed. Thereupon Paris would probably have 
 been captured. It is a crime which ought to 
 be punishable by confinement in a state's 
 prison, for the American people to rely upon 
 untrained volunteers for future wars. Their 
 quality is high and once properly drilled and 
 officered they could march, fight, and hold 
 trenches against any soldiers in the world. But 
 the experience of the United States in every 
 
 35 
 
PROBLEMS OF READJUSTMENT 
 
 war from the Revolution to the Spanish War 
 has been that the refusal to give military train- 
 ing till the war is actually breaking out means 
 a fearful waste of treasure and of lives. The 
 wars of the future are going to be fought by 
 great masses of trained men. What American 
 democracy needs is simply to apply to its own 
 defense the principles of organization, expert 
 service, and efficiency which have made its rail- 
 roads and mines and factories so productive. 
 This favored country cannot go on indefinitely 
 enjoying the privileges of modern life without 
 taking account of the present changes in war- 
 fare and international relations. 
 
II 
 
 AN ECONOMIC INTERPRETATION OF 
 THE WAR 
 
 Edwin R. A. Seligman 
 
 There have been almost as many explanations 
 of the great war as there have been writers. 
 The explanations, moreover, have ranged over 
 a very wide field: personal jealousies, dynastic 
 differences, militarism, wounded pride, the en- 
 deavor to round out political boundaries, racial 
 antagonism, not to speak of such high-sounding 
 phrases as struggle for liberty, or fight for na- 
 tional existence — all these and many more have 
 been advanced for popular consumption. What 
 is lacking in them all, however, is a realiza- 
 tion of the fact that a conflict on this gigantic 
 scale must be explained on broader lines than 
 any of those mentioned. Wherever our sym- 
 pathies may lie in the present struggle, it be- 
 hooves us, as students of the philosophy of his- 
 
 37 
 
PROBLEMS OF READJUSTMENT 
 
 tory, to take a* position far removed from the 
 petty interests of any of the contending par- 
 ties. Servia tells us that she is fighting for 
 independence; Austria maintains that she is 
 struggling against political disruption; Eussia 
 asserts that she is contending for the liberties 
 of the smaller Balkan States ; France urges that 
 she is endeavoring to restore freedom to her 
 lost provinces ; England puts in the foreground 
 resistance to the insolent pretensions of mili- 
 tarism and protection of small nationalities; 
 Germany claims a place in the sun; and Japan 
 — well, Japan is fighting to defend large rather 
 than small nationalities, that is, to free China 
 from German domination. In each country, 
 with scarcely a single exception, there has been 
 a truly national uprising. Each of the contest- 
 ants considers that he is fighting for a holy 
 cause, and is thoroughly convinced not only of 
 the justice of his own claims but of the infamy 
 of his adversary's. Earely in the world's his- 
 tory has there been presented such a spectacle 
 of genuine and universal enthusiasm penetrat- 
 ing every nook and cranny of the belligerent 
 countries, combined not only with an utter in- 
 ability on the part of each to understand the 
 position of the other, but also with a fierce and 
 
 38 
 
AN ECONOMIC INTERPRETATION 
 
 implacable hatred between the more prominent 
 contestants. 
 
 But if, amid the actual clash of arms, it is 
 impossible for any of the belligerents to see the 
 situation in its true light, is there any excuse 
 for us, as neutrals and would-be philosophers, 
 to content ourselves with the explanations that 
 are born of mutual prejudice! Is it not rather 
 incumbent upon us to realize that there are 
 deeper world forces at work which are respon- 
 sible for the present titanic conflict ; and if so, 
 is it not somewhat hasty to endeavor to appor- 
 tion praise or blame for what is the inevitable 
 result of world forces? 
 
 The starting-point of our analysis is the ex- 
 istence of nationality. Modern, as distinct from 
 medieval, and in part from ancient, political, 
 life, is erected on national foundations. The 
 city states of classic antiquity or of the Middle 
 Ages, although forming political entities, had 
 no direct relation to the facts of nationality. 
 There were in fact no nations : there were peo- 
 ples and races and states, but no nations. The 
 Greek states warred with each other, and there 
 was an Hellenic people ; but there was no Greek 
 nation. Eome overran the world, and the 
 Eoman Empire included many peoples and 
 
 39 
 
PROBLEMS OF READJUSTMENT 
 
 races ; but we cannot properly speak of a Eoman 
 nation. In the later Middle Ages, the Italian 
 and the German cities were often at war with 
 their neighbors; but there was no Italian state 
 or German state, and still less an Italian nation 
 or a German nation. Modern political organi- 
 zation, on the other hand, is framed on national 
 lines ; and it is now universally recognized that 
 the creation in the seventeenth century of the 
 first great national states on the continent, as 
 well as the solidification of the British common- 
 wealth, was due to economic forces. It was now 
 that what the economists call the local or town 
 economy gave way to the national economy ; it 
 was now that land as a predominant economic 
 force was replaced or supplemented by com- 
 mercial and industrial capital. Land in its very 
 nature is local; capital, in its essence, trans- 
 cends local bounds. The rise of the national 
 state was an accompaniment of the change in 
 economic conditions. 
 
 From that time to this the basis of national 
 life has been economic in character. I do not, 
 of course, desire for a moment to deny that 
 other factors have contributed. National con- 
 sciousness is a subtle product of many forces, 
 among which geographical situation, common 
 
 40 
 
AN ECONOMIC INTERPRETATION 
 
 language, inherited traditions and similar so- 
 cial and political ideals have all contributed to 
 perpetuate the racial characteristics which 
 differentiate one nation from another. That 
 racial and even religious differences have in 
 the past frequently led to sanguinary contests 
 goes without saying; and he would be ven- 
 turesome indeed who would dare to predict 
 that the future has not in store for the world 
 many a conflict referable to these same 
 causes. 
 
 If, however, we trace the history of the world 
 during the past few centuries we are struck by 
 the fact that, on the one hand, nations of dif- 
 ferent races have lived together in complete 
 amity, and that, on the other hand, separate 
 nations belonging to the same race and the same 
 religion have often indulged in the most vio- 
 lent conflicts. Examples like the war between 
 England and the United States, between Chile 
 and Peru, between Prussia and Austria, could 
 easily be multiplied. If in these cases the old 
 explanation of racial antagonism obviously does 
 not suffice ; if on the contrary the political con- 
 tests in such cases were due to more fundamen- 
 tal economic causes, is it not fair to assume that 
 as between nations of different races as well, 
 
 41 
 
PROBLEMS OF READJUSTMENT 
 
 similar economic causes often lie at the bottom 
 of the controversy? 
 
 While economic considerations indeed do not 
 by any means explain all national rivalry, they 
 often illumine the dark recesses of history and 
 afford on the whole the most weighty and satis- 
 factory interpretation of modern national con- 
 tests which are not clearly referable to purely 
 racial antagonisms alone. The present strug- 
 gle is without doubt to be put into the same 
 category. To say, however, that nationalism in 
 its economic aspects is the root of the present 
 trouble is not yet adequate. For we have still 
 to explain why there should have been such a 
 recrudescence of nationalism of recent years. 
 On the contrary, it might be asked, if the mod- 
 ern age is essentially a capitalist age, why 
 should we not, in the face of the international 
 aspects of capitalism, have a growth of inter- 
 nationalism rather than of nationalism? Why 
 should we not be on the brink of that era of 
 universal free trade, of permanent peace and 
 of international brotherhood for which Adam 
 Smith and the Manchester School so valiantly 
 contended? Why is it that after the downfall of 
 the Mercantile System — which was nothing but 
 the economic side of the great national move- 
 
 42 
 
AN ECONOMIC INTERPRETATION 
 
 ment of the seventeenth and the eighteenth cen- 
 turies — we should witness, hand in hand with 
 the undoubted growth of international inter- 
 course and mutual understanding, the revival 
 of the so-called Neo-mercantilism, as found a 
 generation ago in almost all the continental 
 nations of Europe as well as in the United 
 States ? And why should we at this very mo- 
 ment be in the presence of an almost universal 
 emergence of national consciousness which 
 threatens to destroy well-nigh everything that 
 has been won during the nineteenth century, 
 and which in its deplorable aspects is typified 
 no less by the Oxford pamphlets of the English 
 scientists than by the fulminations of the 
 German professors or the decisions of the 
 French learned societies! What are the world 
 forces which compel human beings, almost per- 
 haps against their will, to act as do the foremost 
 representatives of our present-day civiliza- 
 tion? 
 
 If I read history aright, the forces that are 
 chiefly responsible for the conflicts of political 
 groups are the economic conditions affecting 
 the group growth. These conditions have of 
 course assumed a different aspect in the course 
 of history. The first and most obvious reason 
 
 43 
 
PROBLEMS OF READJUSTMENT 
 
 leading to an expansion of a political group is 
 the desire to insure a food supply for the grow- 
 ing population. It is today a fairly well estab- 
 lished fact that the forces which set in move- 
 ment the migration of the peoples from Asia 
 to Europe and which were responsible for the 
 so-called irruption of the barbarians were pri- 
 marily the inability to maintain the flocks and 
 herds, owing to the gradual desiccation of the 
 original home, and the necessity of seeking 
 fresh pastures abroad. We have recently been 
 taught that the secret of the implacable enmity 
 between Rome and Carthage was the desire to 
 retain Sicily as the granary of the world. The 
 need of an adequate food supply is the first con- 
 cern of every political entity. 
 
 The next step in the economic basis of po- 
 litical expansion is the desire to develop the 
 productive capacity of the community. This al- 
 ways assumes one of two forms. Where agri- 
 cultural methods are still primitive and agri- 
 cultural capital insignificant, the system of cul- 
 tivation is necessarily extensive. As a conse- 
 quence, and especially in those countries where 
 slavery has developed, the need of a continual 
 supply of fresh land as a basis for profitable 
 slave cultivation, becomes imperative. It is this 
 
 44 
 
AN ECONOMIC INTERPRETATION 
 
 fact which explains the Mexican War in the 
 history of the United States, as well as number- 
 less conflicts of former ages in other parts of 
 the world. 
 
 On the other hand, where agriculture has 
 been supplemented by an active commercial in- 
 tercourse, and especially in the case of coun- 
 tries contiguous to the sea, the desire for the in- 
 crease of wealth based on commercial profits 
 has in the past everywhere led to a struggle 
 for the control of the trade routes. From the 
 time of Phoenicia down to the domination re- 
 spectively of the Hanse towns and of Venice, 
 the grandeur and decay of civilization may al- 
 most be written in terms of sea power. 
 
 All these changes, however, were anterior to 
 the growth of modern nationalism. What, then, 
 are the points in which modern struggles differ 
 from their predecessors? 
 
 From this point of view it may be said that 
 the first stage of modern nationalism represents 
 an analogy rather than a contrast; and that it 
 is only in the later stages that the real differ- 
 ences are to be sought. In the first stage of 
 modern nationalism we find in fact a combina- 
 tion of the three forces which, as we have seen, 
 played so important a role in former times. 
 
 45 
 
PROBLEMS OF READJUSTMENT 
 
 The closing of the land route to India, 
 through the Mohammedan conquest of Con- 
 stantinople, and the discovery of the New 
 World were the two chief factors which led to 
 the development of nationality in the sixteenth 
 and seventeenth centuries. It was at this time 
 that the great colonial empires of Spain, Por- 
 tugal, Holland, France and England were 
 formed. The struggle to protect the economic 
 interests involved in the colonial system led 
 necessarily to an organization on a national 
 scale. The real basis of the early colonial sys- 
 tem, however, was the attempt to secure either 
 raw materials for the incipient manufactures 
 of the mother country, or crude articles like 
 the spices from the East Indies, or treasure 
 from America. The early colonial system, 
 w T hich itself marks the transition from medieval 
 feudalism to modern capitalism, thus represents 
 an attempt to increase the area of the supply 
 of certain kinds of food, or the endeavor to 
 expand the basis of productivity by the acquisi- 
 tion of fresh land calculated to yield raw ma- 
 terials or, finally, the effort to secure what was 
 considered the essence of wealth itself in the 
 shape of the precious metals. In order to ac- 
 complish each of these results, a great navy 
 
 46 
 
AN ECONOMIC INTERPRETATION 
 
 was necessary, and such a navy could be pro- 
 vided and maintained only along national lines. 
 Before long, however, the accumulation of 
 capital derived from the profits of the colonial 
 empire found its chief utilization in an appli- 
 cation to industry; and as this capital grad- 
 ually percolated through business enterprise, 
 the whole form of economic organization was 
 changed. In the place of the medieval guild 
 system where the same individual bought the 
 raw material, fashioned the commodity, and 
 sold the product to the consumer, there now 
 grew up what was later on known as the do- 
 mestic system, that is, the system where the 
 first and third stages of the process were in 
 the hands of capitalists who could both buy the 
 raw material and sell the product on a large 
 scale, while the second stage in the process was 
 still carried on by the individual workman in 
 his own home. The emphasis was consequently 
 now put upon the protection of this national 
 industry against its rivals, and the colonies 
 henceforth became important, not so much as 
 sources of raw material as, on the other hand, 
 favorable markets for the commodities manu- 
 factured in the mother country. The so-called 
 Mercantile System was badly named: because 
 
 47 
 
PROBLEMS OF READJUSTMENT 
 
 although it is true that the prosperity of both 
 colonies and mother country depended on the 
 interchange of products carried on through 
 overseas commerce, the essence of the system 
 was the development of domestic industry on a 
 national scale. The great wars of the seven- 
 teenth and eighteenth centuries, fought in or- 
 der to control the sea and to expand the colonial 
 empire, all had in view the development of the 
 nascent industry on capitalist lines. Protec- 
 tion of industry was, therefore, the character- 
 istic mark of nationalism during this period. 
 
 With the advent of the nineteenth century, 
 however, Great Britain was ready to enter upon 
 the next stage of development. Having built 
 up her industry by the most extreme and ruth- 
 less system of protection that the world has 
 ever known, and having wrested a large part of 
 her world empire from her competitors, Eng- 
 land now found it to her interest to go over 
 from a system of protection to one of free trade. 
 The free-trade movement, as is almost always 
 the case with great economic transitions, was 
 only ostensibly in the interests of the consumer, 
 but actually in the interests of the producer. 
 Thanks to a favorable conjuncture of events fa- 
 miliar to all scholars, the industrial revolution 
 
 48 
 
AN ECONOMIC INTERPRETATION 
 
 — which means the complete application of cap- 
 italism to every stage of the productive process 
 — took place first in England, and thus consoli- 
 dated her position of industrial primacy. But 
 as free trade and universal peace were obvi- 
 ously the means best calculated to perpetuate 
 this industrial monopoly, we find Great Britain 
 from this time onward desirous of living in 
 amity with all those countries which had for- 
 merly been her rivals, but which were now hope- 
 lessly distanced in the industrial race and which 
 were henceforth to be regarded as the most 
 desirable markets for the output of British fac- 
 tories. 
 
 With the gradual spread of the factory sys- 
 tem, however, into the continental countries, a 
 new situation was engendered. In the first 
 place, economic pressure upon Germany and 
 Italy gradually resulted in the creation of a 
 political nationality in order to mobilize the 
 economic forces on a national scale. As a con- 
 sequence, we find emanating from those coun- 
 tries, as soon as nationality was achieved, pre- 
 cisely the same movement of protection to in- 
 dustry which had characterized the Mercantile 
 System several centuries earlier. Just as na- 
 tionalism was the real basis of the early Mer- 
 
 49 
 
PROBLEMS OF READJUSTMENT 
 
 cantilism, so this movement now came to be 
 called Neo-mercantilism. In France, indeed, 
 where, as we know, nationalism had been 
 achieved at an earlier date, the new move- 
 ment assumed a slightly different form, 
 namely, that of competition for the mar- 
 kets of the world. It was this competi- 
 tion for the world market which now, after 
 the period of quiescence and universal good will 
 during the sixties and seventies, led in the 
 eighties to the new movement for the in- 
 crease of the colonial empire on the part of both 
 England and France, and which at one time 
 almost threatened to bring those two great na- 
 tions into collision in Africa. Moreover, the 
 advent of the industrial revolution in Germany 
 and the transition from the domestic to the 
 factory system immensely increased the tempo 
 of the evolution. Whereas in the first decade 
 after the formation of the German Empire the 
 chief emphasis was put by Bismarck upon pro- 
 tection, now towards the close of the century 
 the national industry had been built up to such 
 an extent that Germany soon joined France in 
 competing for the world market against Eng- 
 land. 
 
 This transition from a period of protection 
 50 
 
AN ECONOMIC INTERPRETATION 
 
 to a period of competition for markets would 
 not, however, have sufficed to bring about the 
 present gigantic struggle. The most important 
 phase of modern industrial capitalism still re- 
 mains to be explained. After national industry 
 has been built up through a period of protec- 
 tion, and after the developed industrial coun- 
 tries have replaced the export of raw materials 
 by the export of manufactured commodities, 
 there comes a time when the accumulation of 
 industrial and commercial profits is such that 
 a more lucrative use of the surplus can be made 
 abroad in the less developed countries than at 
 home with the lower rates usually found in an 
 older industrial system. In other words, the 
 emphasis is now transferred from the export 
 of goods to the export of capital. 
 
 England reached this stage a generation or 
 two ago. For England, as is well known, has 
 largely financed not only North and South 
 America, but also many other parts of the world 
 as well. In fact, the chief explanation of Eng- 
 land's immense excess of imports is to be found 
 in the profits from her surplus capital annually 
 invested over the seas. Because of her later 
 transition to the factory system, France fol- 
 lowed at a subsequent period, but even then 
 
 51 
 
PROBLEMS OF READJUSTMENT 
 
 only to an inconsiderable degree. For in the 
 first place, the virtual cessation in the growth 
 of population prevented any such increase of 
 output as in England, although naturally aug- 
 menting the per capita wealth, and especially 
 the prosperity of the peasant. And in the sec- 
 ond place, since the French are far more con- 
 servative, largely for the reasons just men- 
 tioned, their annual surplus, such as it is, has 
 been invested chiefly in contiguous countries 
 like Spain and Belgium, and later on, for obvi- 
 ous reasons, in Russia. Thus France did not 
 develop into any serious competitor of Eng- 
 land in the capital market of the world. On 
 the other hand, the significant aspect of recent 
 development is the entrance of Germany upon 
 this new stage of development. The industrial 
 progress of Germany has been so prodigious 
 and the increase of her population so great, 
 that with the opening years of the present 
 century she also began on a continually larger 
 scale to export capital as well as goods. It 
 was this attempt to enter the preserves hith- 
 erto chiefly in the hands of Great Britain 
 that really precipitated the trouble. For if 
 the growth of national wealth depends upon 
 the tempo of the accumulation of national 
 
 52 
 
AN ECONOMIC INTERPRETATION 
 
 profits, and if the rate of profits is, as 
 we have seen, far greater in the application 
 of capital to industrially undeveloped coun- 
 tries, it is clear that the struggle for the con- 
 trol of the international industrial market is 
 even more important than was the previous 
 competition for the commercial market. 
 
 Other and more familiar phases of the eco- 
 nomic struggle have no doubt played their role 
 in the various countries. It is indubitable, for 
 instance, that Russia, still a predominantly 
 agricultural community, is endeavoring to se- 
 cure Constantinople partly in order to obtain 
 an unrestricted vent for her wheat, partly in 
 order to acquire a port which will not be ice- 
 bound for the greater part of the year, and 
 partly in order further to consolidate the basis 
 of her national wealth. Austria, which is some- 
 what further advanced in industrial develop- 
 ment, is assuredly interested in preventing in- 
 terference with her economic hegemony in the 
 Balkan States. Germany, because of her close 
 union with Austria, is almost equally con- 
 cerned in resisting the Russian pretensions. 
 France, finally, would naturally seek to recover 
 her lost provinces whenever the opportunity 
 for an effective cooperation with Russia pre- 
 
 53 
 
PROBLEMS OF READJUSTMENT 
 
 sented itself. So that those who desire to inter- 
 pret the war on the lines of an economic strug- 
 gle between the Teuton and the Russian civi- 
 lizations would find no little basis for their con- 
 tentions. All these, however, would not suffice 
 to explain the one thing which needs elucida- 
 tion : Why has the present contest attained the 
 dimensions of a veritable world war, and why 
 has it become clear, not only to the dispassion- 
 ate observer, but to the contestants themselves, 
 that the real struggle is between England and 
 Germany? 
 
 If, however, Germany and England are the 
 real antagonists, the true interpretation of the 
 war must rest on this antagonism. From this 
 point of view it is significant that England 
 should now for more than three centuries have 
 fought her way up with successive rivals in turn. 
 In the seventeenth century, England's chief 
 fight was against Holland ; in the eighteenth cen- 
 tury her greatest antagonist was France, and 
 now, finally, she has locked horns with Germany. 
 To the student of economic history, the present 
 war, however, was just as inevitable as its pred- 
 ecessors ; in this case, as in the others, it seems 
 unnecessary to advance the minor explanations 
 which are currently found. England's war with 
 
 54 
 
AN ECONOMIC INTERPRETATION 
 
 Holland was a struggle for the control of the 
 seas as a prelude to the expansion of national 
 industry. England's wars with France were 
 contests for colonial empire resting on a com- 
 petition of markets for goods; England's war 
 with Germany marks the final stage of a com- 
 petition involving not simply the export of 
 goods, but the export of capital. 
 
 While Germany was in the first stage of eco- 
 nomic nationalism she took relatively no inter- 
 est in colonial expansion, but was busily en- 
 gaged in developing her industrial power and 
 in utilizing to that end the same weapon of pro- 
 tection which had served Great Britain in such 
 good stead in preceding centuries. With the 
 consolidation and development of industrial 
 enterprise Germany soon entered upon the sec- 
 ond stage of economic nationalism, that of com- 
 peting for the markets of the world. The ex- 
 port of commodities thus led naturally to co- 
 lonial expansion, as a result of which the early 
 Bismarckian policy was reversed. With the be- 
 ginning of the present century, however, Ger- 
 many entered upon the third stage of economic 
 nationalism, supplementing the export of goods 
 by the export of capital. Now it was that there 
 emerged the real rivalry with England. Now 
 
 55 
 
PROBLEMS OF READJUSTMENT 
 
 for the first time there came into view the pos- 
 sibility of the financial control of large sections 
 of the world, of which Morocco and Asiatic Tur- 
 key are good examples. These efforts for finan- 
 cial control represented a penetration of back- 
 ward countries by a developed capitalism — a 
 peaceful penetration if possible, but a penetra- 
 tion at all costs. For Germany was learning 
 the lesson from England's experience, and was 
 fully aware of the fact that a financial or cap- 
 italistic domination is the surest avenue which 
 leads toward commercial growth and which 
 renders probable the greatest multiplication 
 of profits. 
 
 This consideration seems of slight weight. 
 Is it not true, it might be urged, that capital is 
 invested in foreign countries by people of all 
 nationalities, and that the stock of modern cor- 
 porations pursuing their activities in any coun- 
 try is distributed among investors of all finan- 
 cial countries? This criticism, however, does 
 not touch the core of the matter. For in the 
 first place corporation policy is not influenced 
 by the minority stockholders at all ; and it is de- 
 termined, so far as nationality is concerned, by 
 that of the controlling directorate. The fact 
 that the shares of the South African mines were 
 
 56 
 
AN ECONOMIC INTERPRETATION 
 
 traded in on the Berlin stock exchange did not 
 affect the close connection of the British min- 
 ing corporations with the Boer War. And in 
 the second place, the political influence which 
 goes with financial authority is itself respon- 
 sible for all manner of economic advantages, di- 
 rect and indirect. It would be tedious as well 
 as unnecessary to recite in detail the countless 
 benefits that England has derived from India, 
 or more recently from Egypt, and the number- 
 less subtle ways in which she has contrived, just 
 as every other nation would have done, to 
 retain most of these benefits for herself. For 
 who will in any way doubt that under modern 
 conditions political preferment is the real open 
 sesame to economic advancement! We have 
 only to point to what is taking place at this 
 very moment between China and Japan. 
 
 The German statesmen were simply learning 
 their lesson from the vast book of English ex- 
 perience. The German economists were, almost 
 to a man, united in the belief that, while it may 
 not always be true that trade naturally follows 
 the flag, it is clearly not open to doubt that 
 political influence paves the way for economic 
 superiority and vastly enhances the opportuni- 
 ties for economic preferment. It was primarily 
 
 57 
 
PROBLEMS OF READJUSTMENT 
 
 to augment this political influence and to clinch 
 these expected financial and commercial advan- 
 tages that a large navy, with coaling places and 
 stations throughout the world, became a neces- 
 sity. This attempt, however, necessarily con- 
 stituted a challenge to England's virtual mo- 
 nopoly of sea power and engendered in both 
 countries the state of mind which has finally re- 
 sulted in the present conflict. 
 
 To say, then, that either Great Britain or 
 Germany is responsible for the present war, 
 seems to involve a curiously short-sighted view 
 of the situation. Both countries, nay, all the 
 countries of the world, are subject to the sweep 
 of these mighty forces over which they have but 
 slight control, and by which they are one and 
 all pushed on with an inevitable fatality. Eng- 
 land, no less than Germany, Austria no less 
 than Eussia, cannot escape this nemesis. 
 How idle is it, therefore, to speculate as to 
 what the particular torch may have been which 
 set fire to the conflagration ! How bootless is it 
 to attempt to estimate from the blue book or 
 the white book or the yellow book which states- 
 man or set of statesmen is responsible for the 
 particular action that led to the declaration of 
 war ! If the war could have been averted now, 
 
 58 
 
AN ECONOMIC INTERPRETATION 
 
 it was bound to break out in the more or less 
 immediate future. Germany like England, 
 Austria like Russia, Italy like Servia, each was 
 simply following the same law which is found 
 in all life from the very beginnings of the indi- 
 vidual cell — the law of expansion or of self- 
 preservation. 
 
 It is a curious fact that no one should hitherto 
 have attempted to explain the paradox of in- 
 creasing internationalism combined with the 
 recrudescence of the newer nationalism which 
 we are witnessing today. And yet, in the light 
 of the preceding analysis, the explanation is 
 simple. In the earlier days of civilization the 
 stranger was the enemy because the economic 
 unit was the local unit. With the slow growth 
 of trade, these barriers were gradually broken 
 down and the feelings of enmity attenuated, 
 until, as in the Roman Empire, natural law de- 
 veloped as the law common to all peoples. In 
 the same way, in the later Middle Ages, the 
 local antagonisms were disappearing before 
 commercial progress, until we even find dream- 
 ers who several centuries ago welcomed the 
 speedy advent of the universal republic and 
 proclaimed the impending reign of a world 
 citizenship. As we have seen, however, the cre- 
 
 59 
 
PROBLEMS OF READJUSTMENT 
 
 ation of industrial capitalism and the birth of 
 nations in the sixteenth and seventeenth cen- 
 turies consolidated the economic interests along 
 national lines. While individuals now consid- 
 ered themselves citizens of a country rather 
 than of a town, national antagonisms became 
 stronger than the older local antagonisms. Yet 
 after the first fierce onset of national power the 
 forces of internationalism began to assert them- 
 selves, and international law was born, although 
 never becoming a very lusty infant. A little 
 later, however, when Great Britain had com- 
 pleted the first stage of nationalism through 
 protection, it was so clearly to her interest to 
 emphasize the ties that bind nations together, 
 that her philosophers and economists found for 
 a time a more or less ready response to their 
 cosmopolitan teachings among those countries 
 which were not yet quite prepared to start on 
 the road of nationalism. Thus it was that by 
 the middle of the nineteenth century the pre- 
 cepts of Adam Smith were now taken up by 
 Cobden and Bright, and were reechoed in Ger- 
 many, in Italy, in Russia, and in other indus- 
 trially undeveloped parts of the world — with 
 the one significant exception of the United 
 States, which, having entered after the Civil 
 
 60 
 
AN ECONOMIC INTERPRETATION 
 
 War upon her first real stage of nationalism, 
 turned a deaf ear to the preachings of the Man- 
 chester School. 
 
 With the progress of the industrial revolu- 
 tion in the United States, however, and with 
 her gradual transition from an exporter of food 
 to an exporter of finished products, the United 
 States was ready to take its place side by side 
 with England in preaching the gospel of cosmo- 
 politanism and good will, and in emphasizing 
 the forces which make for the growth of inter- 
 national trade. Had all the nations of the 
 world been on the same level of economic prog- 
 ress, the very existence of capital as an inter- 
 national force would have lent a mighty sup- 
 port to the spread of good feeling and inter- 
 national fellowship. Unfortunately, it was pre- 
 cisely this equality that was lacking. In the 
 absence of such a situation, the exploitation of 
 the capitalistically undeveloped countries by 
 the few nations which had reached the third 
 stage of economic nationalism, that of the ex- 
 port of capital rather than of goods, became 
 the keynote of a new struggle. Thus it is that 
 modern capital, which on the one hand works 
 toward real internationalism, peace and public 
 morality and which will ultimately be able to 
 
 61 
 
PROBLEMS OF READJUSTMENT 
 
 .accomplish its beneficent results, is at the same 
 time responsible for the weakening of inter- 
 national law and the revival of a more con- 
 spicuous and determined nationalism because 
 of the greater prize to be achieved and the 
 iiercer struggle necessary to win it. 
 
 In the political life of the world today we 
 see the same forces at work as in all life from 
 ihe very beginning — the forces which we sum 
 up under the terms of the competitive and the 
 cooperative process, the individualistic and the 
 collective movement. Just as the animal or- 
 ganism was built up by a combination of the 
 struggle between the cells and cooperation 
 among them ; just as human society has devel- 
 oped through the advance of the individual 
 working hand in hand with the growth of the 
 group ; so the world society that is slowly com- 
 ing to pass is evolving in obedience on the one 
 hand to the competitive spirit of national strug- 
 gle, and on the other, to the cooperative forces 
 of internationalism — both of them inherent in 
 the modern factory system, resting upon indus- 
 trial capitalism. At certain stages in the 
 world's history the one set of forces seems to be 
 in the ascendency, at another stage the opposite 
 set ; but in reality they are complementary and 
 
 62 
 
AN ECONOMIC INTERPRETATION 
 
 are always working together. It is the indus- 
 trial revolution with the factory system and the 
 growth of capitalism which has set in motion 
 the mighty forces both of world cooperation and 
 of national antagonism. 
 
 In the light of what has been said, the pres- 
 ent and the future of the United States form 
 an especially interesting subject for considera- 
 tion. When this nation was born it was for 
 some decades weak and puny. It was the genius 
 of Alexander Hamilton which realized the true 
 economic basis of nationality and which at- 
 tempted to start the country on its real career. 
 The gradual dominance of American politics 
 by the South, the economic basis of which was 
 agricultural rather than industrial, was, how- 
 ever, responsible for good as well as for evil. 
 The emphasis upon states ' rights indeed almost 
 destroyed the Union; but the need of a wider 
 basis of productivity under the extensive sys- 
 tem of slave labor was responsible for the Mex- 
 ican War and the rounding out of our imperial 
 domain. It was only with the completion of the 
 Civil War that this country as a whole entered 
 on the first real stage of economic nationalism. 
 Thus it was that the United States, following 
 the example of Great Britain a century before, 
 
 63 
 
PROBLEMS OF READJUSTMENT 
 
 "built up an enormous industrial power through 
 a system of national protection. We are now 
 just beginning to reach the stage attained by 
 Great Britain three generations ago, the stage, 
 namely, of transition from the export of agri- 
 cultural products to that of the import of agri- 
 cultural produce and the export of manufac- 
 tured products. We have not yet reached, and 
 it may well be at least another generation be- 
 fore we reach, the third stage of economic na- 
 tionalism, that of the export of capital on a 
 large scale as the typical form of profitable 
 enterprise. When we reach that third stage, 
 which, as we have seen, carries with it the 
 struggle for the exploitation of the relatively 
 undeveloped parts of the world, our real trial 
 will come, and the true conflict between nation- 
 alism and internationalism will begin. Then, 
 and then for the first time since the develop- 
 ment of our national forces, shall we have an 
 opportunity to test the foundation of our his- 
 toric friendship with Great Britain. Then, and 
 then for the first time, will the situation arise 
 when Great Britain, instead of being bound 
 solidly to us by the bonds of her financial in- 
 terest in us, will face the United States as a 
 rival, a rival on the international market for 
 
 64 
 
AN ECONOMIC INTERPRETATION 
 
 the control of the capitalistically undeveloped 
 countries. Whether by that time the forces of 
 internationalism will prevail and good will and 
 peace continue, or whether, on the other hand, 
 the United States will be impelled, perhaps 
 against her will, to take the place now occupied 
 by Germany, can be foretold by no one. 
 
 Finally it may be asked what is to be the 
 outcome of all this? Are wars to go on for- 
 ever? Is the present struggle, gigantic though 
 it be, simply a forerunner of wars still more 
 gigantic? Or, on the other hand, are the 
 dreams of our pacificists to become true, and is 
 universal peace to be realized? 
 
 If there is any truth in the preceding analy- 
 sis, both of these things are coming in the full- 
 ness of time. That is, we are to have more 
 wars, but we are to. have ultimate peace. The 
 reason that we are to have more wars is simply 
 because of the fact that what we call the indus- 
 trial revolution is in reality only a gradual 
 change, and that this change is but slowly per- 
 meating the world. That part of the earth's 
 surface which is occupied by countries with a 
 highly developed industrial capitalism is rela- 
 tively small. Although capitalism is spreading 
 throughout the West and South of the United 
 
 65 
 
PROBLEMS OF READJUSTMENT 
 
 States and effecting a lodgment in Canada and 
 Japan and Russia, it is only beginning in the 
 rest of Asia and Africa as well as in South 
 America and Australia. As long as there are 
 vast stretches of territory still waiting to be 
 developed, so long will they prove to be a lure 
 to the industrially advanced nations of the 
 world. England, and to a much less extent 
 France, have until recently provided this capi- 
 tal. Whatever be the outcome of the present 
 war, however, nothing, if our analysis is cor- 
 rect, can check the ultimate tendency of coun- 
 tries like Germany, and later on Japan and 
 the United States, to be followed still later by 
 other countries, to secure their share of these 
 lucrative opportunities. Whatever may be the 
 immediate results of the present situation, or 
 with whatever great success the attractive and 
 even noble ideal of an imperial British federa- 
 tion may be realized, England can scarcely ex- 
 pect in the long run to retain the monopoly or 
 the domination which it has achieved and which 
 it built up during the nineteenth century as a 
 result of the lucky accident of being the first 
 country to experience the industrial revolution 
 and to exploit her coal supply. England's pri- 
 macy was no doubt deserved, and is assuredly 
 
 66 
 
AN ECONOMIC INTERPRETATION 
 
 welcome to many of us ; but from the point of 
 view of world forces, it is difficult to resist the 
 conclusion that it also is destined to disappear. 
 Rome was able to create a world empire and to 
 maintain it for several centuries because there 
 was no economic expansiveness in the outlying 
 constitutent members of the empire. Great 
 Britain will find it far more difficult to create 
 a world empire permanently dominating all 
 other countries, for the simple reason that in- 
 dustrial capitalism is destined to overrun the 
 world. Even today England is able to retain 
 India only by strict commercial control and by 
 sedulously preventing the growth of any na- 
 tional industry in that huge empire. 
 
 The above forecast as to the probability of 
 the continuance of war rests indeed on an as- 
 sumption that may be challenged. It might be 
 urged that civilization is progressing so rapidly 
 that the nations of the future will realize the 
 economic waste, the inexpressible horror, and 
 the irreparable ravages of war, and that com- 
 mon decency and ordinary humanity will impel 
 the world into an abandonment of what is essen- 
 tially the mark of savagery. However deeply 
 and even passionately we may desire such a 
 consummation, it must be confessed, in all hu- 
 
 67 
 
PROBLEMS OF READJUSTMENT 
 
 mility, there seems to be slight warrant for its 
 expectation. If indeed the chief nations of the 
 world were to abandon all efforts to secure sel- 
 fish advantage for themselves; if an interna- 
 tional pact could be arranged so that each na- 
 tion would cheerfully divide its opportunities 
 with its neighbors, and would welcome the en- 
 trance of continually new claimants into the 
 agreement ; if, in other words, generosity were 
 to replace selfishness in national arrangements, 
 the outlook might, indeed, be very different. 
 But with the frailty of human nature, as it un- 
 fortunately still exists ; with the undoubted na- 
 tional consciousness which is suffused at pres- 
 ent with the distinctively modern emphasis 
 upon the importance of the material basis of 
 the higher life; and above all with the oppor- 
 tunity afforded to each nation to reach out for 
 its share of almost boundless prosperity by 
 grasping the new opportunities afforded to 
 modern capitalism, it seems hopeless to expect 
 any effective resistance to a temptation which 
 is so compelling, so illimitable, and so promis- 
 ing of success under the conditions of actual 
 economic life. No more striking illustration of 
 the real forces that dominate the foreign policy 
 of modern nations can be found than the vain 
 
 68 
 
AN ECONOMIC INTERPRETATION 
 
 effort recently made by certain Italian states- 
 men to repress the popular feeling and to pre- 
 vent their country from joining a war the hor- 
 rors of which had been for months clearly be- 
 fore the eyes of all. Pacificism seems destined, 
 for the near future at least, to remain an unat- 
 tainable ideal; for it is both blind and deaf to 
 the effect of modern capitalism in accentuating, 
 rather than attenuating, the lure of the eco- 
 nomic life. 
 
 But if, then, we are likely to see during the 
 next few generations wars on an even greater 
 scale than the present one, will this endure for- 
 ever ? Not if our analysis is correct. For when 
 once the time comes that industrial capital will 
 have spread to the uttermost parts of the earth ; 
 when China and India and Africa and the rest 
 will all have been as fully supplied with capital 
 as are now Great Britain and Belgium and Ger- 
 many; when, in other words, the industrial 
 revolution will have permeated the world, then 
 the economic basis will have been laid for two 
 supreme events. In the first place, there will 
 no longer be any exploitation of the backward 
 countries, because there will be no industrially 
 undeveloped countries to exploit. Then the 
 whole world will be divided up into a series of 
 
 69 
 
PROBLEMS OF READJUSTMENT 
 
 empires, perhaps a dozen or more, on a level 
 of comparative equality economically, and 
 therefore politically. With such a relative 
 equality of industrial development, and in the 
 absence of any important foreign territory to 
 be exploited, each nation will then find it to its 
 interest to develop what is best within itself in 
 order to carry on a peaceful exchange of com- 
 modities with the other nations. Then, and 
 then only, will Adam Smith's dream be realized, 
 namely, that each nation will be able to utilize 
 its own climatic and other economic advantages 
 in a peaceful struggle with other nations. 
 Then, and then only, will universal free trade 
 become profitable to all, and the rule of inter- 
 national amity become enduring. Then, and 
 then only, shall we have the secure foundation 
 laid for the world republic and for the coopera- 
 tion of all races and of all peoples toward a 
 common ideal. 
 
 In the second place is the industrial revo- 
 lution. Just as the industrial revolution 
 changed England from an aristocracy to a 
 democracy, just as the industrial revolution in 
 the United States is re-creating a new South on 
 a democratic basis, so the spread of the indus- 
 trial revolution will bring democracy through- 
 
 70 
 
AN ECONOMIC INTERPRETATION 
 
 out the world and will enable every country to 
 turn its efforts to the ideals of a political and a 
 social democracy. Then we shall not have to 
 spend more money for dreadnoughts than we 
 do for social progress. 
 
 To predict how soon this change will come 
 about is idle. All that can be said is that the 
 change is in progress, and that in this change 
 there seems to lie the chief hope of the world's 
 future. What the particular economic organi- 
 zation of the future is to be, it is not the pur- 
 pose of these pages to discuss. My point will 
 have been attained if we clearly keep in mind 
 the inevitable spread of industrial capitalism, 
 irrespective of the fact by whom the capital is 
 to be controlled. Capitalism on an interna- 
 tional scale may well lead during the next few 
 decades to a strengthening of certain forms of 
 international cooperation and fellowship, so 
 ardently desired by all forward-looking think- 
 ers. But industrial capitalism will not have 
 completed its allotted task until it shall have 
 brought about the reign of national economic 
 equality which alone will serve as the basis of an 
 enduring internationalism. Whatever may be 
 the influence of the other factors, ponderable or 
 imponderable, that contribute to civilization, it 
 
 71 
 
PROBLEMS OF READJUSTMENT 
 
 is scarcely open to doubt that the dominant 
 forces which are actually molding history to- 
 day are primarily economic in character, and 
 are as a consequence intimately associated with 
 the great transition that is at present taking 
 place in the economic organization of the world. 
 Unless the present conflict is studied in the light 
 of these world forces, its lesson will not have 
 been read aright. 
 
Ill 
 
 THE CEISIS IN SOCIAL EVOLUTION 
 
 Feanklin H. Giddings 
 
 For two or three months after the war began, 
 everybody was asking or telling who was to 
 blame. The primitive human instinct to hold 
 some one personally acconntable had asserted 
 itself in full strength. Then, for two or three 
 months more, every one plunged into a discus- 
 sion of the " causes' ' of the war. Agreement 
 about causes proved to be no more possible 
 than unanimity in fixing responsibility. Doubt- 
 less in his heart every one felt bitterly toward 
 some potentate or people, while in his intel- 
 lectual centers he may have cherished a firm 
 conviction that his own theory of causation 
 was the only true one. Perhaps everybody was 
 right, and only couldn't prove it. You know 
 what the Scriptures say — or was it Don 
 Marquis 1 — 
 
 73 
 
PROBLEMS OF READJUSTMENT 
 
 All the wicked cities 
 
 In the Vale of Siddim 
 Thought of things they shouldn't do — 
 
 Then they went and did 'em! 
 
 Like enough this simple hypothesis is as far as 
 we shall ever get in explaining how the trouble 
 began. 
 
 Of late, the speculations of the thoughtful 
 have turned toward the future. How will the 
 world henceforth be different because this ca- 
 lamity came upon it? Civilization is set back 
 we all believe — but to what extent and in just 
 what way? The destruction of commerce and 
 the loss. of life every one sees and thinks he 
 understands. The waste of capital is realized 
 by some. The irreparable loss to art and to 
 science is appreciated by the few. And beyond 
 this destruction, which is immediate and al- 
 ready is felt, processes of selection and rear- 
 rangement have been set going which will con- 
 tinue to affect the quality and the happiness 
 of mankind throughout future time. May I ask 
 your attention to one or two considerations, 
 rather elementary I fear, touching these trans- 
 forming changes that are likely to continue. 
 
 It is commonly held that modern war undoes 
 74 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 the work of a beneficent natural selection. The 
 best, we say, are killed; and the race must be 
 perpetuated by its weaklings. 
 
 If this is true, or in so far as it may be true/ 
 a war so gigantic as the one now being waged 
 must be regarded as the most appalling calam- 
 ity that has overtaken mankind from the begin- 
 ning. Gains of half a million years have been 
 buried in the trenches, or withered by the fire 
 of artillery. Surely a hypothesis so terrible 
 should be subjected to searching scrutiny before 
 it is accepted. 
 
 It is true, of course, that war takes the phys- 
 ically fit, and takes more of the young in the 
 prime and vigor of life than of the old. It is 
 true, also, that death takes a heavy toll of the 
 bravest and most intellectual of these young 
 men, whose courage and abilities have won them 
 commissions as officers; who, whatever orders 
 from above may be, spare their men whenever 
 they can, and recklessly sacrifice themselves. If 
 this were the whole story, we could not escape 
 the pessimistic conclusion. But there is some- 
 thing more to be said. 
 
 How many of the men who fall in battle die 
 childless, and how many leave offspring ? Who 
 knows 1 Yet plainly, until this question can be 
 
 75 
 
PROBLEMS OF READJUSTMENT 
 
 answered it is absurd to assume that the course 
 of natural selection is diverted by war. The 
 one fact that can be affirmed with certainty is 
 that a large proportion of the victims of battle 
 do leave children, legitimate or illegitimate. 
 Since this present war began, a large number of 
 hastened marriages have been made in all the 
 belligerent countries; and the certainty of an 
 extraordinary birth-rate in the summer of 1915 
 has necessitated measures, both governmental 
 and voluntary, for rendering extraordinary as- 
 sistance to destitute young mothers. 
 
 Again, the men who are killed in battle even 
 in the present war, which probably is excep- 
 tional in this respect, are not the only important 
 harvest of death. In all wars of which we have 
 record, disease has claimed more victims than 
 bullets. And in death by disease there is always 
 natural selection. While cholera, typhus, ty- 
 phoid and pneumonia take the strong no less 
 than the weak, no one, I suppose, will deny 
 that when all allowances have been made it is 
 the relatively weak or non-resisting that are 
 carried off in larger numbers. 
 
 These considerations surely put a question- 
 mark against the assertion that war gives us 
 an adverse natural selection. And these con- 
 
 76 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 siderations are only the more obvious ones. 
 Another, and probably far more important one, 
 although we almost never hear it mentioned, is 
 the intensified struggle for existence among the 
 non-combatants. Hardships are multiplied, 
 food is inadequate, doctors and nurses are at 
 the front, anxiety and sorrow bring tortured 
 nerves to the breaking-point. Under these cir- 
 cumstances, natural selection has its way to a 
 degree approaching the remorseless elimination 
 of the relatively weak which we are accustomed 
 to associate with the jungle, or at least with 
 savagery and barbarism. 
 
 In particular, women and children suffer. 
 It is most curious that those who uncritically 
 take for granted the adverse natural selection 
 of war never let their imagination wander 
 beyond the battlefield and the male combatants 
 assembled there. Would it not be well, before 
 accepting any conclusion on this subject, to ask 
 for the death-rates of women and children dur- 
 ing war years and immediately after? Unfor- 
 tunately we lack adequate statistics; but what 
 scientific man can ignore the plain implication 
 of the facts that are available ? The death-rate 
 of women and children in such times is so much 
 higher than in normal times of peace that it is 
 
 77 
 
PROBLEMS OF READJUSTMENT 
 
 impossible for any observer to be unaware of 
 it, although lie lias no figures — as impossible as 
 it would be to be unaware of an epidemic or of 
 an extraordinary succession of funeral proces- 
 sions in a village street. 
 
 With some diffidence I venture to offer as my 
 own conclusion a bit of pure skepticism. I seri- 
 ously doubt whether war greatly affects the 
 normal course of natural selection. In any 
 case, the assertion that it does, is not proven. 
 
 Natural selection in the strict biological 
 meaning of the term is closely simulated by a 
 selection always going on in the realm of human 
 habits, ideas, inventions, morals, laws, and po- 
 litical institutions. The wiser students of social 
 evolution do not undertake to say how far these 
 phenomena of behavior and relationship are 
 products of unconscious activities, how far of 
 man's conscious planning and reasoned en- 
 deavor. Either way they are products of the 
 struggle for existence carried on collectively — 
 by human beings living in groups, facing com- 
 mon dangers, making common cause, working 
 together. 
 
 As the individual struggle for existence is 
 successful for some and fateful for others, 
 
 78 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 thereby eliminating not only the unsuccessful 
 individuals themselves, but also in the course 
 of time whole varieties or kinds ; so the group 
 or collective struggle — successful often for 
 whole aggregations and fateful for others — has 
 from the appearance of mankind on the earth 
 until now been destroying habits, purposes, cus- 
 toms and policies correlated with unsuccess, 
 and preserving and establishing policies, rela- 
 tions and habits correlated with success. 
 
 Whether war or peace in the long run plays 
 the larger part in social selection is another 
 question, upon which the wiser students of hu- 
 man progress will not offer too positive an 
 opinion. But it is not rash to say that every 
 war has destroyed many things beside human 
 life and material wealth, beyond possibility of 
 recovery or reproduction. Often the destruc- 
 tion is unobserved for years, or even genera- 
 tions, after hostilities have ceased. The habit 
 or institution so eliminated is not usually as 
 conspicuous as American Negro slavery; but 
 the passing of uncounted social phenomena of 
 lesser magnitude may have cumulative results 
 quite as important as the crushing of any one 
 great institution. 
 
 With all its uncertainties, history is less 
 79 
 
PROBLEMS OF READJUSTMENT 
 
 doubtful than prophecy, and it is easier to see 
 the process of social selection in historical 
 retrospect than to visualize its future conse- 
 quences. Nevertheless, a war has this merit as 
 a datum for intellectual speculation : it is a two- 
 sided conflict — it presents alternatives. It was 
 not easily possible to be muddle-headed about 
 what would happen if the Saracens or the Huns 
 conquered Europe ; about what would happen if 
 Great Britain subdued the American colonies, 
 or the Southern Confederacy made good its 
 secession. 
 
 The present war is more than a conflict of 
 nations. It is a struggle between different civi- 
 lizations. It will not result in the destruction of 
 either civilization, or perhaps of any nation, 
 even Belgium. But the outcome will give to one 
 civilization or the other a long lead. It will 
 discourage, handicap, and presently destroy 
 many of the factors or elements that make up 
 the defeated civilization, imparting to it its 
 characteristic qualities. 
 
 It is the boast of Germany that her people 
 are homogeneous, a relatively pure stock. The 
 claim may be allowed if we confine attention to 
 the strictly European elements that are blended 
 
 80 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 in German blood, properly so called. The boast 
 is altogether untrue if the entire population of 
 the empires in question is taken into account; 
 and this discrimination, as will appear, is the 
 key to any thoroughgoing explanation of the 
 profound difference between German civiliza- 
 tion and the civilizations of France and Eng- 
 land. 
 
 By comparison with the German and Aus- 
 trian empires, the allied nations are an old and 
 well-ripened blend of all four of the great Euro- 
 pean stocks. These stocks are: the Mediterra- 
 nean — long-headed, olive-skinned, dark-eyed 
 and dark-haired ; the Baltic — long-headed, fair, 
 yellow-haired and blue-eyed; the Alpine — broad- 
 headed, chestnut-haired and gray-eyed, a prod- 
 uct of the crossing of Mediterraneans with 
 round-heads from the Armenian parts of Asia, 
 who made their way across Europe along the 
 southern foothills of the Alps; and the Danu- 
 bians — broad-headed, florid, red-haired and 
 gray-eyed, a product of the crossing of Baltics 
 with Asian round-heads that pushed across 
 Europe by way of the Danube and Ehine val- 
 leys, the northern foothills of the Alps and so 
 into Belgium and England, where they became 
 historically known as Belgae and Britons. The 
 
 81 
 
PROBLEMS OF READJUSTMENT 
 
 French and English have, of course, in their 
 composition a much higher percentage of Medi- 
 terranean blood than the Germans have. While 
 it is not quite accurate to identify this blood 
 with the so-called Latin race, it is a physical 
 basis of the Latin culture. In the Austrian 
 and German empires, on the other hand, there 
 are large groups of Asian elements far less 
 well blended with European stocks than is any 
 element found in the population of France or 
 of England. The Lapps, Finns, and Slavs with 
 which German blood is crossed in Prussia, the 
 Esthonians, Magyars and Huns which have 
 managed to keep separate from the Germans in 
 Austria, have, all in all, made the population of 
 the German and the Austrian empires much 
 more of a merely mechanical mixture of unas- 
 similable, or at any rate unassimilated, factors 
 than are the populations of France and Eng- 
 land. 
 
 No argument is needed to prove that popula- 
 tions composed of elements that neither amal- 
 gamate to any great extent through inter-mar- 
 riage, nor assimilate mentally or morally 
 through imitation of one another's habits, ac- 
 ceptance of one another's beliefs and ideas, and 
 adoption of one another's purposes, can achieve 
 
 82 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 political cohesion in one way only: they may 
 be held compact by the strong hand of militar- 
 istic sovereignty. Such sovereignty, in its turn, 
 may be the authority of a conquering state or 
 it may be the authority created by the feder- 
 ation of states, not otherwise too friendly, for 
 defense against a common enemy. Such popu- 
 lations engage in teamwork because they have 
 to, not because they want to. They become ac- 
 customed to command. They learn to expect 
 direction, to have life planned out for them. 
 What Walter Bagehot calls "government by 
 discussion' ' they regard as both wasteful and 
 ineffective. A smoothly working administra- 
 tive machine they learn to admire as the best 
 of all machines invented by man, and the most 
 important instrumentality that functions for 
 human well-being. 
 
 How different is the political cohesion of pop- 
 ulations sufficiently alike or sympathetic enough 
 to amalgamate readily and to assimilate inevi- 
 tably! It is as suggestive of chemical union 
 as the political cohesion of antagonistic popula- 
 tions is suggestive of the mechanical union of 
 molecules under the impact of a steam hammer. 
 At some time far back in their history the blend- 
 ing social elements may have been dissimilar 
 
 83 
 
PROBLEMS OF READJUSTMENT 
 
 and hostile, as were the Pictish, Goidelic, Bry- 
 thonic, Saxon, Danish, and Norman elements 
 which combined at length in the English peo- 
 ple. Bnt if through long dwelling side by side 
 antagonisms have diminished and toleration 
 has prepared the mind for understanding and 
 the heart for friendliness, a true people comes 
 into being. Cooperation is created by the meet- 
 ing of minds, policies are determined and 
 shaped by discussion, sovereignty is the peo- 
 ple's will, government is ministerial only; per- 
 sonal liberty, individual initiative, private re- 
 sponsibility and public accountability are things 
 of course. 
 
 It will not do, however, to assume, without 
 some further looking into things, that the civili- 
 zation which is made possible by assimilation 
 and a harmonious blending of elements once 
 different, is on all accounts better than a civili- 
 zation of the more mechanical sort. Civiliza- 
 tion is a certain state, quality, and functioning 
 of human society, and all human society is a 
 great collective enterprise. In the struggle for 
 existence, which began when life began, group 
 effort has played a part as large and far more 
 conspicuous than individual effort. The col- 
 
 84 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 lective struggle for existence has made possible 
 the moral and the intellectual advance of man- 
 kind by establishing relative security, creating 
 economic abundance, and putting a premium 
 upon the restraints, the sympathies, and the 
 mental activities that are essential to social co- 
 hesion and successful cooperation. 
 
 To see the social problem so, in its ultimate 
 nature, shorn of complications and stripped of 
 accessories, is to realize that any group, asso- 
 ciation, community, nation or international or- 
 ganization, achieves the supreme ends of ex- 
 istence more or less fully as it is more or less 
 efficient. And the efficiency must comprise both 
 the collective efficiency of the cooperating whole 
 and the personal efficiency of the individual 
 units whose efforts are combined. If individual 
 efficiency only or collective efficiency only were 
 enough, the problem of the quality of civiliza- 
 tion as poorer or better would be simplified. 
 
 This twofold aspect of efficiency must be 
 borne in mind when we attempt to appraise the 
 redoubtable efficiency of Germany, and to com- 
 pare it with the efficiency represented by the 
 allied nations. 
 
 German efficiency is "made"; French, Eng- 
 lish, American efficiency "grows." In Ger- 
 
 85 
 
PROBLEMS OF READJUSTMENT 
 
 many under orders from above a few selected 
 kinds of education are planned and organized. 
 No detail is neglected. From infancy the child 
 is dedicated to a specific future. By the time 
 he arrives at years of discretion he discovers 
 that parents and the state have left him small 
 "scope for choice. He may, indeed, if of a more 
 than commonly rebellious spirit, break away 
 from the scheme of things into which already 
 he is fitted like a standardized piece in a mech- 
 anism. If he has been prepared for shop or 
 counting-house, in shop or counting-house he 
 probably will abide. His preparation will have 
 been excellent, and the chances are that he will 
 revere and obey the state that so thoughtfully 
 spared him the hard task of shaping his destiny. 
 If for the civil service, the army, or the uni- 
 versity he has been predestined, civil service, 
 military life, or the university career will prob- 
 ably claim him, and hold him to the end. 
 
 Or perhaps so much of education as is need- 
 ful for business or professional life has been 
 thought too precious to waste on him, born a 
 proletarian. The state does not therefore over- 
 look him. He is told how much of his wages 
 he must pay into a fund to provide against ac- 
 cident, illness, or other misfortune. If out of 
 
 86 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 work, a state employment agency, well organ- 
 ized and effective, will aid him qnickly to find 
 new opportunity. If heredity has been unkind 
 to him, or notwithstanding the best efforts of a 
 watchful paternalistic state his childhood has 
 been spent among evil surroundings, he will be 
 taken in hand, and suitably corrected on a farm 
 colony, should he lapse into vagrant ways. 
 
 So in the life of each individual much is 
 foreseen, little is left to chance, and not too 
 much to personal choice. 
 
 In the relation of group to group, a like pre- 
 vision and administrative direction dispose and 
 regulate. Domestic and foreign markets are 
 catalogued and described; trade routes, ship- 
 ping facilities, credit facilities and demands are 
 inventoried. Any important information that 
 the manufacturer or exporter might need in 
 his business, if obtainable at all, can be found 
 in governmental guides or card catalogues as 
 readily as one finds the definition of a word in 
 a dictionary. 
 
 Natural resources and human life are con- 
 served; men are drilled for war as prepared 
 for peace. Nothing is neglected, nothing left 
 to chance and, as in the relation of authority to 
 the individual, little is left to choice. 
 
 87 
 
PROBLEMS OF READJUSTMENT 
 
 If in this pen-and-ink sketch of German effi- 
 ciency there be exaggeration, it is an exaggera- 
 tion that heightens the effect which the Ger- 
 man himself admires. It does not, as he sees it, 
 impair or detract. 
 
 Bnt it is a picture that may be compared 
 with one that was painted in vivid colors by a 
 writer whose profound interpretation of social 
 evolution was given to the world a full gen- 
 eration ago. Who can read Herbert Spencer's 
 imperishable description and analysis of mili- 
 tarism and industrialism, viewed respectively 
 as contrasting social types, without perceiving 
 that any account of German social efficiency that 
 could be written within limits of truth would 
 coincide point by point with Spencer's account 
 of the militaristic, regimented state! 
 
 It is not to be denied that efficiency of the 
 German model has made and will continue to 
 make a powerful appeal to thoughtful minds in 
 other nations. Militarism devours and de- 
 stroys; but an unbridled individualism also is 
 notorious for appalling wastes and cruelties of 
 its own. 
 
 The achievements that we in America credit 
 to personal initiative, to untrammeled individ- 
 ual enterprise, put a strain upon imagination. 
 
 .88 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 The industrial world of today, the accumula- 
 tions of capital, man's power over nature, the 
 substitution of heat energy and electric energy 
 for the toil of human muscles, swift transpor- 
 tation and the network of communication 
 throughout the earth — these are the creations 
 of discoverers, inventors, men of vision and dar- 
 ing, in England, France, America and other 
 countries where the human mind has worked 
 freely, swiftly, with amazing grasp and amaz- 
 ing precision, under liberty. 
 
 Yet these achievements have brought with 
 them a new exploitation of the wage-earner, a 
 concentration of wealth, an increasing control 
 of opportunity by a plutocratic minority, a 
 staggering waste of material resources, and a 
 growing menace of discontent. Is it to be won- 
 dered at that not only amateur reformers, but 
 disciplined publicists and seasoned statesmen, 
 too, have more and more turned to the state for 
 control and coordination? 
 
 Plainly the superiority of one or the other 
 group of efficiency factors is not so far demon- 
 strated. Is it demonstrable ! Can any one prove 
 to the satisfaction of all interested parties that 
 the German plan of life on the one hand, or 
 
 89 
 
PROBLEMS OF READJUSTMENT 
 
 the French, English and American plan on the 
 other hand, is on the whole and in the long run 
 beyond question more effective for the realiza- 
 tion of economic, moral and intellectual possi- 
 bilities? Or do we discover here a controver- 
 sial question that admits of no decisive answer 
 — one over which men may endlessly dispute 
 without result, as the long battlelines of Europe 
 have been fighting in their trenches without 
 important advance on either side! 
 
 The obvious reply, in part at least, to this 
 question about the possibility of answering an- 
 other question, is found in the reflection that, 
 since each of the plans of life here contrasted 
 has great merits and great shortcomings, the 
 development of each so as to incorporate the 
 good features of the other may hold out a maxi- 
 mum hope to mankind. If, for example, Amer- 
 ica, England and France, maintaining their 
 standards of personal liberty, could yet make 
 use of the administrative organs of govern- 
 ment, subject to a democratic control, to corre- 
 late, coordinate, and regulate the spontaneous 
 activities of citizens, might we not attain the 
 best results which stand to the credit of au- 
 thority without sacrificing those that are at- 
 tainable only under liberty 1 
 
 90 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 Surely we may believe that such a develop- 
 ment is possible; at least, we may believe it 
 long enough to ask whether the German plan 
 or its opposite is more likely to develop into 
 one more comprehensive, offering a larger sum- 
 total of merits and a smaller inventory of de- 
 fects. 
 
 Put in this way, the problem in my judgment 
 is correctly stated, and can no longer be re- 
 garded as insoluble. 
 
 One day since the war began, a German uni- 
 versity docent, arguing with an American stu- 
 dent, maintained that Germany is more demo- 
 cratic than the United States. Asked to ex- 
 plain his meaning, he said : ' ' The German gov- 
 ernment does more things for its people than 
 yours does." To his mind, and, I suspect, to 
 the minds of tens of thousands of his compatri- 
 ots, democracy means nothing more than "gov- 
 ernment of the people for the people." Of 
 democracy as denned by Lincoln, namely, ' ' gov- 
 ernment of the people, for the people and by the 
 people," they appear to have little idea. Un- 
 less from the embers and desolation of war that 
 larger conception of democracy shall arise, and 
 transform the Teutonic state, there is seemingly 
 little likelihood that it will be the Prussian plan 
 
 91 
 
PROBLEMS OF READJUSTMENT 
 
 of efficiency organization that will most rapidly 
 approximate the comprehensive scheme ; but in 
 the minds of nations that already have accepted 
 government by the people, for the people, all 
 the factors of idea and appreciation are present, 
 and even now are assembled, for the generous 
 expansion of democratic policy. Without for- 
 getting the priceless value of liberty and of in- 
 dividual achievement, the democratic peoples 
 have rapidly been coming to a truer appraisal 
 than they once made of the legitimate func- 
 tions of law and administration. Can we then 
 doubt that in these peoples centers the hope and 
 the expectation of an efficiency in every way 
 greater than any social efficiency the world has 
 hitherto known? 
 
 Not if one final consideration supports the 
 presumption so far established. The larger 
 tasks of civilization are the same in all gen- 
 erations, but the tasks that any one community 
 or group of communities has to perform in pre- 
 serving and developing civilization are not, un- 
 der all circumstances and generation after gen- 
 eration, unchanging. Group life, like individual 
 life, proceeds through adaptation and adjust- 
 ment; and titanic forces, over which man has 
 but little control as yet, are ever creating new 
 
 92 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 conditions to which civilizations, no less than 
 the humblest plant and animal organisms, must 
 adapt themselves under penalty of death. 
 Therefore the most crucial of all the questions 
 that can be asked about the relative excellence 
 of the two types of efficiency organization that 
 we are comparing, relates to their modifiability, 
 under slow-changing demand or acute crisis. 
 
 So long as the conditions under which an 
 organism lives undergo no change, the reactions 
 of the organism itself are over and over re- 
 peated, without change. Ages ago reactions of 
 this kind became correlated with the mechan- 
 ism of heredity in all the animal species, includ- 
 ing man. They are the original nature of man, 
 as of his humbler animal kindred. We are 
 born with them, we do not have to learn them, 
 we call them instincts. 
 
 Supplementing his instincts every individual, 
 animal or human, has reactions that he has 
 learned but which, over and over repeated, un- 
 der conditions practically unchanging, have be- 
 come nearly as automatic, often as unconscious, 
 as instincts. We have toilsomely learned how 
 to walk and to talk, but usually we are not con- 
 scious of the muscular adjustments so painfully 
 acquired. 
 
 93 
 
PROBLEMS OF READJUSTMENT 
 
 But now and then the unexpected happens. 
 Crisis makes havoc with a complex of condi- 
 tions that had undergone no change, perhaps, 
 for years or for ages. Then habits and in- 
 stincts fail. By accident or by a wild trial and 
 error, well nigh like a beating of the air, new 
 adjustments may be made, and the life of the 
 individual or of the race may continue. But 
 if such new adjustments are not somehow ar- 
 rived at, extermination is the fate of those 
 highly perfected instinct and habit mechanisms 
 that were working quite well enough so long as 
 nothing " happened.' ' 
 
 In the human race, trial and error have cre- 
 ated a wonderful apparatus, supplementing in- 
 stinct and habit, whereby, with a good deal of 
 skill and a large measure of success, we meet 
 the unexpected and adapt ourselves to it. This 
 mechanism we call intellect, or reason. Thanks 
 to it, the human race comes safely through cri- 
 sis after crisis, any one of which would have 
 been, or would be, the end of us all if we 
 had only our instincts and our habits to 
 rely on. 
 
 Groups of individuals, like individuals singly, 
 live instinctively, or by instincts supplemented 
 by habit, to a great extent. The communities 
 
 94 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 of the so-called social insects, the ants and the 
 wasps for example, are only instinctive, or pos- 
 sibly only tropic, forms of cooperation. The 
 villages of beavers are communities maintained 
 and working by means of instinct and habit. 
 Human societies might be creations of instinct 
 and habit only, if they could live on indefinitely 
 under unchanging conditions. Educational 
 systems could by disciplinary methods train 
 every individual to perform certain duties as 
 automatically as a perfect bit of electrical 
 mechanism works. But such a community is 
 static. It would perish at the touch of crisis as 
 surely as the beaver village does when invaded 
 by the hunter with a gun. 
 
 Five thousand years of human experience 
 have demonstrated that in crises of the first 
 magnitude, of which wars are the supreme ex- 
 amples, centralized authority, working through 
 a highly coordinated organization, is vital. From 
 the days of Athens until now successful wars 
 have not been conducted through incontinent 
 resort to recall and referendum. But against 
 this indisputable fact stands a vast accumula- 
 tion of evidence that over and over again battles 
 and campaigns have been lost through a stupid 
 adherence to tradition, through overtraining, 
 
 95 
 
PROBLEMS OF READJUSTMENT 
 
 through lack of individual discretion and fail- 
 ure of initiative. Even in militarism, then, it 
 seems, where central direction is essential, the 
 traits that are correlated with liberty are not 
 negligible. 
 
 If altering conditions do not take the form 
 of acute crisis, but are rather a fairly rapid 
 transformation of circumstance or environ- 
 ment, centralized authority may be of relatively 
 little value; while plasticity of mind, modifia- 
 bility of habit, the passion to explore and to 
 discover, inventiveness, and individual willing- 
 ness to take responsibility, are commonly the 
 factors of successful readjustment. The most 
 enlightening example that history affords is the 
 United States. Here a people, inheriting 
 from the Old World a rich legacy of European 
 custom and tradition, has adapted itself, first 
 to the wilderness and the plain, then to state 
 and national political organization under ex- 
 perimental conditions, and now to a stupendous 
 industrial activity, to the most intense and ex- 
 tended urban life that has thus far appeared in 
 the world, and to the responsibility of world in- 
 fluence. There has been no break in continuity, 
 great crises have successfully been met, a re- 
 sponsible, instead of a despotic, centralized con- 
 
 96 
 
THE CRISIS IN SOCIAL EVOLUTION 
 
 trol lias been developed, yet liberty and in- 
 dividual initiative have been preserved. 
 
 So once more we arrive at the general conclu- 
 sion that the efficiency plan which offers a maxi- 
 mum of merits with a minimum of demerits, 
 which above all meets the requirements of our 
 modern world of incessant change, is the one 
 that is naturally evolved by democracy, having 
 the energetic, responsible, inventive individual 
 as its force-generating unit, but creating or- 
 ganization and strengthening central control as 
 the need arises. 
 
 Such are the elements, such the ideals, such 
 the efficiency, of the contrasting civilizations 
 now arrayed in mortal conflict. In one or the 
 other, every people of the world places its hope 
 and its faith. Each is meeting, as best it can, 
 the supreme test. We are witnessing the most 
 gigantic, the most fateful trial and error ex- 
 periment since human life began. 
 
IV 
 
 THE EELATION OF THE INDIVIDUAL 
 TO THE STATE 
 
 Westel W. Willoughby 
 
 To the political philosopher that which gives 
 extraordinary significance to the great struggle 
 now taking place in Europe is that, critically 
 viewed, it exhibits a contest between divergent 
 and, in the main, contradictory conceptions of 
 the nature of the state, of its ends, and of the 
 relation which exists between it and the individ- 
 uals subject to its authority. Whatever, there- 
 fore, may be the practical outcome of the pres- 
 ent war, its influence upon political theories 
 is certain to be great. The distinctive differ- 
 ences between the political views officially de- 
 clared in Germany and those popularly held 
 in England and her Dominions, in France and 
 the United States will have been made clear, 
 and the results to which they lead demonstrated 
 in deed. It will be noticed that I have spoken 
 
 98 
 
THE INDIVIDUAL AND THE STATE 
 
 in the one case of the opinions officially held, 
 and in the other of the doctrines popularly cur- 
 rent. This difference in characterization would 
 seem to be justified, for the German view, al- 
 though accepted by practically the entire peo- 
 ple, is one which in its source and in the means 
 by which it has been spread, justifies the title 
 which has been given it. These ideals which are 
 described as peculiarly German have in fact 
 been the product of Prussian thought and ex- 
 perience. Inasmuch, however, as they have be- 
 come controlling throughout the Empire, they 
 may fairly be spoken of as German rather than 
 Prussian. How far these theories may prop- 
 erly be spoken of as characteristic of Austro- 
 Hungarian thought it is not necessary to con- 
 sider. The Dual Kingdom has had domestic 
 problems and international ambitions which ex- 
 plain her actions independently of a political 
 philosophy such as is needed to give meaning 
 and logical coherence to the actions and utter- 
 ances of Germany; and it would seem that 
 Germany has utilized the ambitions of her ally 
 to obtain her cooperation in the realization of 
 her own Weltpolitik. 1 
 
 1 Austria-Hungary is of course predominantly Roman 
 Catholic, and Rohrbach asserts that there is a natural con- 
 
 99 
 
PROBLEMS OF READJUSTMENT 
 
 Finally, it may be said that in this chapter I 
 shall not attempt by quotations from official and 
 professional writings to demonstrate the cor- 
 rectness of the analysis I shall make of the 
 political conceptions that are and for some 
 years have been dominant in Germany. I be- 
 lieve that I shall make an accurate statement of 
 them, but as to this fact the reader will have 
 to satisfy himself by an examination of the 
 source material, of which an abundance now ex- 
 ists in English translation. 
 
 It cannot be said that the ante-bellum polit- 
 ical philosophy of England and her allies had 
 been so clearly and definitely worked out as 
 had that of Germany. At any rate, it had not 
 become articulate in the English official and 
 professional mind, and employed as an argu- 
 ment and guide for national and imperial ac- 
 tion. But, though not often explicitly uttered, 
 this philosophy has existed in the thought of the 
 people and has directed constitutional practice 
 and international action and, since the outbreak 
 of the war, the English and those who have 
 sympathized with them have been led to search 
 their own political minds and to state more defi- 
 
 flict between Catholicism and the national idea of a State' 
 such as Prussia stands for. 
 
 100 
 
THE INDIVIDUAL AND THE STATE 
 
 nitely and possibly more emphatically than they 
 have ever done before, their own political ideals. 
 Certain it is that the English have earnestly 
 sought to make evident to all, to themselves 
 as well as to neutrals, that the present war 
 is, at the bottom, a contest between contradic- 
 tory and rival conceptions of the state and of 
 public right, and that it is one in which all peo- 
 ples, aside from their immediate territorial or 
 commercial interests, are vitally interested. 
 
 The relation of the individual to the state 
 may be viewed in three main aspects. In the 
 first place, there is the question as to the ex- 
 tent to which the welfare of the one is con- 
 sidered as indissolubly bound up in the welfare 
 of the other. In the second place, there is the 
 question as to the extent to which and the man- 
 ner in which the individual may claim the right 
 or be granted the privilege of determining the 
 form of political government which shall exist, 
 of selecting those who shall operate it, and 
 of controlling what they shall do. In the third 
 place, there is the question as to the sphere of 
 governmental action; that is to say, of the ex- 
 tent to which public control and operation shall 
 be substituted for individual liberty of action. 
 These are distinct topics and need to be sep- 
 
 101 
 
PROBLEMS OF READJUSTMENT 
 
 arately considered; first we shall consider the 
 relation of public and private welfare. 
 
 During the distinctly monarchical period in 
 Europe and lasting until the end of the eigh- 
 teenth century, a theory was held and widely 
 practiced according to which the welfare of the 
 subjects was absolutely subordinated not so 
 much to the welfare of the state as to that of 
 their rulers; or, to put it in another way, the 
 welfare of the state was identified with the per- 
 sonal welfare of its rulers, and the interests of 
 the people subordinated to both. The state to- 
 gether with its people and their property were 
 regarded as the personal property of the ruler 
 to be disposed of as he might see fit. In his 
 "Four Georges" Thackeray tells us how the 
 Duke of Hanover sold to the seigniory of Ven- 
 ice sixty-seven hundred of his subjects, of whom 
 only fourteen hundred ever saw their homes 
 again, the proceeds of the sale being devoted to 
 the satisfaction of the royal duke's sensual 
 pleasures. "Round all that Royal splendor," 
 writes Thackeray, "lies a nation enslaved and 
 ruined; there are people robbed of their rights 
 — communities laid waste — faith, justice, com- 
 merce trampled upon and well-nigh destroyed 
 — nay, in the very center of Royalty itself, what 
 
 102 
 
THE INDIVIDUAL AND THE STATE 
 
 horrible stains of meanness, crime and shame ! 
 It is but to a silly harlot that some of the noblest 
 gentlemen and some of the proudest women in 
 the world are bowing down ; it is the price of a 
 miserable province that the King ties in dia- 
 monds round his mistress' white neck. In the 
 first half of the last [eighteenth] century, I say, 
 this is going on all Europe over." 
 
 It might seem that a political practice such 
 as this might have been based upon postulates 
 that denied the possession by the people of 
 moral rights to consideration, or placed the 
 conduct of monarchs outside the realm of or- 
 dinary morality. It is quite clear, however, 
 that, despite the general acceptance of the doc- 
 trines of Machiavelli, the argument in behalf of 
 royal absolutism and selfishness was not stated 
 in terms as bald as these. It is true that the 
 rulers, when they took thought at all, regarded 
 themselves as endowed with overlordship by 
 divine providence, or, at least, by the work- 
 ing out of historical processes beyond direct 
 human control, and that, as thus circumstanced, 
 they regarded themselves as the absolute own- 
 ers of sovereignty as of a piece of property, 
 and that this ownership carried with it full 
 rights of use and disposition of their subjects 
 
 103 
 
PROBLEMS OF READJUSTMENT 
 
 and of all that they might possess. This com- 
 prehensive right the rulers claimed as inhering 
 and original in themselves, and not as obtained 
 by any sort of gift or grant, real or construc- 
 tive, from those whom they ruled. At the same 
 time, however, it would be a mistake, I think, 
 to hold that the rulers in their dealings with 
 their subjects felt themselves free from all the 
 moral restraints which humanity and sympathy 
 impose. But it is clear that the moral obliga- 
 tions which they recognized were those of gen- 
 erosity and charity rather than those of jus- 
 tice which imply the possession of rights by 
 those to be benefited by them. 
 
 As rationalizing or at least as explaining the 
 acceptance of this theory which regarded the 
 right of rulership as a piece of property, and 
 as giving to the monarch what amounted to an 
 ownership of his subjects, including their goods, 
 it is to be remembered that it was not until the 
 early part of the nineteenth century that the 
 principle and practice disappeared from Europe 
 of regarding human beings as objects that might 
 be treated as chattels or appurtenances of the 
 soil. And indeed the entire feudal system out 
 of which the monarchical state developed was 
 based upon the idea that political jurisdiction 
 
 104 
 
THE INDIVIDUAL AND THE STATE 
 
 arises out of ownership — ownership of the land. 
 It would seem then that the rights claimed 
 and exercised by the eighteenth-century mon- 
 archs were not different in essential nature 
 from those claimed at the present time by hold- 
 ers of private property who regard the institu- 
 tion of private property as devoid of social or 
 political connotations, and, therefore, regard 
 themselves as vested with rights of use and dis- 
 position, the free exercise of which may not be 
 interfered with except under very special cir- 
 cumstances. Thus, as we know, there are at 
 the present time many owners of large fortunes 
 the possession of which has come to them by 
 accident of descent, by the favoring operation 
 of law, or by the happy working of economic 
 forces, who feel themselves free to use their 
 wealth, if they see fit, for their selfish welfare, 
 and, as employers of labor, consider that those 
 who work for them have no moral claim, and 
 certainly no legal claim, beyond such as is 
 founded upon their contracts of employment, 
 that anything beyond this which they may do 
 for the benefit of those subject to their eco- 
 nomic rule is an act of charity or generosity 
 rather than an obligation of distributive jus- 
 tice. 
 
 105 
 
PROBLEMS OF READJUSTMENT 
 
 This proprietary conception of political 
 rulership has now happily disappeared from 
 the thought of modern civilized peoples. No 
 longer do the rulers of these nations regard 
 their lands and their subjects as objects of own- 
 ership which may be used for the advancement 
 of purely dynastic interests or the satisfaction 
 of purely selfish pleasures. Instead they feel 
 that their powers are to be exercised for the 
 benefit of the state over which they rule. 
 Whether or not the welfare of this political en- 
 tity termed the state is regarded as necessarily 
 including the welfare of its citizens, is a ques- 
 tion presently to be considered. 
 
 In a second respect, also, the eighteenth-cen- 
 tury conception of monarchy has been pro- 
 foundly modified. No longer is it held that the 
 exercise of political authority should be to any 
 considerable extent subject to the discretionary 
 will of those who possess it. Upon the con- 
 trary, in all its manifestations it is felt that 
 political power should be exercised only in ac- 
 cordance with forms and within the limits which 
 existing laws establish. This is the essential 
 meaning of constitutionalism, and under its 
 regime in the modern state the individual is 
 protected against oppression on the part of his 
 
 106 
 
THE INDIVIDUAL AND THE STATE 
 
 rulers as regards at least his ordinary rights of 
 person and property. Whether or not he is pro- 
 tected, and whether or not it is feasible under 
 any workable form of government so to narrow 
 the discretionary powers of those in authority 
 as to protect him against the adoption by his 
 rulers of broad public policies, especially in 
 matters of war and peace, which will be detri- 
 mental to his wishes and welfare, is a problem 
 of administrative politics which cannot be con- 
 sidered in the space assigned to this chapter. 
 It may be pointed out, however, that thus far, 
 not even in the most democratically and consti- 
 tutionally organized states, has it been found 
 feasible to subject the conduct of foreign affairs 
 to a popular control beyond that of censuring 
 a policy to which the state has already been 
 committed by those in authority. And even this 
 right of censureship in practice proves of very 
 slight value in cases where war has been pre- 
 cipitated or rendered imminent, and thus the 
 prestige or honor of the nation apparently in- 
 volved. 
 
 It has been said that the essence of constitu- 
 tionalism consists in the fact that public author- 
 ity has its extent and modes of operation con- 
 trolled by law. When we ask ourselves whence 
 
 107 
 
PROBLEMS OF READJUSTMENT 
 
 came these legal limitations upon the exercise 
 of sovereignty, who control their interpreta- 
 tion, and, in the last resort, determine their 
 continuation, we reach the first point at which 
 an important difference distinguishes the con- 
 stitutional jurisprudence of England, France 
 and the United States, from that of Germany 
 and Austria, and especially from that of the 
 Kingdom of Prussia. 
 
 The political philosophy of England since 
 1688 at least, of France since 1789, and of the 
 United States since its foundation, is squarely 
 committed to the proposition that all political 
 authority comes from the people, and is not 
 vested in the rulers as an original and inher- 
 ent right. 1 This is not the assertion of that 
 
 1 The constitution of France, if its f luidamental laws can 
 be regarded as constituting a complete instrument of gov- 
 ernment, does not contain an explicit statement of popular 
 sovereignty, but the principle certainly finds acceptance in 
 her constitutional jurisprudence. Perhaps the clearest 
 statement of the doctrine in formal terms is to be found 
 in the constitution of Belgium, adopted in 1831, in which the 
 following declarations occur : "Art. 25. All powers ema- 
 nate from the people. They shall be exercised in the man- 
 ner established by the Constitution. . . . Art. 29. The ex' 
 ecutive power is vested in the King, subject to the regula- 
 tions of the Constitution. . . . Art. 129. No law, ordinance, 
 or regulation of the general, provincial, or communal gov- 
 
 108 
 
THE INDIVIDUAL AND THE STATE 
 
 merely moral doctrine that the people have a 
 revolutionary right to resist political oppres- 
 sion, and that thus, in a sense, all just govern- 
 ments may be said to derive their right to be 
 from the consent of the governed. This, indeed, 
 is asserted, but the doctrine is much more than 
 this. It includes the constitutional principle 
 that, as a legal proposition, the rulers possess 
 only delegated authority, and the legal limita- 
 tions which circumscribe their official acts are 
 not self-set, but are imposed by laws which 
 draw their force from the popular will as 
 authoritatively expressed at the polls, in con- 
 ventions, or in representative legislative 
 bodies. 
 
 As opposed to this fundamental constitutional 
 doctrine, the monarchical theory of continental 
 Europe is that the right of political rulership 
 comes from above. It inheres in, and is an 
 original right of, the monarch, and, as such, in 
 its exercise is ultimately subject only to the 
 will of him who possesses it. It is true that 
 Austria-Hungary, and the German Empire and 
 
 ernment shall be obligatory until after having been pub- 
 lished in the manner prescribed by law. Art. 130. The 
 Constitution shall not be suspended, either in whole or in 
 part." 
 
 109 
 
PROBLEMS OF READJUSTMENT 
 
 its individual states, including Prussia, oper- 
 ate under formal written constitutions, but 
 these instruments of government are regarded 
 as themselves the creations of the royal or im- 
 perial will. 1 It thus results that not only may 
 the constitutions be changed by an exercise of 
 the royal or imperial will, but that the sover- 
 eign is regarded not as the exerciser of enu- 
 merated delegated powers, but as the possessor 
 of sovereign authority free from legal restraint 
 in all matters in regard to which he has not 
 seen fit to ^.x self-set limitations. This is the 
 constitutional theory, whatever may have been 
 the popular pressure which, historically speak- 
 ing, may have led to the promulgation of the 
 written constitutions. 
 
 It further follows from this constitutional 
 conception that the part played by the elected 
 representatives of the people in the enactment 
 of laws and in the adoption of public policies is 
 
 1 It is not necessary in this discussion to consider the 
 question whether in the German Empire the sovereign 
 power is vested in the Bundesrath rather than in the Em- 
 peror. The fact that the king of Prussia is, ex officio, the 
 German emperor, and that as king he controls the Prussian 
 delegates which in turn control the Bundesrath, renders 
 largely academic, for the purpose of this paper at least, 
 the constitutional status of the emperor in the Empire. 
 
 110 
 
THE INDIVIDUAL AND THE STATE 
 
 one quite different from that which is played in 
 countries whose constitutional systems are 
 founded upon a democratic basis. According to 
 the doctrine held by German jurists the people 
 through their representatives participate not 
 in the creation of law, but in the determination 
 of the contents of a proposition which is to be 
 submitted to the sovereign for the exercise of 
 his supreme legislative will. Essentially speak- 
 ing, then, the situation is this: The ruler, as 
 a matter of grace and expediency, is pleased to 
 learn the wishes of his people regarding a prop- 
 osition of law or the adoption of a public pol- 
 icy, and to obtain such information regarding 
 its wisdom as a representative chamber is able 
 to provide ; and these wishes and this informa- 
 tion he necessarily takes into consideration in 
 determining the exercise of his own sovereign 
 will. But never does he regard these factors as 
 controlling in any affirmative sense. So long as 
 the constitution which he has promulgated ex- 
 ists, he agrees not to act contrary to its provi- 
 sions with regard to the matters which are 
 therein specified. But never for a moment does 
 the German ruler admit himself to be under a 
 legal or even a moral or political obligation to 
 give effect to an expression of the will of the 
 
 111 
 
PROBLEMS OF READJUSTMENT 
 
 representatives of the people of which he dis- 
 approves. 
 
 It is this relationship in which the king stands 
 to his popularly elected legislative chambers 
 which interprets many features of German pub- 
 lic life which seem strange to English and 
 American observers. It explains in the first 
 place the fact that it is considered a wholly 
 justifiable practice for the king and his personal 
 advisers — ' ' the Government ' ' as they are called 
 — to control so far as they are able not only the 
 elections of members to the representative 
 body, but by rewards and other forms of po- 
 litical pressure to influence the votes of the rep- 
 resentatives after their election. It explains 
 furthermore the policy of the "Government" 
 in playing off one party or faction against an- 
 other and thus through the bloc system of ob- 
 taining a majority vote in favor of action which 
 "the Government desires. It explains also the 
 fact that not even the first steps have been taken 
 in Germany towards the development of respon- 
 sible parliamentary government whether of the 
 English or the French type. It is indeed recog- 
 nized by all of their publicists that such a sys- 
 tem is absolutely incompatible with the Ger- 
 man conception of monarchical power. It is 
 
 112 
 
THE INDIVIDUAL AND THE STATE 
 
 true that irritation, at times intense in char- 
 acter, has been felt and expressed against the 
 assumption of the emperor of the right to di- 
 rect and control foreign affairs by his own per- 
 sonal acts and words. But this, however, has 
 not been because of any derogation of the power 
 of the representatives of the people or of a min- 
 istry which they support, but because, under 
 the imperial constitution, he is required to act 
 through his chancellor, who in turn is supposed 
 to exercise his power in and through the Bun- 
 desrath, which body in turn represents the 
 "Governments" of the several states of the 
 Empire. Since the downfall of Bismarck, and 
 especially since the retirement of his successor, 
 Caprivi, the emperor has selected as his chancel- 
 lor and president of the Prussian Ministerium 
 men who have been willing in very large meas- 
 ure to subordinate their own wills and judg- 
 ments to that of their imperial master, and 
 thus the personal influence of the emperor has 
 been very great, especially in foreign affairs. 
 While this has been at times disapproved of, 
 there has never been any movement, seriously 
 pressed, to subject his will to the control of the 
 popularly elected branch of the imperial parlia- 
 ment. 
 
 113 
 
PROBLEMS OF READJUSTMENT 
 
 The monarchical conception in Germany ex- 
 plains still further the right which is freely ex- 
 ercised by the " Government ' ' of dissolving the 
 elected chamber whenever other methods of ob- 
 taining its support for a government measure 
 have failed; and, it may be said that so pow- 
 erful is the official influence that may be exerted 
 in the ensuing election that in almost all cases 
 the result is that the newly chosen chamber is of 
 the desired political complexion. Von Billow 
 in his ' ' Imperial Germany ' ' complains that the 
 Germans lack political ability by which, as he 
 explains, they show a disposition to form a 
 multitude of minor parties based not on broad 
 public principles but upon narrow, particularis- 
 tic, and personal interests. It would seem, how- 
 ever, that this failure of two or more strong 
 political parties to develop has been due in no 
 small measure to the attitude which the "Gov- 
 ernment" assumes toward all political parties. 
 The one strong political party — the Social 
 Democrats — which has been formed in German 
 imperial politics, is strong in numbers rather 
 than in influence, and, moreover, occupies a 
 very peculiar position, for, as von Biilow 
 frankly says, it has, from the standpoint of the 
 "Government," no right to exist. He flatly 
 
 L14 
 
THE INDIVIDUAL AND THE STATE 
 
 stigmatizes its members as enemies of the Ger- 
 man State — enemies for the overthrow of whom 
 any means, including force when possible, may 
 rightfully be employed. As to the reasons why 
 the Social Democrats are held in such peculiar 
 detestation by the "Government" I shall not 
 have space to speak, but shortly stated it may 
 be said that it is not so much their legislative 
 program which is disapproved of as it is that 
 their fundamental political doctrines are in con- 
 flict with the monarchical conception of the Em- 
 pire and of Prussia. This is made abundantly 
 clear by reading between the lines of von Bil- 
 low's book. 
 
 Finally, it may be said that the monarchical 
 conception in Germany explains the open and 
 avowed measures which are taken by the rul- 
 ing authorities to control the formation and 
 expression of a popular opinion with regard 
 to matters of public policy. Not only is there 
 kept a strict control over unofficial expressions 
 in the press, as the numerous prosecutions for 
 lese majeste testify, but, and more espe- 
 cially, governmentally inspired articles are 
 constantly published in the leading news- 
 papers in order that the people shall be 
 led to take a favorable view regarding public 
 
 115 
 
PROBLEMS OF READJUSTMENT 
 
 policies which are approved by the "Gov- 
 ernment." 
 
 It had not been my intention to encumber this 
 essay with quotations, but the point with which 
 I am now concerned is of an importance that 
 warrants me, in order to make it clear, in giv- 
 ing the words of Dr. Hasbach, the author of an 
 important work entitled "Die Moderne Demo- 
 cratic/ ' published in 1912. In an article pub- 
 lished during the present year * in which he 
 states more specifically the function which pub- 
 lic opinion plays in the modern constitutional 
 state, Dr. Hasbach says: "Who forms pub- 
 lic opinion? In democracy and parliamentary 
 monarchy [England] it is created exclusively 
 by parties; in constitutional monarchy [e. g., 
 Germany] , on the other hand, by parties and the 
 Government. For a full understanding of this 
 important difference we first must clearly dis- 
 tinguish between parliamentary and constitu- 
 tional monarchy. In parliamentary monarchy 
 the influence of the monarch is as a matter of 
 fact so far suppressed that here, too, the 
 stronger party opinion determines the destiny 
 of the country, while in the constitutional mon- 
 
 1 The American Political Science Review, Feb., 1915. 
 "The Essence of Democracy." 
 
 116 
 
THE INDIVIDUAL AND THE STATE 
 
 archy the prince as joint possessor of the legis- 
 lative power, and as the possessor of the ex- 
 ecutive, exercises a considerable influence upon 
 the formation of public opinion. The ministers 
 nominated by him introduce bills into parlia- 
 ment; they defend them against the criticism 
 of representatives whom they are compelled to 
 face; the prince addresses messages to parlia- 
 ment ; he can dissolve it and thereby take a po- 
 sition on definite questions ; official newspapers 
 defend the attitude of the government; party 
 organs which approve the policy of the govern- 
 ment support it or open their columns to it ; the 
 government seeks to influence representatives, 
 etc." 
 
 " These are methods,' ' Dr. Hasbach contin- 
 ues, "some of which are also understood in 
 America; in America the President addresses 
 messages to Congress; presidents and govern- 
 ors attempt to influence the legislative power; 
 there are also newspapers which support the 
 President and governors against the legislative 
 assemblies if they consider the former's poli- 
 cies advantageous." This is true, but the im- 
 portant fact is that in America the president 
 and the governors of the States are themselves 
 the leaders of their parties and are representa- 
 
 117 
 
PROBLEMS OF READJUSTMENT 
 
 tives of the people. The stronger public opin- 
 ion which thus finds expression in State action 
 is therefore a popular opinion and is not one 
 which is largely determined by the judgment of 
 persons who are not responsible to the people 
 and who only in a purely fictitious sense can be 
 said to represent them. 
 
 The refusal upon the part of the "Govern- 
 ment" in Germany to permit the popular will 
 as represented in the legislature to exert a con- 
 trolling influence in the determination of public 
 policies is of course not predicated solely or 
 even in major part upon the purely technical 
 and legal premise that sovereignty finds its fons 
 et origo in the monarch. Nor, as we have al- 
 ready seen, is it justified by any claim that po- 
 litical rulership need not necessarily be for the 
 benefit of the state or its people. Rather, it 
 would seem to be founded upon a conviction 
 that the problem of government is, by its very 
 nature, one, the satisfactory solution of which 
 cannot be secured by surrendering a controlling 
 influence to the people. And, in turn, the rea- 
 son why the government of the state is held 
 to be of this essentially unpopular or undemo- 
 cratic character would seem to be compounded 
 of two convictions. 
 
 118 
 
THE INDIVIDUAL AND THE STATE 
 
 The first of these beliefs is that, as a practical 
 administrative proposition, the problem of gov- 
 ernment is one which requires the exercise of 
 faculties of judgment and of executive over- 
 sight and control which it is not possible for an 
 electorate, however enlightened and well dis- 
 posed, to possess and exercise. The second be- 
 lief, which would seem to have at least a certain 
 amount of currency even if it cannot be said 
 to be generally held, is that the ultimate end 
 for the realization of which the state exists is 
 something else and higher than the welfare of 
 the citizens as individuals, whether distribu- 
 tively or collectively considered. 
 
 Upon the face of it, the proposition that the 
 efficient carrying on of the national govern- 
 ment of a state of any considerable size is an 
 administrative task, in the performance of 
 which it is not practicable to admit any con- 
 siderable amount of democratic participation 
 or control, is not an unreasonable one, and can 
 be met only upon a basis of fact. Certain it is 
 that, in its actual operation, German govern- 
 mental forms and administrative methods have 
 produced results which, from the standpoint of 
 present administrative efficiency, are superior 
 to those which any other government of the 
 
 119 
 
PROBLEMS OF READJUSTMENT 
 
 world lias been able to produce. Not only has 
 the social and industrial prosperity of the peo- 
 ple been wonderfully advanced, and the gen- 
 eral level of education raised to a high degree, 
 but a state has been created which is of tre- 
 mendous military strength. This much must 
 be admitted. The only way, therefore, in which 
 this exhibition of the efficiency of an undemo- 
 cratically organized government can be weak- 
 ened is by what lawyers call "confession and 
 avoidance,' ' namely, by admitting the claims 
 that are made and avoiding the conclusion at- 
 tempted to be drawn from them that this type 
 of political control is thus shown to be, if not 
 the best possible, at least superior to the more 
 democratic forms which are exhibited in other 
 countries. 
 
 The avoidance of this conclusion is based 
 upon the assertion that the state power, the in- 
 dustrial development, the social welfare, and 
 the high level of education, especially upon its 
 scientific side, which Germany has secured, lack 
 certain elements of national greatness which 
 are more important than those which have been 
 obtained, and that, beneath its surface pros- 
 perity, German national life contains potenti- 
 alities of evil which need only time and oppor- 
 
 120 
 
THE INDIVIDUAL AND THE STATE 
 
 tunity to be manifested. Thus the critics of 
 deutsche Kultur have claimed that the successes 
 which have been the product of the German con- 
 stitutional and administrative system have been 
 of a materialistic character and have lacked 
 true ethical and spiritual elements — that right 
 has been sacrificed to might, political liberty to 
 state authority, and individual spontaneity and 
 freedom to organized efficiency ; with a result, as 
 is claimed, that state action has thrown off the 
 limitations which ordinary morality imposes, 
 and the entire mind of the people has been cor- 
 rupted; and that with their pride swollen with 
 a contemplation of the material success which 
 they have gained, they have lost respect for, and 
 appreciation of, the value of civilization and po- 
 litical ideals which differ from their own. Mis- 
 led by this distorted perspective, it is charged 
 that the Germans have adopted a Weltpolitik 
 which has brought them into necessary conflict 
 with other nations and made inevitable the ter- 
 rible conflict which is now devastating almost 
 all Europe. 
 
 A consideration of the issues which are thus 
 drawn between the Kultur of Germany and that 
 of other nations cannot, of course, be here un- 
 dertaken. An adequate treatment of them 
 
 121 
 
PROBLEMS OF READJUSTMENT 
 
 would involve what would practically be a crit- 
 ical examination of the civilization of today. 
 The statement does, however, seem to be justi- 
 fied that the national ideals of which I have 
 spoken have, so far as they have been held, 
 tended to provoke armed conflict with the other 
 great powers. It is quite explainable and, in 
 very large measure, reasonable that any great 
 people should feel a conviction as to the superi- 
 ority of their own civilization over that of other 
 peoples; but this does not necessarily carry 
 with it a belief that it is desirable, or ethical, 
 or even possible, forcibly to impose one's own 
 cultural ideals upon other nations which are re- 
 luctant to receive them. If, however, we may 
 accept as representative the utterances of cer- 
 tain of their leading men, the Germans have felt 
 a conviction not only that their own Kultur is 
 inherently superior to that of any other race, 
 but that its super-excellence is so great that 
 its benefits must ultimately be recognized even 
 by those upon whom it has been imposed by 
 force operating in its materially most devastat- 
 ing form. Finally, one other characteristic of 
 this German conception of Kultur needs to be 
 mentioned, for it has a direct bearing upon the 
 relation of the individual to the state. This 
 
 122 
 
THE INDIVIDUAL AND THE STATE 
 
 characteristic is that Kultur finds its apotheo- 
 sis in the state — in the nation as politically or- 
 ganized. In other words, this Kultur is con- 
 ceived of as something more than a civilization 
 which is the summation of the culture of indi- 
 viduals. It is the nationally organized genius 
 of the people — a genius which finds its highest 
 end and ultimate manifestation in the power 
 and purposes of the state. And thus we are 
 brought to the second conviction which has been 
 earlier spoken of, namely, that the ultimate 
 end for the realization of which the state exists 
 is something else and higher than the welfare 
 of the citizens as individuals, whether distribu- 
 tive^ or collectively considered. 
 
 This theory to which we now turn is one the 
 statement of which in formal terms is not an 
 easy task, for like all mystical conceptions it 
 eludes exact definition. Furthermore, it would 
 seem to be rather an element which pervades 
 and influences German political philosophy than 
 an explicit premise upon which an argument is 
 based. It is, furthermore, an element which un- 
 doubtedly exercises an influence in the feelings 
 of patriotism of all peoples, but would seem 
 to be especially powerful in German national 
 thought. 
 
 123 
 
PROBLEMS OF READJUSTMENT 
 
 The German nation is conceived of as an eth- 
 nic unity distinguished from other ethnic units 
 by a characteristic genius which finds its expres- 
 sion in die deutsche Kultur. This Kultur, how- 
 ever, as we have already pointed out, finds its 
 best expression in and through the state. If 
 then, it is argued, this Kultur, the super-excel- 
 lence of which is assumed, is to find its fullest 
 realization, two things are necessary. First, 
 as far as possible, all persons who have in their 
 veins a sufficient amount of German blood to en- 
 title them to be regarded as inheritors of the 
 German genius should be brought within the 
 control of the state through which the spir- 
 itual inheritance which they potentially pos- 
 sess may find objective realization. Secondly, 
 the German nation thus politically united must, 
 through the strength of its state organization, 
 exercise throughout the world that influence 
 which is its just due. ' ' Der Deutsche Gedanke 
 in der Welt" is the title which Rohrbach gives 
 to his well-known book in which he argues 
 for the widest possible extension of German 
 influence. Weltmach oder Niedergan^ is 
 the alternative which Bernhardi places be- 
 fore the eyes of his countrymen, by the first 
 of which terms, as he has later explained, 
 
 124 
 
THE INDIVIDUAL AND THE STATE 
 
 lie means not world dominion bnt world influ- 
 ence. 
 
 It will thus be seen that a mystical or geist- 
 liche significance is given to the conception of 
 both the nation and the state. The state is the 
 German nation viewed in a certain aspect — as 
 organized for the realization of the function 
 which Providence has assigned to it in the 
 working out of the development of humanity 
 and of world civilization. It has an end of its 
 own which cannot be stated in the terms of the 
 welfare of the individuals who at any time hap- 
 pen to be under its control. Its immediate aim 
 is its own power, for without this power it can- 
 not realize its ultimate ends, and these ultimate 
 ends, it is evident, are so transcendent and su- 
 per-personal in character that the morality of 
 the means that may be employed for their at- 
 tainment cannot be subjected to the criteria 
 which govern the ordinary conduct of individu- 
 als. Furthermore, it is clear that when thus 
 stated the end of the state is one that requires 
 that all individual and community interests 
 should be subordinated to it. 
 
 It is not the purpose of this paper to consider 
 the validity of the assumptions made in the 
 theories which have been outlined. Its aim has 
 
 125 
 
PROBLEMS OF READJUSTMENT 
 
 T)een simply one of orientation. If space 
 had allowed, however, the author would have 
 liked to exhibit the strong infusion of Hegelian- 
 isni which, in his opinion, it contains, and, fur- 
 ther, to show how the political transcendental- 
 ism of Hegel seemed to find objective demon- 
 stration in the history of Germany in the nine- 
 teenth century. If die Weltgeschichte ist das 
 Weltgericlit, it can be appreciated how the Ger- 
 mans were led to think that the Prussian Real- 
 politih had justified itself. 
 
 It cannot be denied that the German doctrine 
 which has been outlined is one which possesses 
 elements of lofty idealism. It rests, however, 
 upon assumptions which cannot be proved, and 
 leads to results which must be deplored. The 
 patriotism which it exacts is a false one. It de- 
 mands sacrifices for which no real return is 
 made ; it is predicated upon premises which, if 
 adopted by all nations, each asserting their own 
 excellence, would render impossible the peace- 
 ful adjustment of conflicting interests and the 
 advancement of civilization through the peace- 
 ful cooperation of the nations of the world. 
 
 We turn now to the third phase of the rela- 
 tion of the individual to the state — a phase 
 which will undoubtedly be greatly influenced by 
 
 126 
 
THE INDIVIDUAL AND THE STATE 
 
 the present war, whatever its outcome. I speak 
 now of the extent of governmental control. The 
 exigencies of war have forced all the nations en- 
 gaged in it to extend in many directions, social 
 as well as industrial, the spheres of their gov- 
 ernmental regulation. Where, upon the whole, 
 good results are obtained from this increase in 
 state action, it may be expected that the regime 
 will, in many instances at least, be continued 
 after peace is established. But, more impor- 
 tant than this, Germany, whether she is deci- 
 sively defeated or not, will certainly have given 
 to the world an impressive exhibition of the re- 
 sults that are to be obtained from an adminis- 
 trative system efficiently organized and oper- 
 ated. There can be no question but that at the 
 present time, in England as well as the United 
 States, the laissez faire doctrine, as an a priori 
 principle, has lost its force, and that that which 
 especially operates as a deterrence to an exten- 
 sion of the activities of the state, whether by 
 way of regulation or direct operation, is the 
 fear that honest and efficient public administra- 
 tion cannot be secured. If then, as is very 
 likely to be the case, the nations of the world 
 should take to heart the lesson which Germany,, 
 and especially Prussia, has so impressively 
 
 127 
 
PROBLEMS OF READJUSTMENT 
 
 taught them, and be led to improve their admin- 
 istrative systems, we may be sure that this will 
 be followed by an increase in the control in- 
 trusted to those systems. How far this exten- 
 sion of the activities of government will be car- 
 ried only the future can reveal. 
 
THE WAR AND INTERNATIONAL LAW 
 
 George Grafton Wilson 
 
 International law is not dead. Those who 
 have made such affirmations have drawn their 
 conclusions too hastily. Far from being dead, 
 the subject is receiving a recognition which is 
 a striking tribute to its vitality. Apparently 
 not one of the warring nations regards inter- 
 national law as even in a weakened condition. 
 
 The attempts of the states at war to put them- 
 selves right in the eyes of the world and to cite 
 precedents in international law in support of 
 their acts is a comparatively new phenomenon 
 in the history of conflict among states. The 
 old idea that the state could do no wrong seems 
 now to be open to question, and it is even af- 
 firmed that kings can do wrong and that no 
 ruler can now affirm, ll I am the state." The 
 right of a state to work its will regardless of 
 
 129 
 
PROBLEMS OF READJUSTMENT 
 
 other states is not admitted, even though the 
 aggressor may be older, more powerful, or more 
 progressive. Some are questioning the old 
 maxim that "a higher civilization may right- 
 fully supplant a lower." Indeed, there does 
 not at present seem to be any satisfactory cri- 
 terion for measuring what is called civilization 
 unless it be, as some claim, the military power. 
 A careful analysis seems to cast more than a 
 doubt upon this basis of standardization. In 
 the exercise of sovereignty it must be recog- 
 nized that there are principles governing the 
 conduct of states and that these principles can- 
 not be lightly disregarded. 
 
 The flood of printed material that has poured 
 from the governmental and other presses in an 
 attempt to justify the action of the several 
 states now engaged in testing by arms some of 
 their ideas of civilization is enormous. There 
 is no escaping from these arguments. They 
 are inclosed in letters from old friends on either 
 side. They are furnished by unsubsidized and 
 subsidized representatives and patriots who 
 plead the causes of their respective states. 
 Why should this be if there exist no standards 
 or principles by which these actions should be 
 judged? The question is answered in these 
 
 130 
 
THE WAR AND INTERNATIONAL LAW 
 
 documents themselves by the frank acknowledg- 
 ment that the aim of the publication is to show 
 wherein the state publishing the document has 
 observed the law of nations and wherein its op- 
 ponent has set it aside. White books, gray 
 books, orange books, yellow books, and others 
 in the chromatic range have appeared. Patri- 
 otic citizens of almost every walk of life and 
 grade of ability have added to the bulk of ma- 
 terial until the mass is appalling to one who 
 seeks the real facts. 
 
 The general testimony of each that its own 
 government " sought only peace,' ' causes one to 
 wonder by what mysterious power the aims of 
 those in authority were so manifestly perverted. 
 In general, international law favors the main- 
 tenance of peace and apparently each state 
 just now desires to have on its side the utmost 
 possible support for its method in the attempt 
 to maintain the peace of the world. Some of the 
 states which seem not to have found good 
 grounds for going to war before actually en- 
 gaging in hostilities have endeavored to dis- 
 cover them afterward. Whether these will 
 stand the test later, remains to be seen. The 
 important fact is, however, that there is a clear 
 attempt to bring the action within the range 
 
 131 
 
PROBLEMS OF READJUSTMENT 
 
 of those which international law justifies and 
 supports. 
 
 It is worthy of notice also that the endeavor 
 to conform to international law as set forth by 
 international conferences and congresses has 
 been universal. The third convention of the 
 Hague Conference of 1907 provides that "the 
 contracting parties recognize that hostilities be- 
 tween them must not commence without a pre- 
 vious and unequivocal warning, which shall take 
 the form either of a reasoned declaration of 
 war or of an ultimatum with a conditional dec- 
 laration of war. ' ' In spite of the fact that the 
 general practice for two hundred years has 
 been in an overwhelming majority of cases con- 
 trary to this convention, even under greatest 
 strain, in 1914, the convention was followed. 
 The excuse could have been advanced that as 
 Servia had not ratified this convention, other 
 powers might be relieved of some of its obliga- 
 tions, but seemingly each wished to conform to 
 the latest pronouncement upon the law relative 
 to the commencement of hostilities. 
 
 How remarkable was this recognition of the 
 Convention of 1907 relative to the opening of 
 hostilities may be seen if the practice of states 
 during the last two centuries be reviewed. Dur- 
 
 132 
 
THE WAR AND INTERNATIONAL LAW 
 
 ing this period there have been about one hun- 
 dred and forty wars. Of course, there are not 
 included the periodical revolutions of some of 
 the states of Central and South America. In 
 all the wars between 1700 and 1914 only ten 
 seem to have received formal sanction by dec- 
 laration, though a few were informally declared 
 and only six of the declarations might properly 
 be called preliminary. This was a wide depar- 
 ture from the practice of those ages which some 
 have been pleased to call "dark" when it was 
 held that an honorable foe would not strike 
 without previous notice. Even in the more 
 ancient days it was a custom to enter upon hos- 
 tilities with a foreign state only after a cere- 
 monial, often of the most elaborate nature, 
 though the religious part seems sometimes to 
 have been to justify the war before the gods 
 rather than before men. The United States in 
 1898 by Act of Congress declared on April 25 
 that war had existed since April 21. In the 
 present great war where there is a network of 
 declarations of state against state, these have 
 been uniformly prior to the opening of hostili- 
 ties and frequently detailed, sometimes indicat- 
 ing not merely the day upon which war would 
 begin but also the hour and minute. Thus in 
 
 133 
 
PROBLEMS OF READJUSTMENT 
 
 the opening of the war there was in 1914 a re- 
 spect for conventional forms which shows in a 
 marked degree the influence of the work of the 
 Hague conferences and for legal purposes gives 
 a definiteness to the relations consequent upon 
 the state of war which has existed in few of the 
 wars of modern times. 
 
 As the third of the Hague conventions of 
 1907 has been observed as shown in the declara- 
 tions of war in 1914, so the fourth of these 
 conventions has been embodied in the laws of 
 nearly all the belligerents. In cases in which 
 this convention has not been thus embodied, the 
 corresponding convention of 1899 has usually 
 served a like purpose. These conventions re- 
 late to the laws and customs of war on land. 
 These rules were detailed and regarded as 
 showing the advanced ideas of the states of 
 the world as to the proper conduct of war if it 
 should unfortunately arise. Definite and for- 
 mal statement of the rules under which war 
 shall be conducted is in itself comparatively 
 modern, the first great set of such rules issuing 
 from the War Department of the United States 
 scarcely fifty years ago and commonly known 
 as Lieber's Code. Subsequent rules have been 
 frankly based upon Lieber's Code. These rules 
 
 134 
 
THE WAR AND INTERNATIONAL LAW 
 
 of 1899 and 1907 are tributes to the fairmind- 
 edness of the early codifier. Is it not in itself a 
 marked advance that the old motto that ' ' all is 
 fair in war" is no longer even current! A 
 careful review of these Hague rules and testing 
 of action of the belligerents thereby show a 
 closer observance of these rules than is gen- 
 erally believed. Each belligerent party has 
 accused its opponent of violation or of failure 
 to observe these rules. These accusations have 
 been widely published and have received cre- 
 dence usually according to preconceived predi- 
 lections of the reader. It is reasonable to sup- 
 pose that there have been acts both in the east- 
 ern and in the western theaters of contest which 
 would not conform to the accepted laws of war. 
 Certainly the invading armies of both parties 
 have been accused of such acts and of course 
 it would be the invading army which would or- 
 dinarily be the only one generally guilty of, or 
 having much reason for, such acts. The rela- 
 tions between the respective combatant forces 
 seem to have been generally in accord with law. 
 The investigation of the treatment of prisoners 
 by a representative of the United States gov- 
 ernment showed a condition usually com- 
 mended. The advance in this respect since the 
 
 135 
 
PROBLEMS OF READJUSTMENT 
 
 days of the American Civil War is marked. 
 
 The instruments of warfare have usually 
 been such as are approved by law. It is true 
 that the guns have been of a larger caliber and 
 of a longer range than those previously used. 
 In the huge siege guns Germany has found a 
 weapon of offense which made advance against 
 strongly fortified positions possible in the early 
 days of the war. The use of such guns made it 
 necessary for the opponents of Germany to use 
 other methods of defense than those originally 
 planned, but the legality of the use of big guns 
 on land and sea is unquestioned. There was a 
 proposition in the Conference at The Hague 
 that limitation of armaments begin by restrict- 
 ing the effectiveness of guns to the standard 
 of the most effective then constructed. There 
 was, however, such reluctance on the part of 
 the states supposed to have the most effective 
 guns, to furnish data upon the subject, that the 
 proposition failed. The effectivity of the gun is 
 not always a matter to be determined by its 
 caliber, but is often dependent upon the "man 
 behind the gun." 
 
 While the size and destructiveness of the gun 
 may not be, up to this time, subject to limi- 
 tation, there are restrictions upon the use of 
 
 136 
 
THE WAR AND INTERNATIONAL LAW 
 
 certain projectiles which cause unnecessary suf- 
 fering. Small explosive bullets, copper bullets, 
 etc., are prohibited and such prohibition seems 
 to have been respected. Accusations in regard 
 to the use of dum-dum bullets have been made 
 by both belligerent parties. It is said that one 
 of the belligerents was about to submit as evi- 
 dence of his opponent's guilt certain dum-dum 
 bullets, when a neutral expert on projectiles 
 called attention to the fact that these bullets 
 about to be submitted were manufactured only 
 in the state bringing the accusation, and that 
 they would not fit any of the opponents' guns. 
 This accusation was allowed to drop. There 
 are in recent times many instances where it is 
 claimed that the uniform of an enemy is used to 
 deceive, but when the aim in modern warfare is 
 to avoid color which will be conspicuous, to 
 eliminate brass buttons and shining helmets, 
 and in many instances even to use no flag, it is 
 easy to understand that cases of mistaken iden- 
 tity in khaki uniforms may easily occur. 
 
 Aerial bombardment has also been a matter 
 on which considerable difference of opinion has 
 been expressed. The laws of land upon this 
 subject are brief and state "the attack or bom- 
 bardment, by any means whatever, of towns, 
 
 137 
 
PROBLEMS OF READJUSTMENT 
 
 villages, habitations or buildings which are not 
 defended is forbidden. ' ' The rales also provide 
 that in making an attack the commander should 
 do all he can to warn the authorities. Mani- 
 festly if the attack is to be a surprise this in- 
 junction would not be obligatory and it was so 
 understood by those negotiating the conven- 
 tion. It is also exceedingly difficult for an air- 
 man to determine in every instance whether a 
 town is defended and there is thus far no clear 
 definition of defense. Only sixteen of the forty- 
 four states represented at the second Hague 
 conference have signed the convention prohibit- 
 ing the discharge of projectiles from aircraft 
 and Austria, France, Germany and Russia are 
 not among these. Indeed aerial warfare is a 
 type so modern that its possibilities and proper 
 regulation can scarcely be predicated. 
 
 Here it should be borne in mind that new 
 means of warfare have from earliest times been 
 opposed by the party not possessing them. 
 Gunpowder was at one time the subject of de- 
 nunciation, cannons were condemned, and tor- 
 pedoes were regarded as the creation of devil- 
 ish ingenuity. There has been opposition to 
 the use of shells which diffuse gases and put 
 the enemy hors de combat. The late Admiral 
 
 138 
 
THE WAR AND INTERNATIONAL LAW 
 
 Mahan pointed out that giving an enemy gas 
 which would not cause unnecessary suffering 
 and then capturing him might be more humane 
 than mangling him with projectiles before mak- 
 ing him a prisoner. 
 
 The laws of war of all countries regard non- 
 combatants who take up arms and commit hos- 
 tilities, except as levees en masse, as liable to 
 punishment for illegitimate acts. The nature 
 of the punishment will be determined by the 
 exigencies. It is true that the Hague rules pro- 
 vide against collective punishment for the acts 
 of an individual, but the report of the commis- 
 sion which drew up this article provides that it 
 shall be without "prejudice to the question of 
 reprisals.' ' Reprisals are usually acts of re- 
 taliation for illegitimate acts of warfare and 
 are therefore usually beyond the range of law. 
 These acts must be judged accordingly and 
 must not be advanced to show that the Hague 
 conventions have been violated. These conven- 
 tions have been observed far more strictly than 
 one could have anticipated in 1907 had the spec- 
 tacle of a general European war been prophe- 
 sied. The observance of the Hague conven- 
 tions has been in the main observance of con- 
 ventions which have been formally ratified. 
 
 139 
 
PROBLEMS OF READJUSTMENT 
 
 More remarkable in some respects is the gen- 
 eral observance of the Declaration of London 
 of 1909 which had not been ratified by any of 
 the belligerents. It is true that Great Britain 
 has added very largely to the list of articles 
 contraband of war under the Declaration and 
 in this France and Russia have followed. Great 
 Britain has also made extensions in the range 
 of destination which may be regarded as hos- 
 tile, thus making vessels more generally liable 
 to capture. Germany and Austria-Hungary 
 have, however, kept fairly close to the Declara- 
 tion in their published regulations and Japan 
 has almost completely embodied its principles. 
 There seems, however, at this time (February 
 20, 1915) a tendency to undue extension of 
 the list of contraband to articles that are of 
 such indirect use in war that the list would 
 hardly have received the sanction of Grotius 
 three hundred years ago. 
 
 Recently negotiations have been in progress 
 in regard to the establishing of a war zone 
 about Great Britain and in regard to the use 
 of neutral flags by British merchant vessels. 
 Each belligerent seems to be endeavoring to 
 the utmost to extend the pressure upon his op- 
 ponent and to save himself as far as possible 
 
 140 
 
THE WAR AND INTERNATIONAL LAW 
 
 without too great risk of complications with 
 neutrals. In absence of complete information 
 as to whether the British government gave or- 
 ders to use the American or other neutral flags 
 and in absence of information as to the method 
 in which Germany is to apply her proclamation 
 in regard to the war zone, it may be said that 
 there is no law against the use of a neutral flag 
 by a belligerent merchant vessel though the 
 governmental order for such use, if such were 
 given, may be questionable. The United States 
 has generally disapproved of the use of false 
 colors in the time of war and the prohibition 
 would have much support in the mind of those 
 who believe in respect for a national flag. 
 
 It may also be said that the proclamation of 
 war areas or war zones is not unknown in in- 
 ternational relations. Such areas were pro- 
 claimed by Japan for defensive purposes dur- 
 ing the Russo-Japanese War of 1904-5 and the 
 entrance to these areas was regulated or pro- 
 hibited. 
 
 The international law embodied in conven- 
 tions, declarations, and other agreements, con- 
 sidering the area of the present hostilities, has, 
 with comparatively few exceptions, been a mat- 
 ter of careful concern on the part of the bel- 
 
 141 
 
PROBLEMS OF READJUSTMENT 
 
 ligerents. International law which is not thus 
 embodied has also received attention and bel- 
 ligerents have endeavored to justify many acts 
 by appeal to its principles, and in some in- 
 stances the belligerents have frankly admitted 
 violations of the law and their responsi- 
 bility for such acts. Of course, many in- 
 stances must await the issue of the conflict for 
 determination of incidence and amount of lia- 
 bility. 
 
 Not alone the belligerents, but neutrals also 
 have shown a disposition to observe their in- 
 ternational obligations. In some cases neutrals 
 seem to have leaned over backward in an en- 
 deavor to stand erect. In some states desirous 
 of maintaining neutrality the exportation of ar- 
 ticles, ordinarily regular objects of commerce, 
 has been prohibited. The articles embargoed 
 by neutral European countries for various rea- 
 sons number more than three hundred. This 
 list is varied, from acetic acid to zinc. It in- 
 cludes armor plates, arms, etc., by nature ab- 
 solute contraband, and dogs in Switzerland, 
 herring meal and reindeer in Norway, skees and 
 sticks in Sweden, etc. 
 
 Some neutral states endeavored in the early 
 days of the war to prevent the making of loans 
 
 142 
 
THE WAR AND INTERNATIONAL LAW 
 
 by private persons to belligerent governments, 
 but the impracticability of such measures was 
 well understood at The Hague in 1907, and such 
 obligations were not imposed on neutral gov- 
 ernments even in form. The obligation of 
 a neutral government itself to refrain from 
 making loans to belligerents was clearly and 
 positively acknowledged. It was plain that 
 while a neutral government might control and 
 be responsible for its own acts, it could not con- 
 trol or be responsible for all the acts of its sub- 
 jects. A banker, particularly if he had branches 
 in other countries, could transfer money in such 
 fashion that its ultimate destination could not 
 be known to the authorities of the state from 
 which the transfer was made. 
 
 The United States' proclamation of neutrality 
 is extremely comprehensive, though it does not 
 as some have asserted forbid the expression of 
 any except neutral opinions within the jurisdic- 
 tion of the United States. On the other hand, 
 it distinctly announces that it does not propose 
 to interfere "with the free expression of opin- 
 ion and sympathy, ' ' provided this does not take 
 certain material forms, as for example, the aug- 
 menting of the force of a belligerent vessel of 
 war. The regulations for securing the mainte- 
 
 143 
 
PROBLEMS OF READJUSTMENT 
 
 nance of the neutrality of the Panama Canal 
 are even more detailed. 
 
 There are, moreover, many new factors in 
 this war which did not exist or were not fully 
 developed in earlier wars, such as mines, sub- 
 marine boats, radiotelegraph, aircraft, etc. 
 There was not a satisfactory agreement upon 
 the use of submarine mines at the Hague Con- 
 ference in 1907. The use of such mines in the 
 Eusso-Japanese War in 1904-5 had called the 
 attention of the world to the dangers of the un- 
 restricted laying of mines. In the conflicting 
 claims of belligerents in the present war one 
 fact stands out clearly, each belligerent desires 
 that his action be regarded as within the law, 
 or else justified as a reprisal to meet a viola- 
 tion of law by his opponent. 
 
 As to the use of submarine boats, there has 
 been and is no well-defined law. This means of 
 warfare is comparatively new and rules have 
 naturally not yet developed for its regulation. 
 That Great Britain had anticipated that it 
 might be used against merchant vessels is in- 
 dicated in the already developed policy of arm- 
 ing such vessels, "for defense,' ' as she an- 
 nounced. It is often difficult to determine the 
 difference in fact between offense and defense. 
 
 144 
 
THE WAR AND INTERNATIONAL LAW 
 
 The simple fact that one strikes first is not 
 sufficient evidence. The claim that the subma- 
 rine boat is a secret means of war is not a valid 
 argument against its use. This argument has 
 been advanced against other means of war but 
 never long and seriously entertained. It is true 
 that the submarine may prey in a dangerous 
 manner upon the private property of a bellig- 
 erent, yet at the Hague Conference of 1907 
 France, Great Britain, Japan and Russia were 
 among the eleven states voting against the im- 
 munity from capture of private property at 
 sea and Austria and Germany supported the 
 American proposition for exemption. The vote 
 stood twenty-one votes for, eleven against and 
 one state not voting. 
 
 The use of the radiotelegraph has been put 
 under very strict control in the United States, 
 thus formulating as it were a set of rules which 
 may later become generally accepted. Cer- 
 tainly the rules have been admitted by the bel- 
 ligerents and to this extent have become inter- 
 national. 
 
 The rules in regard to the use of aircraft 
 were not formulated at the beginning of the 
 war, but in practice there has been care to avoid 
 passing through the air above neutral territory. 
 
 145 
 
PROBLEMS OF READJUSTMENT 
 
 Neutrals have also seemed inclined to main- 
 tain their rights to jurisdiction in the air above 
 their territory. Aircraft have been placed in 
 the category of contraband and no objection 
 has been raised. 
 
 The wide discussion upon the sinking of 
 enemy merchant vessels at sea has shown a gen- 
 eral tendency to look for support for the action 
 in international precedents. These have not 
 been difficult to find. The contention that neu- 
 tral vessels may be sunk if they cannot con- 
 veniently be brought to a prize court is one 
 which it is more difficult to sustain, though there 
 is support for this in the decisions of some 
 courts and in some prize regulations. These 
 are questions upon which the International Na- 
 val Conference in 1908-9 found much difference 
 of opinion. The law upon the subject cannot be' 
 said to be settled. 
 
 There have unquestionably been acts upon 
 the part of belligerents, if one can trust the re- 
 ports that each makes in regard to the oppo- 
 nent, which were not merely not sanctioned by 
 international law, or not within the provisions 
 of international law, but were contrary to in- 
 ternational law. The newspapers of one side 
 accuse the invading party of the other of atroci- 
 
 146 
 
THE WAR AND INTERNATIONAL LAW 
 
 ties. It is natural that this should be the case 
 as the invading party would be obliged to act 
 in a more rigorous manner than the party on 
 the defensive within his own territory. This 
 might lead to, or be accompanied by, acts in 
 excess of, or contrary to, the acts permissible 
 under the rules of international law. 
 
 Here again, however, the fact that the injured 
 belligerent hastens to bring these actions to 
 public notice as being in violation of interna- 
 tional usage and meriting general condemnation 
 is an evidence of the force which the law has 
 acquired. 
 
 It has not been the purpose of these remarks 
 to justify the action of any one of the belliger- 
 ents nor to hold any belligerent up for condem- 
 nation. There seem to have been some acts 
 upon the part of each of the belligerent parties 
 which are open to question and which must be 
 reserved for a later judgment. Such conduct 
 has been common in all wars. This war, in- 
 volving so many states and fought over an area 
 so great, affords more opportunity for acts not 
 in accord with international law. The change 
 in the means of warfare, the introduction of 
 new instruments, the use of the air above the 
 earth, and the sea, and the water under the sea- 
 
 147 
 
PROBLEMS OF READJUSTMENT 
 
 level, have given rise to new problems, and law 
 has not kept pace with these changes. States 
 have been reluctant to make agreements in re- 
 gard to their probable conduct under conditions 
 which have yet to be tested. Such facts as these 
 should be kept in mind when passing judgment 
 on the acts of the belligerents during the last 
 six months. It should also be kept in mind that 
 in some instances the violation of international 
 law has been frankly admitted and indemnity or 
 reparation has been unhesitatingly promised. 
 In such a case the promise of indemnity does 
 not make the act less a violation of law, but 
 makes the existence of its obligatory force un- 
 questioned even when the so-called "higher 
 state policy' ' has been followed. 
 
 "When thinking at the present time of that 
 treaty which was ratified and proclaimed almost 
 exactly one hundred years ago (February 
 18, 1815) and of the hundred years of peace 
 with Great Britain since that time, it is well to 
 recall that even though the present is a time 
 of a war of unparalleled magnitude, it is at 
 the same time a period when the influence of 
 the principles of law are more potent than a 
 hundred years ago and indeed more potent than 
 ever in modern times. The old maxim, inter ar- 
 
 148 
 
THE WAR AND INTERNATIONAL LAW 
 
 ma silent leges, no longer applies, and the doc- 
 trines which belonged with the maxim are pass- 
 ing away. It would be absurd to say that in the 
 great struggle of the nations now going on 
 there has not been disregard of international 
 law, it would be equally absurd to attempt to 
 give a complete justification for all the acts of 
 one side as against the other, and it was not the 
 purpose of these remarks to endeavor to ac- 
 complish either of these ends. It is the purpose 
 to show that the work of the Hague conferences 
 and the International Naval Conference was 
 not in vain, that the principles of international 
 law have not lost all their power, that while 
 new conditions may have made old rules inap- 
 plicable, there has been an inclination to ob- 
 serve the fundamental principles, that while vio- 
 lations of law may have taken place, often the 
 liability for such violations has been recognized, 
 and that international law, far from being im- 
 potent, embodies the principles under which the 
 most powerful nations of the world now seek 
 to find sanction to justify their actions before 
 the opinion of the world. 
 
VI 
 
 THE WAR AND INTERNATIONAL COM- 
 MERCE AND FINANCE 
 
 Emory R. Johnson, Ph.D., Sc.D. 
 
 The economic interests of all countries are 
 so interrelated that a prolonged war between 
 any two important industrial nations inevitably 
 creates a serious disturbance of international 
 finance and trade. The present war, which in- 
 volves the larger part of Europe and also more 
 or less directly much of Asia, Africa and Aus- 
 tralia, has temporarily stopped a large share 
 of the world's international exchanges, has com- 
 pelled such trade as is carried on to be con- 
 ducted under unprecedented conditions, and 
 has so interfered with commerce generally as 
 seriously to modify, at least temporarily, the 
 commercial and industrial activity of all coun- 
 tries, neutral as well as belligerent. It is cer- 
 tain that the permanent industrial and commer- 
 
 150 
 
THE WAR, COMMERCE AND FINANCE 
 
 cial effects of the present war will much, ex- 
 ceed those that have resulted from any previous 
 international struggle, with the possible excep- 
 tion of the Napoleonic wars. 
 
 This result is to be expected, first of all, be- 
 cause of the unprecedented destruction of cap- 
 ital. If the war ends in 1915, it is estimated 
 that the military expenditures will reach twenty 
 billion dollars, and if, as now seems possible, 
 the war should continue through 1916, the % ex- 
 penditures may reach forty or fifty billion dol- 
 lars. The Government expenditures, however, 
 represent only a part of the expenses of the 
 war. Capital is destroyed in great quantities 
 over large areas, production is checked, trade 
 is reduced to a fraction of its normal propor- 
 tions, and the total economic waste due to the 
 war may be double or treble the measurable 
 military expenditures. This wholesale destruc- 
 tion of capital must necessarily influence for 
 many years to come the monetary and financial 
 institutions of the leading countries of the 
 world, must compel changes in international 
 finance, must lessen the industrial output of 
 many countries, modify the conditions of in- 
 ternational competition, and, by means of in- 
 creased prices and lessened opportunity, make 
 
 151 
 
PROBLEMS OF READJUSTMENT 
 
 living conditions harder for the people of 
 Europe and for those in many other parts of 
 the world. 
 
 To what extent and in what manner the pres- 
 ent misfortunes of Europe will affect the in- 
 ternational trade and domestic commerce of the 
 United States ; to what degree the United States 
 will supplant Europe as the financial and inter- 
 national banking center; and in what particu- 
 lars the economic position of the United States 
 among the industrial and commercial countries 
 of the world will be benefited, are problems to 
 which economists and business men are giving 
 earnest thought, with the hope of being able 
 to read aright the horoscope of the world's eco- 
 nomic future. 
 
 Of course no one can at the present time defi- 
 nitely predict how the great European War will 
 affect the financial, commercial and industrial 
 interests of the United States. There are too 
 many unknown factors in the problem. It is 
 not known how long the war will last, nor how 
 many nations will become involved in the titanic 
 struggle. This paper is being written just at 
 the time Italy is joining the war. It is probable 
 that some of the Balkan States, and possibly 
 other countries of Europe, may yet become in- 
 
 152 
 
THE WAR, COMMERCE AND FINANCE 
 
 volved in the struggle. Indeed, it is within the 
 realm of possibility that the United States it- 
 self may be unable to protect American national 
 and individual rights while maintaining her po- 
 sition of neutrality. Assuming that the United 
 States succeeds in remaining neutral — as every 
 patriotic citizen most earnestly hopes will be 
 possible — also assuming that the war will not 
 include more nations than have already been 
 drawn into the conflict, and assuming further 
 that the struggle will continue for another 
 twelve months and thus last for a period of 
 about two years, what will probably be the ef- 
 fect of the war upon the economic future of 
 the United States! In answering this general 
 question it will be well to consider first how 
 the war will affect the American money market 
 and the position of the United States as a finan- 
 cial and banking center. 
 
 The first and most obvious effect of the whole- 
 sale destruction of capital by the European 
 War will be a higher rate of interest. Interest 
 rates were stiff before the beginning of the 
 present war, the relatively high rates of inter- 
 est that have prevailed during recent years be- 
 ing thought by experts to have been the result 
 of the destruction of property by the series of 
 
 153 
 
PROBLEMS OF READJUSTMENT 
 
 wars that occurred from 1898 to 1905. The 
 Spanish- American War is said to have cost a 
 billion of dollars, the Russo-Japanese War an- 
 other billion, and the Boer War two billion dol- 
 lars. The direct expense of these three wars 
 amounted to at least four billion dollars. The 
 effect of the destruction of that amount of capi- 
 tal upon the rate of interest commanded by in- 
 vestment capital had not been overcome when 
 the present war started. 
 
 It is certain that the demand for capital for 
 at least two decades following the close of the 
 present war will be abnormal. Had there been 
 no war, there would have been a relatively large 
 demand for capital in 1915-16. In several coun- 
 tries, particularly in the United States, times 
 have been dull and a period of business expan- 
 sion seems about to begin. To secure capital 
 that must be obtained even at high interest 
 rates, Europe at the close of the war will bor- 
 row from all countries that have surplus capital. 
 American capitalists will unquestionably ad- 
 vance large sums to European borrowers, and 
 American investors will be able to secure high 
 rates of interest not only because of the neces- 
 sities of European borrowers, but also on ac- 
 count of the opportunities for the investment 
 
 154 
 
THE WAR, COMMERCE AND FINANCE 
 
 of American capital in domestic industrial en- 
 terprises. 
 
 If the great nations now at war succeed in 
 making peace with each other before the credit 
 of any one of the nations collapses and thus 
 endangers or overthrows the credit institutions 
 of other countries, we may expect peace to be 
 followed by an entirely abnormal inflation of 
 credit. Indeed, all of the powers at war have 
 made a greater use of credit than would have 
 been deemed possible. About twelve billion dol- 
 lars of war loans have already been floated or 
 authorized. Great Britain has issued between 
 two hundred and three hundred million dollars 
 of paper currency redeemable in gold by the 
 Bank of England; and the bank has agreed to 
 make loans to the Government taking as se- 
 curity the Government's bonds issued in the 
 war loans. The Bank of France has in- 
 creased its note issue more than fifty per 
 cent., and cities and towns in different parts of 
 France have issued large quantities of paper 
 money.~ Likewise, in Germany, loan banks in 
 different parts of the empire, with the approval 
 and aid of the Government and the Reichsbank, 
 have put large quantities of paper money in cir- 
 culation and the banks have accepted practi- 
 
 155 
 
PROBLEMS OF READJUSTMENT 
 
 cally all kinds of property as a basis for credit 
 and financial assistance. The termination of 
 the war will not bring an end to the nse of gov- 
 ernment credit, provided the financial position 
 of the several governments at the close of the 
 war is such that further use may be made 
 of government credit. Capital will be so greatly 
 needed that the revival of business will de- 
 pend very largely upon government assistance, 
 and, if aid can be given, it is certain that every 
 form of government credit that can be safely de- 
 vised will be employed in aiding the revival of 
 industry and trade. 
 
 The demand for gold will continue for some 
 time after the close of the war, and there is 
 much danger that the supply of gold in the 
 United States will be reduced to an unsafe 
 amount. Fortunately, the Federal Reserve Act 
 has established a banking system that will prob- 
 ably enable the United States adequately to pro- 
 tect its supply of gold. It is most fortunate 
 for the country that the banking laws of the 
 United States were revised in 1914. The finan- 
 cial situation of the country would have been 
 even better today had the banking laws been 
 revised a year earlier. 
 
 It is the expectation of many persons that 
 156 
 
THE WAR, COMMERCE AND FINANCE 
 
 the financial and industrial strength of Europe 
 will be so reduced by the present great war that 
 New York City will be able to supersede London 
 as the primary money center of the world. Un- 
 doubtedly, the United States will, as a result 
 of the war, occupy a much more important posi- 
 tion in international banking than it now holds ; 
 and it is possible that at least a part of the bills 
 of exchange drawn in the transactions of inter- 
 national trade will, in the future, be in terms of 
 the dollar instead of the sovereign, and will be 
 drawn against New York instead of London. 
 At the present moment, a Pan-American Finan- 
 cial Conference is in session in Washington,, 
 called together by the United States Secre- 
 tary of the Treasury to consider how the 
 United States may best cooperate with the 
 other countries of the American continent 
 to provide the funds and banking facilities 
 required for the present and future conduct 
 of the trade of Central and South American 
 countries. 
 
 It will be well, however, not to expect that 
 New York will suddenly become the world's- 
 leading financial center. As was stated by Mr. 
 T. W. Lamont, of the firm of J. P. Morgan and 
 Company, in a paper read April 30, 1915, before 
 
 157 
 
PROBLEMS OF READJUSTMENT 
 
 the American Academy of Political and Social 
 Science : 
 
 1 ' Many people seem to believe that New York 
 is to supersede London as the money center of 
 the world. In order to become the money cen- 
 ter we must of course become the trade center 
 of the world. That is certainly a possibility. 
 Is it a probability? Only time can show. But 
 my guess would be that, although subsequent 
 to the war this country is bound to be more im- 
 portant financially than ever before, it will be 
 many years before America, even with her won- 
 derful resources, energy and success, will be- 
 come the financial center of the world. Such a 
 shifting cannot be brought about quickly, for of 
 course to become the money center of the world 
 we must, as I have said, become the trade cen- 
 ter ; and up to date our exports to regions other 
 than Great Britain and Europe have been com- 
 paratively limited in amount. "We must culti- 
 vate and build up new markets for our manu- 
 facturers and merchants, and all that is a mat- 
 ter of time. ' ' 
 
 Mr. Lamont is unquestionably correct when 
 he suggests that no country can become a finan- 
 cial center of the world unless it enters largely 
 and widely into international trade. The fu- 
 
 158 
 
THE WAR, COMMERCE AND FINANCE 
 
 ture of the United States in international 
 finance will depend upon the success attained 
 by this country during the present war, and sub- 
 sequent thereto, in building up its foreign com- 
 merce. What are the prospects in this regard? 
 
 The immediate effects of the war upon Amer- 
 ican commerce have been to stop all direct 
 trade with Germany, to limit greatly the trade 
 to neutral countries, and to render difficult and 
 dangerous all intercourse with the Allies. The 
 foreign trade of the United States in numerous 
 commodities has been greatly limited in quan- 
 tity and trade as a whole is being carried on 
 very expensively on account of the high freight 
 and insurance rates. Certain articles such as 
 foods and military supplies are being exported 
 in greatly increased volume. The effect of the 
 war upon imports has been greater than upon 
 exports. 
 
 At the close of every important war that has 
 interrupted trade and interfered with the in- 
 dustrial activities of two or more producing 
 countries, there is a sudden expansion of com- 
 merce, due to the effort of producers to dis- 
 pose of accumulated stocks, and to the desire of 
 buyers to secure materials with which to renew 
 production, and also because of the extraordi- 
 
 159 
 
PROBLEMS OF READJUSTMENT 
 
 nary effort which everybody makes to recoup 
 the losses suffered during and in consequence 
 of the war. 
 
 It is certain that European purchases from 
 the United States will be large for the first year 
 or two following the declaration of peace. Nec- 
 essarily, those purchases will be made, for 
 the most part, upon credit; and European 
 buyers will make use of their credit to the full- 
 est extent in order to secure the materials and 
 supplies required to renew industry upon as 
 large a scale as capital and labor conditions will 
 permit. After having made these large pur- 
 chases immediately following the war, all pro- 
 ducers in Europe will necessarily be obliged to 
 buy with unusual caution and to limit purchases 
 to the smallest possible proportions. Instead 
 of buying freely, the European producers will 
 endeavor to sell the products which they have 
 manufactured during the first year or two in 
 order to pay off their debts and to secure cap- 
 ital for further industrial activities. 
 
 Thus immediately following the war the ex- 
 ports from the United States to Europe will be 
 large, and this period of heavy exports will be 
 followed by large imports into this country ac- 
 companied by a restricted export trade. Ameri- 
 
 160 
 
THE WAR, COMMERCE AND FINANCE 
 
 can industries, having been stimulated to un- 
 usual activity immediately following the war, 
 will probably experience a severe check two or 
 three years after the war; and, if a panic is 
 avoided, it will be due to the foresight and busi- 
 ness restraint of American manufacturers, par- 
 ticularly the large business organizations that 
 control a relatively large share of the output 
 of staple industries. Every great war of the 
 last century has been followed by a period of 
 feverish business activity which has, within a 
 few years, been succeeded by a business depres- 
 sion of greater or less severity. It remains to 
 be seen whether the lessons of history have been 
 well enough learned by the captains of Ameri- 
 can industry to enable them to prevent the repe- 
 tition of what has happened after previous 
 wars. 
 
 South America, Africa and Oriental countries 
 are, at the present time, unable to secure from 
 Europe many of the articles which they have 
 regularly purchased from European exporters. 
 Likewise, the European market for many South 
 American, African and Oriental goods is 
 greatly restricted. The conditions seem ex- 
 traordinarily favorable for the rapid expansion 
 of the foreign trade in the United States. If 
 
 161 
 
PROBLEMS OF READJUSTMENT 
 
 the war continues through 1916, American pro- 
 ducers ought to secure a portion of the markets 
 that have previously been supplied from 
 Europe. It was expected when the war broke 
 out that there would immediately be a large in- 
 crease in the trade of the United States with 
 South America, The expectation, however, was 
 not realized, because the purchasing power of 
 South American countries was greatly reduced. 
 The banking and commercial connections of 
 South American countries having been mainly 
 with Europe, the European War almost par- 
 alyzed South American trade and industry. 
 Banking and credit institutions in South Ameri- 
 can countries were unable to be of assistance to 
 producers and traders, and even now, nearly a 
 year after the opening of the war, financial con- 
 ditions in South America are still unsettled. 
 The United States is now beginning to secure 
 part of the South American trade that was for- 
 merly carried on with Europe. Great Britain, 
 however, is holding most of her South Ameri- 
 can commerce, and, without doubt, Germany 
 will be able to resume her South American trade 
 without very great difficulty at the close of the 
 war. 
 
 It will be an advantage to the United States 
 162 
 
THE WAR, COMMERCE AND FINANCE 
 
 to be in possession of a part of the commercial 
 field formerly occupied by European producers 
 and traders, but it would be a mistake to expect 
 the United States to be able to hold all the new 
 trade that will have been diverted to her from 
 European producers while the war was in prog- 
 ress. While European manufacturers may not 
 be able to regain all the ground they have lost, 
 they will, within a comparatively few years, re- 
 cover most of the trade that has been taken 
 from them. There are several reasons why this 
 is to be expected. 
 
 The commerce of the United States with 
 South America or with other parts of the world 
 depends, first of all, upon the amount of capital 
 invested in foreign countries. Up to the pres- 
 ent time, the industries of South America, Af- 
 rica and the Orient have been developed mainly 
 by British and German capital. The people of 
 Belgium, Holland, and some other European 
 countries have also invested largely in various 
 parts of the world. Trade follows capital into 
 foreign lands. As far as can be learned, British 
 and German capitalists are retaining their 
 South American investments, with the confident 
 expectation of engaging actively in the indus- 
 tries and trade of South American countries 
 
 163 
 
PROBLEMS OF READJUSTMENT 
 
 as soon as the war is ended. If American trad- 
 ers compete in the future successfully and 
 largely with European producers and traders 
 in South American countries, it will be in con- 
 sequence of a greater investment of American 
 capital than has thus far been made in South 
 America. "What is the prospect that such in- 
 vestments will be made ? 
 
 There are definite indications that American 
 investors are looking with increased favor upon 
 investments abroad. It is stated that seven 
 hundred millions of American capital have been 
 put into Canadian industries other than agri- 
 culture, that a half a billion dollars have been 
 invested in Mexico, Central America, Cuba, 
 Haiti, Chile and Peru. The amounts that have 
 been invested in other Latin American coun- 
 tries cannot be stated, but they are a consid- 
 erable sum. Since the war began, Argentina 
 has taken an unusual amount of American cap- 
 ital in the form of merchandise, for which pay- 
 ment has been made, in part, by treasury notes 
 of the Argentine Government sold in this 
 country. 
 
 It is easier for any country to secure trade 
 abroad when its citizens reside in the foreign 
 country with which the trade is carried on. 
 
 164 
 
THE WAR, COMMERCE AND FINANCE 
 
 Great Britain and Germany, notably, have built 
 up their trade in South America, Africa, and 
 the Orient very largely because British and Ger- 
 man subjects reside in large numbers in for- 
 eign countries. It has not yet become the prac- 
 tice of American citizens to reside abroad in 
 any considerable numbers. Industrial oppor- 
 tunities at home have, until recently, been more 
 alluring than the possibilities of securing wealth 
 abroad. In all probability, the time has come 
 when increasing numbers of persons born and 
 educated in the United States, will, for busi- 
 ness and other reasons, make their residence 
 in South America, Africa, and the Orient, and 
 this will unquestionably prove to be of assist- 
 ance to the United States in holding and devel- 
 oping the foreign trade obtained during the 
 period of the war. 
 
 A former handicap upon the development of 
 the foreign trade of the United States has been 
 remedied by Sections 13, 14 and 25 of the Fed- 
 eral Reserve Act. Now, for the first time, it 
 is possible for an American bank chartered un- 
 der the National Banking Act, to establish and 
 maintain branches in foreign countries. Sec- 
 tion 25 of the Federal Reserve Act provides 
 that "any national banking association possess- 
 
 165 
 
PROBLEMS OF READJUSTMENT 
 
 ing a capital and surplus of $1,000,000 or more" 
 may, with the approval of the Federal Reserve 
 Board, establish " branches in foreign countries 
 or dependencies of the United States for the 
 furtherance of the foreign commerce of the 
 United States." This provision of the act has 
 already been made use of. The National City 
 Bank of New York has established branches at 
 Buenos Aires in the Argentine Republic, and in 
 Rio de Janeiro and Santos in Brazil. Permis- 
 sion has been given that institution to establish 
 a West Indian branch with a main office at Ha- 
 vana and with several sub-branches at various 
 points in Cuba, Jamaica and Santo Domingo. 
 The authority to open a branch bank at Rio 
 de Janeiro also included the right to operate 
 sub-branches at several points in Brazil. In all 
 probability, other American banks interested in 
 foreign trade will establish branches in dif- 
 ferent parts of the world. 
 
 Section 13 of the Federal Reserve Act pro- 
 vides that ' l any member bank may accept drafts 
 or bills of exchange drawn upon it and growing 
 out of transactions involving the importation 
 or exportation of goods having not more than 
 six months sight to run." Banks may accept 
 foreign bills of exchange to an amount equal to 
 
 166 
 
THE WAR, COMMERCE AND FINANCE 
 
 one-half of their paid-up capital stock and sur- 
 plus. This makes it possible for American 
 banks to rediscount acceptances based upon im- 
 ported and exported goods, and opens a new 
 field in which to conduct business, while enabling 
 banks in this country to be of great assistance 
 in the future development of American for- 
 eign trade. The banking prerequisites of the 
 development of a larger trade between the 
 United States and South America seem now 
 to have been met. As the trade increases it will 
 be possible to afford merchants and manufac- 
 turers the necessary international banking fa- 
 cilities. 
 
 The fact that the relatively small volume of 
 commerce that has been carried on between the 
 United States and most South American coun- 
 tries up to the present time has been trans- 
 ported, for the most part, in foreign ships, and 
 that there has been no marked tendency to es- 
 tablish American steamship lines for opera- 
 tion between the ports of the United States and 
 countries of South America, has caused many 
 students of commerce to argue that the future 
 development of the trade of the United States 
 with American countries to the south, will de- 
 pend upon provision being made, either by the 
 
 167 
 
PROBLEMS OF READJUSTMENT 
 
 Government or by private capital, for a large 
 increase in transportation facilities. Undoubt- 
 edly, regular and adequate steamship services 
 from American ports to South American coun- 
 tries would make the development of commerce 
 easier, and tend to diversify as well as to extend 
 the trade between North and South American 
 countries. It should be remembered, however, 
 that steamship lines and other transportation 
 agencies are merely trade facilities which cap- 
 ital will provide whenever it becomes evident 
 that profit can be secured by establishing and 
 maintaining such facilities. 
 
 Trade development depends primarily upon 
 the existence or non-existence of favorable in- 
 dustrial, financial and mercantile conditions. 
 Without doubt, production is carried on within 
 the United States so economically that Ameri- 
 can producers of many kinds of articles can 
 compete successfully with manufacturers in 
 other countries ; and, as has been pointed out in 
 this paper, it seems probable that the interna- 
 tional banking facilities needed in carrying on 
 a larger trade between North and South Amer- 
 ica are about to be provided. There remains, 
 however, for American manufacturers and 
 traders to develop the merchandising meth- 
 
 168 
 
THE WAR, COMMERCE AND FINANCE 
 
 ods by means of which European mer- 
 chants have secured the major share of the 
 foreign trade of South American coun- 
 tries. For some reason, American producers 
 and merchants are not as successful traders as 
 are the merchants of Great Britain and Ger- 
 many. The normal attitude of the American 
 manufacturer is that the superiority of his 
 goods will guarantee their popularity with for- 
 eign buyers ; he feels it is necessary only to call 
 the foreigner's attention to the character of 
 Ajnerican goods and to the opportunity the for- 
 eigner has to secure goods in the United States. 
 The British, and particularly the German, mer- 
 chants, on the contrary, have actively solicited 
 the trade of the South American buyers, and 
 have sought to adapt European goods and 
 European merchandising methods to the needs 
 and customs of South American producers. 
 These generalizations apply broadly, and, as in 
 the case of all general rules, there are excep- 
 tions. There are, indeed, evidences of the de- 
 velopment of better merchandising methods on 
 the part of American producers and exporters. 
 The least difficult facility to secure in the de- 
 velopment of foreign trade is transportation. 
 The world over, ships are seeking cargo and, 
 
 169 
 
PROBLEMS OF READJUSTMENT 
 
 except when temporarily prevented by a war 
 between commercial nations, shipping facilities 
 can be secured in proportion to the needs of 
 trade. If American financiers and manufactur- 
 ers succeed in developing a larger South Ameri- 
 can trade, that trade will promptly call into be- 
 ing adequate shipping facilities. It will not be 
 necessary for the United States, even tempo- 
 rarily, to engage in the steamship business, al- 
 though the Government should do whatever it 
 can to remove the obstacles to the investment of 
 private capital in the business of ocean trans- 
 portation. The function of the Government is 
 to create such trade conditions as will enable 
 bankers, manufacturers and merchants profit- 
 ably to engage in international trade. When 
 trade can be carried on profitably on a large 
 scale, shipowners will be quick to supply the 
 requisite transportation facilities. 
 
 In this connection, it is important to consider 
 what the effect of the present war will be upon 
 the supply of shipping and upon ocean freight 
 rates. A large tonnage of merchant shipping 
 has already been destroyed, and submarines are 
 almost daily sinking one or more vessels. Ef- 
 forts are being made by the United States to 
 bring about some limitation upon the destruc- 
 
 170 
 
THE WAR, COMMERCE AND FINANCE 
 
 tive methods of submarine warfare, but it re- 
 mains to be seen whether a check will be put 
 upon the unprecedented destruction of ocean 
 shipping. What will be the total loss of mer- 
 chant shipping during the war cannot be fore- 
 told; but, although the loss will be large, the 
 percentage of the world's total shipping that is 
 destroyed may not be greater than the percent- 
 age representing the decrease in the volume of 
 international trade that will result from the de- 
 struction of capital during the war and from 
 the reduced industrial output during the years 
 of reconstruction of industry following the war. 
 As soon as the war closes there will be restored 
 to the merchant marine a large tonnage of ves- 
 sels that have been requisitioned for transport 
 services and for other naval uses. It should be 
 remembered that Germany's large merchant 
 marine will probably not be much reduced by 
 the war, and that some of the neutral countries, 
 including the United States, will have a larger 
 tonnage of merchant shipping at the close of 
 the war than they had at the beginning. After 
 the first few months have elapsed, following 
 the close of hostilities, the supply of ocean ship- 
 ping may be quite equal to the needs of com- 
 merce. If so, ocean freight rates will be reason- 
 
 171 
 
PROBLEMS OF READJUSTMENT 
 
 able and may even be relatively low. Should 
 the revival of business at the close of the war 
 be, as some persons fear it will be, so active 
 and unrestrained as to lead to overproduction 
 and overtrading on the part of such countries 
 as can command the capital for industrial devel- 
 opment, and should this boom period be fol- 
 lowed by a severe panic within two or three 
 years after the end of the war, there will be a 
 superabundance of ocean shipping during the 
 years of business depression and freight rates 
 on the ocean will be unprofitably low. 
 
 The probable effect of the war upon immigra- 
 tion into the United States is a subject of great 
 importance. While the war lasts immigration 
 will be practically at a standstill, because most 
 of the immigrants come from the countries now 
 at war with each other. Will the close of hos- 
 tilities be followed by a rush of immigrants to 
 this country, or will the higher wages in Europe 
 and the reduction which the war has made in 
 the number of laborers in Europe reduce the 
 volume of immigration to the United States? 
 
 Every important European war during the 
 past one hundred years has been followed by an 
 increase in immigration into the United States. 
 After the close of the long Napoleonic wars 
 
 172 
 
THE WAR, COMMERCE AND FINANCE 
 
 there was a marked rise in the tide of emigra- 
 tion, and the same was true of the years follow- 
 ing the European revolution of 1848. The 
 Franco-Prussian War also stimulated emigra- 
 tion to the United States. It is the opinion of 
 Dr. Frank J. Warne, who is a recognized au- 
 thority upon immigration questions, that the 
 present destructive war will greatly reduce the 
 economic opportunities of the working classes 
 of Europe; that extremely burdensome taxes 
 will necessarily be levied by all governments 
 to pay interest upon the debts created during 
 the war, and that economic distress will be in- 
 evitable and severe. Dr. Warne believes that 
 economic conditions in the United States will 
 be the opposite of those in Europe, and that the 
 prosperous times in this country will induce 
 great numbers of European families to seek by 
 emigration to escape from the unfortunate con- 
 ditions that will prevail in Europe. This ten- 
 dency to emigrate will, moreover, be strength- 
 ened by the active solicitation of steerage pas- 
 sengers that will be carried on by numerous 
 steamship lines. All of the transatlantic pas- 
 senger lines will be eager to make up for the 
 losses sustained because of the suspension of 
 passenger traffic during the war. 
 
 173 
 
PROBLEMS OF READJUSTMENT 
 
 This forecast as to the effect of the war upon 
 immigration into the United States from Europe 
 will prove to be correct, provided the war lasts 
 as long as two years. If the struggle is con- 
 tinued for that length of time, the destruction 
 of capital and the paralysis of industry will be 
 so great as to make it difficult, if not impossible, 
 for European industries to regain their normal 
 activities until some years after the close of the 
 war. If the war should come to an end in 1915, 
 it may be that the industrial opportunities in 
 Europe will not be so lessened as to make it 
 necessary for the laboring classes of Europe 
 to seek a livelihood by emigration to the 
 United States. It should be remembered, more- 
 over, that the patriotic impulses of the masses 
 of people of every country have been aroused 
 and strengthened, and men may have a senti- 
 mental desire to remain in their native land and 
 help work out its future prosperity. 
 
 Should the war, as many persons expect, re- 
 sult in making the governments of continental 
 Europe more democratic in form and ideals, 
 the tendency to emigrate may be lessened; but 
 it is doubtful whether emigration has much con- 
 nection with government institutions, although 
 it is often claimed that people have left Europe 
 
 174 
 
THE WAR, COMMERCE AND FINANCE 
 
 for the United States to escape the oppression 
 of monarchical government, and to obtain the 
 liberties that may be secured under republican 
 institutions. It is probable that most people 
 have come to this country because the economic 
 opportunities here were greater than in their 
 native land. Political persecution has unques- 
 tionably driven many people from Europe to 
 the United States, but the number that have 
 come to this country for that reason is small 
 in comparison with those that have been at- 
 tracted here by the possibility of securing a 
 better livelihood. 
 
 It now seems probable that the European 
 War will last for two years. If it is prolonged 
 to the end of 1916 there doubtless will be a 
 large exodus to the United States of immigrants 
 from Austria-Hungary, Poland, southwest Rus- 
 sia, the Balkan States and Italy, which are the 
 sections of Europe that are suffering severely 
 from the war and are the regions from which 
 immigrants to this country come in large num- 
 bers. The possibility that the war will be fol- 
 lowed by a rise in the arrivals in the United 
 States of large numbers of immigrants from 
 southeastern Europe makes it important that 
 measures should be taken by the United States 
 
 175 
 
PROBLEMS OF READJUSTMENT 
 
 Government to prevent undesirable persons 
 from coming into the country. Such a wide- 
 spread and disastrous war as that now in prog- 
 ress in Europe is certainly to be followed by a 
 great increase in disease, poverty and crime. 
 Unless the immigration laws of the United 
 States are strictly administered, the people of 
 this country will have to support a largely in- 
 creased population of paupers and criminals. 
 It will be the duty of the United States Gov- 
 ernment to provide for the strict enforcement 
 of the immigration laws. 
 
 This brief analysis of the probable economic 
 effects of the European War upon the United 
 States has naturally been devoted mainly to 
 questions of international banking and finance, 
 of foreign trade and ocean shipping, and 
 of immigration. The changes in the in- 
 ternational economic relations of the United 
 States promise to be important, permanent and, 
 for the most part, advantageous. If future ex- 
 perience corresponds with present promise, the 
 internal development as well as the foreign 
 commerce of the country will be quickened. 
 
 A large and wider foreign trade means a 
 greater volume and variety of production, an 
 increase in the quantity and range of imports, 
 
 176 
 
THE WAR, COMMERCE AND FINANCE 
 
 a diversification of industry and commerce, and 
 a broadening of the foundations of American 
 economic interests. This means greater eco- 
 nomic stability, the ability to endure more easily 
 the recurring ills of business depression, and to 
 pursue a more conservative course through the 
 periods of abnormal prosperity. 
 
 During the last twenty-five years the United 
 States has been changing from a country de- 
 voted almost entirely to the production of foods 
 and the materials of industry to a country hav- 
 ing diversified industries in which manufactures 
 occupy a prominent position. The exportation 
 of manufactured goods is increasing in quan- 
 tity, and foreign markets are being found for 
 a greater variety of articles. The present ter- 
 rible war in Europe will accelerate the economic 
 changes now in progress in the United States. 
 Manufacturing and trade will increase more 
 rapidly and, in consequence, the growth of cities 
 will be faster. With the more rapid growth of 
 manufactures and foreign commerce and of the 
 population of the cities, will come consequent 
 changes in social conditions. The social ideals 
 of rural and village life that have hitherto been 
 so influential in this country will, because of the 
 more rapid development of manufacturing and 
 
 177 
 
PROBLEMS OF READJUSTMENT 
 
 commerce, give way even more rapidly than 
 they are now giving way to the ideals of people 
 who work in large establishments and live in 
 large cities. The European War will change 
 the economic activities and modify social condi- 
 tions in the United States. 
 
VII 
 
 THE CONDUCT OF MILITAEY AND 
 NAYAL WABFAKE 
 
 Caspar F. Goodrich 
 
 I am sorry that the President's stringent or- 
 der on the subject forbids my discussing the 
 events of the present struggle in Europe with 
 entire freedom. You can readily see that to do 
 so might reveal a bias which would violate the 
 neutrality in speech and writing which our 
 Chief Magistrate enjoins. Nevertheless, with- 
 out transgressing that order it is possible to 
 analyze certain features and to draw certain 
 conclusions of technical interest, for this war 
 is as full of lessons as it is of surprises. To 
 call attention to them may be done, and I hope 
 I shall succeed in so doing, with complete im- 
 partiality of statement, if not of sympathy, and 
 in strict accordance with my Commander-in- 
 Chief's injunction. 
 
 179 
 
PROBLEMS OF READJUSTMENT 
 
 The first thing that strikes the eye is the total 
 wreck of preconceived notions. The long range 
 of modern arms was expected to push back the 
 fighting line almost, if not qnite, out of sight of 
 the enemy. To be sure the opposing forces had 
 come into personal contact in the late Balkan 
 wars but this was attributed to local conditions 
 not likely to find their counterpart in hostilities 
 between first-class powers. That Germans and 
 Frenchmen should spend whole months in 
 trenches but a few yards apart, should burrow 
 like rabbits and settle the possession of dis- 
 puted ground by the bayonet or even the fist 
 was inconceivable — yet all know that was the 
 way the trick was turned again and again. 
 Conversely on the sea, the old time desire to 
 get close aboard the enemy may have been, 
 doubtless was, present, but the actions off Coro- 
 nel, off the Falkland Islands, and in the North 
 Sea were decided at ranges that seem fabulous. 
 One shell which landed on the Bluecher from a 
 distance of eighteen thousand yards — about 
 nine geographical miles — is thought by its dam- 
 age to life and vessel to have been, possi- 
 bly, the one most important factor in the de- 
 struction of that ship. 
 
 The greater range of the newest guns has also 
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MILITARY AND NAVAL WARFARE 
 
 proved decisive on shore in bombardments that 
 recur to you all. The surprise, however, lies 
 in the unsuspected existence of such guns and 
 not in their efficacy. To have kept the forty- 
 two-centimeter howitzer a profound secret for 
 so long was in itself a triumph which, I fear, 
 our more open methods would have rendered 
 impossible in this country. 
 
 Speed in men-of-war, a quality advocated for 
 years by one school of naval thought and as 
 strongly opposed, at least in battleships, by an- 
 other school, seems to have practically demon- 
 strated its value in cruisers, destroyers and 
 submarines, as to which application there never 
 has been much controversy. Should the Ger- 
 man and British battle fleets ever engage, the 
 desirability of increasing speed at the expense 
 of armor will be proved or disproved as the case 
 may be. No more pressing question from the 
 naval architect's standpoint can be imagined. 
 It is saddening, however, to reflect on the price 
 in human life which its solution will exact. 
 
 Another surprise has been the extensive and 
 efficient use, by the Germans, of machine guns 
 of a novel type. Instead of the mitrailleuses 
 and Nordenfeldts which required horse traction 
 and were but another form of artillery these 
 
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PROBLEMS OF READJUSTMENT 
 
 new weapons can be and are carried by one 
 man. In destrnctive effect on troops the Al- 
 lies rank them as second only to shrapnel and 
 ahead of the rifle, and surely the Allies know. 
 The result is seen in a radical change in tac- 
 tics. Formerly artillery prepared the way for 
 the infantry attack. Today it is the machine 
 gnn which is pushed to the front, infantry be- 
 ing used to cover and support its approach. 
 
 The appearance on the scene of wholly new 
 inventions like the motor lorry, the aeroplane 
 and the submarine has changed conditions en- 
 tirely and wrought unforeseen modifications in 
 tactics. It is said that the German advance on 
 Paris was stayed through the sudden bringing 
 up of heavy reinforcements from that city in 
 taxi-cabs and automobiles, some forty thousand 
 cars in all. Shades of Napoleon ! Without mo- 
 tor trucks and motor ambulances the men in the 
 field would, many times, have gone hungry 
 and the wounded without that prompt care 
 which so often makes the difference between life 
 and death. We may reflect with pride upon 
 the admitted superiority of our American Red 
 Cross automobile hospitals. Piou-Piou and 
 Tommy Atkins equally rejoice when, if 
 wounded, they fall into our hands. 
 
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MILITARY AND NAVAL WARFARE 
 
 Gasoline has also made possible the armored 
 motor car of whose exploits frequent mention 
 is made. Armored trains were first used in the 
 Tel-el Kebir campaign — but their use was and 
 still is confined to railways. A fairly good 
 road, however, now permits the employment of 
 their more mobile and extremely effective suc- 
 cessor. Even heavy guns up to eleven inches 
 in caliber are moved by motors, the wheels be- 
 ing of the caterpillar type and thus capable 
 of advance over poor roadbeds. 
 
 To gasoline is due the flying machine which 
 as a scout renders sudden concentrations of 
 troops quite out of the question. Very spec- 
 tacular have been some of its performances in 
 raids and bomb-throwing. Doubts may be en- 
 tertained, however, of the real military value 
 of such operations. 
 
 Great things were expected of the Zeppelins 
 but, up to the present moment, these expecta- 
 tions do not appear to have been fully realized. 
 Damage they have done, but nothing commen- 
 surate with the hopes of their advocates. In 
 short, their tactical value has yet to be proved. 
 They are quite unmanageable in heavy weather, 
 a circumstance which doubtless has limited their 
 use this winter. With the advent of spring and 
 
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PROBLEMS OF READJUSTMENT 
 
 summer, when gales are few and breezes light, 
 we shall learn more of their actual perform- 
 ance under favoring conditions. 
 
 The true history of the submarine cannot be 
 written until the war is over and all the facts 
 made public. Upon them was based the war 
 zone just proclaimed by Germany. Its effi- 
 ciency, it is thought by the Germans, will be 
 conclusive. As to this time alone will tell. That 
 the German submarines have been very active 
 and aggressive is certainly true but on good 
 authority it is said that a large number of them 
 have already been destroyed. They seem to be 
 as vulnerable as they are formidable. 
 
 Monitors and other light-draught vessels 
 have been used along the Belgian coast to help 
 stem the German advance on Calais. Nothing 
 new in this. Our Civil War abounds in in- 
 stances of effective cooperation between armies 
 on shore and gunboats on the water. 
 
 Wireless telegraphy is another recent inven- 
 tion to exercise a notable influence on the de- 
 velopment of this war. It is omnipresent, be- 
 ing found with troops or carried by men-of-war, 
 by torpedo boats, by air ships and even by sub- 
 marines, which doubtless owe much of their ef- 
 ficiency to this invisible means of control. We 
 
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MILITARY AND NAVAL WARFARE 
 
 may indeed say that it is present with every 
 military or naval unit, however small. Its value 
 was so clearly understood by the Germans that, 
 in making ready for hostilities, they established 
 radio stations pretty much all over the world. 
 It was through such stations that they were 
 able to collect their scattered vessels into the 
 squadron which sank the Good Hope and Mon- 
 mouth off the Chilean coast last December. 
 
 But a few years old, wireless telegraphy has 
 so completely won its place in military and 
 naval equipments, that today it is impossible to 
 imagine a general or an admiral conducting a 
 campaign without the hourly use of this mar- 
 velous abridger of time and space. 
 
 I have sought, within the limitations imposed 
 on me by the President's order, to indicate a 
 few of the changes brought about in the tech- 
 nique of warfare. They are most important 
 and they convey useful hints even to us. 
 
 A similar search in the domain of strategy 
 remains fruitless. The same rules are observed 
 which governed the campaigns on land of Fred- 
 erick the Great and Napoleon and on the sea 
 those of Hawke and Nelson. Astounding as are 
 the differences between the tactics of the pres- 
 ent and the past, still more astounding is the 
 
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PROBLEMS OF READJUSTMENT 
 
 changelessness of that other side of war — 
 strategy. What the latter was it ever will be. 
 The tactical instruments by which it works may 
 vary as they will but its principles are always 
 the same. Upon them we may rely with abso- 
 lute confidence. If you hold to them firmly you 
 will be able, through careful study, to see into 
 the future as far as it may be given to mortal 
 man; possibly even to forecast the eventual 
 outcome of this gigantic struggle. And this 
 study I commend to you as well worth the time 
 and trouble it may cost. 
 
 These, then, as I see them, are the chief les- 
 sons of the War in Europe, the protean changes 
 in tactics and the immutability of strategy. 
 
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