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UNSEEN EMPIRE
A study of the plight of —
nations that do not 2
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By HO
DAVID STARR JORDAN
President of Stanford Universtiy
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 PREFATORY NOTE

Some years since, I began a study of the

Eugenics of War, the hereditary effects of the
systematic extermination by war of the bold and
strong among the yeomanry of the nations of
Europe. The first results of this study I set
forth in two little books, “The Blood of the Na-
tion” and “The Human Harvest.” I soon found
it necessary to consider also the “Euthenics” of
War, the non-hereditary effects of the financial
impoverishment of the rank and file of the people
by the cost of war and war armament. This
little book is a preliminary survey of the elements
involved in this subject. There is a Persian provy-
erb, “He who knows will never tell.”? In this
lies my justification for venturing into a field in
which first-hand knowledge is largely out of my
reach, I am indebted to Mr. HE. Alexander
Powell for the phrase, “The Unseen Empire.” I
am also under obligations to my colleagues, Pro-
fessors Edward Benjamin Krehbiel, Alvin Saun-
ders Johnson, Payson Jackson Treat and Albert
Léon Guérard for suggestions of various kinds.
I am also indebted to Mr. Arthur W. Allen of
the World Peace Foundation for the tables in the
appendix, showing the record of debt and ex-
penditure. Lastly, I am under deep obligations
 PREFATORY NOTE

to my wife, Jessie Knight Jordan, for construct-

ive and critical work on the manuscript.
Davin Starr JORDAN
Stanford University,
California.
 CONTENTS
de INTRODUCTION
II. THE UNSEEN EMPIRE OF FINANCE
A Preenant Eroce
CoNSTITUTIONAL ten ata AND Deiiep
PayMENT
Nationat Dest
ScleENcCE AND War
Tue Farmer anp His Burpen
“Tuer PEACE oF Dives’
Tue House or RorHscHILp
BaNKING AND “PAWNBROKING”
THe Unseen Empire or FINANCE
THe GRaTITUDE oF NATIONS
“Monrey Power”
III. THE UNSEEN EMPIRE OF DEBT
War Dest anp OrHer Dest
Dest or Great Brirain
Dest or FRANCE
Dest oF GERMANY
Dest oF THE UNITED Seite’
Dest oF THE LeEssER NaTIoNns
RetativE Cost oF War
Trusts versus War Dest
Tue SprENDTHRIFT AGE
Tue Burpen or ARMAMENT
War EXPENDITURE AND NATIONAL etouneis
War Dest as A BLESSING
Tue Cost or Livine

IV. THE CONTROL OF NATIONS

‘Dorttar Diplomacy” ie
“SPHERES OF INFLUENCE;” (Prusta)
“ConTINUITY OF ForEIGN PoLicy”
 CONTENTS
PAGE
Money AND THE Morocco ArrarR . . . - 69
Money AND THE TripoLt AFFarR . . . . 1712
Cost or A SMAtL MoperN Wak... . . 13
Cost or ARMAGEDDON . . .- . . . . - 4
Inverest or “High Finance”... . - 80
War anp MopverN BaNKING ... - . 83

Vie SEAGPOW ER ice iia aaa nO

ARMAMENT COMPETITION . . - -. . . - 86
Purrosrs oF SEA PowrER . ...- - . 8ST
ABoLtITIoN oF Leaatizep Pmacy .. . . 93
KrerinG. STepieet Seek comes ee nS
Tar .Monnor! DocraINE «= <i9.) sau’. « 96
UNWILEINGNESS (OS PAY G1 eeeee ee ee.
Sra PowERvaNDePOVERTY «4. «© «< sf... 99

VIO “SYNDICATES SE ORE W ARage ses amc Oe,

Tue BrittisH Sure Loppy . . .. . . 102
Miuirarism FurtTHER ENTRENCHED .. . 106
ACTIVITIES OF ARMAMENT SynpiIcaTEes . . . 107
THE “War Scare” as A WEAPON... . III
ARMAMENT FoR WAR OR PEACE ... . . 124
Tue “Peace EstasBlisHMENT” . . . 195
“Peace EsTABLISHMENTS” AND Eecaee ae :
PLOMACY nt? at Cy. 2G
Economic Deecutiere IN poder Ales

VIIF WAR TO-DAY? .0e) een SU

UYPES 108, MODERNE WiAR eo Gu ee SO
OTHE GREAT (LLEUSION@.) e «cee Senn SO
(He (MIRAGECOR DHE NAP?) 2 ee et S4s
Tse Hippen Trait or Dirromacy .. . . 136
“Powers” OR JURISDICTIONS? . . . . . 140
GerMaNy A CasE IN Point . . . 141
ENGLAND AND GERMANY AS a Staines 143
Wuy Tatxk or War? .., Speen od oe AA
ProressionaL INTEREST A Haoron eased LG
A GrRoresauE or History ..... . 148
 CONTENTS
PAGE
VIII. RETRENCHMENT . 151
Functions or GovERNMENT . 151
Expenses UNCHECKED Bel oes LOS
Tue Untrep States anp RETRENCHMENT . 155
A Way vo ReTrENCcH . 167
READJUSTMENT OF VALUES . 169
Curr Business or GOVERNMENT . 172
IX. THE PASSING OF WAR tS
Tue Furure or War . 175
A Way Our... ge LY 7,
Tue Passtnc or Wark . 179
APPENDIX—Tastes or Dest anp ExPENDITURE . 185
A Tue Interest-Brearinc DEsBTs of THE PRINCIPAL
Nations . 186
B Tue Worw’s Mirirary ExpenpDITURE . 188
C ExXpenpirures oF THE TEN CHIEF MILITARY
Nations . . j . . 190
D_ Cost or ARMY PER tie OF ute oa . 191
E Cost or Army and Navy per Unit or Pop-
ULATION a A See ea
F Proprortion oF Mutirary Co to Toran
EXPENDITURES IN TEN NatTIons . 192
G GrowtH or ExprenpITuRES For Army, 188]1- 1911 192
H GrowruH or Expenpirures ror Navy, 1881-1911 193
I Growru or CoMBINED EXPENDITURES FoR ARMY
EACRGIIEONGA
VaWeain sulle ie Sear, Sd) Wg sues Te} LOA
J Tse Growrs or Dest . 194
K Growrs oF Interest CHARGE ged deb , es
L Comsinep Cost or Army anp Navy wit In-
TEREST CHARGES Durinc 30 YEARS - 195
M APPROPRIATIONS AND EXPENDITURES OF THE
Unrirep STATES ES pee . 196
N Expenpirvures oF THE Pustic Monty IN THE
Unirep States . 197
O Pousuic Dest or GREAT Budare . 198
P Pusiic Desr or FRANCE . 199
INDEX - 201
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 UNSEEN EMPIRE
I. INTRODUCTION
In this book I have tried to tell in part the
story of the bondage of the nations due to the
cost of war and of war preparation. I have
tried to show that civilized nations are one and
all in their degree under the dominion of a power
stronger than Kings or Parliaments, more last-
ing than Armies or Navies, that is, the Unseen
Empire of Finance. I have tried to show that
this mastery is not now in the hands of individual
men, however powerful, but that it has passed
over into an impersonal Empire of Debt. I have
tried further to illustrate “Johnson’s law of
waste,” * to the effect that military expenditures
among competitive nations expand in peace or in
war as wealth expands, “by the law that war shall
consume the fruits of progress,” and, finally, to
show a way in which our nation, at least, may
possibly escape the operation of this law.
I have ventured to believe that Johnson’s law
is dependent on a lack of continuous purpose in
popular governments, and that conditions may be
changed by the growth of a robust public opin-
ion opposed to war and debt, and by the extension
of treaties of arbitration, which, while dependent
on public opinion, yet serve to clinch and hold it in
right channels. However great the burden of
1Professor Alvin S. Johnson, The Expansion of Mil-
itary Expenditures. International Conciliation, XLI, p. 9.
1
2 UNSEEN EMPIRE

debt, it is in our hands to shift it. As Sir Edward

Grey has said in this connection: “The door of our
prison is locked on the inside.” The way out lies
in the unprejudiced survey of the whole situation
on the part of a civilian commission of high
minded statesmen who will ascertain the real
needs of the people in the line of national defense,
regardless of pressure arising from personal in-
terests, from professional ideals of military per-
fection and from the tendency to follow blindly
the fashion set by the “Powers” of Europe.
There is no final peace until the civilized nations
cease to stand as “Powers” rated according to
their capacity to exercise external violence, be-
coming “States” in the moral union of the world,
each one, large or small, being primarily a dis-
trict of legal and political jurisdiction, not a
center of physical force. And at the end I have
hoped to make it clear that war debt, the over-
lordship of the Unseen Empire, the “war scare,”
and secret diplomacy are all of them necessary
stages in the passing of war.
In this book there is no discussion of the ex-
istence or the effects of the “money-trusts,” in-
ternational or otherwise, nor is there any account
of the various associations, national or interna-
tional, for purposes of industrial exploitation.
The relation of financial matters to war armament
and national debt alone concerns us.
I wish to say at the outset that my thesis in-
volves no criticism of the men who compose our
 INTRODUCTION 3

army or who man our ships. I believe, however,

that the time has come to cast behind us the
thought of war as a possibility in national affairs,
and to devote our money and our energies toward
more real and immediate needs. We have better
weapons than the sword, a more powerful national
defense than warships.
I hold in the highest esteem the character and
influence of our national academies at West Point
and Annapolis. These stand among the best
schools of engineering in the world, and none
excels them in that discipline of self-restraint
which is the foundation of character. Among the
officers of our army and navy are many who do
most effective work for peace. They recognize
the wickedness and futility of avoidable war.
Those who know war best realize that there can
be no worse calamity.
A typical utterance of a brave man, a states-
man as well as a soldier, is this of General Carl
Schurz after Gettysburg: “There are those who
speak lightly of war as a mere heroic sport. They
would hardly find it in their hearts to do so had
they ever witnessed scenes like these and thought
of the untold miseries connected with them that
were spread all over the land. He must be an
inhuman brute or a slave of wild unscrupulous
ambition who, having seen the horrors of war, will
not admit that war brought on without the most
absolute necessity is the greatest and most un-
pardonable of crimes.”
Il. THE UNSEEN EMPIRE OF FINANCE
In this chapter I try to set forth briefly the
story of the rise of the “pawnbrokers” of the
world, into whose hands the commerce and in-
dustry of the nations have been given as pledges
for purposes of war.
It is true that many of these men and the
houses they have founded have become prominent
as bankers and as leaders in commercial and in-
dustrial enterprise. Many of them also have
been eminent for personal virtue and as benefac-
tors to their kind. Nevertheless, one and all
have laid the foundations of their fortunes in
“pawnbroking,” that is, in ministering to the de-
mands of spendthrift nations.
A Pregnant Epoch
One of the most momentous periods in world-
history was that of the early nineteenth century.
This epoch was marked by the coming together
of growing forces in civilization, all related in
one way or another to the rise of democracy, itself
a cause as well as an effect of the passing of civil
war.
First of these stands government by the
people, as opposed to government by the King
and the King’s favorites. Next comes the move-
ment of scientific research which in turn
gave the impulse toward mechanical invention.
4
 CONSTITUTIONAL GOVERNMENT 5

Invention changed the nature of war, as it

changed industry and commerce. It made war
operations vastly more effective as well as vastly
more expensive. Finally, we have the rise of an
international system of finance, strong enough
and with ramifications wide enough to take whole
nations into pawn, and always at hand statesmen
ready to pledge the future to any extent in the
interest of national glory. .
Constitutional Government and Deferred
Payment
Constitutional Government gives _ stability
which makes possible deferred payments on a
vast scale. The Kings of Old had to pay on the
spot. Their credit was bad. They were forced
to make their way by many devices. Among
these was extortion, a form of which was the
“patriotic loan,” enforced with the prison as the
alternative. Otherwise they depended on fawn-
ing, bluster, sale of favors, debasement of coin-
age, issue of paper money, “squeezing” of taxes,
and other methods characteristic of the absolute
monarchy. “L’état, c’est moi,” “I am the State,”
was the declaration of Louis XIV, and the State,
which was the King, borrowed money at a great
disadvantage. But a Parliament could bind the
whole nation. It could borrow money it never
expected to pay. It had only to keep up the in-
terest charges. Thus the debt of Republican
France today exceeds many times the largest bor-
6 UNSEEN EMPIRE
RD

rowings of Louis the Magnificent. Even the in-

terest charges alone approach the high water
mark of the royal loans of the Eighteenth Cen-
tury.

National Debt
In the theory of William Pitt, premier of Eng-
land, the source of authority lay in the people.
The men of England owned England and were
responsible for its present welfare. “The only
source of authority under Heaven,” wrote Crom-
well, “is the consent of the governed.” But in
Pitt’s view, the owners of England were the
people actually alive at any given time. The
past had no stake in it; the future had acquired
no interest. Therefore, if the men of Great
Britain chose to mortgage their nation to secure
some great present good, it was their right.
Thus immense sums were borrowed and expended
in compassing the downfall of Napoleon, and the
national debt of Great Britain mounted up to
the undreamed-of sum of nearly £800,000,000, a
sum which has never been repaid, will never be
repaid, can never be repaid so long as the nat-
ural growth in national wealth, due to peace,
invention and commerce, is all swallowed up by
the incredible burden of armament. With the de-
vice of the National Debt, as Goldwin Smith ob-
serves, “Pitt removed the last check on war.”
War is no longer limited by the exhaustion of the
combatants, but may be continued at the expense
 SCIENCE AND WAR qi

of future generations so long as international

“pawnbrokers” are willing to cash the bills drawn
against the future.
It is said that Pitt’s last words, with the na-
tional debt in mind, were these, “Oh, how I leave
my country.”
Science and War
In the nineteenth century, mechanical inven-
tion, constantly active, supplanted the wooden
frigate of a hundred years ago by Dreadnaughts
and Superdreadnaughts, gigantic floating forts,
each costing many times an emperor’s ransom,
and each new device tending to send all vessels
of earlier make to the junkheap.. Twelve millions
of dollars may now be spent on a single ship and
every feature of its upkeep is costly in the same
proportion. Like progress has been made in the
art of ship-destroying. Shore guns, mines, tor-
pedoes now forbid the approach of a warship
to a hostile port. Furthermore all ships and for-
tresses are already threatened from the air. All
appliances of war have steadily increased in ef-
fectiveness and in cost, in sad parallelism with
the applications of science in other directions. As
the cost of war expanded, the need for more money
in all warlike nations grew likewise. No nation
was willing to be thought not warlike. Thus,
more and more, the statesmen of the day were
eager to pledge the future of the nation for im-
mediate results.
8 UNSEEN EMPIRE

And as all persistent demand is met by supply,

we have as a necessary result the rise of the
great “pawnbroking houses” of the world, the first
and most powerful of these being the great house
of Rothschild.

The Farmer and His Burden

In a French Journal more than a hundred years
ago there was published a cartoon. A farmer was
plowing in the field and on his back he bore
a frilled marquis of the old régime, tapping his
dainty snuff-box. A century later, in Paris,
was published another cartoon, representing again
the burden of France. The farmer still plowed in
the field, but now, on his back, was a soldier armed
to the teeth and on the soldier’s back was borne a
money-lender.

‘‘The Peace of Dives’’

In his poem, “The Peace of Dives,” Rudyard
Kipling has cleverly told the story of the way
in which Dives, the Rich Man, was allowed to
bring peace among the nations, as a condition of
his release from his place in Torment. In brief,
Dives came forth and went abroad through the
earth, selling to the Kings and the Nations the
costliest of toys. He sold them Sea-power and
Land-power and Imperial Dominion and all Pomp
and Circumstance. For these things, so attract-
ively offered, the Kings and the Nations “pledged
their flocks and farms” and he bound them hand
 HOUSE OF ROTHSCHILD 9

and foot in the maze of debt, until even the

mightiest of them were no longer fit to fight.
“They had pawned their utmost trade, for the
dry, decreeing blade,” but the blade once in their
hands, they had no longer strength to use it.
Then Satan appears, but with all his deadliest
magic, greed and fear and hate, he found it im-
possible to stir up the nations to war. For
Dives had “trapped them, armoured into Peace.”
So bound hand and foot and peaceful by force of
debt, they were ready to be laid at the feet of the
Lord.

The House of Rothschild

It is a true story, that tale of Kipling, but
it is a parable and thus needs a bit of interpreta-
tion. The name of this man, we may understand,
was not Dives. In the beginning it was Mayer
Amschel, but as time went on, his descendants con-
tinued his work, and with them were many as-
sociates. He was not a wicked man, as the orig-
inal Dives was reputed to be, not even a rich man
at first, but sturdy, honest and intelligent. He
was not in “Torment.” He lived in a narrow,
sharp-gabled seven-story house in the Ghetto of
Frankfort-on-the-Main. On the front of this
house in the old days swung a pawnbroker’s sign
of the green shield. Later it was repainted and
in Mayer’s time it was a red shield, “zum rothen
Schild.” And as time went on, all those who lived
in the house received the family name of
10 UNSEEN EMPIRE
oS

“Red Shield,’ in German, “Rothschild.” But

to Mayer’s family alone was granted the control
of the Earth.
The story of the rise of the house of Roths-
child is romantically interesting, but its details
need not concern us here. Mayer Rothschild was
the friend of William IX, Landgrave of Hesse
Cassel and through his adjustments the “Hessian”
troops entered the British service in the Revolu-
tionary War. This was the first step towards
fortune. Others came later, for the Landgrave’s
gold and his own were subsequently loaned out
at a profit to suppliant nations. So from being
a local pawnbroker, Mayer became the “Uncle”
of Kings, and his worth and power were recog-
nized among the financiers of Europe. Nathan
Rothschild, his third son, greatest of world
financiers, extended his father’s methods to other
lands. Establishing himself in London, he
placed his brothers in Frankfort, Paris, Naples and
Vienna. It was his assertion that while one bank
in one capital might fail or might be borne down
by a national calamity, five banks in five capitals,
all working together, could amply guarantee one
another.
Nathan Rothschild was with Wellington at
Waterloo. A system of swift messengers, horses
and carrier pigeons bore secret news from him
(Nathan) in the field to the bank in London, in
advance of all other returns.
At once its clerks bought up from scared bond-
 HOUSE OF ROTHSCHILD 11
EE en ee ee

holders, at a great discount, a large part of the

British National debt, which operation established
then and there the supremacy of the House of
Rothschild. This supremacy it still holds in so
far as it may choose to exercise it.
According to authentic records,? the Roths-
childs made a large broker’s profit each of the
four times they handled the £80,000,000 of gold
which they bought for use in Wellington’s cam-
paign:
1. On the sale of the gold to Wellington.
2. On the sale of Wellington’s paper.
1“That the House of Rothschild with its branches had
an open sesame upon the purse-strings of Europe for
half a century, is a fact. Nations in need of cash had
to apply to the Rothschilds. The Rothschilds didn’t loan
them the money—they merely looked after the details of
the loan, and guaranteed the lender that the interest
would not be defaulted. Their agencies everywhere were
in touch with investors.
“For their services the Rothschilds asked only a modest
fee—a fee so small it was absurd—a sixteenth of one per
cent., or something like that. The bonds were issued and
offered at par. If they would not sell at par, they were
placed on ’Change and sold at what they would bring.
What wasn’t taken by the public, brought, oh, say around
seventy-five. Unkind people say that the Rothschilds
beared all bonds which they, themselves, desired to buy.
It wasn’t their fault if Leopold’s credit was bad,—mein
Gott im Himmel!
“It is safe to say that there is but one government in
the world that has not at some time or another from 1815
to 1870 courted the Rothschilds with intentions.” (Elbert
Hubbard. A Visit to the Home of Mayer Anselm Roths-
child.)
2 Jewish Encyclopedia.
12 UNSEEN EMPIRE
eS

8. On the repurchase of gold from Welling-

ton.
4. On the sale to Portugal of the gold bought
back of Wellington.
Later came “bear” operations looking to the
purchase of the British bonds, and the crowding
out of rivals (Baring: Goldschmid) in subsequent
deals of a similar sort. The sum now owned by
the House of Rothschild has been estimated at
$2,000,000,000 net. The properties controlled
are manifold. According to Mr. E. A. Powell,
“they hold one hundred millions of dollars of
American securities alone. They own large es-
tates in Great Britain, Germany, Austria, and
France, cotton factories at Manchester, cutlery
establishments at Sheffield, ships on the Clyde,
warehouses in London and Liverpool, gardens near
Paris, castles on the Rhine and villas on the
Riviera, mills along the Maas, gold mines in Cali-
fornia, statues in Rome, dahabiyehs on the Nile,
plantations in Jamaica, shawls in India, rubies at
Teheran, tobacco fields jn Virginia, forests in
Siberia, towns in Australia. They call themselves
merchants as well as bankers, and in the largest
sense they are both.” And they are pawnbrokers
as well, still “in the largest sense.”
The House of Rothschild adopted early these
rules of management:
1. The different banks should each act in the
common interest, regardless of the purposes of
the nation in which it might be placed.
 BANKING AND “PAWNBROKING” 13

2. They should never deal with unsuccessful

people.
3. They should not demand excessive profits.
4, They should never “put all their eggs in
one basket.”
5. They should always be prepared to sell
out quickly in case of prospective failure.
6. They should take advantage of all help to
be gained from the press.®

Banking and ‘‘Pawnbroking”’

I have spoken of the early loans of the House
of Rothschild as “pawnbroking”; I may for a
moment digress to insist on a certain distinction
between banking and “pawnbroking.”
Banking, Bete speaking, deals with “go-
Ing concerns.” It is a provision by which free
or idle money may be gathered together and con-
verted into active capital. Through the banker,
money on deposit is placed in the hands of those
who by industrial or commercial enterprise can
make it grow.
“Pawnbroking,” broadly speaking, deals with
failure or waste. Its usual function is to af-
ford means for some act of extravagance, or es-
cape from some complication of past folly or mis-
fortune. The extravagance, folly and misfortune
of nations is summed up in war. Pawnbroking
3 And at one time, a seventh rule existed: They should
not lend to Russia, so long as Jews were persecuted in
that country.
14 UNSEEN EMPIRE
SSS

among nations thus concerns itself mainly with

past war or future preparation, in either case
withdrawing the revenues concerned from all pro-
ductive use.
As there are many nations, ruled by statesmen
of the day, ready to sacrifice the future for the
present, as no protecting deity watches over their
financial operations, and as there exists no official
check to national debt, it is clear that the busi-
ness of the international pawnbroker may be a
profitable one. At the same time one must know
where to stop. To guard over waste and folly
is no sinecure. The cream of the business of in-
ternational pawnbroking has been now skimmed
off, later loans often lowering the values of earlier
ones, and in general only weak states in desperate
luck are eager to pledge their future revenues.
The Unseen Empire of Finance
Up to the middle of the nineteenth century the
great House of Rothschild, with its branches in
five leading capitals of Europe, held almost a
monopoly of national loans and of the control im-
plied by these loans.* Later, with the passing of
4I am informed by a friend, a leading banker, that the
House of Rothschild to-day has largely withdrawn from
that type of banking which deals with war and war debts.
“They are now rarely at the head of syndicates under-
taking national loans, leaving this to the large banking
corporations in the various money centers and only occa-
sionally participating in the operations of these syndi-
cates. The house is now known more as a group of cap-
italists participating in industrial enterprises, discounting
 UNSEEN EMPIRE OF FINANCE 15
SS rs

the founders of the house and with the growth of

other similar concerns, the leadership of finance
becomes more and more impersonal. The in-
dividual gives place to a system and the mas-
tery of the Rothschilds is obscured in the rise
of “The Unseen Empire of Finance.” ‘The
Credit of Europe” and “Das Consortium” are
phrases of like significance.
Among the colleagues and rivals of the Roths-
childs, their associates in the “Unseen Empire,”
we may enumerate a few of the most prominent.
In France the House of Péreire is noted for
its many enterprises. The “Ligne du Nord,”
“the Ligne du Sud,” the “Compagnie Generale
Transatlantique,” and the “Crédit Mobilier” are
among its creations. The House of Fould was
the supporter of Napoleon III. The name of
Bischoffheim stands alike for the finance and the
philanthropy of France.
In Germany, the name of Bleichréder is forever
associated with that of Bismarck and the down-
fall of the third Napoleon.®
paper and profitably investing its surplus funds and those
of their old clients, many of whom have in late years
drifted to the larger banking operations. Last year the
loan to Turkey was negotiated by the Deutsche Bank of
Berlin, with Rothschild’s and other large German and
Austrian banking institutions as participants in the syndi-
cate formed for this loan.”
5 “At the treaty of Versailles in 1871, at the close of the
Franco-Prussian War, Bismarck made a demand for
Alsace and Lorraine, and for an indemnity of 5,000,000,000
of francs. The French representatives, Thiers and Favre,
16 UNSEEN EMPIRE
SS

The name of Camondo, “Citizen of Venice,”

stands out as that of the supporter of Turkey,
“Uncle” to the successive sultans. Through the
House of Camondo, Turkey has acquired the debt
of $500,000,000, which has been her salvation as a
European power. The “sick man of Europe”
was kept alive until his debts should be secured.
The Goldschmids in London were already great
loan agents in the days of Pitt, worthy rivals of
the Rothschilds. The Houses of Goldschmid and
Stern in London, united by marriage, have made
Portugal their own, besides holding large invest-
ments in the bonds of other lands.
In Russia, Baron Horace Giinzburg® of St.
insisted passionately and even with tears that the indem-
nity named was utterly impossible; that France was
wholly unable to pay it or any sum approaching it; and
that if counting it had begun at the birth of Christ, it
would not yet be finished. To this Bismarck replied, ‘But
I have provided for that very difficulty——I have brought
from Berlin a little man who begins counting long before
the birth of Christ’; and upon this he introduced the
Jewish banker, Bleichréder, who found no difficulty in
proving that France was so rich that the indemnity asked
was really too small.
“Bismarck further claimed Strassburg and Metz for
Germany on the ground that there had been twenty-three
unprovoked invasions of Germany from France, in days
gone by, and not one, save in retaliation, from Germany
into France. Germany was henceforth determined to keep
the key to her two western doors in her own hands.”
(Andrew D. White: Seven Great Statesmen.)
6“Baron Giinzburg lives in Russia, where the name of
Hebrew is synonymous with persecution. But when the
Minister of Finance wants to raise a loan or seeks
financial advice he does not send for the Baron to come
 UNSEEN EMPIRE OF FINANCE 1%

Pétersburg has been noted as a leader in finance,

equally as the promoter of culture among the
Jewish people.
Still more widely known and equally respected
is the House of Hirsch™ in Austria, as famous for
to him. He deems it wiser to go to the Baron, for this
shrewd, intolerant old man is one of the Masters and
every one in Russia knows it from the moujik to the
Czar.” (E. A. Powell.)
7It is said that the Baron Maurice de Hirsch spent,
from time to time, over $100,000,000 in charities largely in
aid of the people of his’ race. At the death of his son
he said, “My son I have lost, but not my heir; humanity
is my heir.” Referring to the emigration of the Jewish
people from Russia he declared that “Russia would suffer
from the loss of her Jews, until to those who remained
she would grant civil rights, or else she would fall, as
she deserves, the logical victim of her own intolerance.”
Baron Hirsch held through life one constant aim, that
of turning the Jews from the cities to the farms.
“When Baron Maurice died it is said that he left a
fortune estimated at anywhere from two million to five
hundred million dollars. He controlled—and his heirs still
control—the railway systems of all southeastern Europe.
Every egg that is laid in the Balkans for European con-
sumption, every yard of cloth, every rifle, every jack-
knife that is sold south of the Danube pays a toll to the
fortune of the shrewd old Baron. With the vision of a
prophet this man wove webs of railways through those
districts in the Balkan peninsula which had theretofore
been as inaccessible as if they did not exist, and brought
a market and employment to those men in skirts and
turbans such as had never before stimulated their indus-
try or rewarded their toil.” (E. A. Powell.)
“The general impression of Baron Hirsch was of a man
with tremendous will power, the instinctive genius and
the iron strength of the predestined financier on the
grand scale, the kind of man that creates a world-wide
trust in the United States.
 18 UNSEEN EMPIRE

its great enterprises as for its gains in the field

of pawnbroking.
The House of Cassel is intimately associated
with the credit of Europe, and even better known

“After he had made his colossal fortune, Baron Hirsch

became a prominent figure in the social life of at least
three great countries. He had vast estates in Austria,
a palace in Paris, a sporting estate in England. He soon
became a man whom it was dangerous to cross.
“The Jockey Club in Paris refused him admittance
within its doors. He bought the house over their head.
In Austria, the stiff traditions of court and society made
his social way difficult, but again he was always able to
vindicate his position in a dramatic manner, for the then
Prince of Wales was glad to accept the invitation to his
great sporting parties.
“In London he had innumerable friends, was a power-
ful person in court circles, and was everywhere received
with open arms. And finally when he died, he was seen
to have that intense feeling for humanity which is charac-
teristic of his race, who are at once the most materialistic
and the most idealistic race in the world, by leaving gi-
gantic sums for charitable purposes, and, above all, for
the transfer of the oppressed of his race who wanted to
leave the ghettos of Europe for better chances and more
liberal institutions in other lands.”—(T. P. O’Conner,
Chicago Tribune, Jan. 21, 1911.)
Baron de Forest of London, a son of Baron Hirsch,
has become conspicuous in another field, as a champion of
democracy and as an opponent of war and debt as well
as in the overlordship of finance which by inheritance be-
longs to him. Mr. O’Conner continues:
“Here, the idealism of the father is breaking out, but
in an entirely new direction. And this idealism, with its
gospel of sympathy, above all, for the toilers and the
poor, came from a man who might well have been in
the other camp—who, if he had been an ordinary man,
would undoubtedly have been in the other camp.”
 UNSEEN EMPIRE OF FINANCE 19

in connection with a great engineering achieve-

ment in Egypt.§
The Sassoons were the Rothschilds of the Orient,
—their influence dominant in finance from Yoko-
hama to Bombay.
The names of Mendelssohn, patron of Hum-
boldt, of Montefiore, owner of Australian debt, are
better known for their good deeds than for their
part in international finance, large as their in-
vestments have been. With the names of Werth-
heimer of Austria, scholar and “Judenkaiser,” and
Ralli of Athens, “Lord of the Levant,” we com-
plete the visible circuit of the leading names in
the mastery of Europe. In the same class be-
longs the house of J. P. Morgan & Co. in America.
“It must not be imagined,” says Mr. Powell,
“that these several groups of capitalists are
either rivals or competitors. For what would be
the use? They have divided the world among
them, America alone excepted. As a matter of
fact, they are all not only friendly, but are al-
8“The land of Egypt was uneasy and unhappy, for the
Lord had withheld the rains in Abyssinia and the Nile
ran dry and the cotton crops wilted away under the burn-
ing African sun. From London came a banker, Cassel by
name, and built a great dam across the Nile up near As-
suan and the waters poured forth over the parched land
even as they had when his ancestor smote the rock, and
the blue-shirted fellaheen rose up and called him blessed.
They made him a Baronet—whether because he built the
dam or rescued the English king from bankruptcy I do
not know—and in Egypt he is more powerful than the
Khedive and the British consul-general rolled into one.”
(E. A. Powell.)
20 UNSEEN EMPIRE
SS

lied to one another by so many close ties of blood,

marriage and business that it requires but a
stretch of the imagination to describe them as a
single great group, syndicate, dynasty, empire
—The Unseen Empire of Finance.
“To recount the accomplishments of this hand-
ful of men is to recount the history of Europe
for the last three-quarters of a century. Twice
have the Rothschilds saved the Bank of England
from suspension; thanks to the ability of old
Baron Alphonse, France was enabled to pay the
indemnity of five milliards of francs which Ger-
many had imposed in the expectation that it would
crush her for a generation. It was on the money-
bags of the Foulds and not on the bayonets of
his soldiers that Louis Napoleon reached his un-
stable throne. It was Gerson von Bleichréder
who extricated the Prussian Government from its
financial difficulties in 1865, played a great part
in financing the war of 1870-71, and for his serv-
ices as financial adviser on the question of. the
war indemnity had the Iron Cross pinned to his
breast at Versailles by the old Emperor William
himself. Hirsch opened up the Balkan states to
commerce and civilization; Cassel proved himself
the latter-day Moses of the Egyptians; Gold-
schmid, by his gigantic railway schemes, gave
Germany a commercial empire in Western Asia.”
The Gratitude of Nations
The masters of finance have no need of
 GRATITUDE OF NATIONS 21

blandishments. The coaxing has been all on the

other side. The nations who go into debt do so
with their eyes open. The indebtedness of Aus-
tria to the House of Rothschild brought rank and
title to the five brothers at once. That similar
gratitude has been felt by other subservient na-
tions is shown by a moment’s glance through the
biographies of international bankers.®
Here we note the names of Baron Nathan
Rothschild, the founder of “high finance,” Baron
Alphonse de Rothschild of Paris, Baron James
Rothschild of Paris, Baron Karl Rothschild of
Naples, Baron Salomon Rothschild of Vienna,
Baron Albert Rothschild of Vienna, Sir Anthony
Rothschild of London, Baron Lionel Rothschild
of London, Lord Nathan Rothschild of London
(the present head of the house), Baron Mayer
Rothschild and lastly Baron Willy Rothschild of
Frankfort under whose perhaps too conscientious
hands the original bank was suspended. Again,
Sir Ernest Cassel, Sir Moses Montefiore, Count
Abraham Camondo, Baron Sir Edward Albert
Sassoon, Baron Maurice de Hirsch, Baron de For-
est, Baron Herman Stern, Viscount Stern and
Sydney Stern now Baron Wandsworth. Among
the Goldschmids, we find Sir Isaac, created Baron
de Palmeira by the king of grateful Portugal
whose control he shares with his relative, the Vis-
count Stern. In St. Petersburg, Baron Horace
Giinzburg and Gabriel Giinzburg of Wilna, the
9 As given in the Jewish Encyclopedia.
22 UNSEEN EMPIRE

latter not a baron but granted as a special favor

the title of “honorary and hereditary citizen” of
Russia. All these and others bear in their de-
gree testimony to the fact that nations and mon-
archs in distress are not ungrateful.
‘Money Power’’
In this discussion one may freely admit the
sturdy virtues of the founders of the House of
Rothschild, and agree that many of their suc-
cessors in finance have been high-minded men.
Nor need we belittle their achievements in the in-
dustrial development of the world, nor their gen-
erous part in European philanthropy. But this
fact remains: Each of these great fortunes was
established on national waste, ordered by the
people under the forms of constitutional govern-
ment and in the interest of war.
It is also of course true that the so-called
“Money. Power” of the world has had many
sources and many manifestations not connected
with national debt, To follow these in their vari-
ous ramifications is no part of the purpose of this
book.
The recent situation in regard to interna-
tional finance is summed up by Mr. E. Alexander
Powell *° in a statement which, however, dramatic,
can hardly be called an exaggeration. Mr.
Powell says:
“The European peoples are no longer under the
10 Saturday Hvening Post, June 19, 1909.
 “MONEY POWER” 23

Governments of their respective nations. They

have passed under another scepter. They have
become the subjects of another Power—a Power
unseen but felt in palace as in cottage, in Rus-
sia as in Spain, by every parent and child, by
every potentate and every laborer. No nation on
the European continent has any longer an inde-
pendence that is more than nominal. The polit-
ical autonomy of every one of them has been sur-
rendered to the will of a despotism before which
every kingdom and empire and republic fawns in
the most abject subserviency.
“Would the people of Great Britain have you
believe that they are free? Great Britain owes
a war debt of more than three billion eight hundred
millions of dollars. By it she is bound for all time
and eternity. She can never pay the debt and
she knows it. She never expects to pay it. Of
this incalculable sum every inhabitant of the
United Kingdom owes something over eighty
dollars. Every child born under the Union Jack
between Land’s End and John O’Groat’s is con-
fronted with a bill for a like sum. Such, then is
the thraldom of Great Britain—and ‘Britons
never shall be slaves.? From being the most in-
dependent sovereignty that ever existed in the
world she has become but a province of the Un-
seen Empire.
“Ts thrifty, industrious France the exception?
The French nation, republic though it is, is
shackled hand and foot with the chains of her
24 UNSEEN EMPIRE
Th

overwhelming indebtedness—and the money-lords

hold the keys. Germany likewise has fallen before
their stealthy advance. The German Empire,
notwithstanding the bloody victories by which it
came into being, notwithstanding its array of
battleships and avalanche of armies, notwithstand-
ing the mighty weapon which Bismarck forged and
placed in its hand—the financiers picked their
steps in the days of that grim old man—dares
not, any more than any other European nation
dares not, take any important step—to colonize
in China or the Cameroon, to build a warship, to
dig a canal, to contract for a new rifle, to sign
a treaty—without first making petition to the
occult Powers of Money who rule and reign from
the sandy isles of Friesland to the charcoal-burn-
ers’ huts of the Bohmer Wald.”
The bankers of to-day hold Europe in peace,
because, indeed, they hold Europe! !?
11“In the security necessary for international invest-
ments lies the prime hope of the world’s peace. «.
The Jews, the original missionary people in whom
the families of the Earth were to be blessed, have made
the millennium possible by the creation of the Bourse.”
(Israel Zangwill: Italian Fantasies, 1910.)
 Ill. THE UNSEEN EMPIRE OF DEBT

In this chapter is given a brief account of the

rise and growth of the national debt in certain
of the leading nations. In these matters the
fault, where fault there is, must be placed mainly
on the shoulders of the borrowers. The great
masters of finance have played, in general, a wait-
ing part.
War Debt and Other Debt
The extent of the war debt of the individual
nations of the world is shown in Table A, as given
in the appendix to this volume. These vast sums,
in the aggregate, must be described as war debt,
because without war all other debts might have
been long since paid. It is quite true that much
of this money has been borrowed for investment in
railways and other productive utilities. Such
has been especially the case in France, where
about half the debt has had its apparent origin
in expansion of national improvements. A con-
siderable part of the debts of Prussia, Italy and
Japan are of this nature, as also most of the
debt of Canada, Australia, and New Zealand. In
some cases these investments have proved unwise
or losing ventures, thus adding to the aggregate
of inert debt.
Yet it is unquestionably true that by far the
greater part of all this debt had its origin in war,
25
26 UNSEEN EMPIRE
TS

and that in the last fifty years the aggregate

repayments on war debt, together with the inter-
est payments on such debt, have greatly exceeded
the total amount of debt of non-military origin.
In other words, if it had not been for war and
war preparations, the natural income of the na-
tions would have easily paid off all indebtedness,
including that borrowed for industrial and com-
mercial expansion.
We may further add that debt, whatever its
origin, is still debt and has the same general ef-
fect of restricting the financial freedom of na-
tions. Again, in all lands, non-military debt, in
common with other indebtedness, tends steadily
to increase. The nation which seeks to reserve its
available funds for purposes of war becomes thus
still further embarrassed. Peace revenues should
be adequate for peace purposes. The limit of safe
borrowing lies in the ability of the investment
made to pay its way—to cover its interest charges.
The world over, deferred payments of nations
have found in war their origin and their excuse.
The national debt of the world, when fully an-
alyzed, is war debt pure and simple.
In any discussion of national debt, we must re-
member that other branches of government are
not sinless. The national interest charges are all
superimposed on the charges paid by a large
system of local and municipal indebtedness. And
to this again is added the burden of debt carried
by the individual citizen. Municipal debt has in
 DEBT OF GREAT BRITAIN QT

every land been a factor in municipal ownership

of utilities. It may be wise and legitimate to bor-
row money in an expanding business when the
capital taken yields its proper return in interest.
A rapidly growing city can count on the reduc-
tion or dilution of its burden by an increasing
population. But to borrow money to postpone
evil days without adequate means to meet the
interest is dangerous and demoralizing for munic-
ipalities as for men or nations.
There is much to be said for government owner-
ship of utilities, railroads for example. But for
a government to buy without paying, or to bor-
row the money from the original owners to pay
for the roads, is merely to wager that govern-
ment management can make more out of them than
private owners can. It may be justified only when
it succeeds. Oni the whole, most borrowings, state
or municipal, fail in this regard.
The experience of France in buying the “Ouest”
system of railways on these terms is a case in
point. The semi-political management now ex-
isting is at a disadvantage in every way, and the
system has been a source of increasing loss from
the time the government acquired it.
Debt of Great Britain
The bonded debt of Great Britain! properly
1The account of the growth of debt in Great Britain,
France, Germany and the United States is chiefly con-
densed from the Credit of Nations, by Francis W. Hirst:
Washington, Senate Document No. 579, 1910. See also the
diagram in the Appendix of this volume.
28 UNSEEN EMPIRE

begins with the Revolution of 1689. Before that

time the King of England, as was common with
monarchs generally, frequently raised sums by
the pledge of jewels, the mortgaging of tempo-
rary revenues or the extracting of loans (not al-
ways repaid) from the Jews. In the war of
King William III against James II and the King
of France, Parliament was ready to pledge the
national resources, as the available taxes were not
adequate for the operations of war. By thus
forestalling taxes, the foundations of the great
national debt were laid. Because of the doubt-
ful credit of Parliament at the time, the loan of
£250,000 in 1690 could not be had at less than
8% interest. Numerous other loans followed, for
which various sources of revenues were pledged,
as customs duties and finally “taxes on bachelors,
widows, marriages, births and burials.” Even as
thus secured, the bonds were sold at a heavy dis-
count. The name of “Dutch Finance” was ap-
plied in reproach “by old-fashioned people to the
various devices for throwing the burden of ex-
penditure on posterity, that were introduced
along with William of Orange and ‘the Glorious
Revolution.’ ”
In the reign of Queen Anne, lotteries were
added to the sources of revenue and an era of
official and private speculation culminated in the
“South Sea Bubble.”
In the reign of George I, quiet and frugality
reduced the debt, which had amounted to over
 DEBT OF GREAT BRITAIN 29

£12,000,000 in the reign of William III and to

£52,000,000 in the time of Queen Anne. Other
wars raised the figure to £129,000,000, where it
stood at the beginning of the American Revolu-
tion in the reign of George III. “By this time
it was clear that the national debt was advanc-
ing at a dangerously rapid rate and the whole
of it had been spent on war.” The war with the
American colonies was still more disastrous from
the point of view of finance. The total debt at
the end of the war was nearly £250,000,000, and
the value of the “funds” or bonded evidences of
debt fell with each increase of borrowed money.
At every British defeat they fell lower, and
scarcely rose with British victory. “They fell
and fell; the capitulation of Lord Cornwallis re-
duced them to 54, and they could scarcely have
gone lower if they were to retain any value at
all.” The lowest point indicated by Mr. Hirst
is 47,
The figures above named indicate only the
funded debt, which had risen in 1814 after Na-
poleon’s retirement to Elba to £743,000,000.
After Waterloo, the unfunded debt is estimated
at £60,000,000 and the funded debt at £826,000,-
000. This gigantic increase, the beginning of
what we may call world bankruptcy, was due to
the policy of Pitt and his successors, avowedly
throwing on posterity the cost of the downfall
of Napoleon.
Retrenchment has at different times made re-
30 UNSEEN EMPIRE
a
EES

duction in this debt, the most extensive and suc-

cessful effort covering the period between the
years 1887 and 1899. This brought the value
of 3% consols? up to 110. The Crimean war
had added £33,000,000 to the debt. Other dan-
gers to credit have arisen from the Imperial De-
fense Act of 1889, and still later from the con-
stant rise in military and naval expenses.
The political policy which preceded the Boer
War caused the steady fall in value of the con-
sols. With this war came a marked depreciation
of credit until 1901, when consols stood at 913.
The Boer War raised the national debt from
£635,000,000 (in 1899) to £798,000,000, and
“the national savings of thirty-six years of peace
were swept away by national borrowings during
three years of war.” There is, however, a small
but regular decrease of the British Nationa! Debt
which goes on automatically, through the opera-
tion of a national sinking fund.
At the present time English consols stand near
their lowest point, 76. The effect of this de-
preciation in government securities may be il-
lustrated by the history of the Birkbeck Bank in
London, here compiled from London newspapers
of the time.
This bank was noted as one of the most con-
servative in England, its reserve being largely
in consols and other supposed high-grade, low-
interest securities. It went into insolvency be-
2See note page 32.
 DEBT OF GREAT BRITAIN 31

cause of the failing price of these securities. It

suspended payment on June 8, 1911, with a de-
ficiency of about four hundred thousand pounds.
It had, shortly before, weathered a severe run
which resulted in the withdrawal of three millions
of pounds, little of which had been returned.
After the crash, Bernard Shaw appealed to the
government to come forward and make good the
four hundred thousand pounds, claiming that “it
would have paid us as a nation to subsidize the
Birkbeck to four times this sum annually had
such help been necessary. Now 112,000 people,
who, if they had their houses shaken down by an
earthquake would have been rescued by the public
as a matter of course, are thrown into the most
distressing anxiety and threatened with a
calamity that will spread far beyond the direct
sufferers.” Mr. Shaw therefore begs the govern-
ment to reopen the doors of the Birkbeck Bank
and “to give it hopes of such an annual grant-
in-aid as will save it from retreating, like the
other banks, into the service of the comparatively
rich only. There is no class in which the struggle
for existence is so warring and incessant as in the
class that banked at the Birkbeck. Are they to
be abandoned to a calamity which will do several
millions’ worth of mischief when the yield of about
half a farthing on the income-tax would avert
it?” It was said in Parliament by an official that
the failure of the bank was due to “‘Lloyd-George
Finance.” The Chancellor of the Exchequer re-
32 UNSEEN EMPIRE
a
eR ES A

torted by showing that it was due to the deprecia-

tion in the value of securities and especially of the
government securities known as consols.? “At
the time of the Boer War the reserve was
more than ample to cover every scrap of de-
preciation. At that time our securities began to
drop away. In 1899 certain securities stood
at 112. They are now worth 85}. Certain
others stood at 101 in 1899, and now at 84. A
factor in this depreciation is the Colonial Security
Act.”
In Great Britain and Ireland, the local debts
are estimated in 1901 at £376,000,000, in 1906
at £560,000,000. These are growing at a rapid
rate, but they differ from most national debts
in yielding a fair interest return. Nevertheless,
the fact of a rapidly growing municipal indebted-
ness in every city greatly complicates the problem
of national debt and national expenditure.
Debt of France
The national debt of France dates from the
French Revolution. But the Kings of France,
on the theory of absolute monarchy, had been bor-
rowers for long before. The earliest king to
raise loans on security was Francis I. He
secured money from the city of Paris, and in
return alienated certain royal privileges, which
8 Rigidly interpreted, the issue of “consols” (that is,
“Consolidated Bank Annuities”) is not the borrowing of
money directly, but through the sale of “perpetual an-
nuities.”
 DEBT OF FRANCE 33

became known as “rentes sur |’Hotel de Ville.”

The royal debt rose in 1561 to 74,000,000 francs,
a sum so large that Catherine de Medici thought
to reduce it by the seizure of ecclesiastical proper-
ties. The clergy evaded this by a new debt,
“rentes sur la clergé,” accompanied by various
exemptions from taxation. Under Henry IV
the debt had arisen to about 337,000,000 livres,*
which Sully reduced by about 100,000,000 livres.
Afterwards borrowing became habitual and under
Louis XIV, the prince of borrowers, “the finance
ministers had a hard task to supply their mas-
ter’s prodigal magnificence.” The tontine an-
nuity became a popular method of raising money
for the King. This state of affairs was
changed by the great economist Colbert who
took active measures to reduce the debt, “acting
on his belief that rentes were a most useless and
expensive possession of a state. He had no be-
lief in the benefits of credit. In his eyes loans
were always made by idle capitalists for unpro-
ductive purposes and he looked upon the interest
charge as an improper burden on the taxes.”
This sound view had its practical disadvantage,
for war was actually on and under these condi-
tions Colbert found it very difficult to raise any
money at all. It is the device of the deferred
payment which makes modern war preparation,
and therefore modern war, possible to any nation.
With the death of Colbert “all sound manage-
4 Highty-one livres tournois equals 80 francs.
34 UNSEEN EMPIRE
——
ain:

ment vanished from French Finance.” “Aprés

nous le déluge” was a current motto. In 1715,
at the end of the reign of Louis XIV, the debt
stood near 2,000,000,000 francs. Afterwards,
following the operations of John Law and his
reckless colleagues, it rose to 2,400,000,000
livres. Then followed a period of bankruptcies
and forced loans called “reductions and con-
solidations of debt.” With Turgot, under Louis
XVI, came a period of retrenchment and wise
management, “neither bankruptcy avowed nor
masked by forced reductions, nor by increase of
duties, nor by borrowing,” a policy which, in
Hirst’s opinion, might have saved the monarchy
of France. But Turgot’s successors, Necker and
Calonne, continued to borrow and confiscations
on a large scale took place under the guise of
forced loans and loans repaid in paper “assi-
gnats.”
In 1793, Cambon created a great body of pub-
lic debt, in which the king’s indebtedness took the
modern form of a national debt. It had now
risen to a capital value of 3,500,000,000 francs,
which was cut down by paper money, confisca-
tions and patriotic loans, in 1797, to 800,000,-
000 francs. Thus was eased the strain on the
government at the expense of the people, caus-
ing consternation and bankruptcy far and
wide.
Under Napoleon, the issues of inconvertible
paper money ceased and loans were avoided so
 DEBT OF FRANCE 35
ose Se
far as possible.* Napoleon hated debt, but his
“policy of making war pay its way” imposed
very heavy annual burdens on France and still
heavier ones on the conquered _ territories.
France thus escaped, however, the burden of per-
manent debt, and her financial condition under
Napoleon was “enviable compared with that of
the victorious Government of Great Britain.”
The aggregate increase of French debt in the
time of Napoleon was about 140,000,000 francs.
But this figure in no degree represents the money
cost of Napoleon’s wars either to France or to
her willing and unwilling allies.
Under Louis Philippe, the debt steadily rose
until it reached the sum of 3,540,000,000 francs.
The Second Republic was a period of financial
disorder, of “forced loans” and converted obliga-
tions, leading to a capital debt of 4,620,000,000
francs, or about $920,000,000.
The Second Empire continued the policy of war
(and borrowing) in the Crimea, in Mexico and in
Italy. It fell in the Franco-Prussian war of
1870-1872, a struggle unprecedented in Euro-
pean history for cost and waste. The final re-
sult was a debt of 9,000,000,000 francs. “The
enormous stored-up wealth of France and the re-
cuperative powers of the nation were then won-
5“You have supplied and paid the army; you have re-
mitted 30,000,000 francs to the state treasury; you have
enriched the museum at Paris with 300 objects, the
products of 30 centuries.” (Napoleon, 1797, at Bassano.
Address to His Soldiers.)
36 UNSEEN EMPIRE

derfully displayed.” The Germany indemnity

of 5,000,000,000 francs was promptly paid by
two loans through the French house of Roths-
child, and made good by the patient industry of
the people. Then followed giant loans in the in-
terest of the “great programme” of schemes of
public works instituted by de Freycinet. The
guarantee of interest on railways, the purchase
of the Ouest system, the expansion of the army
and navy, the cost of the war and the Commune
brought France’s debt in 1908 to the unpre-
cedented figure of 30,161,000,000 francs. This
is the largest aggregate burden yet borne by any
nation, and its interest charges are double those
of Great Britain. It is true, however, that the
debts of the other Latin nations are higher in
proportion to resources than that of France.
The local indebtedness of France has grown in
like proportion. It is estimated in 1906 at 4,-
021,000,000 francs, having risen from about 60,-
000,000 francs in 1830.®
The national taxes of France including the in-
terest on the public debt, amount to very nearly
5,000,000,000 francs yearly. In addition to this.
and to the local taxes is added the aggravation
of the Octroi or local impost on articles enter-
ing the limits of town or city.
6 For a diagram of the growth of the public debt of
France, the reader is referred to the Appendix of this vol-
ume.
 DEBT OF GERMANY 37
aa

Debt of Germany
Germany, as a consolidated nation, is the
youngest of the Great Powers, her territory hav-
ing been for centuries the battle ground of her
neighbors. Since the establishment of the Em-
pire, her bonded indebtedness has risen by leaps
and bounds, for her war and peace expenditures
have been on a grand scale. In 1877, the debt
stood at 72,000,000 marks. It is supposed,
however, that a modest sum, commonly stated
as 120,000,000 marks, had been held over out
of the total amount received from France in
1873 and still rests in the Julius Tower at
Spandau. But against even this, treasury notes
to the full amount have been issued by the govern-
ment.’ The payment of the indemnity was a
heavy burden on France, but its effect on Ger-
many was equally burdensome, for it led to an
era of speculation and unregulated production,
intensifying those evil results which always fol-
low victory in war.
“Norman Angell’ (Ralph Lane) says of this
experience : 8
“The decade from 1870-1880 was for France
a great recuperative period, and for Germany,
7In the United States, the deposits of gold and silver
in the treasury against which notes have been issued are
not counted as assets of the government, as understood by
us. The “Imperial War Treasure” at Spandau is not the
property of the Empire, but of the holders of the notes
issued against it.
8 The Great Illusion.
ise)ez) UNSEEN EMPIRE

after a boom in 1872, one of great depression.

We know that Bismarck’s life was clouded by
watching what appeared to him an absurd mir-
acle: the regeneration of France after the war
taking place more rapidly and more completely
than the regeneration in Germany, to such an ex-
tent that in introducing his Protectionist Bill in
1879 he declared that Germany was ‘slowly
bleeding to death,’ and that if the present proc-
ess were continued she would find herself ruined.
In the Reichstag, May 2, 1879, Bismarck
said:
“We see that France manages to support the
present difficult business situation of the civilized
world better than we do; that her Budget has in-
creased since 1871 by a milliard and a half, and
that, thanks not only to loans; we see that she
has more resources than Germany, and that, in
short, over there they complain less of bad times.’
“And in a speech two years later (Nov. 29,
1881) he returns to the same idea:
“It was towards 1877 that I was first struck
with the general and growing distress in Germany
as compared with France. I saw furnaces
banked, the standard of well-being reduced, and
the general position of workmen becoming worse,
and business as a whole terribly bad.’
“Trade and industry were in a miserable con-
dition. Thousands of workmen were without em-
ployment, and in the winter of 1876-7 unemploy-
ment took great proportions and the soup-
 DEBT OF GERMANY 39

kitchens and State workshops had to be estab-

lished.
“Every author who deals with this period
seems to tell the same tale. ‘If only we could get
back to the general position of things before the
war, says Maurice Block in 1879. ‘But salaries
diminish and prices go up.’ ®
“In examining the effect which must follow the
payment of a large sum of money by one country
to another, we saw that either goods must be
imported by the nation receiving the indemnity
to compete with those produced at home; or the
gold must be kept at home and prices rise and
so hamper exportation; in the case of the country
losing the gold, prices must fall and exports rise.
That this, in varying degrees, is precisely what
did take place after the payment of the indemnity
we have ample confirmation. The German econ-
omist, Max Wirth (Geschichte der Handelskri-
sen) expresses in 1874 his astonishment at
France’s financial and industrial recovery: “The
most striking example of the economic force of
the country is shown by the exports, which rose
immediately after the signature of peace, despite
a war which swallowed a hundred thousand lives
and more than ten milliards ($2,000,000,000).’
A similar conclusion is drawn by Professor
Biermer, who indicates that the Protectionist
movement in 1879 was in large part due to the
9“T.a Crise Economique,” Revue des Deux Mondes,
March 15, 1879.
40 UNSEEN EMPIRE
RR

result of the payment of the indemnity, a view

which is confirmed by Maurice Block, who adds:
“The five milliards provoked a rapid increase
in imports, giving rise to extravagance, and as
soon as the effect of the expenditure of the money
had passed there was a slackening. Then fol-
lowed a fall in prices, which has led to an in-
crease in exports, which tendency has continued
since.’
“But the temporary stimulus of imports—not
the result of an increased capacity for consump-
tion arrived at by better trade, but merely the
sheer acquisition of bullion—did grave damage to
German industry, as we have seen, and threw
thousands of German workmen out of employ-
ment, and it was during that decade that Ger-
many suffered the worst financial crisis expe-
rienced by any country in Europe.”
In 1908, the national debt stood at 4,253,000,-
000 marks, the lion’s share of it having been paid
out for the army and a steadily increasing per-
centage for the navy. To these sums should be
added the debts of the individual states, that of
Prussia alone having grown at a rate compar-
able with that of the burden of the Empire. The
total debt of the Empire and all the states was,
in 1908, 14,362,000,000 marks or about $3,-
600,000,000, which is not far from the debt of
Great Britain. The debt of Prussia arose from
1,965,000,000 marks in 1881, to 7,963,000,000
in 1908. Under the policy of Germany, by
 DEBT OF UNITED STATES 41

which the expenses of the army in time of peace

are met mainly by loans, we may expect the
steady increase of the national debt which has
been rising of late at the rate of 60 to 100 mil-
lions of dollars per year. This is balanced in a
degree by the extension of national holdings,
especially in the financially profitable state rail-
way system. On the other hand the absorption
of German capital in industrial affairs creates
temporary embarrassments through the necessity
for short-time loans which German banks cannot
wholly cover and which are largely drawn from
London, Paris and New York. German govern-
ment bonds range at about 80. As investments,
I am told, they are now generally avoided by
the banks as undesirable forms of security. The
day is past when the war debts of great nations
offer especial attractions to those whom in the
past they have made “masters of Europe.”
The local debt in Germany as in other coun-
tries rises steadily with the extension of municipal
improvements. The total is given by Mr. Hirst
as over %,400,000,000 marks. It is said that
the debts of the German towns combine financial
security with a high rate of interest. This is
due to their excellent municipal management.
Debt of the United States
In the early days, most of the Colonies had
embarrassed their finances by large issues of
paper money, at first to meet war emergencies
42 UNSEEN EMPIRE
ES

and afterwards ordinary expenses. These notes

fell rapidly in nominal value and they were
finally for the most part repudiated.
At the outbreak of the Revolution the same
mischievous practice continued on the part of the
Continental Congress and of the individual states.
The notes lost in value until “not worth a Con-
tinental’’ was a general expression of worthless-
ness. It is said that Boston was in 1779 “‘on the
verge of starvation: money transactions had
nearly ceased and business was done by barter.”
In 1787 the Federal Constitution granted Con-
gress “power to borrow money on the credit of
the United States,’ while forbidding individual
states to coin money or to emit bills of credit.
“The Government of the United States,” says
Mr. Hirst, “inherited from the states of which it
is composed the vicious principle of confounding
debt with currency. The crude notion of rais-
ing money by debasing the currency whether by
adulterating the metal or by issuing an excess
of paper has now been relegated to the least
civilized and intelligent states of the world. But
traditions die hard and the system of propping
up credit by currency regulations may still be
traced in the laws of the United States.” 1°
The national debt once started grew rapidly
as in other nations, notwithstanding the influence
of wise financiers, notably Albert Gallatin.
In 1816, the bonded debt stood at $127,000,-
10 Hirst, The Oredit of Nations, p. 104,
 DEBT OF UNITED STATES 43

000. In following years of peace this amount

was rapidly reduced. In 1835 it stood at about
$34,000,000. Each war which followed was ac-
companied by increase of debt. The Mexican
War added $49,000,000 to the sum total which
stood in 1851 at $68,000,000. Succeeding
governmental extravagance checked its natural
reduction so that in 1860 it amounted to $64,-
800,000. The Civil War, with its gigantic ex-
penses and depreciated currency, raised it to $2,-
773,200,000. The country had been flooded
“with short time paper which served the pur-
pose of currency, expanded prices and increased
the speculation and extravagance always in-
cidental to war. Temporary obligations falling
due in the midst of civil conflict were a source of
double vexation to the Treasury Department,
which was obliged to conduct a series of refund-
ing operations and at the same time to go into
the market to borrow ever increasing sums.” 11
The Confederate states met their expenses al-
most wholly by treasury notes which served as the
currency of the people. These steadily fell in
value, until they became worthless and the first
issues were repudiated to make way for later
ones equally worthless. It was regarded as im-
possible to carry on war by means of taxes alone.
“This,” says White, “was a mistake. Except for
money borrowed abroad every country pays the
cost of a war at the time of the war. All of the
11 Dewey, Financial History, p. 317, as quoted by Hirst.
44 UNSEEN EMPIRE
enn

debts of the confederacy were obliterated at the

end of the war. . . . There being nobody
else to pay for it, the people of the Confederacy
must have paid for it during the time of the war
and not a moment later.”
After the war, there were many fluctuations
in the values of paper money, and several finan-
cial panics in which the relation of “greenbacks”
and of silver to gold bore a certain part. In
1892 the bonded debt had fallen to $585,000,000.
The war with Spain raised it to $1,046,000,000
in 1899. In 1911 it had been reduced to $915,-
353,000.
Up to 1900, “it had always been the policy of
the government to pay its interest-bearing debts
as soon as possible in order to avoid unnecessary
burden on the taxpayers.” But at present this
policy has been more or less cast aside in the in-
terest of military expansion and unwarranted
River and Harbor improvements. Old-time
economists, occasionally found in Congress, have
rarely succeeded in checking the extravagance
which the politicians and armanent syndicates de-
mand, and which the people seem able and willing
to pay for with borrowed money.'? “I know but
12 Horace White, Money and Banking, p. 148, as quoted
by Hirst.
13In connection with Table A in the Appendix, Mr.
Arthur W. Allen, author of the table, makes the following
explanation of the reasons why the gold and silver certifi-
cates are not to be regarded as part of the national debt.
“In the account of the national debt of the United
 DEBT OF LESSER NATIONS 45

one way,” said Albert Gallatin in 1800, “that a

nation has of paying her debts, and that is pre-
cisely the same that individuals practice; spend
less than you receive, and you may then apply
the surplus of your receipts to the payment of
your debts.”
The local debts of the various states, counties
and municipalities, mount to a large figure. In
1902, the sum total is quoted at $1,765,000,000.
This with all other items in the record is steadily
rising. The aggregate indebtedness of the
United States is, however, small in proportion to
her resources and their constantly expanding pos-
sibilities.
Debt of the Lesser Nations
The bonded debts of the smaller countries of
Europe need not be discussed in detail. In gen-
States, given in table A, I do not include $1,461,600,000 in
the form of gold and silver certificates. Against these
certificates there is held their exact equivalent in gold
and silver coin or bullion, This being the case, though
these may be technically included in the debt of the
United States, they are in reality mere warehouse receipts.
From the business point of view they are no more a debt,
as a matter of fact, than is a bushel of wheat or a bale of
cotton or a piece of furniture, for which a warehouse has
issued its receipt. These articles in every case are the
property of the person holding the certificate, and the
certificate is an evidence of ownership—not a promise to
pay. They can by no process be lawfully used for the
payment of any other obligation of the warehouse.”
An actual obligation, or debt, is involved in the issue of
treasury notes or “greenbacks,” unsecured promises to
pay, to the amount of $346,681,506.
46 UNSEEN EMPIRE

eral, they have followed the lines indicated in the

discussion of the debt of France. But the other
nations of southern Europe have borrowed even
more recklessly than France. The debt of Italy,
for example, is nearly half that of France while
her resources are only about one-fourth as great.
The debt of Spain is nearly one-third that of
France, while her wealth is but one-tenth. The
debt of Japan, $287,500,000 in 1903 (less than
half that before the war with China) since the
war with Russia, has risen to about $1,325,000,-
000. The debt of Persia (about $26,000,000)
is due mainly to the benevolent attentions of her
neighbors, who, in the words of the London
Times, “are exercising control over her for her
own good.” Were she bound hand and foot to
the international bankers as Turkey is, she would
be regarded as fitted for a career as an inde-
pendent nation.
The small nations which have given up the
struggle and frankly devoted themselves to their
own business are more or less definitely free
agents. It is true, however, that in most cases
only the jealousies of their larger neighbors, the-
“balance of power,” has saved them from absorp-
tion. Among these nations relatively free and
prosperous,—prosperous because free,—are Swit-
zerland, Denmark, Holland, Belgium, Norway
and Sweden. In each of these, the average
wealth of the common citizens runs higher in
proportion to population than in England and
 RELATIVE COST OF WAR AT

Germany. This is because their money is largely

left where it belongs, in the hands of the people.
But in all of these one may trace the influence
of the evil example set by their larger neigh-
bors.
Canada owes over $336,000,000, none of it war
debt, money invested in “going concerns” of her
great railways, the profits of which are largely
returned to her people.
New Zealand has little actual war debt. Her
various civic experiences she has purchased at a
cost of a bonded debt of nearly $346,000,000, a
large sum for less than a million people, but their
islands are unusually rich in natural resources,
and very little of this money, about six per cent
only, has gone into the waste of war. This in-
cludes the cost of Maori wars and of a small
armament.
Australia is a greater nation, less favored by
nature, and from the liability to drouth, subject
to greater financial risks. She has no war bur-
den save what she has patriotically and needlessly
assumed, but she has likewise ventured on costly
experiments, the burden of which she has thrown
on generations to come.
Relative Cost of War
Meanwhile, during the nineteenth century, the
wealth and resources of each of these nations
have grown with unexampled rapidity. The in-
crease has been primarily due to mechanical in-
48 UNSEEN EMPIRE

vention, which applied to manufacture and com-

merce has enormously augmented the effectiveness
of the individual man. It has also enabled na-
tions to dispose of their products to better ad-
vantage than when all articles produced had to be
consumed within a limited district. Through the
development of commerce all nations have become
neighbors and international trade is now one of
the greatest factors in human society. At the
same time have come better adjustments in all re-
lations, a better division of labor among men, and
in general a condition in which men of all parts of
the world may contribute to each other’s welfare.
The increase in wealth vastly exceeds the increase
in national debt, but this fact has been more or
less completely neutralized by the gigantic ex-
penditures on war preparation to which nations
have been incited by the vastly increased cost of
war itself. Enormous as economic growth has
been, it is still subject to the check involved in
Johnson’s law, that with expanding and compet-
ing nations, “war shall consume the fruits of
progress.” 'The burden of tax and debt bears just
as heavily on the toiler to-day as it did a century
ago, and this notwithstanding the rapidly growing
political importance of the individual. The
superior prosperity of certain nations is due to
the failure—for various reasons—of expenditure
to keep pace with growing resources; in other
words, such nations have not been living beyond
their means.
 RELATIVE COST OF WAR 49

“The England of William and Mary,” says

Professor Johnson, “a great power, conscious of
her destiny to command the seas, spent on her
army and navy about the same amount of money
that Switzerland, protected by treaties and the
conflicting interests of the powers, spends on her
army to-day. The England of 1775, facing the
revolt of her American colonies and confronted
by bitter enemies on the Continent, spent on her
army and navy a quarter more than Belgium
spends to-day on an army that might almost be
said to exist for ceremonial purposes alone, since
Belgium would be absolutely helpless in case of
aggression by a great power.
‘Absolutely considered, modern peace is un-
questionably vastly more expensive than the wars
of an earlier period. True, the wars involved a
large destruction of property and loss of life that
never figured in the expenditures. But our
statistics for times of peace also fail to include the
waste of time entailed by universal military serv-
ice and the waste of ability in organizing so vast
an enterprise as an army of peace.
“It is true, of course, that the world to-day
is incomparably richer than the world of Pitt or
of Marlborough. The per capita burden of mod-
ern armaments would have been almost in-
tolerable to the British of the eighteenth century;
it would have crushed the taxpayers of France
or Germany. It is possible—though not very
probable—that the burden of military expendi-
50 UNSEEN EMPIRE
ee —————————EE

tures signified greater hardship to the average

citizen of an eighteenth century state than it
signifies to the citizen to-day.”
Trusts versus War Debt
The bonded debt of the United States amounts
to $915,353,000, a huge sum it is true, but of rel-
atively modest proportions as compared with the
debts of Europe. Whether our burden of trusts
and privileged interests in America is less weighty
than the load of war debt in Europe added to
their own burden of privilege (none the less op-
pressive because of long standing) is a question
aside from our discussion. But the war debt of
Europe certainly presses there more closely and
more persistently, especially on the laboring
class, while in America efforts toward the re-
moval of privilege have been more continuous and
effective than most similar struggles in Europe.
However, as the present generations in both
Europe and America have been born to this debt,
the burden pressing everywhere and mostly by in-
direction, the individual man does not feel it
acutely. It is like the pressure of the atmos-
phere, always felt and therefore not recognized.
But a release, were it possible, would work
enormous social and economic changes in the long
run wholly for the better.’
Throughout modern history, two of the most
effective weapons of tyranny have been the De-
14 See p. 127, “Economic Difficulties in Disarmament.”
 THE SPENDTHRIFT AGE 51

ferred Payment and the Indirect Tax. By the

latter, the people never know what they pay, by
the former all embarrassments are thrown on
posterity. The men of to-day are the posterity
of yesterday, and they bear on their shoulders all
that the nineteenth century has shirked. For
debt there have always been a thousand excuses,
but there is only one relief. Nations as well as
individuals must pay as they go.
The Spendthrift Age
The expanded credit of the world, according
to the editor of Life, may be likened to “a vast
bubble on the surface of which, like inspired in-
sects, we swim and dream our financial dreams.
We have long since passed the simple or
kindergarten stage of living beyond our incomes.
We are now engaged in living beyond the incomes
of generations to come.”
Let me illustrate by a supposititious example. A
nation has an expenditure of $100,000,000 a year.
It raises the sum by taxation of some sort and thus
lives within its means. But $100,000,000 is the
interest on a much larger sum, let us say $2,500,-
000,000. If instead of paying out a hundred mil-
lion year by year for expenses, we capitalize it, we
may have immediately at hand a sum twenty-five
times as great. The interest on this sum is the
same as the annual expense account. Let us then
borrow $2,500,000,000 on which the interest
charges are $100,000,000 a year. But while pay-
52 UNSEEN EMPIRE

ing these charges the nation has the principal to

live on for a generation. Half of it will meet cur-
rent expenses for a dozen years, and the other
half is at once available for public purposes, for
dockyards, for wharves, for fortresses, for public
buildings and above all for the ever growing de-
mands of military conscription and of naval
power. Meanwhile the nation is not standing
still, In these twelve years the progress of in-
vention and of commerce may have doubled the
national income. There is then still another
$100,000,000 yearly to be added to the sum avail-
able for running expenses. This again can be
capitalized, another $2,500,000,000 can be bor-
rowed, not all at once perhaps, but with due re-
gard to the exigencies of banking and the temper
of the people. With repeated borrowings the
rate of taxation rises. Living on the principal
sets a new fashion in expenditure. The same
fashion extends throughout the body politic. In-
dividuals, corporations, municipalities all live on
their principal.
The purchase of railways and other public utili-
ties by the government tends further to compli-
cate the problems of national debt. It is clear
that this system of buying without paying cannot
go on indefinitely. The growth of wealth and
population cannot keep step with borrowing even
though all funds were expended for the actual
needs of society. Of late years war preparation
has come to take the lion’s share of all funds how-
 THE BURDEN OF ARMAMENT _ 53

ever gathered, “consuming the fruits of progress.”

What the end shall be, and by what forces it will
be brought about, no one can now say. This is
still a very rich world even though insolvent and
under control of its creditors. There is a grow-
ing unrest among taxpayers. There would be a
still greater unrest if posterity could be heard
from, for it can only save itself by new inventions
and new exploitations or by a frugality of admin-
istration of which no nation gives an example to-
day.

The Burden of Armament

Nevertheless this burden of past debt, with all
its many ramifications and its interest charges, is
not the heaviest the nations have placed on them-
selves. The annual cost of army and navy in the
world to-day is about double the sum of interest
paid on the bonded debt. This annual sum repre-
sents preparation for future war, because in the in-
tricacies of modern warfare “hostilities must be
begun” long before the materialization of any
enemy. In estimating the annual cost of war, to
the original interest charges of upwards of $1,-
500,000,000 we must add yearly about $2,500,-
000,000 of actual expenditure for fighters, guns
and ships. We must further consider the gen-
erous allowance some nations make for pensions.
A large and unestimated sum may also be added
to the account from loss by military conscription,
again not counting the losses to society through
54 UNSEEN EMPIRE

those forms of poverty which have their primal

cause of war.’°
For nearly a hundred years the armament
budget of each civilized nation has been increasing
with acceleration and in one way or another it
finds ample public sanction for all its extrava-
gances. It bears no logical connection to the need
of defense or to any real necessity of the nation.
Professor Grant Showerman justly observes that
“modern peace is only a near relation of war, of
a different sex, but of the same blood.” It is the
dormant side of war. In the words of Bastiat,
“War is an ogre that devours as much when he is
asleep as when he is awake.” It must be noted,
however, that in all lands, voices are being raised
against these forms of extravagance, though as
yet most of them are “crying in the wilderness.”
In a few nations only, and in those mainly from
reasons of tax exhaustion, has there been any at-
tempt to place a limit on such expenditures.
War Expenditure and National Resources
The “endless caravan of ciphers,’’ which ex-
presses the annual interest on debt and the annual
cost of military expenditures, represents the in-
15A recent study of Dr. S. Dumas of Paris is interest-
ing in this connection. Dr. Dumas shows that in France,
Germany, Denmark and Austria, the death rate among the
people at home is 12 to 25 per cent greater in time of war
than in time of peace. The percentage in Austria for ex-
ample rose from 2.92 to 3.22 in the war of 1866, in France
from 3.28 to 4.06 in the war of 1871. (The Peace Move-
ment, Berne, March 30, 1912.)
 WAR EXPENDITURE 55

terest charges yearly on a capitalization of $100,-

000,000,000. This amount, of which the entire
earnings are devoted to past and future war, is
just a little less than the estimated value of all
the property of the United States ($110,000,000,-
000). It is nearly double the wealth of Great
Britain ($58,200,000,000), practically double
that of France ($50,800,000,000), more than
double that of Germany ($48,000,000,000) and
three times that assigned to Russia ($35,000,-
000,000). It is equivalent to the total capital of
eight states like Italy ($13,000,000,000) or ten
like Japan (about $10,000,000,000). Almost the
equivalent of the total estimated wealth of Hol-
land ($4,500,000,000) is expended every year
for military purposes in times of peace by her am-
bitious and reckless neighbors. The greater
wealth of Spain ($5,400,000,000) or Belgium
($6,800,000,000) would last for a year and a
half, while that of Portugal ($2,500,000,000)
would be consumed in a single year by the mili-
tarism of Europe alone.'®
The entire yearly earnings of the United States
in all wages and salaries amount to $15,363,641,-
778. This would pay the military bill of our
country for thirty years, that of the world for
nearly four. The world cost of war for a
year consumes the wages (the average being
$518) of 8,000,000 American workmen, or of
3,300,000 Americans who work for salaries (av-
16 Bliss—Encyclopedia of Social Reform, p. 1279, 1906.
56 UNSEEN EMPIRE

erage being $1,188).‘7 A similar comparison

for Europe would almost double these propor-
tions. The average wealth per capita of the in-
dividual man is set down in Europe as $727, in
America as $1,209. The results of the life work
of ten average men will pay for about one minute
of the military expenditure of the world. Now
if all this is truly necessary to the peace and well-
being of the world there is not a word to be said
against it. But a matter of such gigantic im-
portance should be justified by very careful study
and very complete evidence.
If all civilized nations could be placed on a
peace footing, it would be a comparatively easy
matter to pay off the national debts. The sav-
ings thus achieved would make a new world, in
which poverty need not exist as a result of exter-
nal social or economic conditions, but solely from
causes inherent in the individual.

War Debt as a Blessing

A hundred years ago it was a favorite saying
that “a national debt is a national blessing.” In
this view of the case lies a double fallacy. On
the one hand national borrowing tends constantly
to transfer savings from the common man to the
money lenders. On the other, the money bor-
rowed is used for temporary and non-productive
purposes. When the “navies melt away,” the
17 Kstimates based on the Reports of the United States
Census Bureau for 1910.
 WAR DEBT AS A BLESSING 57

money and the effort expended on them vanish,

leaving the nation so much the poorer, as the
same money and the same effort might all have
been turned into productive channels. If the
government presented its bonds gratis to the
money lenders, or if bonds or money were stolen
outright, the nation as a whole would be none the
poorer. It would be a transfer of wealth, whether
honestly or not, within the confines of the nation.
As matters stand, in the words of Professor John-
son:
“The money raised through the bond issues
serves as an instrument for taking men who would
otherwise be engaged in productive labor away
from their tasks and setting them at the useless
occupation of dawdling around the barracks. It
takes capital away from manufactures and trans-
portation and embodies it in warships that fifteen
years hence will at best serve as targets for still
more formidable warships at artillery practice.
To ignore the waste of war debt is to elevate mili-
tary expenditures in the economic sense to the
rank of graft and common theft—practices which
transfer wealth, but do not destroy it. Mili-
tarism steals our wealth and wantonly burns it up
or sinks it in a bottomless sea. All that is saved
is the financiers’ commission and the armourers’
profit.”
Moreover, the idea that because its bonds are
held within its own boundaries, a nation is none
the poorer for its debt, involves further fallacy.
58 UNSEEN EMPIRE

There are “empires within empires.” For exam-

ple, though the Rothschilds in London are re-
corded as English, those in Paris as French, those
in Berlin as German, this great house never be-
longed to any country. It existed and still exists
for itself alone. So with all other great syndi-
cates of finance. ‘These groups cannot serve two
masters equally. They naturally serve themselves
first.
Whether the gold paid out in interest leaves
the country or not has no significance, so long
as it leaves the purses of the taxpayers. If it
leaves the country, something equivalent has been
returned. All devices of the spendthrift nation,
the indirect tax, the deferred payment, the gov-
ernment monopoly, tend to divert money from the
pockets of the common man to the vaults of the
financiers. A million little streams of coin unite
to form a great river of gold, controlled by the
masters of finance. The common man may waste
his money. The financier knows how to make it
work. We hear of great investments in foreign
lands on the part of the chief nations of Europe.
These investments do not (outside of France !8 at
least) represent the people’s savings. They rep-
resent primarily usury on war loans, profits on
armament and on armament loans, voted by parlia-
ments in excess of fear or excess of “patriotism.”
18 France is a country of small investors. The influence
they individually cannot wield is exercised by an oligarchy
of great financial establishments, Le Crédit Lyonnais, La
Société Générale, and the like—(Albert L. Guérard.)
 THE COST OF LIVING 59
——______
The common man, the farmer and the workman
have no stake in these international investments.

The Cost of Living

Throughout the civilized world for the last fif-
teen years (since 1897) there has been a steady
increase in the cost of living, a steady fall in the
purchasing power of gold, not compensated by a
corresponding increase in wages or salaries.
That this is not due to local conditions or local
legislation is evident, for it affects all nations
about equally. It is felt in the same way in
provincial Austria and in provincial Japan, as I
have personally observed. To this rise in cost,
there are, no doubt, many contributing causes,
most of which I need not discuss here. It is, how-
ever certain that by far the most important of
these arises from the world-wide increase in taxa-
tion due to the immense increase of the cost of war
and war preparation. Taxes, the world over,
bear more and more heavily on the middle men.
Their margin of profit must be increased at the
expense of others. The producer at one end of
the series and the consumer at the other bear
the increased burden. The final incidence of
taxation falls on that social group which has least
power to raise its prices, least force to throw off
its burdens on others.
In the thoughtful report of the Massachusetts
Commission on the Cost of Living in 1910, the
commissioners find the most important element to
60 UNSEEN EMPIRE
Sp eS

be “Militarism, with its incidents of war and

waste and its consequences in taxation.”
“The three great wars of the last decade and
a half—the British-Boer, the Spanish-American,
and the Russo-Japanese—took millions of men out
of the productive activities of our civilization
into the wasteful activities of warfare, diverted
the energies of other millions from useful in-
dustry in shop and mill and farm, and trans-
ferred their skill and labor to the production of
war equipment, material, food and supplies for
the armies in the field. This diversion of labor
and capital from productive industry to waste
and destruction, with the accompanying diminu-
tion of the necessaries of life and an inability
to supply the world’s demands, inevitably resulted
in an advance of the prices of the commodities
of common consumption.
“In addition to these conditions, and incidental
to them, the mania for militarism leads nations
to plunge into debt in order to create and main-
tain armies that may never fight and navies that
may never fire a hostile shot. This mania has
piled up huge financial burdens in England, Ger-
many, France, and other foreign countries, for
meeting which the best energies of their states-
men are diverted to devise new methods of taxa-
tion. In the United States, as in Europe, the
exactions of militarism and its burdens of debt are
prime factors in the economic waste that
Lat produced high prices. This commission does
 THE COST OF LIVING 61

not care to discuss the philosophy of militarism.

It simply desires to show that war in all its phases
is one of the most serious influences in producing
present high prices.”
One result of the increasing cost of living and
the narrowing margin of the wage worker, the
world over, is to raise “Social Unrest” to the
danger point. Bread riots, tax riots, virulent
strikes, “sabotage,” “anti-patriotism” and to a
large extent Anarchism and Socialism arise in
reaction against the oppression of debt and waste.
The final result of the upheaval of social forces
no one can prophesy.
In a recent German cartoon, the prime minister
and the minister of foreign affairs are pictured
as watching, from a balcony, the gathering of
a crowd of people in a public square. “Sie
schreien Moroko! Moroko!” (They cry Mo-
rocco! Morocco!) says the prime minister, whose
thoughts are on matters of diplomacy. “No,”
says the other, “Sie schreien Brod! Brod!”
(They cry bread, bread!)
For the thoughts of the people were not on
Imperial Extension in Africa, “the Mirage of the
Map.” They were interested in their own immedi-
ate affairs, the prospect of escaping starvation.
“To the vast majority of 250,000,000 people,
it does not matter two straws whether Morocco
or some vague African swamp near the equator
is administered by German, French, Italian or
Turkish officials.” (Norman Angell.)
 IV. THE CONTROL OF NATIONS
The financial affairs of Europe, and these in-
clude all questions of war and peace, have passed
into the control of the money-lenders.
The control of a railway system does not neces-
sitate ownership but simply the control of its
debt and its needs at critical moments. Just so
with nations. It is the need for more borrowings
that makes the old loans dominant. In propor-
tion to the bulk of their debts and the acute char-
acter of their need for money are they subject to
dictation. The ordinary creditors or bondholders
have little to say. It is the necessity for further
loans which places control in the hands of the
financier. This may be exercised quietly as befits
the business of the banker, but it is none the less
potent and real.
‘Dollar Diplomacy’’
Barbarous nations have no debt. With the
extension of enlightenment, one by one they fall
under the control of the Unseen Empire. To a
mild form of transition has been recently given
the name of “Dollar Diplomacy.” The essence of
“Dollar Diplomacy” is the conduct of the foreign
affairs of a nation in such a way as to favor
the financial operations of its bankers.
In general, an international banking company
may have three functions. (1) ordinary banking,
62
 “SPHERES OF INFLUENCE” 63

that is, furnishing free money to “going concerns”

to be used in profitable enterprise. This requires
no assistance from the Government and the many
thousands of institutions engaged in it ask only
justice. (2) The control and promotion of busi-
ness enterprises. In so far as these are legal,
and their activities extend beyond national bound-
aries, they have the right to claim the assistance
of the Consular Service in the same degree with
any other industrial undertaking. Large enter-
prises have no greater right than small ones to
governmental assistance. (3) ‘“Pawnbroking” +
on a large scale, that is, the placing of national
loans.
To assist in the adjustment of foreign loans is
no recognized part of the administration of a re-
public. It is claimed in behalf of the new “Dol-
lar Diplomacy” that it assists in bringing to
debtor nations “the blessings of peace, prosperity
and civilization.” But this phrase with its as-
sociate, “Spheres of Influence,” covers a type of
operations from which our nation has, until
lately at least, as a matter of principle stood aloof.
‘‘Spheres of Influence ;” (Persia)
The method of working up foreign loans known
as “Dollar Diplomacy” is relatively simple and
modest, depending not on force but on friendly
advice and the suasion of opportunity. The con-
ventional European method of arranging such
1See page 13, “Banking and ‘Pawnbroking’.”
64 UNSEEN EMPIRE
SS

affairs is by means of the extension of so-called

“Spheres of Influence.” The details of an opera-
tion of this kind are prophetically given by a
Persian journal (Hablu’l-Matin, September,
1907?) four years in advance of the actual oc-
currence.
Referring to the petty revolt of Salaru’d
Dawla, a futile aspirant to the throne of Persia,
the Matin discusses the supposititious comments
of the Times and the Standard on the neces-
sity as expressed by them, that Russia and Eng-
land should codperate to destroy the Pretender
and to bring peace and prosperity to Persia.
“Since the disturbed districts were nearer to Rus-
sian territory, troops should be brought from Rus-
sia, but that the expenses of the expedition would be
equally borne by the two Powers. There would be
a vote in Parliament, followed by a correspondence
with St. Petersburg. The troops would arrive.
The Salaru would be taken prisoner. The troops
would remain for some time in the district, detained
by ‘restoring order.’ The expenses of all these pro-
ceedings would be calculated, and would be found to
amount to about five million pounds sterling, which
would have to be recovered from the Persian treas-
ury (just as in China they demanded the expenses
incurred in sending troops and also a fine). Well,
the Persian treasury would practically be unable to
pay this sum, so it would be found necessary that an
official should be appointed on behalf of each of the
2 As quoted by Browne, The Persian Revolution, 1910, p.
181.
 “SPHERES OF INFLUENCE” 65

two Powers to increase the revenues and supervise

expenditure, and that the Russian official should
watch over the North of Persia, and the English of-
ficial over the South. After a while each would re-
port to his Government to the effect that, having in
view the destitution of Persia, the revenue could
not be increased, and that the payment of this sum
was impossible; and that in some way or other, the
condition of Persia must be improved, so that her
revenues might be enlarged. Persia, they would
add, only needed certain necessary reforms to be-
come more prosperous. Roads and means of commu-
nication should be improved; railways were needed in
certain places; dams must be constructed to increase
agriculture; the erection of factories was greatly
needed. Finally, after prolonged discussions, it
would be agreed that a sum of at least twenty mil-
lion pounds sterling must be lent conjointly by the
two Powers, of which sum part should be spent on
irrigation, part on roads, part on mines, part for ad-
ministrative purposes, and so on, and that with the
remaining two millions a Bank should be established.
The Persian Government would, under the circum-
stances, be compelled to submit to these conditions
and sign the required bond, comforted by the assur-
ance that the conditions were very light and easy,
and comprised no more than ten clauses, that the
loan would cause Persia to blossom like a garden of
roses; and that her revenues would increase ten-
fold!
“The terms of the new loan would comprise at
least two clauses, the ratification of which would
close forever the charter of our independence.
“One of these conditions would be that the offi
66 UNSEEN EMPIRE

cials in control of all the financial departments of

the Government must be appointed by the two Pow-
ers, and that they in turn must appoint the minor
officials. These would assume control over all the
frontier districts, possibly over the interior also, and
would impose a complete check on the functions of
the home officials. We need not remind our readers
how much one single Belgian official, on obtaining
complete control of the Persian Customs, increased
the influence of foreigners, or how he caused Persian
employees to be ignored and humiliated, and this
notwithstanding the fact that we were able to dis-
miss him at any moment we pleased, and that he had >
no sort of independent authority in our country.
Whoever has examined the new Customs Tariff
(drawn up by him) knows of what treason to
our country this ungrateful wretch was guilty, how
he increased Russian influence, and how he behaved
toward the Persians. Hence it will be evident how
the Russian and English officials, enjoying complete
authority and unrestricted power, and representing
Persia’s creditors are likely to conduct themselves.
: Moreover, since the borrowed capital will be
under their own control, they will employ it in such a
way that most of it will revert to their own countries.
“Another condition will be that all concessions
granted by Persia, whether internal or external, must
be approved, sanctioned and ratified by the two Pow-
ers. Accordingly a Persian subject will neither be
able to obtain a concession for the manufacture of
paper nor to set up a factory, since the granting of
all such concessions will be in the hands of the above-
mentioned functionaries, who, in one way or another,
will prefer their compatriots to us, so that all com-
 “SPHERES OF INFLUENCE” 67

mercial undertakings will pass into the hands of Rus-

sian and English merchants.
“Another condition will be that these officials shall
receive their salaries from Persia, who will recog-
nize their claims and rights, and, in return for their
services to their Governments, they will receive a
yearly payment in cash from the Persian treas-
OlVoFie «ot.
“Another condition will be that all the material
wealth of Persia must be handed over to guarantee
the debt. This stipulation will include the mines,
coasts, customs, ports, telegraphs and revenues, and
since the debt must be paid out of these sources of
wealth, and the Persians do not know how to manage
them or put them to profitable use, therefore officials
appointed by the two Powers must superintend them
and take such steps as may be required to render
them productive. The Persian Ministers must there-
fore be subordinated to these foreign officials, whose
commands and prohibitions they will not have the
slightest right to disregard.”

The late Amir of Afghanistan, Abdur Rahman,

is quoted as saying that “Russia is like the ele-
phant who examines a spot thoroughly before he
places his foot down upon it and when once he
places his weight there, there is no going back
and no taking another step in a hurry until he
has put his whole weight on the first foot and
smashed everything that lies under it.”
In general the course of military pacification
lies along the lines above indicated. The presence
of alien soldiers breeds chronic disorder. To re-
68 UNSEEN EMPIRE
SS

lieve this requires more troops and more money

and the end of it all is the submergence by debt
of the “pacified” nation.
The present condition of Persia is thus summed
up in the following paragraph:
“Persia’s unexpectedly setting out to pay off
the mortgage and rebuild her house so alarmed
the covetous mortgagees that they did not hesitate
at highway robbery to keep the redemption money
from being paid.” (The Nation, N. Y., Jan. 25,
1911.)
“The allies are demanding heavy money ‘in-
demnities’ which they will take good care to make
large enough to preclude the possibility of their
payment without recourse to a large foreign loan.
This in turn will be furnished the unfortunate
Persians only on such conditions as will effectually
mortgage for years to come as many of their re-
sources as can be found not already assigned to
foreign syndicates. ‘The Powers will do their best
to leave no money for future Shusters to collect.
The Persians, poor wretches, cannot be allowed
to govern themselves well or ill; they are mis-
guided enough to live in a country possessed of
strategical importance, and they must take the
consequences.” 3
“Continuity of Foreign Policy’’
It is understood that the recent policy of Great
3 Professor Roland G. Usher—“The Significance of the
Persian Question”—Atlantic Monthly, March, 1912.
 THE MOROCCO AFFAIR 69
SS EET

Britain, as exemplified in various episodes in Asia

and Africa, characterized by alternate cringing
and bluster, by scrupulous justice and studied
injustice, by artificial “ententes” and artificial
enmities, is dominated by the great “law of con-
tinuity of foreign policy.” In other words a
great and enlightened nation is forced to live down
to its worst lapses in international courtesy and
moral dignity. The ingenious Mr. Chesterton
remarks: “There is very little doubt as to our
national vice. An acute observer of Russia says
that nation lacks the cement of hypocrisy. We
do not.”
Money and the Morocco Affair
As already suggested, the influence of the
“Unseen Empire” now makes for peace and for
solvency. It controls and creates the credit of
Europe. It will not connive at its own injury.
It is said that the Bank of England has a “psy-
chological reserve,’ which guarantees its solvency
in every crisis. The pride of England is involved
in its maintenance. To default its pledges would
mean the collapse of credit. The great bankers
hold similar relations to the Credit of Europe.
War is a disease which spreads to every function
of the nation. While the bankers might make
large temporary gains through reckless dis-
counts, in the long run they would be the losers
through the disturbances of international war.
They guard the solvency of the world. An il-
70 UNSEEN EMPIRE
TS

lustration of their influence is seen in the late

Morocco affair.
The following account of the Morocco trans-
actions is condensed and slightly modified from an
article by Francis Delaisi.*
“At the end of August, 1911, the sharp crisis be-
tween England and Germany was over. The under-
standing between Paris and London made war impos-
sible. There was no other course but to make an
amiable settlement as smoothly as possible. The
French demand was for (1) a political protectorate
over Morocco, that is, the right to have her soldiers
killed there and to spend millions in order to main-
tain regular administration, and (2) the monopoly
of loans for the public works of Maghreb. This
would give the French business men the compensa-
tion for these costs.
“The German offer was that of economic equality;
whereby the Germans would participate equally in all
gains, leaving France the glory of possession and
the expense. Finally, in exchange for this, they
asked all of French Gabon and the middle Congo.
According to the familiar illustration of Frederick
II, they would squeeze the orange, taking the juice,
love the rind to France.
“Germany, thanks to her marreiaes commercial de-
velopment, is growing rapidly rich. Though not
poor, she has not yet the great capitalism of the old
nations like England and France. In her industries
she needs large sums for short periods, and for these
she goes to the most abundant market, that of
Paris.
4 “Financiers ‘contre Diplomats,” Echo de l'Ouest.
 THE MOROCCO AFFAIR 71

“The French Banks recognize two types of inter-

national loan; consolidated loans on long periods and
advances at higher rates on short terms (“titres en
pension’’).
“With a loan of 25, 30 or 50 years the creditor can
in no case try to collect before the agreed date.
Thus, for example, if it pleased our great friend the
Czar, the morning after one of the loans of 1200
millions of francs which he makes from us regularly
every four years, to abandon us and to attach him-
self to Germany, we should have nothing to say. He
could, in need, declare war, and use to fight us our
own millions. If we wished to constrain him by
force of arms to return our money, we should only
ruin our security. Each one of our victories would
cut down the value of our bond.
“The German demand for economic reasons is for
short loans, to push on the work of manufacture and
commerce. Ordinarily these loans are granted and
renewed as needed. But if trouble arises between
the republic and the Kaiser our financiers have only
to give the sign and our money returns to our own
treasure vaults. Such an action would have grave
consequences to Germany. Let us suppose that the
French bankers recall suddenly the 700 or 800 mil-
lions advanced to the German Bank. The rate of
discount would rise at once from 4 per cent to 5, 6
or even 7 per cent. With this, current industrial
profits would be swept away.
“This is a powerful weapon which M. Dorizon
bore with him on the tenth of August, 1911, when he
carried in his pockets a counter-project to that of M.
Kiderlen-Waechter. If the imperial chancellor had
held out, the banker could let loose on Germany a
42 UNSEEN EMPIRE
a SS

fearful crisis in finance. The machinery of the

“titres en pension,” the short time loan, which has
been figured as a sort of betrayal of our own inter-
ests, is thus transformed into a terrible weapon as
against our adversaries.
“We shall see how our financiers have known how
to use it, and how by its use, they have conquered
the arrogant diplomacy of our neighbors.”

Their own interests not being in jeopardy we

may naturally expect the money-lenders to be
indifferent to questions of international morals,
and ready to finance either side alike. The safe
limit of international loans being reached, as in
the Russo-Japanese war, the dawn of peace is
not far distant, however widely variant the claims
of the contending parties.
Money and the Tripoli Affair
In the present war between Turkey and Italy,
it is recognized that both nations have practically
reached the limit of tax exhaustion. It is
claimed that the “Unseen Umpire” has declined to
make any further loans to Italy. The last loan
granted to Turkey involved a heavy bonus, some-
thing like 17% in advance. It is further under-
stood that in the diplomacy of Europe, Italy has
leave to take her share in Northern Africa at her
convenience. Again, it is believed that Tripoli
would be acceptable as a basis of further loans.
Presumably, in the end, Italy will receive Tripoli,
paying a certain sum in exchange to the creditors
 COST OF SMALL MODERN WAR 13
SSS
seseneeenneeeeeeneeeeee
eeeeeee
I9I9 eee

of Turkey. All this is hypothetical and uncer-

tain, but it forms a working theory of the reasons
why this war has been permitted by those who
are in position to prevent it. It is claimed that
the present desultory warfare is being carried on
by means of the earnings of Italian emigrants, de-
posited in the Banca di Italia.
Cost of a Small Modern War
The question as to whether it will all pay seems
not to have had due consideration from the states-
men of Italy. ‘The “mirage of the map” is in this
region especially elusive. While actively prose-
cuted, the war is estimated to have cost Italy from
four hundred thousand to a million dollars per
day. These sums may serve to expel the Turkish
garrisons from the coast cities of Tripoli. but
the conquest of the Arab tribes of the desert is
another matter. Authorities disagree as to the
amount of Tripoli’s foreign trade. ‘Taking the
highest estimate as to its exports and admitting
a generous per cent. of this as profit, Italy’s gain
from a year’s peaceful occupation of Tripoli
under present economic conditions would scarcely
pay for a day of war. And even such pittance
would go, not to Italy, but to those men, Turks,
Jews, Italians and French, who might chance to
control the export trade. Doubtless under bet-
ter government trade would increase. Possibly
under favorable conditions the profits on a year’s
trade might be made to cover a whole month’s
74 UNSEEN EMPIRE
eT

military expenses. But all Italy will get is the

“mirage of the map” and even this seems to waver
a bit. Her previous melancholy experience in
the invasion of Abyssinia will be repeated in
Tripoli, and this whether at the end she finds
herself victorious or not. Whatever the moral
questions involved, it is certainly bad economics
for a nation to indulge in a raid the cost of which
far exceeds the booty.
Cost of Armageddon
If desultory warfare between a second-rate
power (really become third-rate through burden
of debt) and a third-rate power (now become
fourth-rate) is so expensive, what of “God’s Test”
of the nations lightly prophesied by certain mili-
tarists? °
5“At the present epoch in the world’s history Mr.
Carnegie might just as well have created a trust for the
abolition of death. oS Ws
“The real Court, the only Court in which this case (Jap-
anese immigration) can and will be tried is the Court of
God, which is War. The Twentieth Century will see that
trial, and in the issue, which may be long in the balance,
whichever people shall have in it the greater soul of
righteousness will be the victor. 5
“Never was national and racial feeling stronger on earth
than now. Never was the preparation of war so tre-
mendous and so sustained. Never was striking power so
swift and so terribly formidable. What is manifest now is
that the Anglo-Saxon world, with all its appurtenant
provinces and states, is in the most direct danger of over-
throw final and complete, owing to the decay of its mil-
itary virtue and of the noble qualities upon which all
military virtue is built. . . . The voice of every God-
 COST OF ARMAGEDDON 75

I quote below from a Paris correspondent of

the American Associated Press (San Francisco
Chronicle, January 2, 1912). Whether the de-
tails are wholly correct or not is a matter of
minor importance.

“Europe is preparing for war. It has battalions,

ships, howitzers, steel-clad automobiles, aeroplanes
for dropping bombs and bombs for making aeroplanes
drop; swords to cut you to pieces and surgeons to
sew you up again. In fact, the war machine is fault-
less. But who has got the fuel to set it working?
Who will plump down the cash for war between Eng-
land and Germany, and for the resulting Armageddon
between the Triple Alliance and the Triple Entente?”

“Is Herr Bebel right when he says the coming

Franco-German war will cost $750,000,000 a month
or $9,000,000,000 a year? If England, Austria,
Italy and Russia join in, may it be assumed that the
war will cost in proportion—that is, $27,000,000,000
for the first year, not to mention the second? And
who will pay the $27,000,000,000?
“Europe’s brilliant statesmen waste no time on this
fearing man should be raised . . . to revive that dying
military spirit which God gave to our race that it might
accomplish His will on earth. .
“The Shadow of Conflict and of ‘displacement greater
than any which mankind has known since Attila and his
Huns were stayed at Chalons is visibly impending over the
world. Almost can the ear of imagination hear the gath-
ering of the legions for the fiery trial of peoples, a sound
vast as the trumpet of the Lord of Hosts.”—(Harold F.
Wyatt, “God’s Test by War”; Nineteenth Century, April,
1911.)
76 UNSEEN EMPIRE
a

insignificant problem. They are far too busy brew-

ing those glorious wars—a business easier far than
carrying them gloriously on. But frivolous, unpo-
litical people—financiers, economists, statisticians,
traders—would like to know who will pay?
“First, they ask themselves what will a war cost?
No man knows. Herr Bebel’s estimate is guesswork
and probably exaggeration. Italy’s little war with
Turkey is costing $400,000 a day, allowing for a
mere 60,000 fighting men. Professor Viviani of
Rome says that if only 80,000 men are sent it will
cost 1,000,000,000 lire or $200,000,000. Since this
estimate was made it appears Italy will have to send
120,000 men; and if she marches into the interior,
still more. The Boer war, in which England’s army
averaged 200,000, cost $1,055,000,000 in two and a
half years. The Franco-German war, which lasted
only 190 days, cost Germany $450,000,000 for an
average fighting force of 1,250,000 men. The war in
the Far East cost Japan $650,000,000 and Russia
$723,000,000, not counting lost ships. Only toward
the end had either side anything like a million men
in the field.
“The coming Armageddon will cost infinitely more
than these, because the armies in the field will be
bigger and because food, clothes, arms and ammuni-
tion every year cost more, and more of them will be
wasted. Moderate estimates are that a war lasting
a year will cost France, Germany and England each
about $2,300,000,000. Russia’s yearly bill would be
$2,800,000,000 and Italy’s and Austria’s about
$1,400,000,000.
“To meet such demands and to prevent universal
panic no single European state has made proper pro-
 COST OF ARMAGEDDON a

vision. Europe’s war chests consist mainly of Eu-

rope’s capacity for borrowing. Germany alone has
an “Imperial war treasure,’ which has captivated the
European imagination, but in reality is ridiculously
small. This is the Reichskriegsschatz, which lies in
the Julius tower of Spandau citadel, guarded by
triple steel doors, ‘simultaneous keys’ which are held
by different individuals, and a dozen sentries. It
amounts to a beggarly $30,000,000, all in coined ten
and twenty mark pieces, kept in boxes, each of which
contains $25,000. Against it are issued $30,000,000
in imperial treasury notes, so that no interest is
lost.
“Germany’s real war asset is her state railroad sys-
tem. No country has such a splendid asset. The
Prussian railroads, which cost $2,250,000,000, are
now valued at $4,500,000,000. They pay an average
of 7 per cent on the invested capital. The result is
that only $1,500,000,000 railroad debt is outstanding,
so that the state owns railroad property which has a
sale or mortgage value of $3,000,000,000 clear of
debt. The South German state railroads are not so
remunerative, but they could be mortgaged for a con-
siderable sum, and optimists have declared that on
her state property Germany, if need be, could secure
loans totalling approximately $4,300,000,000.
“Russia is the only other state that can talk of
realizable assets in terms of hundreds of millions of
dollars. First comes the $495,000,000 gold reserve
which lies in the cellars of the Bank of State.
Against it are issued $610,000,000 in credit notes,
and about $400,000,000 more in credit notes could be
issued in war time without exceeding the legal limit.
That is one asset. The 29,000 miles of state rail-
78 UNSEEN EMPIRE

ways cannot be counted an asset because they show

an annual deficit of $10,000,000. The greatest Rus-
sian asset is the ‘State Vodka Monopoly,’ which was
started as an experiment by Witte in 1895, and is
now in force all over the empire. Under it the state
is the sole manufacturer, wholesale and retail liquor
dealer. The monopoly has tended finally to demoral-
ize the muzhik, but as a financial measure, it has been
a brilliant success. It yields an annual profit of
about $225,000,000 and has a capital sale value of
about $4,000,000,000.
“At first sight, England and France, Europe’s rich-
est two states, are far worse off than relatively poor
Germany and very poor Russia. They have prac-
tically no assets. France has only the tobacco, match
and powder monopolies, and England has her posts,
but neither can produce an asset like the Prussian
state railroads and the Russian drink monopoly. Yet.
the national credit of England and France is more
valuable than these two put together. Considering
the far lower interest, English Government stocks are
quoted much higher than German. England’s credit,
even during war, is better than Germany’s during
peace. In March, 1900, England issued at 98} a
28 per cent Boer war loan of $150,000,000. It was
subscribed eleven times over. In the same month
Bavaria appealed for a mere $10,500,000. For this
she had to consent to interest at 34 per cent and an
issue price of 934. The late Sir Robert Giffen said
that on emergency England could appeal for $500,-
000,000 at 8 in the morning and have it at 8 o’clock
at night. The credit of England and France is based
on their national wealth and accumulations of capi-
tal.
 COST OF ARMAGEDDON 79

“When war breaks out this laying hands on sav-

ings will be the immediate unromantic occupation of
the brilliant statesmen who have brought it about.
The first steps will be to transform the state banks
into war-banks, and to proclaim le cours forcé—that
is, that Government issues must be accepted at their
nominal values. In Germany in time of peace, the
issues of the ‘Reichsbank’ may be rejected and gold
demanded. A second war measure will be to suspend
the periodical publication of the level of the state
banks’ gold stock. This also was done by France in
1870. The economist Stroell holds that Governments
will further finance war by issuing ‘forced paper,’
without any gold backing, thus keeping their gold re-
serves intact. The only security for such paper
would be the Government’s credit. But England and
France are ahead in both the conditions of their stock
exchanges and of their savings banks. The German
savings banks are weak because their money is largely
invested on mortgage and cannot be quickly realized
in case of panic.
“Looked at from the money point of view, the Eu-
ropean Armageddon is not at all the obvious, simple
thing which people imagine. It is a complex, men-
acing question, full of disagreeable surprises and
treacherous pitfalls, and it promises the ruin of at
least some, if not all, the states which rush into it
lightheartedly. But Europe’s brilliant diplomatists
do not worry themselves about such contingencies.
What with diplomatists, statesmen, shipbuilders and
gun makers—not to mention The Hague arbitration
judges and the bloody-minded peace societies—all
trying to bring about a war, a war is some day inevi-
table. But who will pay the piper?”
80 UNSEEN EMPIRE

Nevertheless, however big the war cloud, the

storm will pass over. We may be sure, to use
Mr. Powell’s words, that “there will be no war
until the real rulers of Europe from their strong-
holds in Lombard Street and the Rue Quatre-
Septembre, in the Burgstrasse and the Schotten-
ring themselves tell the fighters to fight.”
Interest of ‘‘High Finance’’
In the London Nation (January 21, 1912)
occurs the following:
“Fortunately it is to the interest of la haute
finance that France and Germany should live in
peace. Indeed the last thing that the financiers
desire is a European war. The advantages of
adventures in Asia or Africa may lead them to
endanger the peace of Europe, but they always
think that they can prevent the danger of war
from becoming a reality and, in fact, they did
so in the recent crisis. For the present they will
be content, no doubt, with the advantages al-
ready secured, and we are not likely to have a
repetition of the Moroccan venture.”
The present relation of international finance to
international war is thus convincingly presented
by the New York Tribune:

“On more than one occasion in recent years we

have been able to discern unmistakable indications of
the sway of . . . ‘the unseen empire of finance’
in international affairs, and particularly in the avert-
 INTEREST OF “HIGH FINANCE” 81

ing of wars and in the promotion of friendly relations

among the powers.
“From one theoretical point of view that is, of
course, to be much deplored and disapproved. The
nominal rulers of a land should be also its actual
rulers. The exercise of control by an irresponsible
‘power behind the throne’ is too susceptible of abuse
to be approved. Yet in practice, by the very show-
ing of its critics, this system has had certain good re-
sults. It has consistently made for peace. That is
indisputable. Nobody has ever heard a hint that the
Rothschilds were trying to bring on a war. Their
influence has always been for peace, for the very
practical reason that in peace lie their security and
their profits. There is abundant reason for the be-
lief that on several occasions this money power has
been the chief barrier between Europe and a devas-
tating war. To that extent, therefore, the rule of
this ‘unseen empire’ must be regarded with approval.
“There is, however, a paradox involved in the case,
in the circumstance that the moneys lent by these
capitalists to the governments are used largely for
military purposes. They are, in fact, potential war
loans, made by those who desire the keeping of the
peace. Capitalists do not hesitate to advance money
for naval construction or for army enlargement. In-
deed, there have at times been suspicions that they
were using their influence in favor of the making of
large appropriations for such purposes, which would
necessitate the issuing of loans. And then, after the
loans are made, they exert their influence to prevent
the fulfilment of their intended uses. It is an inter-
esting subject of speculation whether the influence of
the provisions which are made by the loans, or of the
82 UNSEEN EMPIRE

makers of the loans, will in the end prove the more

powerful.”

Norman Angell® shows the growing inter-

dependence of nations to be such that even a policy
like Bismarck’s could not bring on war between
Germany and France.
“Where Germany could have ‘bled France
white’ with a certain satisfaction without any im-
mediate damage being involved to his own coun-
try, Herr von Kiderlen-Wachter (I am told to
his surprise), learned that to ‘bleed white’ this
relatively feeble France of 1911, would be to
plunge this great and powerful Germany into the
direst economic distress. . . . The very
threat of it was enough. . . . I could trace
for you a really humorous chart establishing the
direct relationship between the vigor of German
foreign policy and the figures of German com-
mercial insolvency.”
The experience of the world shows that no_na-
tion can have at once a great army, a great navy,
a great debt, a vigorous foreign policy and the
prosperity of its citizens. Two of these it may
have and sometimes three, but never all five at
once.
In another article,’ the writer above quoted re-
fers to the solidarity of industrial and commercial
interests as illustrated by the international rela-
6 Public Opinion, February 2, 1912.
1 Public Opinion, January 26, 1912.
 WAR AND BANKING 83

tions of the bankers of the world. He asserts

that “banking all unconsciously is bringing peace
to the world by making nations financially inter-
dependent: that the material side of wealth as rep-
resented by banking makes for and not against
a better human society and the higher welfare of
the race; that the world’s granary will have
enough to spare for all mankind when men and
women work together for mutual good.”
War and Modern Banking
Some time since Lord Rosebery, noting the
movement in society from personal and arbitrary
rule, said that “royalty is no longer a political
but a social function.” A change similar in char-
acter has modified the nature of banking. Bank-
ing is becoming not a political but a social func-
tion. Many cf the misfortunes of Europe have
been ascribed to the early alliances between poli-
tics and banking. That alliance is being dis-
solved. Banking, as well as government, is under
the growing influence. of democracy and cosmo-
politanism. While “pawnbroking” on a large
scale still concerns itself with affairs of derelict,
inchoate or helpless nations, and is therefore still
8 For the most part “it is not the banker who wants to
interfere with politics. It is the politician who wants to
interfere with banking. All that the banker generally asks
of politics is to be left alone.” . . . “Separate even the
most powerful of these ‘sinister figures’ (of the interna-
tional financier) from the interests or the economic forces
of which at the moment he may be the representative and
he is reduced to practical impotence.” (Norman Angell.)
84 UNSEEN EMPIRE

allied with politics, the spread of common banking

causes it in a way to become the nervous system
of society, its protection against economic harm.
Norman Angell ® has clearly shown that in pub-
lic affairs the banker is the first to feel the symp-
toms of disorder. War is sickness in the eco-
nomic as well as in the social organism, and the in-
fluence of sound banking is everywhere and auto-
matically opposed to it. To the modern banker,
as to Benjamin Franklin, “there never was a good
war nor a bad peace.” “Destruction of capital,
in the nature of things, never appeals to a
banker.” 1°
The influence of finance now lies, not in spectac-
ular provision of great loans, but in “the unno-
ticed impersonal forces which the ordinary week-
day humdrum work of banking has called into ex-
istence, the cumulative outcome of those number-
less every-day operations that take place almost
completely outside the control of Governments and
of financiers, often unknown to them, often in
°“TIf we can imagine an animal that did not feel hun-
ger or cold or the bad taste of poisons, it would very soon
be wiped out. It has nothing to guide it in its adaptation
to its environment, none of the acute promptings which re-
sult in placing it in the most favorable conditions to allow
the unconscious and uncontrollable processes to be carried
on favorably. Now, banking is performing, among other
functions, this immense service to the economic and social
organism; it is providing it with sensory nerves by which
damage to any part or to any function can be felt, and
thanks to such feeling, avoided.” (Influence of Banking
upon International Relations: Norman Angell, 1912.)
10 Tsaac N. Seligman.
 WAR AND BANKING 85

spite of them, representing forces far too strong

and far too elusive for such control, so much a
part of the warp and woof of the ordinary life of
the world that they are rapidly and surely weav-
ing society into one indissoluble whole.” 1!
According to Mr. Isaac N. Seligman,!* “the
Russo-Japanese conflict of 1904-5 was halted in
large measure because bankers refused to float
further loans at anything like ordinary terms
after probably $1,500,000,000 had been wasted in
that contest. The interests of commerce have
thus put into the hands of international bankers
a powerful weapon to use in the interests of con-
ciliation and peace.” Mr. James Speyer has pro-
posed that this weapon be formally adopted and
consistently used against those nations who may
try to disturb the peace of the world by making
war, as all war must be made, on borrowed money.
“If by withholding the ‘sinews of war’ the
banker can force a nation to desist from war, he
conserves to its people the enormous sums which
would have been wasted” (Seligman).
Banking is the democratic phase of what un-
der autocratic rule is pawnbroking. In common
with other influences of democracy banking makes
for peace. It is a function of peaceful industry
as pawnbroking is of war. “A king without
money is like a spear without a head.”
11 Norman Angell.
12 International Banking and International Unity Concilia-
tion Society, No. 50, 1912.
 V. SEA POWER

In this chapter is given an account of “Sea

Power” in its relation to national affairs. It is
the most costly element in the business of govern-
ment. The very name has in itself a magic which
unlocks the strong boxes of the world.
Armament Competition
The present status of “Sea Power” is thus
graphically summed up? by Professor William
I. Hull:
“Each nation argues that it can protect its own
peace only or best by increasing its armaments; and
accordingly each of the circle of forty-odd nations is
feverishly engaged in the edifying task of out-arm-
ing, to the best of its abilities, each of the others.
Great Britain, assured that her own peace and the
peace of the world is threatened by the menace of the
Teuton, lays down the keels of two dreadnaughts;
Germany, perceiving the portentous shadow of the ad-
vancing Briton, lays down the keels of two super-
dreadnaughts. This gives to Great Britain a realiz-
ing sense of the inadequacy of her twenty-eight miles
of warships, and in order to avoid another panic such
as the German super-dreadnaughts caused her, she in-
creases her per capita naval expenditures within ten
years by 43 per cent.; Germany ‘goes her several bet-
ter,’ and increases her per capita naval expenditures
1 The World’s Two Vicious Circles: Advocate of Peace,
December, 1911.
86
 PURPOSES OF SEA POWER 87

within ten years by 119 per cent. Some American

‘statesmen dream of the menace of Germany in South
America or Japan upon the Pacific, and the United
States, frightened by such nightmares, increases its
per capita naval expenditures within ten years by 64
per cent. Japan, emulating its Occidental school
teachers in their fallacious logic, and postulating the
impossibility of having too much of a good thing, in-
creases its per capita naval expenditures within ten
years by 137 per cent. The other four ‘great Pow-
ers, caught up in the same frenzy of fallacious logic
and futile competition, convert their national re-
sources into dreadnaughts, and all eight together ex-
pend upon their navies within ten years the almost
unimaginable sum of $5,600,000,000! ?
“Thus the vicious circle is formed; the small mem-
bers of the family of nations join in the frenzied
competition for big, bigger, biggest armaments, and,
like the serpents of an African jungle, each strug-
gles and strains to raise its head high above the oth-
ers. But how much like a will-o’-the-wisp is the
peace based upon such a chain of reasoning is shown
by the continually precarious and fragile character
of that peace, while above it broods the shadow of a
menacing Armageddon unrivalled in history or proph-
ecys”
Purposes of Sea Power
The end of almost half the military expendi-
tures of the world is to develop “sea power.”
For this, nearly every sea-faring nation, great
or small, spends more than the cost of all its civil
2 Figures from the British Admiralty’s “White Paper”
of October, 1911.
88 UNSEEN EMPIRE

equipment, lavish as this sometimes is. And yet

the function of “sea power” is most vaguely un-
derstood by the people who pay for it. Seven
reasons are variously given for its maintenance:
(1) National defense, (2) maintenance of
peace, (3) protection of commerce from pirates
and belligerents, (4) circumventing of other na-
tions, (5) protection or subjugation of alien de-
pendencies, (6) ceremonial purposes, and (7)
“Control of the Sea.” ;
(1) So far as the United States is concerned,
the first item, that of national defense, may be
regarded as negligible, as fortified towns with
their torpedo boats, mines and 16-inch shore-guns
are impregnable to battle-ships, unfortified towns
under the laws of war are now immune from bom-
bardment, and no modern army can subsist in
a hostile land without a tremendous train in the
way of supplies. Since Napoleon’s time, no army
has lived on the enemy’s country. Neither does
the battle-ship any longer ravage the coast, burn-
ing villages or robbing farmers. It is far too
costly a tool for such use. A _ battle-ship has
equipment for about an hour’s warfare with an
enemy of its own grade. Broadly speaking, one
may say that after an hour’s actual fighting those
ships which are not victorious are captured, sunk
or fled. The great sea-fight off Tsushima was
settled in twenty minutes.
The defense of England on the other hand,
depends primarily on her navy. She cannot feed
 PURPOSES OF SEA POWER 89

herself and looks to other nations for bread.

But her navy is now swollen far beyond reason
and so becomes in a degree a menace to world
peace.
If we consider naval expenditures as “insur-
ance” whether on land or sea, the rates are far
too high. The “risk,” such as it is, applies
only to seaboard property and to very little of
that. For the most part such insurance is
wholly needless for reasons elsewhere given.®
Further it fails of its purpose because it does not
reduce the risk. "The more numerous the engines
of war, the greater the chance of collision, except
as held in check by the operations of bankers.
(2) The second item, the maintenance of
peace, we may neglect as a figure of speech.
“Sea power” makes for peace through awe or
through exhaustion. The first of these keeps the
little nations quiet. The second places war out
of reach of the large ones, a matter which is dis-
cussed further on.*
(3) The third item, the protection of com-
merce, has but limited range of value. In all nor-
mal conditions commerce is wholly independent
of naval operations. The trade of great nations
is, for the most part, not with their dependencies
but with their equals. The commerce of Norway
and Holland, without sea power, is greater per
capita and greater in relation to national wealth
8 See page 159.
4See page 98.
 90 UNSEEN EMPIRE

than that of Great Britain or Germany. Even

the trade of Switzerland stands in proportion,
it is claimed, above that of the great sea-faring
nations. Exploitation is not trade. In the con-
trol of colonies, the idea of spoliation must be
given up before commerce begins.
(4) The fourth reason, the circumventing of
other nations, involves the old fallacy that each
nation is an individual, mean and grasping,
ready at any instant to pounce on its unprepared
neighbors. This Pierre Loti calls the “hyena”
idea. Nations, however, are groups composed of
men each intent on his own affairs, and wholly
opposed to collective action which shall interfere
with these. The “hyena” spirit sometimes ap-
pears in antiquated diplomacy, in reckless jour-
nalism or in the belated utterances of case-hard-
ened war-makers,’ (who have never fought a bat-
tle), but not often in the actual interrela-
tions of modern states. Commerce in civilized
nations is a mutual affair, and in every cargo that
crosses the ocean many nationalities have a stake.
The moneyed interests of every civilized nation are
to-day bound up with those of every other.
(5) <As regards the fifth reason, the protec-
tion or subjugation of alien dependencies, the
navy can do little more than to serve as a convoy
for transport ships. In time of peace this serv-
ice is scarcely needed: To accomplish it in any
5 For example, see General von Bernhardi’s Deutschland
und der nichste Krieg.
 PURPOSES OF SEA POWER 91

évent would require neither large vessels nor many

of them. If it means a great fleet, the game
is not worth the candle. Some of England’s
wisest have doubted whether it is ever worth
while. Others have called it the “White Man’s
Burden.”
We may note further that actual war is con-
ducted in the main by armies. Ships cannot
fight armies, even as “a herd of whales cannot
fight a herd of elephants.”
(6) The sixth reason, that of ceremonial
needs, is one not often emphasized, but it is ob-
vious that great navies exist largely for giant
decoration. It is said that 167 vessels took part
in the late Coronation of King George V. Only
one of these had seen service, and that was of
little importance.
The same spirit which led the Emperor of Ger-
many to add to his honors the title of “Admiral
of the Atlantic” is involved in every movement
for naval extension. The love of national dis-
play, peculiar to no one nation, finds satisfaction
in naval parades. In America our biggest ships,
however well constructed and however skilfully
managed, are valued largely by the people as
a decoration. We must not forget, however, that
engines of destruction were built for use; they
tend always to achieve their normal function, they
are at once costly and dangerous beyond all other
toys.
Some time since, Norway celebrated at Bergen
 92 UNSEEN EMPIRE
ee

the anniversary of the birthday of the great

naturalist, Michel Sars. From the Imperial
University of Tokyo came an eminent Japanese
scholar to do honor to his colleague. At Bergen
lay the little Norwegian fleet of battle-ships.
Some one remarked that, compared with the fine
navy of Japan, the guest must look down on
this paltry fleet.
“No,” said he, “the reproach of Japan is that
she has a great navy with no Michel Sars whose
birthday she can celebrate.”
(7) The seventh reason assigned, the ‘‘Con-
trol of the Sea,” rests on an outworn anachron-
ism. In 1493 Pope Alexander VI divided the
ocean between the two great sea-faring nations
of the day, Portugal taking control of all east
of about the fiftieth meridian, Spain of all that
lay to the west. This gave to Portugal Africa
and Brazil and to Spain the rest of the tropical
world. But in our day nc nations control the sea.
All governmental authority stops at the three-
mile limit. The open sea is a highway for all
peoples alike. In time of war, under the present
antiquated code, navigation may be a bit dan-
gerous to merchant vessels of belligerent nations.
To-day, however, war never lasts long. It is now
beyond any nation to carry it on for more than
a few months with a foe of equal resources. A
million dollars a day is a moderate cost for a
moderate war. Large wars can be had at a
proportionate rate. But the lanes of traffic are
 ABOLITION OF PIRACY 93

soon open again and control of the sea no longer

exists.
To say that the United States must fight Japan
for “Control of the Sea,”’ as some of our armament
promoters have claimed, is the height of absurd-
ity. There is nothing to fight about, and the
fight over, nothing would be settled. There is
room for a thousand merchant ships on the Pacific
where one now sails. If by control of the sea
we mean the fact that one nation has more mer-
chant ships than any other or even all others,
very well. This is not a matter of war and has
no relation to war-ships. The Pacific may, as
has often been said, be “the scene of the great
deeds of the twentieth century,” but these will be
deeds of peace and constructive effort. “Sea
Power” will then disappear as a nightmare of
history.
Abolition of Legalized Piracy
Moreover one of the next acts of The Hague
Conference is almost certain to be that of the
neutralization of all merchant and passenger
vessels. When this comes about piracy will no
longer be one of the great evils of war.
Under the laws of war as accepted in 1899 after
the first Hague Conference, private property on
land, unless used for war purposes, is immune
from seizure or destruction. Thus far, under
these laws private property at sea may be seized
by the crews of hostile vessels and appropriated, as
prizes, to their personal benefit. The right to
94 UNSEEN EMPIRE

plunder is supposed to stimulate officers and men

to renewed activity. Great Britain has upheld
this right, presumably because she has more men
to encourage. But she has also most to lose and
some of the ablest of British statesmen are now
in favor of the neutralization of non-combatants
and their property on sea as well as on land.
The old point of view of the English admiralty
was expressed in 1861, by Lord John Russell, that
England with her superior navy must aim at ruin-
ing the commerce of the nations at war with her
in the shortest possible time after the outbreak of
hostilities, and thus ensure not only her overlord-
ship of the sea but also her supremacy of trade
for all times. . . . “It is impossible for other
nations to take, lying down, such a perpetual
menace. . . . The chief essentials to-day for
the maintenance of peace are the general enforce-
ment of the principle of the ‘open door’ and the
general recognition of the inviolability of private
property at sea.®
While at the beginning of each international
war of the last century, a certain number of ships
have been seized as prizes there is no evidence that
the final results of any conflict have been in the
least affected by these preliminary acts of piracy.
Keeping Step
The excessive cost of armament when recog-
nized is usually considered inevitable. A Jap-
6 Professor Lujo Brentano: Munich, 1912.
 KEEPING STEP 95
5

anese writer in the “‘Chuo-Koron” says: “No doubt

the war taxes of 160,000,000 yen per year are
destroying our country, but the strain of inter-
national relations will not allow us to lower our
taxes. What we have to do is to strive to in-
crease our natural wealth so that the burden of
taxation will not seem so heavy. To reduce
Japan’s army is impossible, owing to the neces-
sity of looking to the future of China, while to
reduce expenditures in the navy is equally im-
possible. We must do everything to keep the
prestige of our glorious navy.”
Lafcadio Hearn says that “the Japanese
farmers wade knee deep in the mud to produce
the rice they cannot eat themselves in order to
buy poorer rice and let their Government build
battleships to show that Japan has a place among
the great Powers.”
One of the ablest of Japanese statesmen, and
himself opposed to the policy of debt, voices
the common feeling of Japan that the chief reason
for the development of the Japanese navy lies
in the increase of armament of the United States.
This is not that Japan really supposes herself in
danger from the United States. It is rather that
the larger nations set the fashion. It is feared
also that the financial credit of Japan, jealously
guarded by her ministry, may suffer if she fails
to keep step with her sister nations.
Bad habits are catching. In Argentina it is
only a “banal commonplace to observe that the
96 UNSEEN EMPIRE
ST

peace of the world has no better support than

naval preparation in every quarter.” The jour-
nal, La Argentina, continues:

“The demand for a naval fleet of Argentina does

not imply the possibility of conflict with our neigh-
bors. The ground for this demand is that the rich
productions of the country make oceanic navigation
indispensable, with the result that Argentina should
be in position to make her merchant flag respected.
“Away with weak and idle pacifism and down with
all those who oppose tooth and nail the project for
a powerful Argentine Navy.
“The arguments stated above point out to the peo-
ple at large and to the powers that be the importance
of a complete reorganization of our Navy, especially
as regards the material, size and number of its ships.
At the same time we must condemn the attitude taken
by our pacifists and the falsity of the position as-
sumed by those who persist in a systematic opposi-
tion to all schemes of naval expansion.”
The Monroe Doctrine
It is claimed by certain militarists, that “the
Monroe Doctrine goes as far as our navy can
reach and no farther.” In other words, this
slogan of the republic rests on force and force
alone. If that is the case, it is not worth the
cost. If it rests on force and not on right, the
sooner it is done away with the better. It may
be indeed that it really has no claim on our re-
spect. It may be, also, that our occupation of
the Philippines has already repealed the Monroe
 UNWILLINGNESS TO PAY oF

Doctrine. For there is a sort of Golden Rule

among nations, that no one of them can do what
it forbids to its neighbors.
If the Monroe Doctrine has any validity, it is
a definable part of international law. It was
originally a proclamation against European
spoliation in regions geographically allied to the
United States. It is fair to others that the doc-
trine should have a modern formulation by ex-
perts in international law. It is a reproach to
ourselves that this has never been done. Such a
formulation should command the assent and ap-
proval of statesmen in all nations. The point at
issue is that the nation stands for justice, not
for the protection of delinquents.
The Monroe Doctrine would not necessarily
forbid transfer of sovereignty even from an Ameri-
can republic to.a European empire. It would
prohibit its transfer by force of arms. It is not
evident that we have any right to go further than
this. The belief that we may do so is giving
effect to the contrary “Calvo Doctrine” that
Latin America can take care of herself. Allied to
this is the “Drago Doctrine” that no nation
should collect money for its subjects by force of
arms.
Unwillingness to Pay
In one of his many discourses on sea-power,
Admiral Mahan suggests that the growing un-
willingness of the people, the world over, to pay
for it may be due to their “degeneration.” “De-
98 UNSEEN EMPIRE

generation,” as thus used, is a word without mean-

ing. The only “national degeneration” known
to history is found in the reduction of the average
force of the units of which a nation is composed.
Such reduction may be due, as a temporary mat-
ter, to poverty or to failure in education or to
oppression of any sort; or, as a permanent mat-
ter, to emigration, to immigration or to war.
Emigration in many parts of the world has low-
ered the average at home by taking away the best.
Immigration may lower the average in any region
by filling it up with poorer stock, “the beaten men
of the beaten races.” The general effect of war
is to destroy the virile, leaving the commonplace
to reproduce their kind. In this sense, war and
immigration have each produced a varying de-
gree of “degeneration” in most parts of the world.
But we can find better explanations for the
increasing aversion of the people to borrowing
more money for more sea power. Their growing
sense of tax-oppression on the one hand, their
rising intelligence on the other and the increas-
ingly murderous cost of the whole thing seem to
furnish adequate reasons. It may be true, as
Admiral Mahan indicates, that the growing cost of
armament no more than keeps pace with the in-
crease of national wealth. (In other words, it
follows ‘Johnson’s law,” to which I have several
times referred.) But in this discussion, we may
ask whose wealth it is that keeps pace with the
growing cost of militarism. A nation’s capacity
 POWER AND POVERTY 99
ee

to pay is not measured by the swollen fortunes of

armament-builders nor of those financiers “without
a country” who loan the necessary money. In the
long run, it is the common man, the ultimate pro-
ducer and the ultimate consumer, who pays for all.
In all waste production and in all waste consump-
tion, the cost falls on the worker in the end.
Sea Power and Poverty
There is no question that the excessive and
growing cost of armament is one of the great
factors in national poverty. The greater the sea
power, the less the nation has for other pur-
poses. It is agreed in Great Britain for exam-
ple that to strengthen the army is to weaken the
navy, the limit of taxation being already so nearly
reached. As sea power grows, the nation weak-
ens through loss of reserve power and through
the stress of taxation. The weaker the nation,
the greater its need of sea power. In this para-
dox we find a clue to the persistent state of alarm
in England, whose sea power fairly balances that
of all her rivals taken together. She fears Ger-
many on the one hand, her own unhappy proleta-
riat on the other, and no accession of sea power
can protect’ her from internal discontent.
England is rich, if you look at her from above.
The great dukes got her land—for nothing and
free from taxes—in the early “merry” days when
a county might be given to a royal favorite free
of taxation, except for his pledge to raise so
100 UNSEEN EMPIRE

many troops on call, From this pledge the great

lords have long since been released by processes
of easy commutation. Even yet, they still hold
half of England in their grip. Looked at from
below, England is very poor. It is said that
out of a hundred Englishmen only six make a
last will and testament.’ The rest have nothing
to leave. One man in seventy holds about all that
is worth having.
London is at once the poorest and the richest
of all cities. Her East End is the hopper into
which fall the incompetents of the land, the
generations of those whom war could not use.
At the same time she is the clearing house of the
world. The traders of all nations meet there to
balance their accounts. She is the center of the
buying and selling of money,—but not the
people’s money.
The shadow of debt in England and on the
continent grows with the growth of sea power
and land power and imperial dominion. It looms
darker still against a glowing background of
pomp and circumstance. For the debt of the na-
tion is the debt of the toiler. It is borne on the
back of industry.
“Fall to each, whate’er befall,
The farmer, he must pay for all.”
Behind and beneath all public affairs stand the
people. They do not count for much in great.
7 Reginald J. Campbell at Ford Hall, Boston.
 POWER AND POVERTY 101

displays and their final end, according to Gam-

betta, is a “beggar crouching by a barrack door.”
Yet as soldiers and as taxpayers they are really
necessary to the continued dominance of a great
and fearless nation. An essential element in
militarism is a patient industrial army which can
pay the costs. It seems plain enough that the
great lords cannot pay the taxes and that the
great bankers will not. To be relatively tax-free
is one of the natural privileges of greatness.
It is true that in England the lords are com-
ing more and more to bear their share of the costs
they help to create. In continental Europe tax
discrepancies are greater. It must be granted
however, that the world over, in America as well
as in Europe, industry carries more than its
share of the burdens.
“Gare au bas vide” (beware of the empty stock-
ing), was a warning of Gambetta. To tax too
closely is to risk the overthrow of organized gov-
ernment.
 VI. “SYNDICATES FOR WAR”

It is a fact, more or less well known, that the

arguments that “expansion of armaments is
necessary to insure peace,” that “big armies and
navies are the insurance premiums of peace,” and
that “to insure peace a nation must always be
prepared for war,’ rest heavily on the desires of
the armament syndicates to keep up their busi-
ness. The armament lobby of Europe is the most
powerfully organized instrument of its kind in
the world. Its operations are consciously and
carefully planned. It is ably supported by a
very large body of men and women consciously
or unconsciously interested in one fashion or
another in military expenditure. It has also the
continual and effective backing of that class, in
business or in journalism, who in Burke’s famous
phrase “scent with delight the cadaverous odor
of lucre.”’ The term “Armor-Plate Press” is. ef-
fectively applied by Francis W. Hirst to the large
group of subsidized journals. “Defense not De-
fiance,” says Robert Young, is the “international
code-signal” of the armament pirates.
The British Ship Lobby
In a recent article! Francis McCullagh of
London describes the “greatest of the unseen and
1 Syndicates for War; New York Evening Post, April 1,
1911.
102
 BRITISH SHIP LOBBY 103

pernicious forces with which economists have to

contend.” These are “the powerful companies
which exist to produce armaments and which
have been encouraged to increase their capital
obligations within the last few years by the suc-
cessive scares and naval programmes of the last
decade.” The capitalization of the six leading
English firms is thus quoted from the London
Morning Leader:

Vickers, mons and Maxim. ......%... $ 40,000,000

Carmine lwwluairds LCOm, votessoe hee ce 20,500,000
Armstrong, Whitworth & Co. ......... 33,500,000
‘Win. bearamore « CO. G2c. ces ose ss 18,500,000
MOH TOW TICs COLue ne sare eels osteo ators. e 21,000,000
Thames Ironworks Company .......... 4,300,000

$137,800,000

This list is by no means complete so far as

England is concerned. ‘The importance of these
figures,” says McCullagh, “is evident. The
country has encouraged private concerns to ex-
pend these sums so that they may be productive
of profits year by year for the benefit of their
shareholders. Any restriction in the building of
armaments either by the home or foreign Govern-
ments has disastrous results on the year’s profits.
It requires no stretch of the imagination to see
that the enormous number of investors in every
class of society scattered through the country
exert a subtle influence in favor of the expansion
104 UNSEEN EMPIRE
SS

of armaments. The numbers are not so much as

the quality.” According to the Investor's Re-
view, the social position of some of the leading
owners of three of the principal firms is as fol-
lows:
Vickers Brown Armstrong&
& Maxim & Co. Whitworth
AUK ate ate e etadelo.
srete She 2 1
MATGUis 7)...
awe w «ane 2 on ea
Karl tors Baron (a). sse 50 10 60
Baronet i.e) eae ade as 1D 2 15
Kutrhte ts .gehcebert 5 5 20
Member of Parliament. 3 2 8
Jisatl? ee ks kins teneael Ca eae 7 9 3
Ke Ce he aie, de Ar araes se ae 5
Military or Naval Offi-
CED acaceeredy “shes hs) oiiSite 21 2 20
JOUTMMISte nore ere cre 6 3 8

It is said that the plant of Vickers’ Sons and

Maxim is prepared to lay down and complete
three dreadnaughts in three years without going
outside its own factories.
Whatever the final effect on Great Britain or
on civilization, these plants must be fed with
government orders.
At the Lord Mayor’s Banquet, in November,
1911, Mr. Winston Churchill, first lord of the Ad-
miralty, is quoted as saying that “naval suprem-
acy is the whole foundation of the British Empire.
Upon it stands, not the empire alone, not merely.
 BRITISH SHIP LOBBY 105

commercial prosperity, not merely a first place

in the world’s affairs, but actually our lives and
the freedom we have guarded for nearly a thou-
sand years.”
If an independent and courageous leader in
“Liberal” politics thus makes himself the mouth-
piece for the armament syndicate, it is not sur-
prising that minor officials should feel the same
patriotic impulse. In the London Nation (March
9, 1912) we are told that two government offi-
cials “occupying distinguished and confidential
positions” have joined the Armstrongs as di-
rectors. “Sir Charles Ottley was until the other
day the naval Secretary of the Defence Commit-
tee, and in this and other high and confidential
posts must have had access to all the inner secrets
of our defensive services. Sir George Murray
was . . . the Permanent Secretary of the
Treasury and was therefore the official head of
the Bureau which controls national expenditure.
The weight of experience, of confidential
knowledge of social and official ties, which has thus
been added to the resources of a firm competing
for contracts could hardly be exaggerated.
Henceforth it will be in the minds of senior men
that . . . such valuable appointments are
open to them on their retirement. They must
constantly meet, officially or socially, the agents
of firms which might so reward them, and in their
dealings the tempting thought can hardly fail to
insinuate itself in their minds, that a public serv-
106 UNSEEN EMPIRE
(RS en

ant who stands well with a great contractor may

look to him in his declining years for a very valu-
able and remunerative post.”

Militarism Further Entrenched

In referring to the standing army of men now
maintained by the British Empire, the “largest
peace establishment” in the world, Mr. George
Herbert Perris? says:
“And behind this force of able-bodied and
middle-aged Englishmen, there lie two bodies,
also of adult men, most skilled and able-bodied,
whose numbers can be only approximately deter-
mined: (1) Those engaged in the arsenals and
dockyards, and the numerous armament trades;
and (2) Pensioners, small and large, possibly
100,000 of them, since their cost on the estimates
is about £2,500,000 a year.
“The probability is, that at least 1,500,000
adult able-bodied men—or one in six of the ‘oc-
cupied’ adult males of the United Kingdom—
share, to some extent, in the £65,000,000 a year
which we spend on the twin ‘defense’ services.
Thus, even when we remember that many of
these, like the ‘Terriers’ and Reservists, get a
mere allowance, while a large part of the regular
army is paid for by India, it will be seen that we
have here the most widely ramified of all our
vested interests, a fearful drag upon reproduc-
tive industry, and an influence which must often
2“Hands Across the Sea.”
 ARMAMENT SYNDICATES 107

diverge from the straight line of democratic ad-

vance. The big prizes, of course, all go to a small
class of financiers and industrial magnates, who,
in order to keep the game going, exert a
thoroughly pernicious influence on Parliament
and middle-class opinion. The higher official
ranks of the army and navy are an aristocratic
preserve, and are highly organized for the ad-
vancement of their professional interests. This
alliance of money power and class power, whose
shibboleth and trademark is ‘Imperialism,’ in-
cludes the most determinedly reactionary element
in British society.
“We are a part of a world-wide movement
against obsolete forms of servitude, savagery and
waste. The best of the civilization of to-day is
on our side and the power of to-morrow is ours.
Greedy contractors, silly scare-mongers, and their
official friends whether in Germany or in England,
are not checked by warlike preparations on the
other side—quite the reverse. Each country
must get rid of its own parasites. The demo-
cratic parties in each land must cut the claws of
the enemies of the people. This is the work of
national defence—the only road to real national
security, the only true patriotism.”

Activities of Armament Syndicates

It is stated on good authority that the estab-

lishment created by the late “King Krupp of
108 UNSEEN EMPIRE
ed

Essen,” ® still the most noted of all builders of

engines of war, maintains its ambassadors in
every court of Europe. It is the business of
these “strong, silent men” to force or coax the
rulers of the nations into patriotic rivalry in the
matter of buying great guns and great warships
on credit. Behind them, still stronger and more
silent men are prepared to loan the money needed
on the terms of a moderate rate of interest and
a cash bonus in advance. One of our greatest
railroad builders used to boast that no one could
trail him “by the nickels he had dropped.” But
it is claimed that the initiated can trace Krupp’s
men across the continent of Europe by their tips
and douceurs as well as by the political downfall
of the public officials not open to their persua-
sions. Not long since, according to McCullagh,
the war minister of Servia was forced by Ger-
many to resign because he had noted the personal
interest of the German minister at Belgrade in
the supplying of guns. M. Clemenceau intimates
3 The directors of the Krupp Company have recently
declared a dividend of 25 per cent.
The Austrian establishment for the manufacture of fire-
arms (“Fabrique d’Armes Autrichiennes”) has declared a
dividend of 16 per cent. after a large addition to the re-
serve fund. The stock of all these companies is far above
par, as far as that of the nations they rob is below. The
larger the armament the more easily may further increase be
secured, Each step widens the circle of bribery.
It is said that the imperialist journal Ueberall “carries
sixteen pages of advertisements of the Krupp and Schican
companies.”
 ARMAMENT SYNDICATES 109

that, in Argentina, “French guns are beaten by

the German because the emissaries of Krupp and
his associates are more generous in their tips.”
McCullagh also tells of meeting in Con-
stantinople a military emissary selling arms to
the Turks after putting through a good busi-
ness in St. Petersburg. “At that moment,” says
he, “the young Turk officer was supposed to be
so full of patriotism that he would cut your head
off if you so much as hinted at bribery. But this
astute military man from the North assured me
that bribes were still accepted and still ab-
solutely necessary. As a matter of fact, he
bought up whole commissions of experts who were
appointed to examine the weapons he had sub-
mitted.”
“That all this diabolical activity,” continues
McCullagh, “makes for war is beyond all doubt.
The good folks who sell Turkey a hundred million
cartridges would not be averse to a Balkan scare
or even to a Balkan war which would make Turkey
want another hundred million to-morrow.”
That in the United States similar activities are
at work, both in and out of Congress, is a fact
well attested although details are not easily
secured. Whenever the question of appropria-
4In different issues of the Vew York Evening Post of
some four years ago is given a full account of the efforts
at that time of one “General” of militia, editor of Arms
and the Man, about the halls of Congress in the interest of
various plans of military expenditure. Through his activ-
ity a “National Board for the Promotion of Rifle Practice”
110 UNSEEN EMPIRE

tions is brought to the front we hear the same

old stories as to the designs of Germany on the
Monroe Doctrine, and the schemes of Japan on
was established. This Board maintained an active press
agent, “to be paid for his work through voluntary contri-
butions made by powder and ammunition makers and
other persons and parties interested in the rifle practice
propaganda.” “The matter written by the Press Agent
was distributed by the War Department and sent out
free under the franking privileges.”
The main purpose of the “General’s” activities was to
induce the Government to supply militia companies with
guns, ammunition and trophies and especially to induce the
purchase of ammunition from private companies.
The “General” greatly regrets “that the United States.
does not buy a considerable and fixed proportion of its.
ammunition from commercial manufacturers each year.
Such a course would afford an invaluable means of com-
paring the merits of the respective creations and effect the
stimulation of each by competition. . . . A similar
method should be employed in obtaining our rifles.” To
this end he urges that besides the “School of Musketry at
the Presidio of Monterey,” we should have eight others,
displacing “a system of target practice which is archaic.”
The DuPont Powder Company issues a pamphlet on the
“Policy of Patriotism,” in which it is clearly shown that
its factories “can be regarded in no other light than quasi-
governmental institutions.” “Approximately $300,000,000 is
expended annually on the Army and Navy, and less than
one per cent., or about $3,000,000, of this vast sum goes to
powder. How important the item of excellence!”
A friend in Congress calls my attention to the following
significant abstract from the Congressional Record, April
28, 1911, in reference to a Senator from Delaware:
“Mr. du Pont”
Assignments:
Military Affairs, Chairman.
Coast Defenses.
Expenditures in the War Department.
Pensions.
 “WAR SCARE” Lit
ci Soe es EE ee

California or the Philippines. We are told of

“35,000 Japanese ex-soldiers in Hawaii,” of the
purchase by Japan of Magdalena Bay “where
she has already 75,000 soldiers,” of the need
of “meeting our enemies in the open ocean,”
of the “Danger Zone of the Caribbean Sea,” and
of other matters, real or imaginary, calculated to
induce us to continue to “throw good money after
bad” in the interests of naval preponderance.
The ‘‘War Scare’’ as a Weapon
The chief weapon of the Armament Syndicate,
because the most effective one for persuading a
nation to go more and more deeply into debt, is
the “‘war scare.” Always the one nation is pitted
against the other. Always there is imminent dan-
ger from our neighbors. Awful revelations ap-
pear at critical moments. Not alone in Europe,
where war scares have a mischievous diplomacy
behind them, but also in the United States, the
peace center of the world.’ Curiously enough,
the “war scare” appears also in Australia and
New Zealand. No part of the world is more
naturally immune from even the thought of war
than New Zealand, but even here the emissaries of
armament are active. Patriotic zeal calls for
universal conscription and the “impending dan-
5“If our navy should shrink to lesser proportions and
should be permitted to fall below the level of Germany,
France and Japan, these nations would bully our commerce
and insult our Monroe Doctrine whenever they felt like
it.’—(Republican Peace Committee, New York.)
112 UNSEEN EMPIRE

ger of Japanese invasion” is urged with a vigor

worthy of a real cause. Already Japanese fisher-
men have been seen on the reefs of New Cale-
donia, barely a thousand miles away! There is
not the slightest evidence that Japan or anybody
in Japan has any designs whatever on Australia
or New Zealand. The whole agitation would be
absurd if it were not thoroughly mischievous.
The storm center of war scares is found in.
England, not that her danger is greater, but
because she has more builders of armament. It
is in the interest of these men, not of the nation,
that Great Britain shall have twice the “sea
power” of any other nation. The growth of
England’s armament reacts on Germany, furnish-
ing her diplomatists with an excuse for her ex-
travagance in shipbuilding. A further excuse
for her army excesses appears in the specter of
Panslavism, which is also readily evoked.®
6In this connection, and making toward the same end,
we have the joyous philosophy of militarism. Heinrich
Leo (1853) prays cheerfully and unafraid: “May God
deliver us from the inertia of European peoples and make
us a present of a good war, fresh and joyous, which shall
traverse Europe with fury, pass her peoples through the
sieve and rid us of that scrofulous chaff which fills every
place and makes it too narrow for others, so that we can
again live a decent human life where a pestilent air now
suffocates us.”
Truer to fact is the following: “You have been made
sick by tasting dangerous poison. Great soldiers have
often told their men .. . that they have tasted
the salt .oft life. ‘The, saltwofy lifelioer 4... For;it. ds
nothing but the salt of death. It is a very subtle poison
 “WAR SCARE” 113
an

‘Typical of the war scare is the following re-

ferring to the story “in the air,” to the effect
that Japan is buying Magdalena Bay as a coal-
ing station.
“This we have to say, and we mean every
word of it—that we desire no trifling or tamper-
ing by a foreign power with our neighbors on
the Western Hemisphere that may prove a menace
to them or to us, or that may in any way interfere
with the declared principles of the Monroe Doc-
trine. We should not heed this hysterical peace
talk that Asiatic missionaries and other well-
meaning but deluded fanatics are giving us. We
desire peace, but the air seems full of war. The
public safety demands that our coasts and pos-
sessions be promptly and adequately fortified at
strategic points, that the regular army be in-
creased to its full strength, that our State militia
be organized, drilled, and equipped, and that we
should possess a most formidable navy to be pre-
pared at a moment’s notice for any and all con-
tingencies.” *
In Professor Grant Showerman’s charming
essay, “Peace and the Professor,” this quotation
appears, accredited to a modern “Cassius”: ®
“T am one of those who look for the simplest
which may lie hidden in the blood for many years. I be-
lieve it is a terrible thing!”—(B. L. Putnam Weale; Indis-
creet Letters from Peking.)
7 Mexican Revolution and American Public Opinion,
p. 4, 1911.—William Temple.
8 Nicholas Murray Butler.
114 UNSEEN EMPIRE
pe 2 eee

motives of explanation of action or of conduct.

My impression is that somebody makes something
by reason of the huge expenditures in preparation
for war. Have you ever noticed that about the
time that the appropriations are under considera-
tion in the House of Commons, in the Chamber
of Deputies or in the Reichstag, or just before
that time, hostilities are always on the point of
breaking out in two or three parts of the
world at once! . . . It might be worth
while . . . to make some measurement of
the sincerity and disinterestedness of the lively
type of patriotism which accompanies these mili-
tary and naval debates the world over. Is the
propelling motive for them to be found in
economics or in psychology? . . . While
both these admirable sciences are represented in
the make-up of that propelling motive, economics
is not always the less important of the two.”
Hon. David J. Foster, the late Chairman of
the House Committee on Foreign Affairs, ven-
tured to assert:
“I am absolutely convinced that there is a
criminal conspiracy on foot for the purpose of
bringing on a war between the United States and
Japan. ‘Thousands upon thousands of dollars
are being spent to carry on this propaganda, and
I am confident that the plans of these conspira-
tors will unfold themselves before very long. I
am convinced that this constant agitation for a
war between the two nations is nothing but a
 “WAR SCARE” 115
Pee erm ee
subterfuge employed by those people who are
determined that this government shall build not
less than two battleships each year. To endanger
the friendly relations of two great nations in or-
der that certain selfish interests may be gratified
is nothing short of criminal.”
“Looking back over 60 years,” says George
Heck® in London: “I can recall innumerable
scares as to the sinister designs of some foreign
country, scares which were as groundless as their
recurrence seems to be inevitable. When imagina-
tion takes the form of fear, it becomes not a
priceless gift, but a costly danger.” 1°
2 The Nation, London, February 10, 1912.
10 Among the really sincere creators of war scares, and
there are such, “General” Homer Lea, author of the “Valor
of Ignorance,” stands in a class by himself. Born in Den-
ver in 1876, a Sophomore at Stanford University in 1900, a
boy with dreams of Empire, he spent some time in Canton,
becoming a member of some secret society of agitators.
“Undersized and frail the little General in uniform of his
own deyising, overburdened by his spreading epaulettes,
was always a figure of merriment to the scoffers, but the
very qualities that dwarfed him in the eyes of his neigh-
bors added to his stature when the uprising in China be-
came an effective reality.” (San Francisco Chronicle, May
gy woe.
His ae of “Commander of the Second Army Division,
holding the rank of Lieutenant General over these forces”
(see Who’s Who, 1911, p. 1129) was also “of his own de-
vising,” the “forces” so far as known being “broomstick
companies of Chinese in empty squares and vacant lots”
about Los Angeles. He was never connected in any way
with the United States Army.
The “Valor of Ignorance” is a crude but clever echo of
the military philosophy of Napoleon’s times, with plans of
116 UNSEEN EMPIRE
ES
ee

The following note appears in the telegraphic

despatches of the week:
“The appearance of Germany as a possible sup-
porter of Colombia is regarded here as the latest
proof of the Kaiser’s willingness to challenge the
Monroe Doctrine. The history of Germany’s in-
triguing to get a foothold on American soil, although
it has not yet been written, is of course well known
in naval circles here. The best-informed officers of
the Navy have long been convinced that the steady
increase in the German fleet has been aimed not at
England and not at France, but at the United States;
and that it is not Japan in the Pacific which we need
watch most closely, but Germany in the Atlantic, and
that it is with her rapidly increasing battle-ships that
we shall eventually have to try conclusions.” (San
Francisco Chronicle, March 11, 1912.)
A few days later we read:—‘Strategists in
Washington have not the slightest doubt that the
moment the spark in China is ignited, Japan will
seize upon the opportunity to grab the Philip-
pines, if indeed that is not one of her principal
objects in endeavoring to precipitate an inter-
national war.” (San Francisco Examiner, March
20, 1912.)
Still later, April 3, a climax is reached in the
following from the Los Angeles Examiner:
“A confidential letter received by a diplomatic
imaginary campaigns to be executed by Japanese in Cali-
fornia. It has no value from the military or political point
of view.
 “WAR SCARE” ahh

official in Washington contains the startling informa-

tion that the moment the United States intervenes in
Mexico a Japanese force will attack the United
States. The letter states:
““T know that Japan is ready to help Mexico. I
know that there are over 60,000 Japanese in Mexico,
and I know each one is well armed and is only waiting
the word to join the Mexican army.
““T know that every Central and South American
State will send its quota of men and money to help
Mexico. The United States would win in the end,
but it would lose its prestige.
“ “Germany would get a big slice of Brazil; France
would get part of Chile, and England a part of Ar-
gentina. The Japs would get the Philippines and
Sandwich Islands and would bombard the cities on
the Pacific slope. I learned this from a source that
is undeniable, but I determined that I would not tell
it unless intervention was imminent.’ ”
On the same day, April 3, 1912, the following
appeared in the Boston American:
“For more than three months a great syndicate has
been in negotiation with the Mexican Government for
a vast tract bordering on Magdalena Bay. The
avowed purpose is to establish a Japanese colony.
Back of it, however, is understood to be the Japanese
Government.
“Already 75,000 Japanese are located along this
most convenient body of water. Nearly every ship
of the Japanese line, which operates on the Pacific
coast, adds to the number. While many of these
men are farmers, most of them are trained soldiers,
many being veterans of the Russo-Japanese war.
118 UNSEEN EMPIRE
a
ES

“So great is the menace of this colony to the peace

of the American continent, according to information
received by the American to-day, that as far back
as a year ago Great Britain sent a secret note to the
United States demanding that the Oriental nation
restrict its activities.
“In this note Great Britain called attention to the
fact that she had an alliance for offence and defence
with Japan and was therefore unable to make force-
ful representation herself. Such representation, the
note insisted, must be made by the United States.”

It may be noted that Magdalena Bay lies in the

rainless belt of Lower California, that the lands
about it are uninhabited and practically worth-
less, mountainous, and without vegetation save
scanty cactus and cedar bushes. There is a good
harbor, in a stormless sea. The fisheries in the
roadstead are very rich, and are covered by a con-
cession made by the Government of Mexico to Mr.
A. Sandoval, resident in Los Angeles. This con-
cession includes all the fisheries of Lower Cali-
fornia.
‘There are a score or two of Japanese fishermen
in Southern California and some of them haye,
I am told, examined the Sandoval concession.
There is no market for fresh fish in Lower Cali-
fornia, but there is a chance for salting large
fish and for packing small ones in oil, as also
turtle flesh and crabs at Magdalena Bay.
There is no town’! of any consequence nor
11 As a matter of fact, there is now at Magdalena Bay
 “WAR SCARE” 119

site for a town, as there is no water, save, I am

told, from a brackish spring, opening among the
sand dunes. On the Bay, there was once a colony
who gathered from the rocks the lichen called
Orchilla, then used as a yellow dye, but now re-
placed by the cheaper anilines. The whole orig-
a village of 100 people, six of them Japanese, a few
Chinese, the rest mostly Mexicans. These are employed
at a cannery owned by Mr. Sandoval. In this, crabs and
green turtle are put up in tins. The flesh of the tunny
is salted and dried while other fishes are made into fertilizer.
It is expected that this concession will be ultimately devel-
oped with French, not Japanese, capital and with the
aid of French fishermen. There are practically no Mexi-
ean fishermen, and since 1907 no Japanese laborers have
been allowed by the Foreign Office at Tokyo to come to
Mexico or to Canada.
A third enterprise of expatriated Japanese and their as-
sociates in Mexico has also come under the notice and con-
demnation of the “Armor-plate Press.” A fishery concession
covering some 200 miles of coast about Salina Cruz, another
' to the same extent about Manzanillo, and a third similar to
these between these two points, near Acapulco, have been of-
fered to bidders for a period of ten years, at a total
rental of $1500 each. Representatives of the Toyo Hoge
Kaisha (Oriental Whaling Company) have secured for a time
the refusal of these concessions, at $2,000 for the three for a
period of ten years. Along these shores fishes are abun-
dant. They are not easily preserved by salting, especially
with Mexican rock-salt. They dry up or else decay be-
fore the salt strikes in. The market for fresh fish is too
far away, and the canning of sardines in that climate is
a precarious business, as they are likely to spoil before
they can be brought to land. The sums involved in the
whole matter are petty, and these little ventures call for
no notice from our Government. There is not a shadow
of evidence that the Japanese Government or any com-
bination of Japanese capital has ever had any designs on
anything in Mexico.
120 UNSEEN EMPIRE

inal basis of these newspaper stories is thus given

by a Japanese friend, conversant with the facts,
a man of the highest standing in San Francisco:
“There appears to be a concern known as the
Chartered Company of Lower California, of which
John E. Blackman of Los Angeles is President. I
do not know where or how this company was incor-
porated, or where its headquarters are; but it seems
to be in possession of a grant from the Mexican Gov-
ernment of certain lands on the west coast of Lower
California, including territory on Magdalena Bay.
Efforts to sell a portion of this land, or colonize it,
seem to have been made by the company, and, among
its other activities, it has attempted to interest Jap-
anese capital. Through its representatives it ap-
proached Messrs. O. Noda and K. Abiko, two well-
known Japanese residents of this city, and Mr. Noda
was induced to go down last winter and inspect the
territory. In doing so he represented no one but
himself and possibly Mr. Abiko. Neither one of
them has any capital behind him, nor has either one
of them any authority to represent any bank, steam-
ship or other financial body—let alone the Govern-
ment. Acting in his personal capacity, Mr. Noda
had a perfect right to take the course he did; but, in
view of the readiness with which certain trouble-
seekers in this country are prone to seize upon every
opportunity to misrepresent and distort the motives
of the Japanese Government and the individual enter-
prises of its people, his course was, perhaps, inju-
dicious and unwise. It was an incident—perfectly
proper in itself—but readily lending itself to the
 “WAR SCARE” 121

purposes of mischief-makers and sensationalists. Mr.

Noda is now conducting a little business in SAcra-
mento and Mr. Abiko edits a newspaper in this city.
So far as they are concerned the matter is ended.”

Whether as a crab cannery or speculation in

desert lands, the whole affair has no more interna-
tional significance than would arise if “Italy” es-
tablished a new peanut stand on the Bowery “in
dangerous proximity to the treasures of Wall
Street.” 12
The fear of Japan lends spice to journalism in
other parts of the world as well. In the Japan
Chronicle (March 21, 1912), I find a transla-
tion of an article in the Russian journal Dalny
Vostok. The writer, who signs his name as “Da-
linsky,” sees in the awakening giant of China
and the mighty military power of Japan a
menace to Russia making it “necessary to take
steps beforehand against a new Mongolian inva-
sion.”
He finds that “at the present time Japan for
warlike purposes can dispose of the following
forces :”
12 Yet, at Washington and in the “Armor-Plate Press”
we are told that the Magdalena Bay “Colony” is a menace
not only to the United States, but to the Panama Canal.
It is located at the same distance from Panama that it is
from Pittsburgh. There is no fuel nor food (except fish)
obtainable in quantity from any point nearer than Mazatlan
or San Diego, both as far away as Boston is from Wash-
ington, with no regular connections.
122 UNSEEN EMPIRE

With the colors 763,000 men

First reserve 415,000
Second reserve 831,000

Soldiers 2,009,000 men

Trained militia 124,000
Untrained militia 873,000

Militia 997,000
Total 3,006,000

These, “with the already existing Korean troops,”

give to the cry of “Asia for the Asiatics!’ a most
powerful backing, and Russia may indeed trem-
ble. ‘We have been keeping ourselves quieter
than water, lower than the grass . . . giv-
ing way to all their wishes, even trying to antici-
pate them. China is still weak, and a prey to
civil war. America, until the digging of the Pan-
ama Canal, is helpless against Japan.” “A crow
does not peck out a crow’s eyes.” . . . “In
this. outburst (of aggressive movement) Japan
will probably come into collision with us and not
with the Chinese.”
It is evident that the imagination of the “dock-
yard strategist” is quite as vivid and fantastic in
Russia as in Washington. How pitiful seem the
75,000 armed Japanese gathered by Mr. Hearst
on the barren sand dunes of Magdalena Bay as
compared with the three millions thus conjured up
by this Russian operator!
 “WAR SCARE” 123
nS

The Sydney Bulletin in Australia, as quoted

in the Japan Chronicle, cites the case of one
Yang Ki-tak, a Korean imprisoned for some rea-
son by the Japanese, and described as a member
of ‘a race which believed in the talk of Peace So-
cieties and spurned the idea of naval or other de-
fense.”
It says:

“Australia’s personal interest in the above lies in

the fact that the fate of Yang Ki-tak of Korea may
be the fate of John Brown of Victoria or Bill Smith
of New South Wales, if the Great Trouble comes
before the Commonwealth Boy Army has had time
to grow up or its infant fleet a chance to develop into
something worth while.”
Henri Golay (Berne, 1912) says: ‘The actual
political philosophy of government is fear of
ghosts. Each state has two or three ghosts which
hold the strings to which are attached the min-
isters and chiefs of that state. When one lives under
the fear of ghosts, one exists in a distorted and unreal
light—the veritable molehill would appear as a moun-
tain, the little ship quietly steaming off on a voyage
would suddenly appear to assume the proportions of a
pirate, and one word uttered from a mouth more or
less responsible is enough to call forth a declaration
of war. Let us as nations cast aside our ghosts .
and disarmament will come as a natural sequence.”

Sir Edward Grey once observed that many mis-

understandings could be averted by “an interna-
124 UNSEEN EMPIRE

tional exchange of journalists.” An exchange

of “dockyard strategists” might also help.
Armament for War or Peace?
Certain general propositions may be laid down
as to war and peace. To regard war as “glo-
rious” is to invite it. To regard it as a hideous
calamity is to avoid it. The nation which holds
war in the background as a possibility in case of
difference is likely sooner or later to resort to it.
The nation that eliminates war from its methods
of adjustment will find peaceful methods at hand
whenever differences do arise. To be pledged to
arbitration is to be “thrice armed,” for it is to
have one’s “quarrel just.”
Artificial] “ententes,” meaningless friendships
and “entangling alliances” increase the danger of
war. To a nation’s own enemies and the friends
of its enemies, these coalitions add the enemies
of its friends. The diplomacy which seeks to
thwart the aspirations, righteous or otherwise, of
other nations is itself thwarted in turn, and each
entanglement is described in terms of war.
It is the claim of each nation that its armament
is solely for defense, for the protection of its
commerce, its colonies or its coasts. This claim
is clearly not true in every case; perhaps not true
in any case.
Purely defensive armament may make for
peace. It may impress rival diplomatists that
war would be a risky process. But defensive
 “PEACE ESTABLISHMENT” 125

armament is never satisfied to remain purely de-

fensive. It is intolerant of a waiting policy. It
tends to aggrandize itself. It would be “pre-
pared to meet the enemy in the middle of the sea.”
In other words, it would become armament for
offense as well as defense. War involves both.
Moreover, the fighters are dissatisfied with a
waiting game. ‘We like to have a mark that
will wriggle when we hit it. We cannot have
weapons without wanting to try them and see
whether or not they will work.”
Professor William Graham Sumner '* has well
said:

“There is no state of readiness for war; the notion

calls for never-ending sacrifices. It is a fallacy. It
is evident that to pursue such a notion with any idea
of realizing it would absorb all the resources and
activity of the state; this the great European states
are now proving by experiment. A wiser rule would
be to make up your mind soberly what you want,
peace or war, and then to get ready for what you
want; for what we prepare for is what we shall get.”
“War,” says the German Colonel Gadke, “is the
father of other wars. The more we think of our own
power and ability, the oftener we have tasted of the
fruit of victorious war, the more we are surrounded
by the evil spirit of Chauvinism and of imperialism.”

The ‘‘Peace Establishment’’

The military equipment of England is often
13 Yale Review, October, 1911.
126 UNSEEN EMPIRE

mentioned as “The Peace Establishment.” Here

we have a stroke of giant humor. Thoreau once
referred to the weather as being “so dry, it could
fairly be called wet.”
But it is nevertheless true that the so-called
“Peace Establishment” does make for peace in two
ways. It may promote the “Peace of Preponder-
ance” to use Lord Rosebery’s phrase, or what
we may call the Peace of Impotence.
So far as “preponderance” goes, it is clear that
a little nation will not often attack a big one
whatever its grievance. Persia will not declare
war on Russia and England, nor, if you please,
Colombia on the United States. It is fairly safe
to be “preponderant” but that fact has nothing
to do with justice. 14
The “Peace of Impotence” follows an over-
drawn bank account. This introduces a third
element, the international banker. His relations
to war and peace have been already sufficiently
discussed in these pages.
‘‘Peace Establishments’’ and Secret Diplomacy
In the Europe of to-day, “Peace Establish-
ments” serve mainly as counters in the game of
secret diplomacy. When the chief business of
the state was war, the function of the diplomatist
was to spy out weak places for attack in his
14“Where empires towered that were not just
Lo the skulking wild fox scratches in a little heap of
dust!”
—(Lowell.)
 ECONOMIC DIFFICULTIES 127

neighbors’ preserves, next to devise pretexts to

make such attack seem honorable. The armament
builders of the world strive to keep alive this
tradition. The presence of idle armament is a
constant spur to diplomatic activity. Thus is
established a mischievous round of diplomacy and
armament in which every “Great Power” is en-
trapped. “It has been apparent,” says Admiral
Mahan, “that the governments of Great Britain,
France and Germany have earnestly striven for
peace.” On the face of things, such would not
appear to be the fact. Rather the center of war
menace seems to lie in the Foreign Offices of these
three nations. If private citizens behaved toward
their fellows in like fashion, it would be said that
they were “hunting for trouble.”
Great armaments support a policy of diplo-
matic aggravation. Diplomatic aggravation in
turn serves to make costly armament inevitable.
Economic Difficulties in Disarmament
Under present conditions with an armament
expenditure for the world of over $2,000,000,-
000 yearly, the number of men engaged runs far
into the millions. With the suppression of war
all of these men as well as all the other millions now
withdrawn by conscription, will be returned to
the ranks of toilers.’®
Such a transfer will temporarily involve seri-
15 After the Boer war, according to McCullagh, the
extra hands employed in the Government gun-factories at
128 UNSEEN EMPIRE

ous disturbance in economic adjustment. For

it is recognized that any fundamental change in
labor conditions causes immediate confusion to
some part of the industrial world. The advent of
peace would for a time bring widespread dis-
tress, although it would soon be more than com-
pensated for, as the mass of the people would
thus be released from the burden of supporting
millions in what (economically considered) is de-
structive idleness. When these also became
workers the aggregate of demand and supply
would rise alike, and all would gain from the
shutting off of the avenues of waste.
During the period of transition, however, there
would certainly be suffering. Would it be unrea-
sonable to expect the commonwealth which has
forced its artisans into gun-making, powder-
making and the building of warships, to lead in
amelioration of conditions following the change
of military establishments into industrial and the
makers of war implements into artisans of peace?
The change must come—will come—and it is for
wise statesmanship to make it as little drastic as
possible. As Governments have reserved to them-
Woolwich had to be discharged. “What else was to be
done? The Government could not proceed to start another
war just for the sake of keeping these men in employment,
and it could not pay them for being idle. Nevertheless a
roar of indignation went up from the imperialistic press.”
Even the labor leaders, or some of them, joined in this
clamor against throwing so many good men out of em-
ployment merely because the Government had nothing for
them to do.
 ECONOMIC DIFFICULTIES 129

selves the right of making war, they should ac-

knowledge the obligations incident to its passing.
The revival of the American Merchant fleet would
go far to relieve the exigencies connected with the
abandonment of war preparation in the United
States. As to our naval personnel, the changes
impending must of necessity be so gradual as to
cause no serious embarrassment. Our standing
army is small, being relatively near a peace basis.
Its extravagant cost is due not to its size, but to
the lack of discretion on the part of Congress in
the needless multiplication of army posts.’®
16 See page 168.
 VII. WAR TO-DAY
Types of Modern War
In our time, the various wars actual or
threatened may be divided into three types.
These we may term Civil War; International
War; Imperial War.
Civil war is strife within the confines of a na-
tion. It indicates, in general, the failure of the
essential attribute of a modern nation,—the will
and the power to maintain peace within itself.
Internal peace depends on the maintenance of a
representative legislative assembly on the one
hand and of courts of justice on the other. A
despotism is essentially a condition of civil war.’
Historically, in civil war every despotism has
found its final and necessary end. Civil war may
be the work of thieves, marauders and malcon-
tents; or it may be the last resort of “murdered,
mangled liberty”; or it may also be an inextri-
cable mixture of the two.
International war is a conflict between recog-
nized nations, more or less equal in prestige.
This form of strife has filled the pages of Euro-
pean history, and it stands as a constant menace
in the background of most of the diplomacy of
the world.
1A Chinese saying thus describes absolutism in China:
“Big fish eat little fish; little fish eat shrimp; shrimp eat
mud,”
130
 TYPES OF WAR 131

Imperial war, or in Novicow’s classification,

“War of Spoliation,’ comprises conflicts under-
taken for extension of national territory and
rule. Its function is the control by a strong
hand of inefficient or inadequate peoples. Its
motives may be various, half-altruistic or wholly
selfish, for riches or display. The results may
be equally various, moral and physical improve-
ment of the conquered nation, or the utter ruin
of its people through processes of miltary pacifi-
cation, or any intermediate combination of the
two. Whatever the motives, it is worth notice
that the real one is seldom actually avowed.
Always these conflicts take the guise of benevo-
lence or else of “military necessity” or “manifest
destiny.” It is said that the Turks are the only
people who do not try to veil in some way their
schemes of territorial spoliation.?
The only check to civil war consists in the
establishment of democracy. Constitutional gov-
ernment and the development of the courts afford
its only remedy.
International war, as I have already tried to
2The following sentences from speeches of Abraham Lin-
coln are pertinent to the discussion of Imperial Control.
“Let us discard all this quibbling about this man and the
other man, this race and that race and the other race being
inferior and therefore must be placed in an inferior posi-
tion.
“What I do say is that no man is good enough to govern
another without that other’s consent.”
“The sheep and the wolf do not agree on the meaning of
liberty.”
132 UNSEEN EMPIRE

make clear, is now virtually at an end. The

growth of debt and the cost of armament have
placed the control of European affairs in the
hands of the money-lenders. It has forged for
them weapons against which the belligerent
nations are powerless. The more warlike the na-
tion, the more firmly is it held in the actual grip
of debt.
With Imperial war the case is not so clear.
It is likely to continue until all barbarous lands
are covered by the flags of civilization. And the
fierce intrigues and bitter jealousies to which these
operations give rise hold within them again the
menace of international war. But here too the
bankers and the common-sense of the people may
intervene. Imperial wars are scarcely less costly
than others, and almost as profitless. Meanwhile
the public opinion of the world is rising against
and increasingly condemns the encroachments of
Europe on Asia and even on Africa.
‘“‘The Great Illusion’’
Norman Angell has applied the term, ‘The
Great Illusion” to the idea that a nation can be
strengthened or enriched by war. War of any
sort no longer pays. Conquered territory is al-
ways a burden of expense. It adds to national
vigor or to national wealth only when it becomes.
an integral part of the nation, the home of a
coéperating and_ self-governing people; the
“Louisiana Purchase” of the United States rep-
 “THE GREAT ILLUSION” 133

resents an expansion of this kind. Illustrations of

costly but unprofitable holdings may be seen al-
most anywhere on the map of Asia or Africa. <A
well-governed dependency may be a source of
moral strength to the parent nation but not a
source of wealth. There can no longer be “taxa-
tion without representation.” A “colony” cannot
safely be asked to pay even its military expendi-
tures. The secret of our creditable recent govern-
ment of the Philippines lies largely in the fact that
the taxes of the islands are used for their own
public purposes. For the services of army and
navy we do not ask them to pay. Our own military
outlay in their behalf has been estimated (1912)
at $168,000,000. Nowhere in America or
Europe have the people had the experience of
being taxed for civil expenditures only. In Eng-
land, as Mr. L. T. Hobhouse observes:? ‘The
proceeds of expanding revenue flow into the War
Office and the Admiralty, and it is with difficulty
that social reformers snatch something on the
way. . . . It is this constant increase which
hamstrings measures for the internal development
of the country, and cripples every effort to
alleviate the widespread misery of the masses.”
For behind the “Great Illusion” looms the
“Great Debt,” and both are necessary results of
the intricate and futile diplomacy which under-
lies the affairs of Europe to-day.
3 Atlantic Monthly, March, 1912, p. 351.
134 UNSEEN EMPIRE

The ‘‘Mirage of the Map’”’

By the “Mirage of the Map”* is meant the
fallacy that national importance is measured by
extent of territory. “In the days” says Norman
Angell, “of the sailing ship and the lumbering
wagon dragging slowly over all but impassable
roads, for one country to derive profit from an-
other it had to administer it politically. But the
steam engine, the railway, the telegraph have
profoundly modified the problem. In the mod-
ern world political dominion is playing a
more and effaced rdle in commerce. It is
the case with every modern nation that
the outside territories it exploits most suc-
cessfully are precisely those of which it does
not own a foot. Even with Great Britain, the
greater part of her over-seas trade is done with
nations which she makes no attempt to “own,”
control, coerce, or dominate. She has ceased to
do any of these things with her colonies.
The modern German exploits South America by
remaining at home. German colonies are colonies
‘pour rire. The Government has to bribe Ger-
mans to go to them. Her trade with them is
microscopic. If the 20,000,000 people who have
been added to Germany’s population since the war
had to depend on their country’s political con-
quest, they would have had to starve. ‘
Germany draws more tribute from South America
4 Norman Angell, London Daily Mail, November 14, 1911.
 “MIRAGE OF MAP” 135

than Spain which has poured out mountains of

treasure and oceans of blood in its conquest. These
(South American states) are Germany’s real colo-
nies. . . . The immense trade they represent
owes nothing to the diplomat, to the Agadir in-
cidents, to Dreadnaughts. It is the unaided work
of the merchant and manufacturer.”
In carrying the French flag and the French
debt over Algiers, Tunis, Morocco, Sahara, and
Soudan,—about two-fifths of all Africa,—France
has gained nothing in population or wealth.
After thirty years in Tunis, she has established
a colony of 25,000 Frenchmen. This exactly
corresponds to the yearly loss of population in
France, “the real France,” which grows less every
year. “The diplomats can. point to 25,000
Frenchmen living artificially and exotically under
conditions inimical to their race, as expansion and
as evidence that France is maintaining her posi-
tion as a great power. . . . There are to-day
more Germans in France than there are French-
men in all the colonies that France has acquired
in the last half century and German trade with
France outweighs enormously the trade of
France with all French colonies. France is to-
day a better colony for Germans than any exotic
colony which France owns.
“They tell me,’ said a French deputy ‘that
the Germans are at Agadir. I know they are in
the Champs Elysées.’” And Paris is a much bet-
ter place for doing business than Morocco.
136 UNSEEN EMPIRE

Professor Delbriick, a leading German In-

perialist, in the “Preussische Jahrbiicher,” ex-
plains and defends the spirit of the “mirage of the
map.” Germany we are told desires not isolated
over-seas possessions but “a vast continuous area
which is purely German.” It must stretch some-
where from ocean to ocean and it must be ruled
by an “aristocracy of German planters and mer-
chants” which will evolve “a German-African na-
tional pride.” It is freely admitted that no
economic gain can arise from the contro] of this
domain. The desire for it rests solely on racial
feeling. Mr. H. W. Massingham from whom we
have taken the above quotations compares this to
the involuntary reflex movements of an animal
organism deprived of its directive nerve centers.
“Nations continue to act on a given impulse long
after the living thought of a people has advanced
beyond the motives which inspired the action,
precisely as a frog will go on moving after its
brain is removed. . . . To be a governing
aristocracy among naked tribes and to see German
descend to be the patois of semi-civilized negroes
is not a dream which allures us by its esthetic
charm, Already it admits its own intellectual
nullity. It has shed its economic fallacies. It has
dropped the argument from material advantage.
It stands frankly on a basis of sheer sentimen-
tality.” (The Nation, London, March 16, 1912.)
The Hidden Trail of Diplomacy
Through all these matters of colonial expan-
 THE HIDDEN TRAIL 137

sion, there runs a sinuous trail of diplomatic in-

trigue. The secret treaty® is the bane of
Europe, because the people have no control over
it, and its existence is made known only through
its unpleasant reactions. In physics it is rec-
ognized that a current of electricity will set up
counter currents in conducting bodies which lie
parallel to it. Something of this kind takes place
with the currents of intrigue. Parallel with the
main line of diplomacy and contrary to it are
two other lines, each of the same nature as the
first.
The main trail leads from Berlin to Vienna,
then down the Adriatic and through the Balkan
capitals to Constantinople. Here effort centers
in the Great Bagdad Railway with its direct
threat at India, to which it is much the shortest
route, and its indirect menace to Egypt on the
one hand and to Persia on the other. This great
military highway built by a German Syndicate on
a concession from the Turkish Government to the
German Empire was to lead across the Taurus
Mountains down the rich but wasted valley of the
Euphrates, past Bagdad, Nineveh and Babylon
to the Persian Gulf.
To the eastward runs another hidden line of
intrigue from St. Petersburg across the Caucasus,
5 One of the wisest provisions of the Constitution of the
United States is that requiring confirmation of treaties by
the open vote of the Senate. This involves delay, an ele-
ment of safety, and it insures publicity, which makes
diplomatic intrigue an impossibility.
138 UNSEEN EMPIRE

involving Persia, Turkestan, Mongolia, North

Manchuria, and whatever else is exploitable along
the whole Russian frontier. 'To the westward, a
similar line of secret agreements extends from
London to Paris, Rome and Athens and across
to Delhi, codperating at times with the under-
ground schemes of Russia and at all times crossing
and thwarting the secret designs of Germany.
Two lines of intrigue met.at Morocco, and in the
arrangements of both it seems to be agreed that
Italy for her part should at her convenience take
possession of Tripoli. In the one stroke of the
annexation of the half-forgotten principality of
Koweit,® the diplomacy which we may call British
6 The essential facts in the Koweit affair are as follows:
The Sultan Abdul-Hamid had granted to the government
of Germany a concession of land on which to build a rail-
way from Constantinople diagonally across Turkey to the
Persian Gulf. This would cross the Taurus Moun-
tains to Adana and Aleppo, then proceed to Nineveh
on the Tigris, thence to Bagdad and Babylon to
Koweit. The concession also included navigation rights on
the Tigris, Euphrates and Shat-el-Arab, besides access’to
the richest of oil lands and of wheat-fields in the Valley of
Mesopotamia. Koweit, on the Persian Gulf, is an “insig-
nificant cluster of mud huts.” Its Sheik, a half-independ-
ent Arab vassal of the Sultan, was visited some years ago
by a British officer. According to report the gunboat
which brought him from India was generously provided
with presents, as well as with flagstaffs and the Union
Jack. It did not take long to persuade the Sheik that it
was for his advantage to come under British protection. In
this fashion was Koweit annexed to the British Empire.
Thereupon the German Foreign Office was promptly noti-
fied that the terminus of the Bagdad Railroad would be
on British soil. It was therefore suggested that the road
 THE HIDDEN TRAIL 139
a

achieved a distinct advantage, unless we count

the sacrifice of moral values involved in assisting
at the loot of Persia. Koweit constitutes the only
possible terminus for the Bagdad Route and when
it passed under the British flag the costly rail-
way was halted’? at the Taurus Mountains. By
further consenting to the effacement of Persia,
England has saved that nation from the danger
of German domination by turning her over bodily
to the military despotism of Russia. For it is
claimed that a self-governing Persia “would be
simply a plum to be picked by the owner of the
Bagdad Railway at his convenience.” A second-
ary ramification of diplomacy is the fair-weather
alliance with Japan. Another is the zeal for con-
scription aroused in Australia and New Zealand.
be made neutral, British and Germans to share in its man-
agement and construction. Work was immediately stopped
and the line still extends no farther than Eregli, in the
Taurus Mountains. If completed it would form a route
to India much shorter than that by the Suez Canal. It
was therefore regarded as a “military menace” to the
British occupation of India, as well as to Egypt and Persia.
It is not easy for a layman to see any reality in this al-
leged “menace.” Besides the reasons for believing that a
war between Great Britain and Germany is impossible, we
have the difficulties involved in a very long range attack on
an entrenched antagonist. The German army would be
needed at home. If ever an attack were to have been made
on England, it would seem as if the time of the Boer war
offered the best opportunity. It was probably morally, as
well as financially, impossible then, as we trust that it is
to-day.
7In essentially the same fashion, the British “Cape-to-
Cairo” line has been blocked by German influence in Africa.
140 UNSEEN EMPIRE

In the war-scares evolved in these regions, Japan,

four thousand miles away, is the only evocable
spectre.

‘‘Powers’’ or Jurisdictions?
The medieval conception of a nation, still ex-
tant in Europe, is that of a “Power,” its impor-
tance being determined by the physical force it
can exert on other nations.
Our ultimate conception must be that of a sim-
ple jurisdiction either as an individual unit or
else as composed of confederated states. In this
view, the boundary line represents merely the
limit of jurisdiction. That jurisdiction ceases
does not imply probability of violence between the
people on the two sides nor require fortification
for the purpose of repelling violence. The Cana-
dian boundary is an example of this meeting of
states not as powers but as jurisdictions.
This four-thousand-mile line, ranging through
all kinds of territory and all sorts of conditions,
disputed nearly all the way “with all the brutal
frankness common to blood relations,’ ® has for
nearly a hundred years not known a fortress, a
soldier, a warship or a gun. It is a peace bound-
ary, the limit of the jurisdiction of one self-gov-
erning nation, the beginning of that of another.
It lacks but one thing to make it ideally perfect,
the removal of the custom-house, the emblem of
national suspicion and greed, the remnant of the
8Dr. James A. MacDonald.
 GERMANY A CASE 141

days when it was considered good economics for a

nation to “have its taxes paid by foreigners.”
Entirely similar to this in all regards is the long
boundary of Mexico. This we have to defend, it
is true, not against Mexicans but against the
predatory excursions of our own law-breakers.
The states in a federal union meet as jurisdic-
tions. The small ones have no fear of the large
ones and those not touching the sea suffer in no
way from their restricted position. A “Power”
hampered as is the state of Illinois would chafe
against its limitations, and its jingoes would talk
of fighting their way to the ocean. But viewed as
a jurisdiction, surrounded by similar jurisdictions,
the people of Illinois have no consciousness of their
limitation.
Germany a Case in Point
Viewed as a “Great Power,” in the medieval
fashion, the German Empire is hampered on every
side. Her scant sea-coast is split in two by the
presence of Denmark. Her German Rhine dis-
charges itself through Holland. The ports of
Amsterdam, Rotterdam, Antwerp and Ostend,
geographically hers, are occupied by alien peo-
ple whom she could crush out in a moment, were it
not for the physical force of the rest of Europe
and the moral force of the world. Of Poland,
she has too much or too little? A large part of
9 “Wir haben Polen genug auf dem Wagen.” (A German
Journal.)
142 UNSEEN EMPIRE

the German people live in the alien empire of

Austro-Hungary and in the republic of Switzer-
land, while after forty years of possession, she
scarcely owns Alsace or Lorraine. She is hemmed
in everywhere by the scars of old struggles, to
her perennial discomfort. For this reason, she
suffers from the “Drang nach Osten,” she seeks a
road to the Persian Gulf, an empire over seas,
and every form of imperial extension to lands
“under the sun,” which may for the moment seem
plausible or possible.
But Germany as a jurisdiction suffers none of
these limitations. Her powers are only those
which are needed for the people’s good. They are
merely her public duties. It matters nothing
that her sway is checked on almost every side be-
fore it reaches the sea. Other jurisdictions in-
tervene, and each of these looks after the public
needs of man, which are mostly justice, conser-
vation, education, sanitation and peace. As one
of the “Great Powers” of the world, Germany
(with her fellow states as well) is a center of fric-
tion, injustice and unrest. Viewed as a jurisdic-
tion, the administration of Germany is worthy of
the highest praise, and no enlargement of bound-
aries would enhance her usefulness. When the
nations cease to be “Powers,” great and small,
and become fellow-citizens of a civilized world, this
fact will mark the reign of peace.
The power and extent of a nation bear no re-
lation to its prosperity, that is, to the welfare of
 RIVAL “POWERS” 143

its individual citizens, except as the debt and

waste through which “power” establishes itself
may be harmful to the people of which the nation
is composed. “There is no welfare of a nation
apart from the well-being of its people.” 1°
England and Germany as Rival ‘‘Powers’’
A conspicuous example of the rivalry engen-
dered between great nations still viewed as “Pow-
ers’ is found in the present relations of England
and Germany. Between these nations as intelli-
gent, civilized and progressive peoples there is no
reason for enmity. As a matter of fact, except
as an aftermath of war scares and serpentine di-
plomacy no such enmity exists. No responsible
person on either side, King, Kaiser, Reichstag or
Parliament, desires war. All realize that a fight
between these two most powerful, most deter-
mined and most advanced of nations would in-
volve the entire world in indescribable calamity.
And we know that the whole influence of com-
merce, of labor, of education on both sides is un-
alterably opposed to armed conflict. Behind all
this, as we believe, the Unseen Empire of Finance,
the natural order of business, has decided that
such a conflict shall never take place.
Nevertheless, the old idea of the function
and duties of a “Power,” with its burden of debt,
its necessity for armament and its mischief-mak-
ing diplomacy, has kept these two nations for
years on the apparent verge of war. Some
10 Rikichi Kamada, President of Keio University, Tokyo.
144 UNSEEN EMPIRE

phase of this menace will endure until we clarify

the common conception of what a nation is for.
Why Talk of War?
The trouble in each nation comes from the al-
leged wickedness of its neighbors. Each tells the
same story, “The waning fleet of England is tied
to its shores by German menace”; “The small
but efficient fleet of Germany is solely for defense
of Germany’s growing commerce.” More ex-
plicitly, on March 16, 1911, there was prepared
the following statement signed by Eickhoff,
chairman of the German Committee for “Peace
and Arbitration,” also endorsed by fifty-one mem-
bers of the German Reichstag and thirty-four
members of the Prussian Diet, as well as by the
Count of Schwerin-Lowitz, President of the
Reichstag and by the Prince of Schoenaich-
Caroleth.
The statement (translated) reads as follows:
“It is the opinion of the undersigned that because
of the interests involved in the close international in-
terdependence existing in the finance and commerce
of the world, Germany holds its army and navy in
readiness only as a means of protection against any
attack, but not as a means for aggressive warfare
(nicht aber um einen Angriffskrieg zu fiihren).”
In England it would be easy to get an array
of distinguished names after any statement of
similar tenor. It could be done in any nation.
War is the last thing the statesmen want, although
 WHY TALK OF WAR? 145

it is the first thing for which they prepare. Nei-

ther nation could gain much by victory, while in
the end there would be no material choice be-
tween that and defeat. The British would still
own England, the Germans Germany, whatever
the trend of events. Not an Englishman (con-
tractors, armament-builders and “ghouls” ex-
cepted) would be the richer for the downfall of
Germany. Not a German but would be the
poorer for the destruction of England’s credit.1!
The toilers of the world are everywhere opposed
to war and to debt. The Labor Unions are al-
most a unit in this regard. The Socialist groups
11 “How far are we removed from the glorious days when
Bismarck could glibly talk of bleeding France white with
the satisfactory assurance that not a German would be the
poorer in consequence, and that on the contrary the Ger-
man state would immensely gain thereby.” By “the social
Law of Acceleration . . . Bismarck was nearer to
being able to apply the methods of Attila, nearly 1,500
years removed from him, than we are to being able to
apply the methods of Bismarck, from whom only 40 years
separate us. . ._.
“But surely we must realize that in the end the Govern-
ment is the world of affairs, in the sense that the general
trend of its policy must sooner or later be determined by
the interests and the necessities of the mass of the people
from which it derives its power, its money, its general ca-
pacity to act with efficiency and precision—a modern war
of all things involves that capacity which must be derived
from acting in the long run in connection with the great
currents, economic and moral, of its time and people. It
is not possible for any great state taking an active part in
the life of the world to do otherwise. The state simply is
powerless before these currents.’—(Norman Angell, “Influ-
ences of Banking on International Relations.”)
146 UNSEEN EMPIRE

take the same stand against international war,

though many of them advocate another kind, the
struggle of “class consciousness.” The Social
Democracy of Germany,'” pledged in opposition to
monarchy as well as to militarism, has arisen
as an inevitable reaction from the policy of “the
Mailed Fist.” As for the rank and file, they are
mere incidents in the movement of diplomacy;
not the principals, merely the victims or, at most,
pawns to be moved in the game of national glory.
Hidden forces control] their activities, and their
lives are spent to no purpose known to themselves.
The Prime Ministers and Ministers of War are
never on the firing line. The pawnbrokers, pro-
moters, and camp-followers are also well to the
rear. To risk their own lives would also risk
the profits. ‘The rich man’s war, the poor man’s
fight, this,” says Carl Schurz, “was the Winged
Word” among the poor whites of the Tennes-
see mountains.
Professional Interest a Factor
There can be no doubt that in every navy,
many of the wardroom officers look beyond
their dreary routine of futile repetitions to the
time when they can make use of their costly
12In the recent German election, January 12, 1912, the
Social Democrats polled over seven millions of votes as
against less than five millions cast by other parties. In
every district but one in Berlin including Potsdam itself,
they were successful. The result is significant of the great
reaction in Germany.
 PROFESSIONAL INTEREST 147

trainmg. So in looking forward to the day of

action there may be first a selfish element. War
means a chance for promotion, a chance to rise
from the nameless roll into the rank of the idols
of the hour.
A higher impulse arises from the professional
spirit. When a man devotes his life and energy
to a calling, he may naturally wish to practise
it, in a degree at least. It is true some of the
ablest advocates of peace are found among men
who know what war is and who realize that it
must disappear in the onward movement of civ-
ilization. But the average European officer
feels the spirit of militarism. He takes his pro-
fession seriously, and at a value set by the money
expended on it. For the cost either in money or
in blood, he cares little. Of the cost in money, he
knows little: he has nothing to do with taxes. Of
the cost in blood, he knows little more, only a
very small percentage of European military men
having ever seen a battle. Militarism has al-
ways held itself superior to civil affairs and lightly
regarded the life of the individual. Napoleon is
reported to have said: “A soldier like me cares
not a tinker’s damn for the lives of a million men.”
There exists moreover the scientific desire to
test, in some way, the teaching of the books in
military affairs. Changes in armament mean
great changes in tactics, but these have never
been formulated or tested. They can be tested
only in the laboratory of actual war. It is there-
148 UNSEEN EMPIRE

fore not strange, and it is perhaps no reproach

to the young officers that they toast, “Der Tag,”
as the day of their release and their opportunity.
A Grotesque of History
The persistence of medieval traditions of war
and glory in an age of science, commerce and rea-
son has produced an extraordinary confusion of
effort and motive without a parallel in the history
of the world. This condition can be viewed only
as a part of the necessary stages in the passing
of war.
Zangwill says, quoting from a supposititious
future-day Chinese historian: ‘Like a sloughing
snake, the West lay sickening; the new skin of
commercialism only half put forth, the old skin
of militarism only half put off. <A truly piebald
monster, this boasted civilization of ours. On
the one hand, a federation of peoples eagerly
strengthening one another; on the other hand,
packs of peoples jealously snapping at one
another. A sextet of nations styling themselves
Great Powers, all with vast capitals invested in
developing one another’s resources, were yet
feverishly occupied in watching and cramping the
faintest extension of one another’s dominions. A
more ironic situation had never been presented in
human history, not even when Christianity was
at its apogee. For, whereas, in the contest be-
tween Church and Camp, it was simple enough to
shelve the Sermon on the Mount; in the contest
 A GROTESQUE OF HISTORY 149

between Commerce and Camp both factors were

of equal vitality and insistence. The result of
this shock of opposite forces of development were
paradoxical, farcical even. In the ancient world
there had been the same struggle for supremacy,
but the Babylonians or the Egyptians did not
build up each other’s greatness. The Romans
did not lend money to the Carthaginians, nor did
Hannibal sell the Roman elephants. But in this
era the nations fought by taking up one another’s
war loans. In lulls of peace they built for one
another the ships they would presently be bom-
barding one another with. The ancient mistress
of the world never developed a country till it be-
longed to Rome. The medieval rival mistresses
were all engaged in developing countries which
belonged to their rivals, or to which they might
one day themselves belong. In brief, two threads
of social evolution had got tangled up and tied
into a knot, so that neither thread could be fol-
lowed clearly. It was death to give away your
country’s fortifications—at a percentage. It
was high treason to help the enemy in war time,
but you could sell him your deadliest inventions
if your Government offered less or waived you
aside. And you manufactured those weapons
and exported them to the enemy by the million
so long as he had not given you notice that he
was going to fight you next week. Quite often
a nation was hoist with its own petards and no
sooner had you devastated your enemy’s country
150 UNSEEN EMPIRE

than you lent him money to build it all up again.

In vain shells hissed and dynamite exploded.
The stockbroker followed ever on the heels of the
soldier and the grass of new life (and new loans)
sprang up over the blackened ruins. Indeed, na-
tions, instead of being extinguished in the strug-
gle for political existence, because they were too
weak to pay their debts, had to be kept artifici-
ally alive in order to pay them.”
 VIII. RETRENCHMENT

In these pages we have tried to indicate the

present relations of the nations to war and peace.
We have shown how peace has followed in the
wake of debt, and how the rule of the war-lord
has given place to that of the money-lender, and
this in turn to the operation of the ordinary laws
of finance. We have shown that nations have
lived beyond their means to a degree that cannot
be permanent. We shall further see that the
demands of peace must arise to contest with war
the right to “the fruits of progress.” The way
into debt lay through heedless extravagance.
The way out lies through a reversal of policy,
a return to forethought and frugality.
Functions of Government
Until well along in the nineteenth century, war
and diplomacy constituted practically the sole
business of government. The force of tradition
still gives them the right of way in almost every
country. The present organization of every
government in the world is based on the medieval
theory ? that war is a natural function of a na-
tion, not a moral, physical and financial catas-
1The conception was thus formulated by Machiav-
elli: “A prince ought to have no other aim or thought,
nor select anything else for his study than war and its
rules of discipline, for that is the sole art that belongs to
him that rules.”
151
152 UNSEEN EMPIRE
ST

trophe. In our own country, the President is

Commander-in-chief of Army and Navy, with a
Secretary of each in his Cabinet. It is not
humanly possible for any one of these three to
reduce the range of power his office represents.
In almost all other nations the force of militarism
is still more dominant. For these reasons, com-
peting civil interests have never been able ade-
quately to establish themselves anywhere. The
sums devoted, the world over, to all civil pur-
poses range in amount from one-fifth to less than
one-half those devoted to military affairs.
A remedy for all this lies in the exaltation
of the civil functions of government, the safe-
guarding of the common rights and interests of
men in the promotion of justice, sanitation and
education and in the conservation of public
properties, together with the fostering in all ef-
fective ways of art, science and invention. Posi-
tive efforts along these lines rather than direct
attacks on the waste of militarism may indicate
the way out. The formation of a high commis-
sion which in statesmanlike fashion can consider
actual facts in the scheme of national defense,
with the relative values of those needs on which
money may be expended, will give the surest solu-
tion of our problem in America.
Expenses Unchecked
One of the most disheartening features in popu-
lar government everywhere is the absence of all
 EXPENSES UNCHECKED 153

machinery to check expense. Even an empty

treasury does not count. There is always some
way to negotiate a loan. ‘This absence of check
is especially notable in the case of the army and
navy. Their expert demands are beyond the
understanding of the common man. By minis-
tries and parliaments their estimates are accepted
practically without question. No finance minister
anywhere has thus far maintained himself against
them, with the single exception of Yamamoto in
Japan.
The “watchdog of the treasury” receives no
support from his fellows or his constituents, and
his work for retrenchment marks him for political
extinction.2, Thus it happens that the United
2 This is illustrated in the recent experience of Wermuth
in Germany: “But the guardian of the finances of the
Empire, Herr Wermuth, has gone, without a word of
thanks for his services from his Imperi master. .
The civilian goes and the warrior remains. There is some-
thing symbolical in this for the political situation of Ger-
many and of the world of so-called Great Powers.
The true reason of Herr Wermuth’s resignation lies deeper.
It is not the dispute about one particular tax. Enough has
leaked out to make it evident that the whole system of
spending money and preparing further expenditure as
practised at present has found a decided opponent in the
former Chancellor of the Exchequer. He was certainly
not in principle an antagonist of armaments; but he appears
to have fought strongly against the reckless increase of ex-
penditure on them. . . . The story of the naval mad-
ness in Germany furnishes an instructive example of how
certain plants themselves create the conditions of their
growth. With the increase of the German navy, the num-
ber of officers of the navy has increased too, so that to-day
perhaps five or eight times more middle-class families have
154 UNSEEN EMPIRE
ES

States in time of peace, with nothing save peace

ahead, spends $800,000 a day in military opera-
tions,—not counting interest and the removal of
men from productive enterprise. No clear evi-
dence of the need of this has ever come before
the people. The world over, as we have shown,
each nation finds itself in the same ruinous com-
petition, with the same ignorance of any reason
why these conditions should exist.
It is a reproach to the people of China that,
suffering as they have for ages from the mis-
use of irresponsible power and from the form of
taxation known as the “squeeze,” they have until
lately never attacked the system, rising only at
intervals against the individuals who have abused
it. The same reproach holds against the people
of Europe. They have floundered for a century
in the morass of debt, war-waste and poverty,
but while there have been bread-riots and tax
riots, strikes, “sabotage” and “syndicalism,” the
people have made no adequate stand against the
sons or near relatives in the navy than fifteen years ago,
and consequently take a much larger and more direct in-
terest in all questions referring to it. This accounts also
for the small resistance offered by the middle classes to
the proposed increase. Hence the only quarrel of the mid-
dle class parties in regard to this question relates to the
method of paying for it.” (Ed. Bernstein, London Nation,
March, 1912.) With each expansion of naval armament
goes a corresponding extension of the numbers of those
consciously or unconsciously interested in promoting naval
expenditure, and this influence is cast on the side of still
greater debt and waste.
 RETRENCHMENT 155

system of military expenditure which is one of the

primal sources of economic troubles.
The United States and Retrenchment
The recent “Pageant of the Ships” on the Hud-
son River was regarded by some of us as a mighty
illustration of the force of a free people, a great
awakener of patriotism, and a glory of democ-
racy. To others it represented the most costly
monument ever reared to the spirit of heedless
waste. There is perhaps some middle ground
on which we may meet.
No one may question the necessity for a small
but effective army and a navy also small but
with the best of necessary equipment. There is
certainly some justification for protecting our
great coast cities, but many of us see no reason
for fortifying the Panama Canal nor the port of
Honolulu. There is no nation on earth that has
either the will or the money to attack us. On
the other hand we see in international friend-
ship, international commerce and freedom from
international debt, weapons stronger than any
fortress or navy. If in America we can safely
retrench, if we ought to retrench and dare to
retrench, it will ultimately solve for the world the
whole problem of debt and militarism.
Let us consider this matter somewhat in de-
tail. Civil wars aside, our nation has been three
times engaged in war, each time of its own ini-
tiative. Leaving out the War of 1812, in some
156 UNSEEN EMPIRE

degree an aftermath of the Revolution, we have

only the wars with Mexico and with Spain. The
Mexican war no one now pretends to justify.
It was an affair of spoliation in the interests
of slavery. That beneficent results followed in
no way justifies its purpose.
The primary motive in our differences with
Spain was one of sympathy for a much abused
people. The usual processes of “military pacifi-
cation” * familiar in Asia and Africa and going
on to-day in Persia, Armenia and other unfor-
tunate regions, were being practiced at our own
doors. It was natural and righteous to protest.
But this need not have involved war. It certainly
did not involve war, for it is a matter of record
that before war was declared, our Minister to
Spain had secured assent to a treaty granting’
all we had a right to ask, all in fact that we
did ask,—namely full autonomy to Cuba and
arbitration of all differences, including the dis-
aster of the Maine.
3 For a statement of facts as to “military pacification”
in some other regions see “Bella! Bella! Horrida Bella,”
a masterpiece of moral indignation, by Mr. F. J. Corbet,
in the Westminster Review, March, 1902. Also “Pax
Britannica in South Africa,” by Francis P. Fletcher-Vane,
and “The Captain Sleeps,’ in the present author’s “Im-
perial Democracy.” For the close relation between a stand-
ing army and the “White Slave Traffic,” see “Queen’s
Daughters in India,” by Elizabeth Andrews and Kather-
ine Bushnell, and also Mr. Corbet’s article mentioned above.
See also “Indiscreet Letters from Peking,” by B. L. Put-
nam Weale. “History,” says Mr. Weale, “is made, only
to be immediately forgotten.” +
 RETRENCHMENT 157

Whatever else we may say of that war, we can-

not assert that before it began, we were exposed
to the danger of Spanish aggression.
We are not exposed to aggression from any
quarter. As the wealthiest nation on earth, we
have business allies in every capital. In spite of
our tariffs, we are the world’s best customer.
Unlike the great nations of Europe, we have not
overdrawn our accounts. We spend as much each
year as the best of them—or the worst—but
our debt is small and our reserve surplus is gigan-
tic. If we had no navy whatever, no nation could
afford to attack us. For we are protected in
isolation, in wealth, in relative freedom from debt,
in the absence of entangling alliances and entan-
gling enmities, in having no fallen dynasties to
restore and no defeats to avenge, in being—as
a whole—fully competent, through commerce,
through industry, through alliance by blood and
alliance of friendship to banish all consideration
of war.
Moreover, the United States has a defense in
her moral strength, an influence strained a few
times to be sure by lapses real or apparent, yet on
the whole persistent and potent. To have stood
fairly consistently for peace and fair play is in
itself a guarantee against wanton attack even
if we had no other defense. Were the United
States to make war on any power of Europe
(a wholly absurd proposition), it could not under
present conditions invade the enemy’s territory,
158 UNSEEN EMPIRE
eee

nor inflict much damage on its people or its

property. The United States in wealth, popula-
tion and resources stands far above the strongest
of the European powers, but she could not suc-
cessfully attack any of them on their own ground.
Conditions of warfare have changed since the days
of Napoleon, and Napoleon fought on land be-
cause by his own avowal he could not contro] the
sea. The most the United States could do was
exemplified in the war with Spain. She could,
pirate-fashion, capture a few merchant ships, do-
ing some injury to her enemy’s commerce and. to
her own (carried mostly in European bottoms)
and she might dislodge the occupants of a remote
dependency. All of which is based on the imag-
inary possibility that this nation may again for-
get herself and resort to the crude and brutal ar-
bitrament of war, when so many other ways are
simpler, cheaper and more honorable.
Furthermore, under any conditions, the United
States, with or without a navy, is in its turn effect-
ively defended against any attack from Europe.
In a recent articles Captain Alexander G.
McClellan, an English authority, expresses
strongly his belief that naval expenditure is a
menace to the nation responsible for it and that
the United States, for example, would be amply
defended against any attack from Europe, even
with no navy at all.
4A British View of American Naval Expenditure,
Atlantic Monthly, January, 1911.
 RETRENCHMENT 159

The whole coast-line is admirably adapted for

defense and our important harbors are protected
by shore guns which no fleet could face or silence.
Even should these fail, no fleet would dare enter
a harbor guarded by submarine vessels, torpedoes
and floating mines, with purposely misplaced
buoys and beacons. No city of importance stands
on an unprotected bay, and no enemy’s squadron
would waste its precious strength on fishing vil-
lages and seaside resorts. No nation could main-
tain a successful blockade and none could do much
damage in the robbery of our merchant ships,
because most of these, thanks to our protective
shipping laws, already fly the British or the Ger-
man flag. For any nation to land and maintain
an army on our shores, as Captain McClellan
clearly shows, is quite impossible. “The nation
which could fight a war like the Civil War, with-
out even a standing army worth speaking of and
divided against itself, has little to fear from any
army of invasion, even though it should gain
admittance into the country.”
Captain McClellan further observes: “My
arguments are logical, and therefore I ask: Is
America justified in spending about $150,000,000
yearly on her navy, when the most powerful antag-
onist that we can put against her cannot do dam-
age enough to require that sum to set it right
again, in one year? I think not! :
“But the question whether the American fleet
could be destroyed or not, could not in the least
160 UNSEEN EMPIRE
— ——————EEE

affect the final result, when one takes into con-

sideration the infinitesimal amount of damage
which an enemy’s fleet could do, were there
no American fleet on the spot to stop it. That
small damage in no way justifies America’s pres-
ent naval expenditure, or even the existence of
her navy at all.
“Nothing in the world can justify America in
building a fleet strong enough to tackle Japan
single-handed on the Pacific, or a fleet strong
enough to tackle single-handed any European
naval power on the Atlantic. It would mean
keeping her navy up to a two- or three-power
standard all the time. Will American extrava-
gance run to this? If not, why play at owning
a navy to satisfy vanity? Why pay away one
hundred and fifty millions of dollars a year on the
navy when it is practically helpless, because it
lacks the vital support of a merchant marine?
The all-around-the-world trip which an American
fleet made a couple of years ago would have been
an impossibility without the help afforded by
British and German colliers. Not one American
merchant-Jack’s ensign could be seen in attend-
ance on the naval ships during the whole cruise.
This was commented upon by the chief in com-
mand—Admiral Evans. Not very palatable
reading, is it? Remember, it applies to the
country with the finest navigable coasts, harbors,
and rivers in the world!
“There is still another important point of view
 RETRENCHMENT 161
a ES

to consider, and it is this: Britain’s and Ger-

many’s merchant marines are chiefly composed of
deep-water—foreign-going—ships, while American
merchant ships are chiefly engaged in the coastal
and inter-coastal trade. Again, Britain depends
upon her merchant ships for the means to live;
America does not. In case of war and blockade,
her coasters could tie up in harbor, coil down
their ropes, and wait for peace. The work they
do could be carried on by railroads.
“Turn now to American commerce. Here lies
another great advantage of America. She can
afford to stand by and snap her fingers at any na-
tion, no matter what the size of its navy. In the
first place, her position as a producer makes her
absolutely independent of all nations: other na-
tions must come to her, and not she to them, for
necessities. This being the case, she is in a posi-
tion to retaliate without firing a shot, should
offensive measures be taken against her. Again,
where two such countries as Britain and Germany
depend upon America for the employment of a
great part of their shipping, war with either is a
remote possibility. America, not owning a deep-
water merchant marine, need fear no captures or
destruction in this direction. Should America
carry on a war with Germany, what would hap-
pen to her over-sea commerce? Simply nothing!
During these times of too much merchant ton-
nage, British ships would be only too glad to
take American products anywhere; and so would
162 UNSEEN EMPIRE
SF
a RRR SEE A

German vessels in case of an Anglo-American

war. Thus we see that if America went to war
with either country, the damage would be con-
fined to a few unimportant towns on the coast,
and her over-sea commerce would reach its des-
tination just as merrily as ever. Peace also has
its victories, and the country which warred with
America would find that after war had ceased,
her ships would have little left to pick up in the
way of cargo. A revival of old trade relations
would not come with the declaration of peace,
but it would take years of keen competition to re-
gain the lost ground.
“Would it not be better if America voted less
on naval ships and just a little on merchant
ships? The latter would bring millions into the
treasury, while the former only take millions out.
It would prove a profitable investment, I am sure.
“Tf in the march of civilization we need the help
of battle-ships and 12-inch guns, then I say that
our civilization is rotten, and will not last. I am
confident that the day is not far off when the
people of America, at least, will oppose the need-
less waste of millions. The preparations for war
which need never come about, only suggest child-
ish folly which must be thrown aside.
“ ‘Mailed fists’ and huge standing armies and
navies are out of date. . . . As a plain
sailor who has seen all the mighty navies of the
world, I say in plain language that they stand
only to mock us and prove our civilization a sham.
 RETRENCHMENT 163

The man in America, or even in Europe,

who thinks that this craze can last, or is bound to
culminate in a war, has a poorer opinion of his
fellow men than I have.”
From these and other considerations, it is evi-
dent that no foreign nation could inflict on the
United States an injury comparable to the cost
of the present upkeep of the American Navy. It
is also evident that a nation attacking the United
States would work, through derangement of
finance and commerce, an injury to itself greater
than it could inflict on us.
We have next to inquire from what direction
We may expect attack. We are on the best of
terms officially with every nation. No nation
for half a century has ever seriously suggested
making war upon us. We have had in the past
no foreign wars save of our own choosing.
There was never a time when our people were so
determinedly set on peace. Where then is our
antagonist?
Not Great Britain, that is certain. We are
bone of her bone and Canada, between us, is
drawn by the closest ties to both. There have
been in the past English statesmen, scornful of
plebeian America, and American politicians whose
function it was to “twist the British Lion’s tail.”
We have been sometimes swayed or apparently
swayed by Irish influences. We have been vexed
by “a certain condescension from foreigners” and
we have resented the bombast of British Imperial-
164 UNSEEN EMPIRE
A
RSER EE I LT

ism, too much like our own. But all this has been
skin-deep, and the ties that bind us to England
may not be severed. With or without a treaty,
we shall never have a difference with her that
cannot be settled by arbitration.
Is it France?» Assuredly not. Here again we
have a multitude of ties and no hint of estrange-
ment. No armament-lobbyist or other disturber
of society has ventured to suggest a possible clash
between the two great republics.
What then of Germany? Germany and the
United States have a thousand reasons for friend-
ship and not one for enmity. Nearly one-fourth
of our people are of German blood and Germany
has furnished full share of our leading men. Our
higher education owes more to German scholar-
ship than to all other foreign influences whatso-
ever. The interweaving of business and com-
merce between Germany and the United States
is scarcely less complex than the nexus which
joins us to England. The great commerce rep-
resented by the North German Lloyd and the
Hamburg-American Company deals chiefly with
the United States. England’s quarrels are not
ours. Moreover, we do not believe that England
has any real quarrel with Germany.®
5In the midst of futile noise and nagging diplomacy, it is.
most refreshing to read the noble and scholarly address
delivered by Viscount Haldane, British Secretary of State
for War, at the University of Oxford on August 3, 1911,
entitled “Great Britain and Germany, a study in National
Characteristics.” This is a most truthful and sympathetic
 RETRENCHMENT 165

But the Monroe Doctrine, some may say, does

not this gall Germany by restricting her colonial
operations to Africa and Asia? If so, Germany
has given no indication of being vexed. Commer-
cially she controls South America already, if we
may use the word “control” for a relation which
rests on mutual benefit. Her merchants have seen
their opportunity and they have used it. The
same chance is open to any nation. The German
trade would gain nothing from the annexation
of any South American state.
But South Brazil is becoming German. Will
not these provinces revolt and throw themselves
under the protection of the German flag? There
are no visible signs of any such intention, no likeli-
hood of the dismemberment of Brazil, no desire
to become part of German Imperialism. The
“mailed fist,’ and the “spiked helmet,” the em-
blems of German imperialism, have no attraction
to the German trader. He prefers to carry on
his business under a less exacting flag than that
of the Fatherland. I have yet to find a Ger-
man who attaches the slightest importance to this
matter. It is certainly too remote to enter into
our military and naval calculations. Even if it
demanded consideration, the boycott is a weapon
more effective than the sword. But we may note
in passing that sword and boycott alike are two-
edged, cutting both ways at once.
discussion of the real relations, altogether friendly, of the
people of the two nations.
166 UNSEEN EMPIRE
|

Is our enemy among the smaller nations of

Europe? To ask the question is to answer it.
The one item of the tourist trade goes far to
pardon any lapses on our part in international
courtesy.
Is it Russia? _We deprecate the Russian treat-
ment of Jews, of Persians, of Finns—and for that
matter of Russians—but no one dreams of fight-
ing about it. At long range, moral suasion is
our strongest weapon.
Have we an enemy in South America? No
military expert will ever admit it, but every com-
mercial expert recognizes that we might to ad-
vantage go farther in the promotion of friend-
ships with these Latin nations.
Only Japan is left and to point her out as our
rival and our enemy is the most criminal folly
of all. The Japanese are fond of saying: ‘“‘The
Pacific Ocean unites our nations, it does not
separate.” The leaders of Japan are largely men
educated in the United States, and thoroughly
imbued with our traditions of college loyalty.
Japan recognizes the United States as her near-
est neighbor among Western nations, her best
customer and her most steadfast friend. It is
said of Korea that through the ages her face
was toward China, her back toward Japan.
Through the ages, the face of Japan has been
toward Asia. Her present ambitions and her
financial interests lie now in the reclaiming of
Korea, in the safeguarding of her investments
 WAY TO RETRENCH 167

in South Manchuria and in the part she must yet

play in the future of China. For her own affairs
she needs every yen that she can raise for the
next half century. She would not if she could
organize an expedition against us and she could
not if she would.
A Way to Retrench
We believe that the public opinion of the na-
tion is turning away from war. This means
sooner or later an abatement. But in our pres-
ent machinery of government there is no point
where public opinion impinges on the matter of
national expense. That this is a “billion-dollar
nation,” spending that incalculable sum each
year on its civil and military affairs, seems a
matter rather of pride than shame, even though
we are told on very high authority that one-third
of this sum is absolutely wasted.
Following the model of our Tariff Board, there
should be in the United States a High Commis-
sion composed of statesmen and economists who
should decide, as civilian citizens, on the aim, ex-
tent and purpose of national defense. This done,
a committee of military experts should determine
ways and means to accomplish these necessary
results.®
6 Since writing the above, I have learned that the Sec-
retary of War has suggested a somewhat similar plan.
This involves the creation of a National Council of De-
fense, composed of two members of the Cabinet, four
Senators, four Representatives, two Army and two Navy
officers. It shall be the duty of this Commission to sug-
168 UNSEEN EMPIRE

Besides the gigantic cost of armament there is

another sort of waste in connection with national
defense, for which the officials of army and navy
are not in the remotest degree responsible. This
consists in extravagant multiplication of navy
yards and army posts at the demand of local
pride or local greed, through the efforts of “log-
rolling’? Congressmen.
General W. W. Wotherspoon* estimates that
the elimination of those useless expenditures which
have been forced on Congress by local demands
would effect a reduction of more than half the
present cost of maintenance of the army. A
proper condensation of army posts would reduce
the cost of these establishments from $42,300,000
to $21,132,000 and the annual cost of upkeep
from $846,720to $211,680. <A similar reorgan-
ization of the Navy Yards, as urged by the Sec-
retary of the Navy, would effect a still larger
reduction.
An officer of the army once said to the writer:
“It is no part of the work of military experts to
determine what places need defense, but to spend
gest “a broad and comprehensive military and naval policy
for the country.” In the composition of this body, it is
said “there lies no desire that military opinion should pre-
vail in its deliberation.”
The appointment of such a Commission would be a
great step toward making our military expenditures rational
as well as economical, though it would seem to me that
the non-official public should also be represented, and per-
haps by a majority in the commission.
7 The Independent, February 15, 1912, p. 343,
 READJUSTMENT 169
a a EY

to the best advantage whatever sums may be as-

signed to any given purpose. If we are directed
to fortify Honolulu, we shall plan the most per-
fect defense possible for the money and under the
conditions.”
Readjustment of Values
It is necessary that we should undertake a re-
adjustment of our estimate of relative values in
our functions of government. Matters of the
most vital moment pass unheeded, while sums
which would meet almost every need which goy-
ernment can satisfy are voted for items of mili-
tarism, apparently without a second thought.
For example, we have in the band of “white
slavers” ® an international group of the worst
kind of criminals who form a menace to every
family in our land. The sum now provided yearly
for protection against them would keep us in
smokeless powder for a day and a half. The
whole infamous traffic the world over could be
exterminated for the cost of a third-rate battle-
ship.®
The enemies that threaten our society are with-
in, not without. The artistic completeness of the
work of defending our shores against impos-
8 The term “White Slave” was originally and aptly ap-
plied to military conscripts, according to Frédéric Passy.
It was used in 1867, by Emile Girardin, and it originated
with the Emperor Napoleon III.
9 At the present writing, this sum is said to be less
than $15,000. However, in the current appropriation bill
of 1912, $250,000 has been asked for.
170 UNSEEN EMPIRE
RR a

sible enemies should, if necessary, wait until we can

make some better start on our moral and physical
sanitation. The danger from foreign foes is a
mere nightmare reminiscence of medizvalism.
The danger from the “White Slaver” and the “Red
Plague” surrounds us on every side.
In this connection we may mention the need of
a national university. Every great capital in
the world, London and Washington alone ex-
cepted, maintains as a matter of course, a corre-
spondingly great university. Since the days of
Washington who gave his fortune to Congress to
this end, the project has been under discussion.
With each succeeding Congress it has been set
aside because the millions necessary could not be
spared from the cost of national defense.
Such a center of advanced work is in itself a
national defense. It would utilize for our en-
lightenment the great riches of our capital in
science, art, statistics and libraries. It would
furnish a reservoir of experts who could be drawn
upon in all activities of government in which
special training is required: it would call from
other lands advanced students of the workings
of democracy. Lastly it would furnish to the
social life of Washington the element not now ade-
quately developed, of men of character and
scholarship permanently at home, to whom the
petty incidents of politics and the fate of appro-
priation bills are not the objects of first interest.
 READJUSTMENT 171
sree eek te eet lel al eal ale el

In the recasting of values the need of a national

university should have a leading place.
It should be the place of the university at
Washington to demonstrate with Professor
Huxley that the day has come when civilized na-
tions must “discard their old weapons to make
way for the new ones forced upon us by the
growth of knowledge and the rush of commerce.”
“We are in the presence,” Professor Lockyer '°
reminds us, “of a new struggle for existence, a
struggle which once commenced must go on till the
fittest survive. It is a struggle in which science
and brains take the place of swords and sinews.
The school, the university, the laboratory and the
workshop are the battlefields of this new war-
fare.”
The real strength of a great nation does not
lie in its belated militarism, developed at the cost
of an unceasing burden of debt. It rests on
the lives and character of its men, their ability
to work to the best advantage morally and
economically and their power to assimilate and to
utilize the garnered and classified experience of
the race.
In his famous address on the “Moral Grandeur
of Nations” at Boston in 1845, Charles Sumner
showed that the battle-ship Ohio, then at anchor
in Boston Harbor, had far exceeded in cost the
greatest of our educational institutions. The en-
10 Nature, Sept. 1903.
172 UNSEEN EMPIRE

dowment of Harvard College at that time was

$703,175, its annual budget $47,935. The Ohio
had cost $834,845; its annual upkeep was $220,-
000.
Harvard University, still our greatest seat of
learning, has grown immeasurably in six decades.
Her endowment has now risen to $24,323,618,
mostly from the grateful gifts of those who have
been her students; her annual expenses to more
than two million and a quarter. She has in fact
far outrun the Ohio of 1845, though I believe
that a new Ohio of costlier build is still in the serv-
ice. I do not know what the new Qhio cost, but
it will take half the endowment of Harvard Uni-
versity in a few years to replace it, while the en-
tire endowment of Harvard College in Sumner’s
time would not pay its upkeep for a single year.
And before long it must go unused and unre-
membered to the junkheap, while the influence of
the University has permeated and permanently
ennobled Christendom. This influence in all its
ramifications in America to-day has a value be-
yond all question or comparison.
The need of battle-ships may be great—as to
this we have yet to be convinced. But there can
be no question as to the need of universities.
Chief Business of Government
The chief business of government should be no
longer war and diplomacy. It should be, to fall
back on the definition of Aristotle, restated in
 BUSINESS OF GOVERNMENT 1%3

similar terms wholly independently by Abraham

Lincoln, to establish justice among men and to
do those things of common necessity which col-
lective action can accomplish better than private
enterprise.
But in the past and in the present, it is cer-
tainly true that the most costly and most absorb-
ing business of government has been war prepara-
tion. Government by Congress or by Parliament
is still too often a device by which the people pay
for what they do not want, and at times for what
they do not get. “I cannot help thinking of you
as ye deserve, O ye Governments,” said Thoreau.
“The only government that I recognize, and it
matters not how few are at the head of it or
how small its army, is that which establishes jus-
tice in the land, never that which establishes in-
justice.”
The chief “national defense” which any nation
needs to-day, is protection from the enemies with-
in itself. Such protection is possible only
through a broad statesmanship which sees the
end from the beginning, and from beginning to
end will strive for the welfare of its people.
The “grandeur of nations” is measured not by
their extent on the map; not by their population
or wealth nor their apparent military or naval
supremacy; nor yet in the long run by their uni-
versities, their arts or their sciences. Emerson
says “America means opportunity.” That na-
tion is great which to its rank and file means
174 UNSEEN EMPIRE

opportunity and which further breeds men capable

of seizing the opportunity it offers. First then
they must be free from crushing burdens of debt.
Next they must live in peace. War implies
everywhere a reversal of the processes of natural
selection. Broadly speaking, in war the strong-
est are destroyed, the men best fitted to be the
parents of the new generation.
 IX. THE PASSING OF WAR

The Future of War

In the majestic work of Jean de Bloch?! on

war and its future, the foundation of the modern
peace movement, it is shown that international
war has become a physical impossibility. The
term war in that sense, as Bloch himself observed,”
does not apply to “frontier brawls nor to punitive
operations or trumpery expeditions against semi-
barbarous people.”
“The war of the future, the war which has be-
come impossible, is the war which has haunted the
imagination of mankind for the last thirty years,
the war in which great nations, armed to the
teeth were to fling themselves with all their re-
sources into a struggle for life and death. This
is the war that every day becomes more and more
impossible . . . alike from a _ military,
economic, and political point of view. The very
development that has taken place in the mechan-
ism of war has rendered war an impracticable
operation. The dimensions of modern ar-
maments and the organization of society have
rendered its prosecution an economic impossibility,
with finally the inevitable result of a catastrophe
which would destroy all existing political organi-
1In Russian, Ivan Stanislavich Blioch.
2In an interview with Mr. William T. Stead.
175
176 UNSEEN EMPIRE

zations. Thus, the great war cannot be made,

and any attempt to make it would result in sui-
cide.”
Bloch concludes his discussion with the demon-
stration that:
“Tf the present conditions continue, there can
be but two alternatives, either ruin from the con-
tinuance of the armed peace, or a_ veritable
catastrophe from war.
“The question is naturally asked: What will
be given to the people after war as compensation
for their immense losses? The conquered cer-
tainly will be too exhausted to pay any money
indemnity, and compensation must be taken by
the retention of frontier territories which will be
so impoverished by war that their acquisition will
be a loss rather than a gain.
“With such conditions can we hope for good
sense among millions of men when but a handful
of their former officers remain? Will the armies
of Western Europe, where the Socialist prop-
aganda has already spread among the masses,
allow themselves to be disarmed, and if not, must
we not expect even greater disasters than those
which marked the short-lived triumph of the Paris
Commune? The longer the present position of
affairs continues the greater is the probability
of such convulsions after the close of a great
war. It cannot be denied that conscription, by
taking from productive occupations a greater
number of men than the former conditions of
 A WAY OUT 177

service, has increased the popularity of subver-

sive principles among the masses. Formerly only
Socialists were known; now Anarchism has arisen.
Not long ago the advocates of revolution were a
handful; now they have their representatives in
all parliaments, and every new election increases
their number in Germany, in France, in Austria
and in Italy. It is a strange coincidence that
only in England and in the United States, where
conscription is unknown, are representative as-
semblies free from these elements of disintegra-
tion. Thus side by side with the growth of mili-
tary burdens rise waves of popular discontent,
threatening a social revolution.
“Such are the consequences of the so-called
armed peace of Europe—slow destruction result-
ing from expenditure on preparations for war,
or swift destruction in the event of war—in both
events, convulsions in the social order.”

A Way Out
The way out of war will open, the world over,
with the enlightenment of public opinion, with
the extension of international law and the per-
fection of the International Courts at The Hague.
This machinery of Conciliation is created by
public opinion, and with its more perfect adjust-
ment, the force of public opinion behind it will
grow steadily more insistent. Little by little in
the thought of men war is erased from the list
of possibilities. Its crude and costly conclusions
178 UNSEEN EMPIRE

become less and less acceptable, and the victories

of peace more and more welcome, and more and
more stable.
The fact that a better way of composing
differences exists is, in itself, a guarantee that no
serious differences shall occur. For, as a rule,
wars do not arise from the alleged “causes of
war.” These “causes” are almost wholly mere
pretexts after war has been determined on.
“Affairs of honor” between nations are worthy
of no more respect than “affairs of honor” among
men. In either case, an adequate remedy is
found in a few days or months of patience, and
in the adjustments of disinterested friends. This
we call arbitration, and its supreme virtue with
nations as with individuals, lies in its being un-
limited.
In our own country, at present, there opens a
door of escape from the waste of war preparation.
This, as we have already suggested,’ lies in the
appointment of a civil commission which shall
give a definite purpose to our plans of national
defense. No one can justify gigantic expendi-
tures, blindly undertaken. It is surely not neces-
sary for us to strive for ideal perfection of de-
fense against unknown and imaginary foes. It
is surely unnecessary to pour out $800,000
a day (not counting pensions nor interest)
simply because two other nations are doing the
same, and still three others would keep step if
3 See page 167.
 PASSING OF WAR 179

they could. Nor should we act from year to

year on the advice of interested parties solely,
“muddling along” through sheer inertia without
a look forward to our final aim.
Such an aim a commission of statesmen could
furnish. With its help we should justify our
ways or else change them. No one can doubt
that to justify we must needs also change, in
what way or in what degree perhaps no one can
now foretell. But this at least is certain: if the
United States should find for herself a definite
policy, building no more fortresses, dreadnaughts,
or destroyers until her best minds are convinced
that these are needed, such action would go far,
very far, toward solving the problems of debt-
ridden Europe.
The Passing of War
The passing of war is marked by many condi-
tions both incongruous and disconcerting, as I
have already tried to set forth. From the stand-
point of Social Evolution, these erratic and
fantastic phenomena are all necessary stages in
a world process—the change from the rule
of force to that of law. On the one hand we
note the persistence of medieval traditions
and their consequences, the burden of debt,
the unwieldy and ruinous body of armament,
the “war scare,” the overlordship of the “pawn-
broker,” the sinuous trail of secret diplomacy, the
180 UNSEEN EMPIRE
SS

“Great Illusion” and the “Mirage of the Map.”

On the other hand, and parallel with these, we
remark the fraternity of trade, the unification
of banking, the internationalism of art, science
and invention, the steady extension of humane
sentiments and the crystallization of world con-
gresses and world courts. It has been observed
that the different nations of Europe have yielded
up their sovereignty and that they are now but
“Provinces of the Unseen Empire.” This phrase
referred to the subservience of debt, but it is
true in another and more honorable sense. They
are in fact but provinces in the unseen em-
pire of civilization. The world has become an
intellectual unit. The thoughts of all men are
the common property of all. In like fashion the
world has become an economic unit. The cur-
rents of business flow through all nations alike.
Whatever disturbs one part of the organism
affects all others. The boundaries of nations
really signify no more than the boundaries of
counties or states. Only our outworn diplomacy
and the enmities it engenders serve to conceal this
fact.
It is easy to see that these are days of transi-
tion. The past is losing its hold. The future
has yet to make its grasp complete. And from
the larger point of view we see that these various
conditions could not have come together at any
earlier stage in the history of the world. A hun-
 PASSING OF WAR 181

dred years ago, these combinations would have

been unthinkable.
A hundred years hence, the combinations of
to-day will be equally incredible. The motives
behind our present war preparation will then seem
as remote as to us now are the motives behind the
great Crusades,
Mankind does not linger over impossibilities.
The coat-of-mail vanished from European his-
tory all at once, when men realized that it had
no further effectiveness. The war equipment of
to-day will disappear scarcely less promptly when
men see clearly the changes which have made it
futile and absurd. In the fine and true words of
Admiral Winslow: “No matter is so trivial that
nations will not go to war over it, if they want to
go to war. No difference is so weighty that it
cannot be quietly settled if nations do not wish
war.”
Science has slain War. Rather it has forged
the weapons by which War has slain itself. It
remains for Finance to give it a decent burial.
 ZIGVEWIA

nat ‘?niga byin i m

ba tA vea

7 co
TABLES OF DEBT AND EXPENDITURE
Following are tables’ illustrating the cost of
armament and other matters of expense of the
leading nations of the world. Of these, tables A
to M are the work of Mr. Arthur W. Allen, cer-
tain additions to table A having been made by Mr.
Clayton D. Carus.
1 These tables have been separately printed by the World
Peace Foundation under the title of “The Drain of Arma-
ment,”

185
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a

TABLE D.
COST OF ARMY PER UNIT OF FIGHTING FORCE FOR
THE TEN CHIEF MILITARY NATIONS.

Fighting Costof Cost per

Country Force Army man
Austria-Hungary ..... 396,000 $$ 173,513,000 §$ 186
Erance Soest oes kes 582,000 187,632,000 322
Germany hiss diem aoe 626,000 203,938,000 326
Greate Britains. cece se oo 1262,000 1138,800,000 1530
Baulyes stare stecs ates avec .eiove 291,000 81,033,000 279
J Pan Vas aes siete 52225,000 49,196,000 2219
ARUSSIO eerste es a'eis viele1,250,000 265,642,000 212
SOPalt ete ecrstelse sic olsete:2 115,000 37,671,000 328
SRUTKCVM tonctoies citar o5.2 2375,000 242,071,000 2112
Wintted SStates) soiiss 85,000 162,357,000 1910
TOE ioe 32265 ecto 4,207,000 $1,241,853,000 $295
1Regular army only; deducting about $19,600,000 appro-
priated for Reserves and Territorials, the average, per man
of the regular force is about $455.
2 Uncertain.

TABLE E.
COST OF ARMY AND NAVY PER UNIT OF POPULATION,
FOR THE TEN CHIEF MILITARY NATIONS.
Cost per
unit of
popu-
Country 1 Population Army & Navy lation.
Austria-Hungary .... 51,000,000 $ 87,000,000 $1.70
EVANCE warierasitrsisne cae 39,000,000 271,000,000 7.00
GETIMADY geeiage seveinrs) icici 65,000,000 318,000,000 4.90
Great Britain ....... 45,000,000 342,000,000 7.60
[hie isamoodigracdetor 35,000,000 121,000,000 3.45
I APA pesojarsd He severe sake ators 52,000,000 93,000,000 1.79
ECESSIAD iasro,ceca- rene siexe 160,000,000 320,000,000 2.00
Spain ise. -sree steers 20,000,000 51,000,000 2.55
TERT OY woistene: <qeyexesparekoras 22,000,000 48,000,000 2.18
United States ....... 92,000,000 283,000,000 3.07
POUH aresiaiate <Pslaroie 581,000,000 $1,934,000,000 $3.33
1World Almanac, 1912.
 192 UNSEEN EMPIRE

TABLE F.
PROPORTION OF MILITARY CHARGES TO TOTAL GROSS
EXPENDITURES ! IN TEN LEADING NATIONS.
Country Total Expenditures Army & Navy a
Austria-Hungary 2 . . $890,656,000 $ 87,244,000
BRACE. ac vewreletalen's
sores 877,292,000 270,918,000 20:5
Germanyaiee sf? Geist «> a 731,286,000 318,446,000 43.5
Great) Britain Ga.ieci1<crs 997,410,000 341,820,000 34.3
Uibealy:- .crdintare
ete aose 's.ore 500,595,000 120,676,000 24.1
HiAPAN 2 Anes eleaieieio wie<'e 284,452,000 92,601,000 32.5
ISSA ws ew eee eyetete ie«snr 1,360,054,000 319,770,000 23.5
SPain) scowlsse « 224,526,000 51,367,000 22.9
MUTKEY — gewpeiserctes le<< 154,033,000 48,294,000 31.4
United States ........ 654,138,000 283,086,000 43.3
TLotalanyritweh ss; $6,674,442,000 $1,934,222.000 29.0
TABLE G.
GROWTH OF EXPENDITURES FOR ARMY, 1881-1911,
FOR SEVEN NATIONS.!
The estimated total for thirty years is obtained in all
cases:
1. By averaging the amounts at the beginning and end
of each decade;
2. By averaging the three amounts thus obtained;
3. By multiplying the final average by thirty.
Country 1881 1891 1901
Austria-Hungary2 .$ 61,827,000 §$ 58,645,000 $ 59,726.000
ETADCO™ sccvisise wheee 113,597,000 141,694,000 138,723,000
Getmany poniesol 91,075,000 120,964,000 167,588,000
Great Britain ... 75,126,000 88,640,000 2307,500,000
tally Meistue vote ot 40,585,009 56,484,000 54,232,000
UMUSSLO) ciectcionieise 90,783,000 123,326,000 162,012,000
United States .... 38,117,000 44,583,000 134,775,000
sorLOtalsin ferereaiare $511,110,000 $634,336,000 $1,024,556,000
1Interest on national debt, pension charges and other war
matters not belonging to the immediate cost of militarism,
are not included under ‘‘Army and Navy Expenditures.’’ For
example, in the United States the sum of $161,710,367 was
(paid out for pensions in 1909, and about $21,000, 000 as in-
terest on war debt. The total war expenditures for 1909
were thus about $462,000,000, or about 694 per cent. of the
total expenditure. The total expenditure in some Sehialt
includes items charged in others to local expenses, (D. J.)
2This is probably larger than it should be. It is aifticuit
to separate the Imperial expences from those chargeable
to the two separate nations. (A. W. A.)
 DEBT AND EXPENDITURE 193

Excess over Estimated total

1911 1881 for 30 years
Austria-Hun-
LAL eee sare $ 73,513,000 § 11,686,000 §$ 1,860,410,000
BYance™ ccs..
+e e's 187,632,000 74,035,000 4,310,315,000
Germany ...... 203,938,000 112,863,000 4,360,585,000
Great Britain .. 138,800,000 63,674,000 3,031,030,000
LWA ESSwigt Soaaers 81,033,000 40,448,000 1,715,250,000
RUUSSIAN ase
aieo's 265,642,000 174,859,000 4,635,505,000
United States.. 162,357,000 124,240,000 2,295,950,000

Totals .....$1,112,915,000 $601,805,000 $22,209,045,000

TABLE H.
GROWTH OF EXPENDITURES FOR NAvy, 1881-1911,
FOR SEVEN NATIONS.
Country 1881 1891 1901
Austria-Hungary ..$ 4,355,000 $ 5,672,000 $ 8,698,000
EOPATICEN ss tess oats eet 42,557,000 43,754,000 65,857,000.
Germany. fae 11,434,000 23,470,000 38,195,000
Great Britain ...... 51,130,000 68,935,000 137,615,000
talyiente sete ss verses 8,870,000 24,293,000 24,477,000
FRUUSSIA Mer sass eee tte 13,098,000 21,880,000 46,799,000
United States ..... 13,537,000 22,006,000 55,953,000

Totals hissas cents $144,981,000 $210,010,000 $377,594,000

Excess over Estimated total

1911 1881 for 30 years
Austria-Hungary ..$ 13,731,000 $ 99,376,000 $ 234,130,000
ECPATICCMi ag ec cee oe 83,286,000 40,729,000 1,725,325,000
Germany <3). 2..0.% 114,508,000 103,074,000 1,246,360,000
Great Britain .... 203,020,000 151,890,000 3,336,250,000
IEMs Go aouta0 39,643,000 30,773,000 730,265,000
PRUSSIGY poset%-.00
Giate 54,128,000 41,030,000 1,022,920,000
United States .... 120,729,000 107,192,000 1,450,920,000

Totals .......$629,045,000 $484,064,000 $9,746,170,000

1These are the only nations that present a fair basis of

comparison since 1881. :
2Reckoned as $107,500,000 in estimating total for 30 years,
to allow for extraordinary expenditures in Boer War.
194 UNSEEN EMPIRE
ee ——

TABLE I.

GROWTH OF COMBINED EXPENDITURES FOR ARMY

AND NAVY, 1881-1911, FoR SEVEN NATIONS.
Country 1881 1891 1901
Austria-Hungary. .8 66,182,000 $ 64,317,000 $ 68,424,000
Brance 92% ness.< cau 156,154,000 185,448,000 204,580,000
Germany 9 =... 22% 102,509,000 144,434,000 205,783,000
Great Britain .... 126,256,000 157,575,000 445,115,000
Ttally isicicie acevo sates 49,455,000 80,777,000 78,709,000
RUSSIA eitie date «cies 103,881,000 145,206,000 208,811,000
United States .... 51,654,000 66,589,000 190,728,000
Totals” << <1 . .$656,091,000 $844,346,000 $1,402,150,000
Excess over Estimated total
1911 1881 for 30 years
Austria-H un-
@alyaroen $ 87,244,000 $ 21,062,000 $ 2,094,540,000
France} «cmc ate 270,918,000 114,764,000 6,035,640,000
Germany .... 318,446,000 215,937,000 5,606,945,000
Great Britain. 341,820,000 215,564,000 6,367,280,000
italy gaee eet 120,676,000 71,221,000 2,445,515,000
Russias... 319,770,000 215,889,000 5,658,425,000
United States. 283,086,000 231,432,000 3,996,870,000
Totals ...$1,741,960,000 $1,085,869,000 $32,205,215,000
TABLE J.
THE GROWTH OF DEBT, 1881-1911, oF THE FIVE
GREAT MILITARY NATIONS OF EUROPE.
Country 1891 1891 1901
2 Austria-Hun-
PATYee stess $1,607,800,000 $ 2,914,876,000 $ 3,219,830,000
France! (2.05. 3,972,407,000 6,400,000,000 6,011,079,000
3Germany .. 43,804,000 308,377,000 555,738,000
Italy Ta eee 1,746,921,000 2,248,200,000 2,451,000,000
Russia ...... 1,225,000,000 1,797,365,000 3,112,000,000
Totals ..$8,595,932,000 $13,668,818,000 $15,349,647,000
1Interest bearing debt only. Issu of paper
notncluded. 4 ae del on
ustrian Empire, Austria proper and Hungary proper
combined. Since 1867 no loans have been contracted by the
pire,
’ German Empire only. Prussia alone has a se
of nearly $2,400,000,000. spite Se 5°
 DEBT AND EXPENDITURE 195

Excess over
1911 1881
2 Austria-Hungary ..... $3,612,389,000 $2,004,589,000
PranC@ gers acdsic.ee's cere 2 6,286,435,000 2,314,028,000
SIGeEYMANY ee ers,oo ere:erereres 1,224,158,000 1,180,354,000
Italy ..... cesses eeee. 2,614,183,000 867,262,000
WAISES oAgsonoe ceeeseee 4,507,071,000 3,282,071,000
TABLE K.
GROWTH OF INTEREST CHARGE, 1881-1911, oF THE
FIVE GREAT MILITARY NATIONS OF EUROPE.
Country 1881 1891 1901
Austria-Hungary ..$ 65,108,000 $116,595,000 $128,793,000
MPance wenn Was o ss eae 149,681,000 256,000,000 249,073,000
German Yaretersiats ster 1,752,000 12,335,000 18,525,000
Dal Watesteiats.c
eisis! as). 69,900,000 89,818,000 96,000,000
ARUSSI Wises rere-<
oisoinre\6,0: 55,125,000 90,881,000 140,065,000
Totals ........-$341,566,000 $555,629,000 $632,456,000
Excess over Estimated total
1911 1881 for 30 years
Austria-Hun-
gary ........1$144,496,000 $ 79,388,000 $ 3,501,900,000
France ..... ++» 192,762,000 43,081,000 6,762,945,000
Germany ...... 41,981,000 40,229,000 527,265,000
taly eee eae voces 92,145,000 22,245,000 2,668,405,000
Russiay 3. 3. oe - 1180,283,000 125,158,000 3,386,500,000
Totals .... $651,667,000 $310,101,000 $16,847,015,000
1Hstimated at 4%.
1TABLE L.
THE FIVE GREAT MILITARY NATIONS OF EUROPE)
COMBINED COST OF ARMIES AND NAVIES WITH
INCREASE OF INTEREST CHARGES DURING
THIRTY YEARS.
Increase of interest
Armies and charges due to in-
Country Navies creased debt. Total.
Austria-Hungary 2,094,540,000 $1,548,660,000 $ 3,643,200,000
France ......... 6,035,640,000 2,272,515,000 8,308,155,000
Germany ...... 5,606,945,000 474,705,000 6,081,650,000
Italy ........+. 2445,515,000 571,405,000 —3,016,920,000
Russia ......... 5,658,425,000 1,732,750,000 7,391,175,000
Dotals12i.2:. 91,841,065,000 $6,600,035,000 $28,441,100,000
1See Tables VI to X inclusive.
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 DEBT AND EXPENDITURE 197

TABLE N.
(From the Boston Advertiser)
EXPENDITURES OF THE PUBLIC MONEY IN THE
UNITED STATES,

Military Civil
TSM 3 ce. ditae woo Omens $201,514,672 $17,371,779
JMO hot. aioe sc aingine aac 110,175,389 20,767,628
LOO Tate atte osha crsibiguaieie-s
0tre 120,070,834 21,009,985
WE Sb pene cb SoGnemebE 93,974,727 16,097,725
QUES “GSS oncepad succ50 obe 91,591,533 25,890,167
TIRE. “erabl clcaen SecRiarowee 89,010,039 24,752,916
QRS Sood po ptae-suCuU ese 94,119,947 25,317,532
URNS? « b8e Se@bias wee eosbe 85,962,396 26,693,955
GRE merle oops eB%=esses <a: 93,525,946 26,040,132
HECEien sobs Apia6.deean mace 100,431,384 31,293,690
TRIOS ole os Satie tooo 118,204,788 35,691,467
TO Serr dipse toe reece 118,953,603 29,740,612
TCO. bre = ReeeReto Cre ioirin = 116,741,705 34,558,960
In round numbers since the Spanish War the War De-
partment has spent more than $1,500,000,000, while the
operation of the civil government has cost only about $350,-
000,000,
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 INDEX
Armament, burden of, 53;
A Competition, 86; Syndi-
Abdul-Hamid, 138. cates, 111.
Abdur Rahman, on Russia, Armor Plate Press, 102.
67. Arms and the Man, 109.
Absence of Check on Ex- Armstrong, Whitworth &
penditure, 152. Co., 103, 104.
Abyssinia and Italy, 73. Army of Japan, 122.
Acapulco, Fishery Conces- Atlantic Monthly, 133.
sions, 119. Attila and Bismarck, 145.
Admiral of the Atlantic, 91. Australia, debt of, 47.
Advertiser, Boston, 197. Australian War Scares, 111,
Advocate of Peace, 86. 123.
Affairs of honor, 178. B
Air full of War, 113. Bagdad Railway, 138, 139.
Alexander VI, 92. Banca di Italia, 73.
Alien Soldiers breed chronic Bank of England, its psy-
disorder, 67. chological reserve, 69.
Allen, Arthur W., 185; on Banking, and International
national debt, 44. Relations, 145; and Pawn-
America means opportu- broking, 14, 85; and War,
nity, 173. 83; as sensory nerves of
American, Boston, 117. Society, 84.
American Commerce, 161. Baring, House of, 14.
Amschel, Mayer, called Bastiat on War as an ogre,
Rothschild, 9. 54.
Anarchism, 61. Battleship Ohio, 172.
Andrews, Elizabeth, 156. Beardmore & Co., 103.
Angell, Norman, 37, 82, 83, Beaten Men of beaten
84, 132, 134, 145; on peo- races, 98.
ple’s interests, 61. Belated Militarism, 90.
Antipatriotism, 61. Bella, Bella, Horrida Bella,
Appendix, 183. 156,
Argentina, Navy of, 196. Bernhardi, General von, 90.
Aristotle, 172. Bernstein, Kd, 154.
Armageddon, Cost of, ‘74, Birkbeck Bank, 30.
TOL Osn Uke Bischoffheim, House of, 15.
203
204 INDEX
PRI EIT ET TE PE EET SI ET TE ED

Bismarck, 145; and Napo- Cartoons of the farmer’s

leon, 111, 15; on French burden, 8.
Indemnity, 37. Carus, Clayton D., 185.
Blackman, John EK, 120. Cassel, 20; House of, 18.
Bleeding France white, 82. Cassius, 113.
Bleichroder, 15, 16, 20. Causes of War not vital,
Blioch, Ivan S., 175. 181.
Bloch, Jean de, 175. Cement of hypocrisy lack-
Block, Maurice, 39. ing in Russia, 69, not
Boer War, effect of, 30. lacking in England, 69.
Borrowing, methods of, 51. Chartered Company’ of
Bread wanted, not Morocco, Lower California, 120.
61. Chauvinism, 125.
Brentano, Lujo, 94. Chesterton, Gilbert K., on
British Admiralty, views of, “Cement of Hypocrisy,”
94. 69.
British debt, 27, 28, 29, 30. China and the squeeze, 154.
British Imperialism, 107. Chronicle, Japan, 121.
British Ship Lobby, 102. Chronicle, San _ Francisco,
Brown & Co., 103, 104. iTS; 16.
Browne, Edward G., on the Chuo-Koron on Japanese
Persian Revolution, 64. Taxes, 94.
Bulletin, Sydney, 123. Churchill, Winston, 104.
Burke, Edmund, 102. Civil functions, exaltation
Bushnell, Katherine, 156. of, 152.
Business of Government, Civil War, 130.
172. Colonies, 133.
Butler, Nicholas Murray, Commerce of America, 161.
rts. Concessions, Mexican, 119.
Conciliation, 177. :
Cc Confederate States, debt of,
Cadaverous odor of lucre, 43.
Consols, value of, 32.
Calvo Doctrine, 97. Consortium, Das, 15.
Cammell, Laird & Co., 103. Conspiracy against Japan,
Camondo, House of, 16. 114.
Campbell, Reginald J., 100. Continuity of British For-
Canada, Debt of, 47. eign Policy, 68.
Canadian Boundary, 140. Control of Nations, 62.
Captain Sleeps, The, 156. Control of the Sea, 92.
Caribbean Sea, Danger Zone Corbet, F. J., 156.
of, 111. Coronation of King George
Carnegie, Andrew, 74. V, 91
 INDEX

Cost of Harvard, 172. Dukes of England, 99.

Cost of Living, 59; affected Dumas, S., on deaths in
by militarism, 60, rise of, time of war, 54.
due to excessive taxation, DuPont Powder Company,
59; rises everywhere, 59. 110.
Cost of national defense, 55. Dutch finance, 28.
Cost of small war, 73. E
Cost of war steadily rising, Economic difficulties, 128.
48.
Eickhoff, 144.
Credit of Europe, 15, 69.
Elections in Germany, 146.
Credit of Nations, 27. Emerson, Ralph Waldo,
Crimean War, effect of, 30. 173.
Cromwell on source of au- Empires, fall of, 126.
thority, 6. Endless Caravan of ciphers,
Cuba, 156. denoting War _ expendi-
D tures, 54.
Daily Mail, London, 134. England and Germany as
Dalny Vostok, 121. rival powers, 143.
Danger Zone of Caribbean England’s poverty, 100.
Sea, 111. England’s wealth, 100.
Debt and Expenditures of Ententes, and enmities, 69.
world, 188-199. Evans, Admiral Robley D.,
Debts of Nations, 186, 187. 160.
Defense not Defiance, 102. Evening Post, N. Y., 102,
Deferred Payment, 51. 109.
Degeneration of Nations, Exaltation of Civil Func-—
98; due to war, emigra- tions, 152.
tion or immigration, 98. Examiner, Los Angeles, 116.
Delaisi, Francis, on ‘“Mo- Examiner, San _ Francisco,
rocco Affair,” 70. 116.
Delbriick, Professor, 136. Exchange of Journalists,
Deluded fanatics of Peace, 123,
113. Expenditures of Ten Na-
Deutschland und der nachste tions, 190.
Krieg, 90. Expenditures of World, 188-
Dewey, Davis R., on War 197%.
debt of United States, 43. Expenses unchecked, 152.
Diplomacy, 126, 136. F
Disarmament, difficulties in, Fabrique d’Armes Autrichi-
127. ennes, 108.
Dockyard Strategists, 116. Farmer and his Burden, 8.
Dollar Diplomacy, 62. Fishery Concessions about
Drago Doctrine, 97. Acapulco, 119.
206 INDEX
| FR eS IT TT EC TE TE OE ELE 5S TEER TE

Forces working for Expen- Germany’s alleged intrigues,

diture, 106. 116.
Foreign Offices, 127. Ghosts, international, 123.
Forest, Baron de, 18. Ginn, Edwin, dedication.
Foster, David J., 114. Girardin Emile, 169.
Fould, House of, 15, 20. God’s Test of Nations, 74.
France and Germany, 82. Golay, Henri, 123.
France, Burden of Debt of, Gold and Silver certificates,
23; Debt of, 199; growth 45.
of debt of, 32, 33, 34, 35, Goldschmid, 20, House of, 16.
36. Government by the people
Franklin on bad wars, 84. paying for war, 4.
French Colonies, 135. Government ownership, 27.
French Revolution, 32. Governments, 173; and
Friendship, with France, Waste, 173.
164; with Germany, 164; Grandeur of Nations, 173.
with Great Britain and Gratitude of Nations, 21,
Canada, 163; with Russia, Great Britain, Burden of
166; with South America, debt of, 23; Debt of, 198.
166. Great Illusion, 132.
Future of War, 175. Great Powers, 141.
Grey, Sir Edward, 123; on
G prison doors of debt, 2.
Gadke, Colonel, 125. Grotesque of History, 148,
Gallatin, Albert, opposed to Guérard, Albert L., Preface;
debt, 42, 45. on French Banking, 58.
Gambetta on the Empty Giinzburg, House of, 16, 17.
Stocking, 101. H
Gare au Bas Vide, 101. Hablu’]-Matin, 64.
German African ideals, 136. Hague Conference, 93."
German Colonies, 134. Hague Courts and Confer-
German Imperialism, 165. ences, 177.
Germans in Brazil, 165. Haldane, Viscount, 164.
Germany and England as Hands across the Sea, 106.
rival powers, 143. Harvard College and the
Germany and France, 82. Ohio, 171, 172.
Germany as an unhampered Hawaii, 111.
Jurisdiction, 142. Hearn, Lafcadio, on taxes
Germany as cramped on all of Japan, 94.
sides, 141. Heck, George, 115.
Germany, Burden of debt Hessian Troops, 10.
of, 24; financial crisis of, Hidden Trail of Diplomacy,
40; growth of debt of, 37. 136.
 INDEX 207
|
seustnpalianaeeisiapuelidenseueeaiannennmsmnimpessannesmemammasiammescrasmmems
acess eee nee

High Commission of De- Jews, and the Millennium,

fense, 167. 24; creators of the Bourse,
High Finance for peace, 80. 24,
High Finance, Interests of, Johnson, Alvin S., on ex-
80. penditures, 1; on rise of
Hirsch, 20; House of, 17, 18. cost of war, 49; on war
Hirst, Francis W., 102; On waste, 57.
Confusion of Debt with Johnson’s Law, 1, 48, 98.
currency, 42; on Credit of Jordan, Jessie K., Preface.
Nations, 27; on National Jurisdictions or Powers,
Debt, 27. 140, 141.
Hobhouse, Leonard T., 133.
Hubbard, Elbert, on Roths- K
child, 11. Kamada, Eikichi, 143.
Hull, William I., on the Kiderlen-Waechter, 82.
World’s vicious circles, 86; King Krupp of Essen, 108.
on Sea Power, 86. Kings as borrowers, 6.
Huxley, Thomas J., 171. Kipling, Rudyard, on the
Hyena idea of Nations, 90. Peace of Dives, 8.
Koweit affair, 138.
Illinois as a power, 141. Krehbiel, Edward B., Preface.
Imperial Democracy, 156. Krupp, 108.
Imperial War, 131, 132.
L
Imperial War Treasure, 77; at
Spandau, 37. La Argentina, 96.
Imperialism, 107. Labor Unions opposed to
Independent, N. Y., 168. War, 143.
Indirect Tax, 51. Lane, Ralph, see Angell,
Indiscreet Letters from Pe- Norman.
king, 113. Lea, Homer, 115.
International Code Signal Leo, Heinrich, 112,
of Pirates, 102. Lesser Nations, Debts of, 46.
International Courts, 177. Liberal Politics, 105.
International Finance, 5. Life, Editor of, on expendi-
International War, 130; at tures, 51.
an end, 131. Lincoln, Abraham, 131, 173.
J Lion’s Tail, twisting it, 163.
Japan, alleged designs of, Lloyd-George, David, on fall
111; and the Armor Plate of consols, 31.
Press, 166; taxation of, 94. Lockyer, Norman B., 171.
Japanese fishermen, 112. London, as the hopper of in-
Japanese friendship with competence, 100; as the
America, 166, world’s clearing house,
Japanese Navy, 94. 100.
208 INDEX
TAT SEY RT EAE ETS ELS EE EE YASITS LMP BIEI RELIST ET

Loti, Pierre, 90. Money trusts not discussed,

(a)
Louis XIV as borrower, 5.
Louisiana Purchase, 132. Mongolian Invasion of Rus-
Lowell, James Russell, 126. sia,Pled:
Lower California, 118. Monroe Doctrine, 96, 97, 165.
Montefiore, 19.
M Monterey, Presidio of, 110.
McClellan, Alexander G., Moral Grandeur of Nations,
158. ihea
McCullagh, Francis, 102, Morning Leader (London),
103, 108, 109. 103.
MacDonald, James A., 140. Morocco Affair, 70, 71, 72.
Machiavelli, on the duties of Municipal debt, 26.
a Prince, 151.* Murray, Sir George, 105.
Magdalena Bay, 113, 118,
119, 120, 121, 111; 75,000
N
Japanese troops located Napoleon, hatred of debt,
there, 117; six Japanese 35; on human life, 147.
crab-catchers found there, Napoleon III, 169; and Bis-
119. marck, 15.
Mahan, Admiral E. T., 97, Nation (London), 105, 136,
127. 154; on interest of high
Mailed fist, 165, 146. finance, 80.
Maine, The, 156. Nation (N. Y.), on Persia,
Massachusetts Commission, 68
report of, 59. N ational Academies not
Massingham, H. W., 136. criticised, 3.
Mendelssohn, 19. National Council of De-
Mexican Boundary, 141. fense, 167.
Mexican Concessions, 119. National Debt, 6.
Mexican War, 156. National defense, 173, 178,
Militarism entrenched, 106. 179; against enemies with-
Militarism in Argentina, 96. Wy Lids, LOt.
Military Defences, 169. National vice of England,
Military Expenditures and 69.
Progress, 1. Nature, London, 171.
Military Expenses, 169. Naval Supremacy of Great
Military Expenses of World, Britain, 104.
188, 189. Navy for protection, not at-
Military Pacification, 156, tack, 144.
67 New Caledonia, 112.
Mirage of Map, 61, 73, 134. New Zealand, debt of, 47;
Money Power, 22. war scares in, 111.
 INDEX 209
LS EWE ES SST LT ESD

Nineteenth Century a mo- Persia, abuses of, 64, 65, 66;

mentous epoch, 4, crushing of, 64,
Noda, O., 120. Philippines, 96.
Norway, ceremonies at Ber- Piracy, abolition of, 93.
gen, 91. Pitt and the last war check,
Novicow, Jacques, 131. 6; as borrower, 6.
Pitt’s last words, 7.
O Policy of Patriotism, 110.
O’Conner, T. P., on Baron Portugal, 92.
Hirsch, 17; on Baron de Powder, expense of, 110.
Forest, 18. Powell, E. A. on achieve-
Octroi, 36. ments of pawnbrokers, 20;
Opportunity, 173. on burden of European
Orchilla, 119. Debt, 22, 23, 24; on Cas-
Oriental Whaling Company, sel, 19; on Ginzburg, 16;
119. on Hirsch, 17; on Impos-
Ottley, Sir Charles, 105. sibility of War without
Ouest Railways, 27. money, 80; on wealth of
P Rothschilds, 12.
Pageant of the Ships, 155. Powers or Jurisdictions, 140,
Parliaments as borrowers, 5. 141,
Passing of War, 175, 179. Privileges, struggles against,
Passy, Frédéric, 169. 50.
Patriotic loans, 5. Professional Interest in
Patriotic waste, 155. War, 146, 147.
Pawnbroking and banking, Prussia, growth of debt of,
13, 63, 85. 40.
Pawnbroking, basis of great Public Expenses of United
fortunes, 4. States, 196, 197.
Pax Britannica in South Af- Public Opinion (London),
rica, 156. 82.
Peace and Solvency, 173, Q
174, Queen’s Daughters in India,
Peace and the Professor,
156.
113.
Peace establishments, 125, R
126. Ralli, 19.
Peace of Dives, 8. Readjustment of Values,
Peace of Impotence, 126. 169.
Peace of Preponderance, Real rulers of Europe, 80.
126. Republican Peace Commit-
Péreire, House of, 15. tee, 111.
Perris, George H., 106. Retrenchment, 151, 167.
210 INDEX
TR SS ESE SE RT SSE ST SE TE REE SE I ET,

Reversed Situation in War, ialism, 90; purpose of, 87.

174. Secret Diplomacy, 126.
Rich Man’s War, the poor Secret Treaties, 137.
man’s fight, 146. Seligman, Isaac N., 85.
Riots, against taxes, 154; Servitude, Savagery, and
due to high taxes, 61; for Waste, 107.
bread, 154. Shadow of Conflict, 75.
Rosebery, Lord, 126; on Shaw, Bernard, on national
royalty, 83. duty toward bank credi-
Rothschild, house of, 8, 10, tors, 31.
20; rules of house of, 12; Showerman, Grant, 113; on
wealth of house, 12. Armed Peace as sister of
Rothschild, Mayer, 10. war, 54.
Rothschild, Nathan, founder Shuster, Morgan, 68.
of high finance, 21; great- Smith, Goldwin, on Pitt, 6.
est of financiers, 10. Social Democracy, 146.
Russell, Lord John, 94. Social Unrest, 61.
Russia, War Scares of, 121. Socialism, 61.
Socialist groups opposed to
S war, 145.
Sabotage, 61, 154. Solidarity of Commercial
Salt of Death, 112. World, 82.
Salt of Life, 112. Spain, 92.
Sars, Michel, 92. Spanish War, 156.
Sassoon, House of, 19. Spendthrift Age, 51.
Schican Company, 108. Speyer, James, 85.
School of Musketry, 110. Spheres of Influence, 63, 64.
Schurz, Carl, 146; on need- Spiked Helmet, 165,
less war, 3. Squeezing of taxes, 5.
Science and the cost of war, Stead, William T., 175,
fe Stern, House of, 16.
Science and war, 7. Subservience of European
Scientific research and me- peoples, 23.
chanical invention, 4. Sumner, Charles, 171.
Sea Power, 86; and Control Sumner, William G., 125.
of Sea, 92; and Poverty, Syndicalism, 154.
99; and the hyena idea, Syndicates for War, 102.
90; as a. nightmare of
History, 93; as Ceremo- T
nial Decoration, 91; as Temple, William, 113.
Insurance, 89; as Nation- Thames Ironworks Co., 108.
al defense, 88; as peace Thoreau, Henry David, 173.
maker, 89; as protector of Toyo Hoge Kaisha, 119.
commerce, 89; in Imper- Transition period, 180.
 INDEX 211
RR En TIE FT SS

Treat, Payson J., Preface. 181; source of national

Treaties open not secret, 137. debt, 26.
Tribune, N. Y., on interests War of 1812, 155.
of high finance, 80. War of Spoliation, 131.
Tripoli Affair, 72, 73. War Scares, 111, 112, 113,
Trusts, 50. 114, 115, 116, 117, 121.
Tsushima, 88. Wardrooms and war, 146.
Turkey, loans to, 72. Waste of Armament, 54.
Watchdog of the Treasury,
U 153.
Ueberall, 108. Weale, B. L. Putnam, 113,
Uncle of Kings, 10. 156.
United States, debt of, 41; Wellington as borrower, 11.
power of, 157. Werthheimer, 19.
University, National, 170. Wermuth, 153.
Unrest, 61. Westminster Review, 156.
Unseen Empire of Civiliza- White, Andrew D., on Bis-
tion, 180. marck’s demands, 16.
Unseen Empire of Debt, 25. White, Horace, on Confed-
Unseen Empire of Finance, erate debt, 43.
4, 15, 20. White Man’s burden, 91.
Usher, Roland G. on Per- White Slave Traffic, 156,
sia, 68. 169.
William, Landgrave of Hesse
Vv Cassel, 10.
Valor of Ignorance, 115. Winslow, Admiral, 181.
Vane, Francis P. Fletcher, Wirth, Max, 39, 40.
156. World Wide Movement, 107.
Vickers, Sons and Maxim, Wotherspoon, Gen. W. W.,
103, 104. 168.
Wyatt, Harold F., on God’s
Ww Test of War, 75.
War, and modern banking, Y
83; as a catastrophe, 151; Yale Review, 125.
as normal function, 151; Yamamoto, Tatsuo, 153.
as world sickness, 83; Yang Ki-tak of Korea, 123.
buried by finance, 181; Young, Robert, 102.
war debt and other debt,
25; war debt as a bless- Z
ing, 56; expenditures a to- Zangwill, Israel, on Peace
tal loss, 57; future of, as created by Jewish
175; not a mere heroic moneylenders, 24; on pass-
sport, 3; slain by Science, ing of war, 148, 150.
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Library Bureau Cat. no. 1137