Chapter XI
One of the hardest facts about the new revolution for Americans as well as the British to understand is that it means the end of the British Empire. The new revolution, obviously, does not mean the end of imperialism, of political and economic concentration of power, of the rule of the weak by the strong, of the absorption of the small by the large or of the rule of naked power. But the new revolution, in its very essence, is the erection of socialist imperialism on the ruins of capitalist imperialism. This must mean, among other things, the liquidation of the British Empire, the keystone of which is money or money lending and money manipulation. The United States over the Western Hemisphere, Germany over a considerable part of Europe, Italy over a considerable part of the Mediterranean and North Africa, France over her self-sufficient territory in Europe and some of North Africa, Russia over eastern Europe and central Asia and Japan with/or China over the Far East can survive by going national socialist. In so doing each of the great powers just named can practice imperialism as indicated by the exigencies of special situations, needs and relationships. The smaller Scandinavian countries, Spain, Portugal, Switzerland and the low countries, to the extent and in the manner approved and prescribed by the great powers immediately concerned can also survive independently on a national socialist basis, each being largely self-sufficient and not dependent on parasitic forms of foreign income.
But the British Empire can never go national socialist since the essence of the present relationship of the home country as money lender, investor and banker to the colonies is a parasitism which no conceivable variety of workable socialism and economic autarchy can long tolerate. That is the supreme tragedy of the British people in this fateful hour of their destiny. Majority public opinion in the British colonies at the present time, of course, would indignantly, sentimentally and loyally repudiate this pronouncement. That, however, is of no long run importance any more than the gold clauses on American government gold bonds and currency gold certificates were in the face of the imperious pressure of revolutionary economic change to force repudiation.
The British have foreign investments totaling some £3,292,000,000 or some $16 billion at the old parity of dollar-pound exchange. Most of these investments are in the British Empire. In 1937 they yielded Britain an income of £210,000,000, or roughly a billion dollars, which was about 4% of the total national income of Great Britain. This is not a large percentage. But it is a highly important financial quantity as it means a source of supply of foreign exchange. In 1937 Britain’s net import of commodities, that is of commodities retained for British use and not re-exported, was £952,000,000. They were paid for with exports valued at £521,000,000 (F.O.B.) by foreign investment income valued at £210,000,000; shipping services rendered to other countries amounting to £130,000,000; by commissions earned by banks, insurance companies and other institutions amounting to £40,000,000; by £5,000,000 of miscellaneous receipts; and by some £45,000,000 from the liquidation of foreign assets. All in all, over £400,000,000 or some $2,000,000,000 in foreign cash from foreign investment income and liquidation and for services sold to foreigners was needed in that recent year of comparative prosperity to balance the British accounts with the world.
If the world went national socialist or autarchist, most of this cash income from abroad would be permanently lost to Britain. Her imports would have to be cut correspondingly, if not in excess of this figure, since her commodity exports would be sure to decline in a world of nations all pursuing policies of increased self-sufficiency and all industrializing; the less industrialized nations, of course, industrializing most.
If Britain had to cut her commodity imports forty per cent to match her diminished foreign money income, she would have to lower real wages, thus inviting revolt by labor, and she would also have to raise taxes and curtail the capital or unearned income of the wealthy, thus inducing a large-scale flight of British enterprisers and stagnation among those who remained. Economic retrenchment in Britain would entail a whole series of disasters for the British polity and economy. Wiping out foreign cash income on investments and services, which amounts to only some eight per cent of the total national income, will be a far more serious business than this percentage would indicate. It will not mean merely an eight per cent lower standard of living. It will mean the difference between the bearable economic stagnation of the recent past and an unbearable economic stagnation of the near future.
To get a proper basis of comparison by which to appraise the new British economic situation after the world has gone national socialist, it is necessary to bear in mind the following: When British economy was in a healthy state before the war, its commodity exports were so large in relation to its imports that its combined income from sales of goods and services (shipping and financial) and from foreign investments was large enough not only to pay for all imports but, also, to allow a yearly increase of some seven hundred million dollars to twelve hundred million dollars in British portfolio foreign investments. Recently the British have been reducing the total of their foreign assets by two or three hundred million dollars a year. During the war they will reduce the total as much as the day-to-day possibilities of liquidation will allow. After the war, socialism will practically wipe out such investments. Then the British economy, which is geared to a velocity of operation and to types of production of exports and shipping services which allowed a net yearly increase of around a billion dollars in foreign investments, will have to operate almost without income from foreign investments or shipping. In other words, the British economic metabolism flourished for a long time putting on foreign fat; then, for a short time, it lived on that fat; and, finally, as a sequel of a serious illness, it has to lose all its foreign fat and thereafter to live, an emaciated, anemic shell of its former self, wholly without foreign fat.
There is an almost universal tendency among American economists to assume that the British Empire can go national socialist as easily as an economically self-contained and geographically integrated Germany, Russia or United States, once Britain exchanges the rule of the old school tie for that of the new breed of socialist Caesars. The assumption will not bear analysis. Canada, Australia, New Zealand, South Africa and India, to mention only the major economic units of the British Empire, would never, as national socialist states, pay toll or tribute to the English investor, the English banker, the English manufacturer, the English merchant or the English crown. Why should they? They can print their own money, manufacture their own bank credit, manufacture all the goods the British manufacture, sail their own ships and defend themselves.
The notion that the British defend their colonies is largely erroneous. The colonies defend England—just why, they are bound sooner or later to ask themselves. We defend Canada. If the Australians or the Indians needed defense from Japan, the English could not supply it. The British Empire today simply is not a unit for defense purposes as is Russia or the United States. The English need all their fleet to defend their home islands and insure supplies. They, therefore, are of no practical use for the defense of their major colonies.
It may be argued that if the British fleet were not able to hold off Germany and to blockade other potential aggressors, none of the colonies would be safe from them. The problem has to be considered from another angle. Of course, England’s fighting Germany and holding a naval threat over the heads of the Japanese and Italians adds to the defense factors of the British colonies. But that is not the question. The question is whether in the present or rather the future state of world economic organization the British can afford to maintain their fleet and fight a major war with the Have-nots every twenty-five years. If the British cannot afford to contribute heavily to this brand of protection for the colonies out of the profits of their foreign trade and out of their foreign financial income, there is nothing to hold the empire together.
In brief, the financial and defense sides of the British Empire are mutually complementary and dependent on each other. If British finance capitalism has to succumb to socialism in and after the war, and no socialism can tolerate absentee finance capitalism, Britain cannot thereafter afford empire defense and a world war with Germany every generation for the safety of the British colonies. The British colonies, therefore, willy-nilly must then look to other arrangements and policies for their defense as well as be their own bankers and manufacturers.
If British capitalism will not pay, British imperialism will not work. This does not mean that imperialism will pass with capitalism. It merely means that, without capitalism, without the power of money and without world-wide respect for the money system, its ways, myths and contracts, without all these, a little island of nervy adventurers cannot rule a third of the earth. Money knows no geographic limits that is why the British people did not laugh when they guaranteed Poland), but socialism does, and so does military strategy. In the mysticism of money, credit and British ideology, the British Empire is a unit. But in the realism of geography, military strategy and socialistic policy, the British Empire is not and never can be a unit for political administration, economic planning or military defense.
America from the North Pole to the Cape of Good Hope is already, geographically, a unit for defense by a preeminent United States. This hemispheric area could possibly be made a unit for economic planning and barter under our hegemony. For our complete political domination, the area from the North Pole to the Rio Grande is a natural unit, and possibly also from the North Pole to the Panama Canal. The Russian empire is clearly a unit for political and economic administrative and military defense purposes. A French empire in North Africa, an Italian empire in another part of the Mediterranean and a German empire from the Baltic and North Seas to the Black, Aegean and the Adriatic Seas, could all become workable political and economic units and defensible military units. But the British Empire, in the breakdown of finance capitalism and the world-wide dominance of socialism, is an utterly impossible unit, politically, economically and militarily. Hence the utter folly of our lighting for it.
The British have overpopulated the British islands on the assumption that foreign tribute to British money and other monopolies would always take care of a population in excess of the islands’ means of subsistence. For more than twenty years now the British have not been able to market the output of three of their oldest and best monopolies, coal, shipbuilding and textiles. The evidence and consequences may be observed in the “special areas” of Wales, the Tyneside, the Clydeside and parts of the midlands in which men have grown to middle age on the dole without ever once in their entire lives having held a steady job. What has happened during the past twenty years to British coal, shipbuilding and textiles will happen in the next twenty years to British finance. As it does, the curtain will fall on the greatest imperial pageant of history. And, as the world goes national socialist, the British isles will turn into a settlement house, or world charity case No. 1. It is not strange, then, that, in fighting for the perpetuation of their doomed economic power and system, the British make their war objectives synonymous with every moral absolute men are known to cherish. For the British, the new revolution and their war effort to stop it are life-and-death matters. For us they ought to be only a great historical spectacle and lesson. But education, apparently, comes only through experience; and experience comes high. So we shall probably have to sacrifice hundreds of thousands of American lives and billions of dollars worth of American resources to learn that when an empire or a system has to go, it has to go.
Enter Socialist Imperialism
The failures of the democracies since Versailles in diplomacy as well as in economics augur ill for their success both in and after the present world war and both presage and suggest the outline of the new revolution. The outbreak of war in 1939, of course, was, in itself, the most shattering single proof of democracy’s post-Versailles failure. The fact that a nation as badly beaten and as completely overpowered as Germany was in 1919 should be able twenty years later to defy her victors of two decades earlier is a fair measure of the failure of diplomacy and statesmanship among the democracies. Having made in 1919 a peace harsh enough to create Hitler, the Allies, as late as 1935, or four years before the outbreak of the world war, had not the intelligence or the unity to prevent the re-militarization by Hitler of the Rhineland. Players holding poor cards usually play them badly.
It is easy to explain as typically British muddling the blunders of imposing a harsh peace on the world’s most warlike and efficient people and Europe’s most numerous breed, and taking no subsequent steps for its enforcement. It is plausible to account for the non-application of effective sanctions against Japan in 1931, against Italy in 1935-1936 and against Hitler in 1937 on the same general ground. But these facile and popular explanations will not hold water. For one thing, the British are not a stupid race nor, in foreign affairs, are they inexperienced or naive. Still less are they congenitally incapable of long-run calculation or quick action. They did not get their empire by being ninnies or in a fit of absent-mindedness. If their statesmanship has failed to avert a second world war in one generation, the explanation is to be found in a changed situation and a bankrupt system rather than in the deterioration of British statesmanship.
From Versailles to Warsaw, the statesmanship of the democracies played a role of weakness and impotency because money had lost its power. The British and their American and French disciples never believed up to September 2, 1939, that a bankrupt Germany could, if it would, challenge the armed might of the richest nations in the world. Even after the British had declared war on Germany, they continued for a considerable time to cherish the fond illusion that, by virtue of their money superiority, they could win the war almost without fighting. Gold, God and the fleet were supposed to do most of the fighting necessary for the defense of Britain. The fact that British and American statesmanship never, until the last, believed money could be successfully defied by bankruptcy, God by Bolshevism and sea power by land power, is not so much a reflection on the intelligence of the responsible statesmen as an indictment of the scholarship and social thought dominant in the democracies during the twenties. The so-called social scientists of the democracies have not prepared their peoples for the events of the forties for the simple reason that, by and large, the social scientists of capitalism are commercialized, intellectual prostitutes who pander to the tastes of their patrons. The simplest way to prove this is to try to get a realistic discussion of a current social problem published in an American publication or aired over an American radio network.
After Versailles the British could have acceded to the French demand for an ironclad Anglo-French military alliance to keep Germany down and to uphold in a realistic fashion the Versailles system. French military men, with the contempt for capitalism apt to be characteristic of their profession, argued that such an alliance, implemented by a perpetual military occupation of the Rhineland and complete and effective military control of Germany was the only formula for continued peace and security along Versailles lines. They were entirely right. British statesmanship had faith in the power and hopes in the future of money. With such faith and hopes, the British shrank from the costs and implications of a purely military policy on the Continent. Of course, if the power of money made a military enforcement of Versailles superfluous, then, from the British point of view, it was doubly undesirable, since the military repression of Germany in perpetuity was obviously uneconomic in capitalistic terms. The simple logic of it all was that if such measures were necessary and were, as in the nature of things they had to be, extremely bad business, then Britain and capitalism were doomed anyway and Versailles had been won in vain. Obviously, the British were reluctant to make any such admission.
The truth is that if the power of money is finished, so are the power and prosperity of Britain. She has far too many mouths to feed to operate on any basis of pay-as-you-go, produce-what-you-consume and international-barter, national socialism. The tragedy of all this for Americans is that we shall have to be dragged down with the collapse of money and Britain, because British propaganda and the ideology of capitalism have made us the ultimate support of the system.
As Voigt points out so clearly in Unto Caesar, other nations may lose wars and recover, but Britain can lose only one war, her last war. Since the Reformation, Britain has never lost a war, except, after a manner of speaking, that of the American Revolution. Subsequent developments, however, have so subordinated the United States to British interests that the American Revolution can no longer be considered a loss for the British Empire. We are still, now more than ever, a British colony, and by reason of our technical separation from Britain we have been able to develop into an infinitely more powerful and useful ally of the empire than any of the other colonies. If Britain loses a war, she loses her empire and her financial primacy. If socialism triumphs, she has to lose them anyway. With these lost, Britain is through, not only as a great power, but also as a self-sufficient nation.
No other nation in Europe is so dependent on capitalism as Great Britain. No other nation faces as great difficulties in the course of a transition to socialism. If the British have to go under as a great power with the passing of capitalism, it is in keeping with their tradition that they as a people should go down with their ship, fighting to the last. But it is rather silly of us Americans who are the most favorably situated of any people in the world to get on noncapitalistically, to stand with the British on the burning deck of their sinking ship until it goes under. The more Englishmen who are killed and the more their fertility is diminished by prolonged war, the easier will be their ultimate task of living on reduced territorial resources. But no matter how many Englishmen die fighting for capitalism they cannot save it in war this time any better than they could in peace during the twenties and thirties when they, in common with all the triumphant Allies, were flushed with the fruits of the Versailles victory.
From a purely humanitarian and British-loving point of view, it would be vastly more sensible for America to bid England and France stop the war, which they might do, if we told them that they could under no circumstances count on our assistance in the event of its continuance, and if we then assumed full responsibility for the rehabilitation of Britain and the defense of such parts of the empire, under our flag, as we might decide, on strategic grounds, we could reasonably carry out. The real question for us, so far as the British are concerned, is whether we take them over before they are ruined or afterward. There would appear to be a strong case in logic for doing it before instead of afterwards. But logic, like the flowers that bloom in the spring, has nothing to do with the case, and, as habit and passion have everything to do with it, the British will probably have to be ruined with our assistance before their rehabilitation along permanently workable lines can ever receive serious consideration. After we have assisted them through war to the lowest depths of collapse, they may be harder to rehabilitate than at present.
Rehabilitation of Britain by the United States to adjust it to the requirements of the new revolution would, of course, be possible only after we had undergone revolutionary changes ourselves. We should have to revamp our economy so as to permit of the absorption into the United States and Canada of some twenty million British immigrants. That we obviously could not do with ten million Americans already unemployed in this country. We should have to take over Canada and Australia and write off all the British possessions in Africa, Asia and the Mediterranean as well as absorb the excess population of the United Kingdom. Australia could be made invulnerable to invasion by means of appropriate coast defenses, industrial diversification and economic organization. The defense of the entire American hemisphere by ourselves would present no insuperable difficulty. We should abandon Britain’s African, Asiatic and Mediterranean possessions and stations to those best able to grab and hold them.
A gigantic reorganization of the parts of the British Empire which we could defend under an American receivership and reorganization could create a new Anglo-Saxon world which would be not only invincible in a military way but workable in an economic way. The United Kingdom would become another Sweden. The royal family might be kept as a tourist attraction like the quintuplets in Canada. The English would be humbler but happier. It is a revolutionary project, but this is pre-eminently a moment in which new revolutionary projects are necessary for survival. The trouble with our squandering billions of dollars and millions of lives trying to save the British by exterminating bad Germans, bad Japanese and bad Russians is that such expenditure, no matter how successful in destroying British foes, will not—cannot, create for the British a post-war bread-and-butter solution.
Of course, my suggestion for an American receivership for the British before instead of after their total bankruptcy and collapse will not receive serious attention in any responsible allied quarter, either here or abroad. I do not make it with any such expectation. It is my fixed conviction that the British have to commit imperial suicide as a beau geste in keeping with their glorious past and that we Americans have to accompany them quite far in their Götterdämmerung in keeping with the sentimentalism and irrationality of a democracy untempered by enough recent suffering to make realism comprehensible to the masses of the people.
I am, however, deeply sincere in expressing a wish to help the British people. This interest in the British as people and not in their system has its basis in race and not in money. I respect and cherish the values of British blood but not the values of capitalism or any other form of a now doomed internationalism. I would do anything feasible to perpetuate the British as a people and to amalgamate as many as possible of them with ourselves. I am opposed to our taking station on and going down with their sinking ship, international capitalism, as I feel sure we shall do. I value people more highly than systems. The new revolution will go on. The British people can survive by adjusting themselves to the new after centuries of adjustment to the old or they may suffer incalculably by a hopeless defense of the old order and futile opposition to the new order.
There are many thinkers in the democracies today who recognize the inevitability of revolutionary change, but would have it carried out everywhere by their crowd, which, of course, is the great democracies. Thus Clarence Streit’s much discussed Union Now and innumerable other similar proposals emanating from allied sources as propaganda these days, all favor a rather drastic reorganization of the world by the right people, meaning the British, assisted by ourselves, the French, the small neutrals and generally the international satellites of the British. Actually, these proposals, if carried out, would constitute a more revolutionary change than anything so far envisaged by the Fascists, Nazis or communists.
From the point of view of this book, which is anything but pacifistic, the main trouble with these proposals is that they call for the imposition on all mankind of an Anglo-American revolution, something which seems preposterously unattainable to any realist. Revolution, every nation and people must have, but it has to be carried out by each nation. In the name of democracy and freedom, the British and the French are in 1940 fighting to end in Germany a German revolution appropriate to the 20th Century and there to impose the I7th and 18th Century revolutions of Britain and France which are over everywhere. Revolution must come from within, not from without. I should oppose a proposal for an Anglo-American-French conquest of the world for the same reason I oppose the Streit or any other similar plan for a world order conceived and enforced by the aforesaid three power combination. Reasons: It can’t be done and the attempt to do it will be an unmitigated disaster. We can extend our moral or legal control only as far as our guns can shoot and only as long as they can shoot that far. Any sort of hegemony envisioned in terms of other assumptions or hypotheses is a pure chimera as all past experience shows.
It is easy to formulate a hegemony of the democracies on purely moral or legal bases. But the creation and maintenance of such a hegemony, to the realist, presents only the following questions: Whom do we have to fight to impose it? When? Where? How? And with what chances of success? We can answer summarily that any such hegemony is, ipso facto, a scheme of the Haves which will have to be imposed by arms on the militant Have-nots who now greatly outnumber and outwork the Haves, even if they are inferior in economic resources to the Haves. A realist cannot take seriously any proposal, however piously or idealistically it may be dressed up, which is tantamount to an attempt to force upon four hundred million Germans, Russians, Japanese and Italians a world order which is unacceptable to them and would be essentially discriminatory in favor of the two hundred and forty million white British, American and French Haves. This view is by no means taken out of sympathy with the four hundred million dissatisfied. Anything the British and French can put over on the Germans, Russians or Japanese or any other people outside the Americas is all right as far as I am concerned, provided they can do it without our aid. Conversely anything the Germans, Russians or Japanese can put over on the British and French or any other people outside the Americas is equally not my concern. To take a different view is logically to commit one’s country to a permanent military alliance with the countries one assumes one must protect and preserve in their present boundaries. And to make this commitment of the United States to a perpetual defense of any foreign empires and boundaries, would entitle us to a large measure of control over the policies of the countries we guarantee. Otherwise we should be in the position of a person who guaranteed all the liabilities of a partnership, shared title to none of its assets or income, and had no voice in its management. Such a person would not be a partner but a sucker. If the money system cannot support British hegemony without necessity for a world war in which we must take part against the wicked challengers every twenty-five years, there is something wrong with the money system and something impractical about the British hegemony.