Chapter II: Irish-American Feeling (1)

Until I came to America I had not the least idea of the depth of hatred which has existed among Irish-Americans toward England. Nothing that I ever encountered in Ireland itself is comparable with this transatlantic fury of unforgiving hate.

An Irishman who had held very high office in America, a well-educated, a kindly, and a judicious man, told me that when war with Germany was in the air he could not prevent himself from hailing this opportunity for declaring his hatred, his undying hatred, of England. His father had suffered frightfully in the great famine; every story he ever heard at his mother's knee was a story of English tyranny, English brutality, English rapacity; England, for him, stood at the rack centre, the lustful and bestial slave driver, the cruel and merciless extortioner.

This man's good judgment, however, would not suffer him to approve of German militarism, and as events moved forward he gave his support more and more to the cause of the Allies.

"But I want you to know," he told me, striking the table with his hand and watching me carefully, "that I was dead against John Redmond for saying that Ireland must go to the aid of England. Ireland's call was to go to the aid of civilization. If Germany had stood for civilization, I should have been on Germany's side and dead against England.

"I tell you, at the beginning of this business I longed to see England defeated, humiliated, broken to the dust. But civilization is of such enormous consequence that I put my natural hatred of England on one side. The violation of Belgium made me an anti-German. And with the vast majority of Irishmen in America it was the same thing. The menace of German militarism forced us into your camp.

"I am perfectly certain that but for the violation of Belgium there would have been in this country among Irish-Americans an open movement publicly proclaimed in favor of Germany. That is my fixed opinion. And I happen to know what I am talking about."

No Hatred of England.

I gathered in the course of his conversation that Irish friendliness toward England is a final manifestation of a change in the feeling of all America toward England. It was not very long ago that President Cleveland wanted war with England. Hatred of England was at one time as fiercely handed down from generation to generation by Americans as by Irish-Americans. We have to thank our English stars that America has outgrown this historic hate and that Irish-Americans now show the new and happier feeling of their compatriots.

I asked this Irishman, no one better able throughout America to express a just opinion on the subject, what difference had been made in the feeling toward England by the passing of the Home Rule bill.

"It was the passing of that bill," he replied, "which finished the work begun by German militarism. Home rule has softened our feelings toward England, particularly among the thousands of Irish-Americans who are born over here and whose fathers have become too Americanized to remember the sufferings of their ancestors.

"There is still some hatred of England, but not very much. It is a sentimental, a poetic hatred, not a political hatred. One finds it among a few individuals. What agitation is now going on is secret and underground, a sure proof that it is unrepresentative. We ignore it. It means nothing. No; the passing of the Home Rule bill has given balance to the Irish mind.

"It has helped Irish-Americans to realize that the dreadful sins of England are sins of a dead and gone England, and it has helped them to see that the present England, so far as its democracy is concerned, sincerely desires to make reparation for the past. In fact, the war and the Home Rule bill together have produced such a transformation in the Irish-American nature as I, for one, never expected and never hoped to see."

He then warned me that this great change might suffer a dangerous reaction if England allows the religious bigotry of Ulster to split Ireland into two camps. To the Irish-American Ireland is a country, a home, and a shrine, one and indivisible.

"Such a surrender," said my friend, "would not only be fatal to Ireland but fatal to something even greater than Ireland, and that is the cause of religion in an age of increasing paganism. For the world can only be saved from the ruin of paganism, as we are beginning to see very clearly in America, by a union of religious forces.

"I am a Catholic, but I say that any man who says 'Only through my door can you enter into heaven' is a bad Christian. There are many doors into heaven. What we have all got to do, Catholics and non-Catholics, is to insist together that there is a heaven, that there is a life after death, that there is a God. The more doors the better. No one has a monopoly of heaven.

"And to Ireland is offered the opportunity, greater than politicians appear to perceive, of presenting to the world an example of tolerance and compromise in the supreme interests of religion which may have incalculable results for the whole world. But what will happen if England bows before the worst and the stupidest bigotry the modern world can show? Not only will you strike a blow at Ireland and a blow at Irish-American sympathy, but a blow at the vitals of religion.

"For it is only by sinking religious differences and making a common advance against this universal paganism that religion can save the soul of civilization. If you do not see the truth of that fact in England I think you must be blind. The fullness of civilization hangs upon religious union; religious dissension is the enemy."

Change in Ulster.

Another Irish-American who was present on this occasion, an accomplished man of letters and a traveler, asked me what England felt about Ulster's share in the responsibility for the present war.

"I myself have seen two letters from Ulster," he said, "in which the phrase occurs, 'Rather the Kaiser than the Pope.' These letters were written before the war. Ulster, no doubt, has now changed her tune. But it was that spirit, surely, and the reports sent to Berlin by German officers who visited Ulster and inquired into the military character of Carsonism which persuaded Germany that England would not fight."

Irish-Americans are persuaded that Sir Edward Carson is in very great measure responsible for all the ruin and death and bitter suffering of the enormous catastrophe. He boasted that he would make civil war, and such were his preparations that in any other country in the world civil war would have been inevitable.

Germany counted on that civil war. The British Army was said to be completely under the influence of Carsonism. The real catastrophe for the diplomacy of Berlin was not India's loyalty and the vigorous uprising of the young dominions, but the dying down of Ulster mutiny.

These Irish-Americans have hated the ruling classes in England, not only for sins of the past but for the unworthy and most cruel opposition offered by those ruling classes, in the name of religious intolerance, to the ideals of the Irish Nation.

When Unionist politicians sneer at the subscriptions sent by Irish servant girls in America to help the cause of Ireland they should reflect that not only do they fail to make a good joke, not only do they exhibit a horribly bad taste, but they spread hatred of England through the thousands and thousands of people. For it is the loyalty of the poorest of these Irish-Americans, the sacrifices perpetually made by the humblest of them, which should move us to see, as it has certainly moved the American people to see, that the cause of Irish liberty is noble and undying.

Religious Education.

With all my heart I would beg Unionists in England to reflect conscientiously upon this very significant state of affairs in America:

A non-Catholic Bible used to be read in the public schools of America down to the year 1888. A Catholic agitation against this Bible reading was begun in 1885, and in 1888 the custom was finally abolished. From that date to this there has been no religious instruction of any kind in the public schools of America.

Bigotry and intolerance won that victory. The Catholic Church, in its folly, destroyed religious teaching in the schools of the country. Catholics themselves are now looking back on that agitation with religious repentance and political regret.

The result of this abolition is that Catholics and non-Catholics who believe in the importance of religious instruction, and who see the pagan effect of purely secular instruction, do not send their children to the public schools.

"These schools, for which Christians are heavily taxed, are in the possession of the Hebrews. If nothing is done to alter the existing state of things Americans themselves assure me that in five-and-twenty years America will be a pagan country. But a fight is to be made to avert this disaster at the Constitutional Convention to be held next month.

"What we have to do," my Irish friend told me, "Catholics and non-Catholics alike, is to appeal for schools representing Catholic and non-Catholic teaching. Instead of the various churches fighting against each other they must fight together, helping one another to get the schools they demand. Only in this way can we save civilization."

This is how the Irishman, breathing the free air of America, and in America rising to positions of extraordinary power and responsibility, views the foundational question of religion; while England allows herself to be dragged at the heels of the frothing fanatic who has actually dared to raise the unholy battle cry of "Rather the Kaiser than the Pope."

Let the Unionist Party hesitate before it seeks to revive this hideous, utterly irrational and most unchristianlike spirit at the very heart of the British Empire. The sower of hate is the reaper of death.

TO MELOS, POMEGRANATE ISLE.

By GRACE HARRIET MACURDY.

(Destroyed by Athens, 416 B.C., because of her refusal to
break neutrality.--Thucydides V., 84-116; Euripides, "Trojan
Women.")

O thou Pomegranate of the Sea,
Sweet Melian isle, across the years
Thy Belgian sister calls to thee
In anguished sweat of blood and tears.

Her fate like thine--a ruthless band
Hath ravaged all her loveliness.
How Athens spoiled thy prosperous land
Athenian lips with shame confess.

Thou, too, a land of lovely arts,
Of potter's and of sculptor's skill--
Thy folk of high undaunted hearts
As those that throb in Belgium still.

Within thy harbor's circling rim
The warships long, with banners bright,
Sailed bearing Athens' message grim--
"God hates the weak. Respect our Might."

The flame within thy fanes grew cold,
Stilled by the foeman's swarming hordes.
Thy sons were slain, thy daughters sold
To serve the lusts of stranger lords.

For Attic might thou didst defy
Thy folk the foeman slew as sheep,
Across the years hear Belgium's cry--
"O Sister, of the Wine-Dark Deep,

"Whose cliffs gleam seaward roseate.
Not one of all my martyr roll
But keeps his faith inviolate,
Man kills our body, not our soul."

What America Can Do

By Lord Channing of Wellingborough.

Lord Channing, who makes the following suggestion to American
statesmen, was born in the United States of the well-known
Channings of Boston. His father was the Rev. W.H. Channing,
Chaplain of the House of Representatives during the civil war
and a close friend of President Lincoln. Lord Channing has
been for twenty-five years a member of the British Parliament,
and for the last three years a member of the House of Lords,
having been created first Baron of Wellingborough in 1912. He
is President of the British National Peace Congress.

To the Editor of The New York Times:

As a member of the British Legislature for a generation, and a lifelong Liberal, and having also the closest ties of blood with America, and a proud reverence for her ideals, I would wish, with the utmost respect, to offer some comments on one specific aspect of present affairs, as they affect America, which does not seem to have been marked off with the distinctness its importance calls for.

This is the greatest crisis in the history of the world, and attention concentrates itself on the attitude of the greatest neutral State.

It is unthinkable that America can divest herself of responsibility for the final outcome. This seems as clearly recognized in America as in Europe.

To us in England this war is a life or death struggle between two principles--Pan-Germanism on the one side, with its avowed purpose to impose its hegemony and its rigid system of ideas and organization on the rest of the world, not by consent, but by irresistible military force; on the other side the claim of the other nations, large and small, to maintain inviolate their freedom and individuality, and to think and work out for themselves their own political and economic future in their own way.

The one principle would seem the flat contradiction of all that America stands for, the other principle would seem to be precisely the essential idea of free self-government and democratic evolution, in which are rooted the very life and being of America.

For this reason there is instinctive and profound sympathy on the part of the great majority of native Americans with the cause of England and her allies.

This sympathy is not merely the tie of blood or the unity of ideals. Reason has convinced Americans that the supreme principles and highest interests of America will be best safeguarded if the Allies win.

They dread instinctively what might happen if Pan-Germanism absorbed the smaller nationalities, crushed the great free countries like France and England, and dominated the whole world with the "mailed fist," not only Europe and the Far East, but South America and the Pacific. Perhaps the hint of Count Bernstorff that Canada may be treated like Belgium, and the Monroe Doctrine like other "scraps of paper," may also have thrown some light for Americans on a "Germanized" future! And a cast-iron system of commercial and industrial monopoly dictated by German needs cannot attract.

America Can't Stand Apart.

That is one side that American statesmen have to consider. There is, of course, another.

The United States visibly form the greatest force the world has yet seen to bring together, to unite, to assimilate, in the development of their vast territories, measureless resources, and complicated industries, all that is best from all the other great nations, welding slowly but surely, through free institutions, these new elements into instruments for the fuller realization of the generous and noble ideals for which America stands. Perhaps an eighteenth or even fifteenth part of the population is of German origin, a percentage not far from equal to that contributed by the United Kingdom and Canada.

There is thus not only the broad question of avoiding war with Germany, whose people have so large a share in the life of America, a war doubly unwelcome at all times because of the innumerable links of science, invention, professional training, of commerce, and of personal friendship; but there is also the local question of peace and good-will in the daily work of America as between huge sections of her population. These visible facts not unnaturally give great weight to the argument for neutrality. No wise man on this side of the Atlantic will try to ignore them, or take exception to the dignity and correctness with which the American Executive has dealt with the grave problem before it.

Neutrality has, of course, its limits and conditions, logical and moral. Those limits and conditions, the possibility of their infringement in such a way as to make some change of policy imperative, are matters solely for the United States.

The point the present writer wishes to press is on a different plane, and is precisely this:

America does not and can not stand wholly apart from supreme European decisions.

America is as responsible as Europe for the great extensions, definitions, the strengthening and modification of international law. America stands forth as the apostle of arbitration, to widen the area within which disputed points may be determined amicably. America stands also as the chief signatory of the great world conventions which have settled new rules for the conduct of war, to mitigate its horrors, especially for non-combatants.

America has taken a noble part in framing machinery for securing peace and justice, and in moving forward the landmarks of civilization as against savagery, and of human mercy as against cruel terrorism.

Can America safely or wisely divest herself of the duty thus placed upon her, logically and morally, by her participation in this, the noblest work of our age?

And is it wise or is it safe to indefinitely postpone the discharge of this duty?

By the events of the last three months the whole of this new charter of humanity has been challenged and is at stake.

Is it not sound policy as well as an imperative duty to take some step here and now to "stop the rot" and to make good here and now as much as we can of what we have won and wish to keep?

Belgium's Wrongs.

Admittedly a "guiltless and unoffending nation,"[1] whose neutrality and independence had been solemnly guaranteed by treaty, to which the powers concerned in the war were parties, has had her treaty rights violated by one of these powers on the cynical plea that there is no right or wrong as against national interest, that necessity obeys no law, and treaties are "scraps of paper." This is not matter for inquiry or judicial decision at some later date. It has been frankly avowed by the German Government from the outset of this war.

[Footnote 1: Theodore Roosevelt.]

Again, this admitted wrong is not the sudden and unavoidable outcome of events unforeseen and uncontrollable. It has been deliberately planned years ahead, with elaborate preparation of railway and other facilities, and with every invention and contrivance, to rush in irresistible forces; to subvert and destroy the independent State that Germany was herself pledged to defend.

Thirdly, this policy of absolute annihilation of Belgium, of its right to live its own life, its right even to preserve those monuments of its noble and beautiful history which had become treasured heirlooms of the whole world, has been carried out with a ruthless barbarity to the people, and especially the non-combatants, for which it is hard to find a parallel in the worst incidents of the Thirty Years' War or of the devastation of the Palatinate. To bring the actual guilt home to those who actually did or ordered these deeds to be done in individual cases is one thing. The broad fact that these barbarous deeds were done stands manifest and insistent, and demands such instant action as can be taken by a great and responsible people.

And, lastly, there is the undisguised adoption of the policy of terrorizing non-combatants to submission by such acts as forcing women and children to walk before the advancing enemy, the wholesale burning of houses, shooting of hostages and other non-combatants, and the dropping of bombs from aeroplanes not on forts or troops, but on places where women and children can be killed or injured.

And all this tragic sweeping away of such good things as had been won with worldwide consent, at the instance of the Czar in initiating The Hague policy, has gone on, so far as it could go on, with equal horror, throughout Northern France. Rheims and Senlis have suffered the fate of Louvain and Termonde and Malines, and Paris has had her quota of women and children wantonly slain by bombs, exactly like Antwerp.

The Threat to England.

And America knows, as we here in England know, from the open menace of the German press, writing of England as the _one supreme enemy_, that it is the full intention of Germans, if they can, to carry through England, too, even more ruthlessly, the same policy.

We are fighting here, and are confident that we shall fight with success, not only to protect our English homes and to guard the historic buildings of this land but to make an end of this Prussian terrorism of the world; to secure no national aggrandizement, but to secure a permanent and solid peace, based on guaranteed liberties, and a rational settlement of the question of armaments.

These questions touch us all the more because many of us have been the most persistent friends of international peace and have specially labored to promote happy and friendly relations with the German people. The present writer, who was honored by election as President of this year's National Peace Congress, has been associated with the work of men like Lord Brassey, Sir John Lubbock, (later Lord Avebury,) as a member of the Anglo-German Friendship League, and has repeatedly in Parliament argued against any hostile or provocative attitude toward Germany. This war is our answer and our reward!

America in the Settlement.

So far as can be judged from authoritative words of President Wilson and ex-President Roosevelt, America does and will claim a right to share in the final settlement of the terms of a permanent and stable peace.

If that claim is sound, if the efforts of America to create better machinery for securing peace and for generously and humanely vindicating the liberties and happiness of nations and of the individuals who make them up do entitle America to a voice, and a potent voice, in the work of mending and remaking the world after this terrific catastrophe, then I would submit with all respect that it is really idle to wait till all the recognized principles of what has been held to be right or wrong as between nations, and what has been held to be right or wrong in the methods of conducting war have gone overboard, without one word of protest; we must save the world first, if we are to have a real chance of remaking it on lines which are worth having.

Nothing but good could come from immediate action by the American Executive to assert as they, best of all nations, could assert, now and at once in terms uncompromising, unanswerable, that the ground taken up by international consent in the past generation must be held now and hereafter, and accepted as an essential basis of the final settlement.

Such a pronouncement now by America would make a landmark in history--would render a measureless service to the whole world in emancipation from the persistent degradation of the twin doctrines that might makes right, and that necessity knows no law, and would bring to America herself imperishable honor and glory in the fearless assertion and eternal consecration of her own noblest ideals.

I would submit further that such a national declaration by America involves no violation of neutrality, and is in no sense inconsistent with the spirit of official utterances already made.

To take the latter first--we have had notable utterances from the President and from the ex-President.

President Wilson seems to have given a sympathetic hearing to the mission which laid the case of Belgium before him, both as to the violation of Belgium's neutrality and as to the cruel treatment of the non-combatant population and the wanton destruction of towns and villages and of precious historical monuments. He is understood to have promised an investigation, and it is gathered from the Indépendance Belge this week that this investigation has been, and is being, carried out by American Military Attachés in Belgium, and also at the London Embassy of the United States.

Again, President Wilson's recent letter to the Kaiser, while confirming neutrality in precise terms, went on to intimate that there must be a "day of settlement" and that "where injustices have found a place results are sure to follow, and all those who have been found at fault will have to answer for them." If the "general settlement" does not sufficiently determine this, there is the ultimate sanction of "the opinion of mankind" which will "in such cases interfere." He would apparently reserve judgment until the end of the war, but in no way disclaims or surrenders American responsibility.

Mr. Roosevelt is not tied by official responsibility, and can speak with less restraint and more freedom. In The Outlook he has substantially accepted and indorsed all that is material in the Belgian case.

America should help in securing a peace which will not mean the "crushing the liberty and life of just and inoffending peoples or consecrate the rule of militarism," but which "will, by international agreement, minimize the chances of the recurrence of such worldwide disaster," and "will, in the interests of civilization, create conditions which will make such action" as the violation of Belgian treaty rights "impossible in the future."

Like President Wilson, he seems to think that the time for judicial pronouncement on acts presumably guilty and wrongful will come at the conclusion of the war. At the same time he surrenders no part of America's responsibility, but reaffirms it with all the force of his trenchant style.

But elsewhere, and later, he has insisted on the "helplessness"--the "humiliating impotence created by the fact that our neutrality can only be preserved by failure to help to right what is wrong."

Mr. Roosevelt's Remedy.

And he has gone on to adumbrate his practical remedy--"a world league" with "an amplified Hague Court," made strong by joint agreement of the powers, to secure "peace and righteousness," and to vindicate the just decisions of such a court by "a union of forces to enforce the decree." He adds that this might help to obtain a "limitation of armaments that would be real and effective."

That so happy a plan may be capable of realization would be the hope of all wise men.

But where I take exception with Col. Roosevelt is as to America's present "impotence"--that nothing effectual can be done by America without breaking her own neutrality.

That view I wholly traverse. It might conceivably be felt by America, under certain grave eventualities, that neutrality must be broken.

But it is clear that the articles of The Hague Convention of 1907 amply provide for the type of action here and now by the United States which I have ventured to lay before American statesmen in this paper. And, in my opinion, it is conceivable that more good might be achieved by America taking that action, while maintaining her neutrality.

It goes without saying, it really needs no demonstration, that nearly every international agreement embodied in The Hague Convention has been broken, wholly or in part, in the letter and in the spirit, in the proceedings of this unhappy year.

The violation of the territory of a neutral State by the transit of belligerent troops and other acts of war is forbidden, (Articles 1, 2, 3, 4, &c.) It is the duty of the neutral State not to tolerate, (Article 5,) but to resist such acts, and her forcible resistance is not to be regarded as an act of war, (Article 10.)

Interference with Neutrals.

That, of course, covers the case of Belgium completely and establishes absolutely that there is, and need be, no breach of neutrality in resistance thus legally sanctioned to illegal interference with neutral rights.

It is hardly necessary to recapitulate the articles that have been torn up. To refer to the most striking, there is the repeated bombardment of undefended towns, pillage incessant throughout Belgium and Northern France, (Articles 28 and 47;) the levying of illegal contributions, (Articles 49 and 52;) the seizure of cash and securities belonging to private persons, banks, and local authorities, (Articles 52 and 56;) collective penalties for individual acts for which the community as a whole are not responsible, (Article 50.) Articles 50 and 43 should have made impossible the punitive destruction of Visé, Aerschot, Dinant, and Louvain, and numberless villages; Article 56 should have preserved from destruction institutions and buildings dedicated to religion, education, charity, hospitals, &c. All these wrongful acts, committed everywhere, have been prohibited by these articles.

The gradual introduction of the policy of terrorism has been ably traced by perhaps the highest French authority on international law, Prof. Edouard Clunet, formerly President of the Institute of International Law, in a recent address.

"Bombardment par intimidation" was adopted by the Germans in 1870 and used at Strassburg, Paris, Péronne, &c., shells being directed and conflagrations spread in the inhabited parts of towns apart from the fortifications. Germany herself assented to serious mitigations of this practice at the Conference of Brussels in 1874 and at The Hague in 1907.

The worst evolution of the policy of terrorism has been in the throwing from aeroplanes of bombs, explosive or incendiary. M. Clunet lays down that, by the most recent decision of the institute, bomb throwing from aeroplanes must follow the rules of bombardment by artillery. This would prohibit such bombs without formal notice. But in Antwerp bombs were dropped without notice over the Royal Palace, to the peril of the Queen and her young children, and the number of peaceable inhabitants killed or injured was thirty-eight, three children being mutilated in their beds. In Paris, besides the bombs dropped on Notre Dame, bombs were deliberately dropped in the public streets and a number of peaceable victims killed or wounded. The dropping of bombs as an act of war on fortresses, ammunition depots, Zeppelin sheds, &c., is, of course, legal. But the bomb dropping adopted in Belgium and France, and threatened in England, if the opportunity arises, is undisguised terrorism, and not war.

It is important to note also that at Brussels in 1874 Antwerp addressed a petition to the conference praying that any bombardment should be limited to fortifications only. The commission of the conference, which included three well-known German Generals and two professors, recognized the justice of this plea and recommended Generals to conform to it.

But the one point that should appeal most strongly to the patriotism as well as the idealism of America is the fact that the instructions of 1863 for armies in campaign, drawn up by the United States Government in the height of the civil war, first codified the laws for the conduct of war, and have been the source and starting point of all these later international agreements.

And it should be remembered that both Germany and America signed the Fourth Convention of The Hague with its annexed regulations as to sieges and bombardments (Articles 22 to 28) and the further provision which may even yet be applied punitively to the proceedings of the present war. "The belligerent who shall have violated the provisions of the said regulation shall be held liable for an indemnity."

And if it be thought that America can render no help in such a position as the present without violating her neutrality, the answer is that by Article 3 of Convention 1 of The Hague, 1907, neutral powers have the right to offer their suggestions (bons offices) or their mediation, even during the course of hostilities. And further: "The exercise of this right must never be considered by one or the other of the parties to the conflict as an unfriendly act."

With all submission, I earnestly urge on the leaders of American thought to support this attempted interpretation of the supreme duty and the noble opportunity the present position places before their country.

One more word. I referred to the possible benefit of neutrality being maintained while this protest against wrong and appeal for right is at the same time advanced.

Is it not more than probable that there is an immense section of moderate though patriotic opinion in the great German people which at heart deprecates the extreme doctrines of conquest and world supremacy in pursuit of which the great, the wonderful achievements of the German race in science, in industry, in the extension of commerce, are being rashly risked?

CHANNING OF WELLINGBOROUGH.

40 Eaton Place, London S.W., Oct. 29, 1914.

TO A COUSIN GERMAN.

By Adeline Adams.

My Hans, you say, with self-applausive jest,
"When Albert gave his Belgians Caesar's name--
'Bravest of all the Gauls'--surely 'twere shame
The King, unthorough man, forgot the rest:

"'Bravest because most far from all the best
Provincial culture.'"[2] Friend, if now your aim
Be that fine thoroughness your people claim,
Read on: "Such culture's wares, it stands confest,

"Oft weaken minds." And Caesar's word was just.
If men, bedeviled under culture's star,
Have left Louvain a void where flames still hiss,
Speared babes, and stamped the world's own Rose to dust,
God grant that Belgium's soul may dwell afar
Forever, from a culture such as this!

[Footnote 2: "Propterea quod a cultu atque humanitute provinciae longissime absunt."]

What the Economic Effects May Be

By Irving Fisher.

Professor of Political Economy at Yale University; member of
many scientific societies.

When the future historian chronicles the facts of the present great world struggle and attempts to analyze its causes and effects the economic losses, gains, shiftings, and dislocations will form an important part of the story. It is, of course, quite impossible at this time to know, in any detail, what all the economic results will be. Much will depend on how long the war lasts, how many people and how much property are destroyed, what financial devices are resorted to in order to finance it, and which side is finally victorious.

The most palpable and the most fundamental effects will be a partial stoppage of earnings in the nations directly concerned, i.e., a reduction in the "real income," which consists of enjoyable goods. All the other important results follow from this.

The cost, however reckoned, is sure to be stupendous. Prof. Richet is quoted as reckoning it at $50,000,000 a day. This is probably more than half the total income of all the inhabitants of the warring countries. The highest estimates of the total income of the United Kingdom, France, and Germany, estimates of Bowley, Laverge, and Buchel, respectively, total up less than $70,000,000 a day. Russia and Austria are poor countries per capita, and would scarcely bring the grand total to $100,000,000 a day. Moreover, the loss of real income to Europe is, I imagine, in reality much greater than Richet's estimate, chiefly because he takes little account of the indirect costs, which may well be the greatest of all. The cost to the fiscal departments of Government is probably only a small part of the total cost which the people will have to bear. The killing and disabling of the men engaged will cut off the financial support of European families to the tune of hundreds of millions of dollars per year. The physical destruction of capital through the devastation of crops, the burning and demolishing of merchant ships and buildings, the crippling of industry through the sudden withdrawal of labor and raw materials, the introduction of new trade risks, and the cutting off of transportation, both internal and foreign, make up a sum of items which cannot be measured, but which may exceed those which can. Last, but not least, is the impairment of that subtle but vital basis of business, commercial credit.

In short, the central effect is a vast impairment of Europe's current income and of the capital from which her future income will flow. It means a veritable impoverishment of vast populations. The great burden will bear heaviest, of course, on the poor. It will impinge very unequally and will cause a great redistribution of wealth. As always happens, some people, mostly lucky speculators, will come out of the mêlée wealthier than before. This fact will not serve to lessen the discontent of the masses, which their impoverishment is sure to create. Food prices will be high, the earnings of labor will be low, and after the war unemployment will be great, due to the impossibility of quick absorption into the industrial system of returned soldiers, as well as other maladjustments which the war is sure to bring.

The victor may secure indemnity for part of the loss, but not for all; he will, in spite of himself, be a net loser. Taxes will be a crushing burden, merely to secure funds with which to pay high interest on vast new war debts, to say nothing of funds with which to purchase new armaments--if again the nations are forced, by lack of international control, to resume the stupendous folly of racing each other in military equipments.

Bankruptcy and Revolution.

It may well be that among the economic consequences of the war there will be some national bankruptcies, and that among the political consequences will be revolutions. High prices, high taxes, low wages, and unemployment make an ominous combination. We may be sure that discontent will be profound and widespread. This discontent is pretty sure to lead, especially in the defeated nations where there is no compensating "glory," to strong revolutionary movements just as was the case in Russia after her defeat by Japan. Whether or to what extent these movements, in which "Socialism" in the various meanings of that word is sure to play a part, will succeed, depends on the relative strength of opposing tendencies which cannot yet be measured. One possible if not probable result may be, as I suggested in THE TIMES two weeks ago, some international device to secure disarmament and to safeguard peace.

Though part of the losses to Europe will be permanent, her chief loss will be coterminous with the war. She will, therefore, seek ways and means to fill in this immediate hole in her income in order to "get by." To do this she must borrow; that is, she must secure her present bread and butter from us and other nations and arrange to repay later out of the fruits of peace. She can stint herself, but not enough to meet the situation. She must borrow. And in one way and another she will satisfy this necessity by borrowing in the United States.

Most of the strange and unprecedented phenomena which we have witnessed in the last month, in rapid succession, are due to this pressing necessity of the belligerent peoples to cash in now and trust to good fortune to pay later. As soon as the war became even probable Europe tried to cash in on our securities. The pressure for our gold pushed it toward Europe faster than it could move. Exchange jumped to the gold-shipping point of $4.89 per pound sterling, and did not stop. In some cases it reached $7. This was partly due to the desire to get our gold and bolster up a credit structure, tottering before the deadly blow of war; but it was also partly due to the need of ready money for supplies of all kinds. This need applies not only to the Governments, but to the individual people. To obtain this ready money they threw back on us the securities they had purchased of us in former years. They wanted us to take back these titles to future income and give them instead titles to present income. Had they secured our gold their next step would have been to spend part of it for supplies, and this would have caused any foreign dealers to whom they applied to place orders with us. The gold then might have turned the exchanges and have been brought back to us in return for our wheat and other products.

This double transaction is in essence one--a barter of present income in the form of our wheat to Europe for future income in the form of investment securities. It was interfered with by the refusal of the insurance companies to insure the gold and by the closing of Stock Exchanges against the inundating flood of securities. The first difficulty, as to transporting gold, has been largely removed by arranging for drafts against stocks of it kept on both sides of the Atlantic. This will save the need of sending it on risky voyages back and forth, and any final net balances can be liquidated after the war. The second obstacle, the closure of the Stock Exchanges, is more formidable, but cannot completely or permanently prevent the transactions which so many people on both sides are anxious to consummate. Curb markets and limited cash sales on the Exchanges themselves are doing some of this business, and, sooner or later, much more will be done, whether the Exchanges are open or not. Europe needs our wheat and cannot pay for it except with securities, partly because her own industry is paralyzed, partly because ocean transportation is difficult.

What Dumping Securities Means.

Few people seem to realize that the dumping of securities on our shores and the efforts of foreign Governments, such as France and Switzerland, to borrow money in our markets are at the bottom very much the same thing. They are simply two forms of securing present supplies from America in return for future supplies, the dividends and interest on securities from Europe.

It does not much matter whether we buy Government bonds or other securities. If we buy of French capitalists their holdings in American railway securities we simply provide them with the wherewithal to take the French Government loans themselves. They virtually become, without our knowledge, the go-between through which we lend, as it were, to the French Government, in spite of ourselves. It is doubtless well, as a matter of policy, to refuse to loan directly to France, but we must not for a moment conclude that France or any other nation will have to finance the war without our aid. We shall not be consciously helping any particular nation, but we shall be actually helping any nation which can trade with us. Evidently England will get more of our help than any other nation because her shores are more accessible. Germany is more isolated. Unless she possesses a larger food stock than commercial statistics indicate she will be pressing for our food supplies, which may reach her indirectly, we selling to Holland and Holland to Germany; also reversely, via Holland or via Austria and Italy, Germany may sell a stream of securities the other end of which we receive. Whether directly or by devious routes there will inevitably be, so far as I can see, a vast exchange of commodities passing to Europe for securities coming from Europe. In this interchange will be found the dominant economic effect of the war on the United States.

Foreign nations will get their much-needed loans on better terms, even if less promptly, by the circuitous process mentioned than if they could borrow directly in our markets; for their own citizens will pay higher prices than we would, even if, to get the money, they have to sell their other investment securities to us at a considerable sacrifice. England has sold Treasury bills for seventy-five millions of dollars on as low a "basis" as 3-3/4 per cent.

In this virtual trade of this year's crops for titles to future years' crops we shall get a high price for the former and pay a low price (in present valuation) for the latter. Investment securities are, and will be, a drug on the market. In other words, the rate of return to the investor will be high; the rate of interest on long-time loans will be high and stay high, that on short-time loans may fluctuate greatly. The rise in the rate of interest on long-time investments is one of the most vital and far-reaching effects of the war. At bottom, interest always arises from the exchange of present and future goods. The rate of interest, as I have tried to show in my book of that title, is simply the crystallization, in a market rate, of the impatience of the human race for its bread and butter. War has now produced such impatience in populations of hundreds of millions. It is this impatience which dumps the securities upon us, sends down their price, and sends up the rate of interest. As Byron W. Holt has said, there is no moratorium for hunger. The fall of securities in Europe produces the like fall in this and other countries.

One of the consequences to America of being forced to play the rôle of money lender and one of the consequences of the rise in the rate of interest here, or what amounts to the same thing, the fall in the prices of bonds, will be an increased difficulty of financing our own enterprises. Only the most promising enterprises will be able to sell their securities. This means that we shall be neglecting, to some extent, our own enterprises, to finance the European war instead.

This general depreciation of investment securities will doubtless lead to many bankruptcies, if not to a genuine crisis. It will also give tempting opportunities to investors. The likelihood of a genuine panic is lessened by the fact that every one recognizes the real cause of the disturbance and that insolvency is not suspected. According to the best commercial observers, the previous liquidation had been fairly well completed. Unless they are mistaken, disaster will not be likely to follow.

We repeat that since the necessities of Europe have forced her to buy our food in return for her investments, it is evident that during the war food prices will be high and security prices, especially bonds, will be low. These are the two facts of greatest economic significance to us. To the country as a whole they defer some of our pleasures till after the war. Uncle Sam will cut down for the present on his eating and drinking, his clothes, shelter, and amusements in order to share his rations with Europe. Instead of the pleasures foregone he will invest--not in new enterprises at home, but in old ones--American and possibly European also--purchased of Europe. We can never have our cake and eat it too. In this case we shall let Europe eat some of it on condition that she in turn shares hers with us after the war. Moreover, we shall trade off a relatively small piece of our present cake for a relatively large piece of Europe's future cake. In other words, Europe will fill up the great breach in her income now impending by inducing us to make a small breach in ours. The result will be that the course of our real income, that is, economic satisfaction or enjoyable consumption, will imitate in some degree that of Europe. This is, reduced to its lowest terms, the chief economic result of the war.

But to many the question is, do we gain or lose, as compared with what might have been the case if there had been no war? I do not think any one can answer that question with certainty. Europe is willing to mortgage its future to us on terms very advantageous to us; but when the future comes, the purchasing power of money will probably be so much lessened as to have absorbed all our advantage. Probably we shall lose slightly on the whole. But it is not economically impossible that there will be a net gain. In either case the net effect will, I believe, be small.

Of more importance will be the various effects on various classes. Certain people will be greatly benefited by the rise in food prices and the fall in security prices. The farming classes will profit by the former; the investing classes by the latter. Those who have the good fortune to belong to both classes will grow rich. The farmer who is in a position to save money will both make more money to save and be able to invest it more advantageously after he has saved it. If he lends to his neighbors he will find the market rate of interest high. Even if he buys more land the purchase price will be restrained from the great rise we might expect from the prosperity of farming by the fact that the "number of years purchase," as the phrase is in England, will be small, or, in other words, that the interest basis, which enters into every land price, will be high.

Labor Will Not Suffer Much.

On the other hand the general consumer of farm products will suffer from another advance in that part of his cost of living, while the debtor classes will suffer from the fall in bonds or rise in interest. Many speculators on the Stock Exchange, those who have speculated for a rise, are in effect undoubtedly ruined already, and many borrowers at banks on collateral security will feel the pinch from the depreciation of their property and the hard terms of renewing their loans.

And the laboring man, who forms the majority, what of him? It seems improbable that he will be greatly affected, that is, on the average. He will have to pay more for his food, and food constitutes more than a third of his budget. But some articles he buys will probably fall and he may secure higher wages because of the withdrawal of competing laborers. Some labor may rise, especially in the industries benefited by the war, such as, for instance, farming and other food industries, canning, flour mills, sugar, &c., the automobile industry and perhaps ammunition and steel. In other industries thrown out of gear for lack of foreign markets or for lack of foreign raw material, the wage earner may lose in wages and employment. In other words, labor will be dislocated in spots, like the other parts of our industrial machinery.

Important dislocations will be felt in the fields of shipping and banking. One consequence is that American enterprise has now the golden opportunity to capture a good share of each. The outbreak of the war and the simultaneous opening of the Panama Canal will tend to divert the course of trade from Europe to South America. Probably our merchant marine can be developed more successfully for this South American trade than it could for the European trade. New York can largely take the place of London as the world's exchange centre for Pan-American trade. This opportunity is increased by the possibilities in the new Banking act for the establishment of branch banks abroad.

With these opportunities and the rise of interest in Europe, the United States will change to a great degree from a debtor to a creditor nation.

One of the dislocations of the war in the United States will be the cutting off of imports of a large part of our dutiable commodities, and therefore the loss of national revenue. There is an urgent need to compensate for this loss by some other form of tax.

But it is well not to lose perspective, to remember that dislocations are not necessarily losses, that, however loudly they are proclaimed in news columns, they are small in extent, when considered in relation to our whole trade, that this country of ours is a vast one, and that the rank and file of Americans will be but slightly affected by the war--especially by contrast with our friends, now fighting each other, across the sea.

We are too nearly self-supporting to be prostrated. Our foreign trade is and always has been a trifling matter compared with our internal commerce. The internal commerce paid for by money and checks annually in the United States amounts to nearly five hundred billions of dollars, which is more than a hundred times as much as our combined exports and imports.

Almost all of what has been said so far had grown out of the prospect that the prices of foods and other materials needed in Europe will be high, while the prices of securities which Europe does not need and cannot afford will be low. Other prices will rise or fall according to special circumstances. Like a bomb-shell, the effect of the war will be to disperse or scatter prices at all angles of rises and falls. The prices of luxuries will be lowered. The prices of chemicals will be raised. The same article will fall in price in one country and rise in another if the transportation from the former to the latter is interfered with. This is true today of cotton.

There has already been a speculative movement to anticipate these changes and arbitrarily to mark some prices up and some prices down. But as this is guesswork, and will be subject to frequent revision, one of the striking phenomena will doubtless be an increase in the variability of prices. The general level of prices will tend to rise. The rise will probably be greatest in little countries like Belgium, which are in the war zone and largely dependent on foreign trade. The rise will be less in England and in the United States than on the Continent. In fact, it is conceivable that in England the hoarding of money and the shock to credit, which is as predominant there as it is here, may actually lower the general level of prices during the war, especially if we could include in the index number the prices of securities, luxuries, and articles of English internal trade. If any nation tries the old experiment of paying its bills in irredeemable paper money, that desperate expedient will have the same result that it did with us during the civil war. Inflation of the currency will expel gold from that country and raise its price level higher than elsewhere.