WH

Yet

ESTERN civilization has been deeply influenced by economic factors. Every phase of our life reflects the results of our modern methods of production and distribution. So much that goes on about us we accept as everyday commonplaces. these very commonplaces constitute the basis of our life. The production of products in factories and on the ranch or farm, the flow of commerce from one section or country to another, the accumulation and investment of capital, the development of transportation on land and sea, the rapidly growing systems of communications, the distribution of raw materials and energy resources-these are factors which shape and in some cases determine our political and social life.

They are often obscured by political and personal conditions and the results are proposals or conceptions which have no relation to the essential facts. For example, it is proposed to outlaw war by resolution. This is a naïve conception of our modern world which contemplates the removal of the possibility of war by a mere agreement that war shall not be. Just as far from the truth, however, is the contention that war is an inevitable accompaniment of human relationships.

ECONOMIC CAUSES OF WAR

The objective occasions of war would soon disappear if the external causes tending to make war inevitable were

removed. But we cannot stop war by peace resolutions so long as we have those external causes operating. The efforts of those who seek peace must be concentrated upon the removal of the causes of war and the provision of guarantees of security which will make armed force unnecessary. If we are to understand our modern world, we must recognize that war follows in necessary sequence upon causes arising out of the processes of production, trading and financing. Personal and political factors necessarily are added to and at times obscure the economic causes of rivalry between nations. Not infrequently the economic causes of war are entirely lost sight of at the time of crisis. Propaganda is resorted to. In the stress of patriotism and sentiment the purposes of the war are summed up in a phrase or idealized declaration which may be related only remotely to the basic causes of the struggle.

Wars are frequently ascribed to political and personal differences which may be the immediate cause of the conflict, but which have arisen from more fundamental economic differences existing between the warring nations. The complexity of modern life is such that even the close observer often fails to realize the forces which are operating -but this is not strange since the very leaders in the business of producing, trading and financing seldom understand the political consequences which may follow upon their daily acts.

National security and the preservation of world peace depend upon an analysis of the economic basis of our society and the provision of means of adjusting economic disputes before they reach the stage of political differences between nations. Nations which are at peace today can argue themselves into a false security through peace societies, and through pleasant references to their past relations, but if economic rivalry is permitted to go on unrestrained, unsuspecting peoples will awake some morning and find themselves at war. War is not a necessary accompaniment of human relationships, but the causes of war are imbedded in our economic life and, if they are not removed, war follows inevitably upon them.

For the purposes of the present discussion it is not necessary to consider the question whether or not all international wars are caused by economic rivalry. Certainly history records wars to which the economic factors have had remote, if any, relation. The important thing to recognize is that wars do result from economic causes. The relations of nations are not always complementary; they are often antagonistic. Competition between two national groups for markets, sources of raw materials and opportunities to invest capital, if persisted in and if vital to national welfare, sooner or later reflects itself in rivalry between governments and peoples. This may be proper or improper. But before we can have an intelligent opinion on it we must recognize that it exists. To speak of the economic causes of war has been considered improper and even disloyal. It must not be so any longer. If the menace of modern war, which now is the curse and disgrace of our civilization, is to be removed, we must know what we are fighting about.

THE BACKGROUND OF MODERN
COMMERCE

1. Territorial Conquests

A glance at the background of our modern world is necessary to an understanding of its problems. The first fact of importance is the territorial conquests of the non-European world by the discoverers, explorers, adventurers and settlers in the 16th, 17th and 18th centuries. The first nations to participate actively in this conquest were Portugal and Spain. The Portuguese ships went east around the southern cape of Africa and made their way to India and the Spice Islands. They thus broke the monopoly which the Venetians held of the trade with the East by way of Egypt. Trade in those days consisted chiefly of articles of small bulk and high unit value such as teas, spices and silks. The Portuguese Government maintained a state monopoly in trade with the East and all interlopers were dealt with severely.

Spanish ships sailed westward and laid the foundation of Spanish culture in the Americas. Spain also sought to establish trade monopolies. Not only were other Europeans excluded from trade with the Spanish colonies in the new world, but the movement of Spanish ships was strictly regulated in accordance with what was conceived to be the interest of the state.

It is a striking commentary on the religious and political conditions of the 15th century that the Pope could divide the non-European world by the Treaty of Tordesillas (1494) between Spain and Portugal.

The trade monopolies of Portugal and Spain soon led the Dutch to seek a greater share of the profits. No longer content merely to act as distributing agents from Spanish and Portuguese ports, the Dutch attacked boldly the Portuguese in the east and

the Spanish in the west. Before the end of the 17th century, Portugal had lost to the Dutch the Spice Islands, including Ceylon, and retained only a few trading points on the coasts of Asia and Africa. The Dutch had also established settlements in Guiana and at the Cape of Good Hope. The Dutch trade conquest had been accomplished through powerful trading companies which were granted the sovereign rights of making treaties, raising armies and conducting local government, and war was looked upon as a necessary accompaniment of a business venture.

In the meantime, France and Great Britain became interested in trade with the non-European world. A blow was struck by the English about the middle of the 17th century against Dutch trade by the enactment of stringent navigation laws the purpose of which was to "clip the wings of the Dutch." The Dutch trade monopoly was gradually whittled down until, in the 18th century, France and Great Britain faced each other as the chief colonial rivals of the world. Just before the middle of the 18th century began that great struggle between these countries for world supremacy. It was tinued in the Seven Years War (17561763), and did not conclude until the Congress of Vienna. France was ousted from Canada, from India and from various lesser colonies. Thus, in spite of the loss of the thirteen American colonies which occurred during this period, Great Britain laid the foundation of her great empire.

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The effect of the discoveries and conquests upon the non-European world was far-reaching. In the temperate zone outside of Europe, the foundation was laid for settlement colonies which were subsequently to become nations, rivaling in power the nations of Europe. The United States became independent and, with the purchase of the Louisiana

Territory from France, the foundation was laid for a great state. The beginnings of a nation appeared in South Africa. In South America colonies developed which early in the 19th century became independent nations.

Africa, except in the extreme south and in the extreme north, was hardly touched by this first wave of conquest of the non-European world. Trading posts were established on the coast, but the life of the interior was practically in no case affected. The civilizations of Asia were not affected by Western ideas. In a few isolated instances, as, for example, Java, the life of native peoples was interfered with, but in general their manners and customs, both in Africa and Asia, remained undisturbed.

The character of trade and industry during the centuries preceding the Congress of Vienna contrasted strikingly with trade and industry today. The ships were small and the quantity and variety of products which were carried extremely limited. The goods carried were chiefly luxuries and had relatively little relation to industry as it was then conducted. Industry itself was in the handicraft stage. Capital had not accumulated; division of labor had not developed; the laborer performed practically all of the processes necessary for the making of any given article. He sold it himself and thus received the full value of his labor. Those raw materials used were the raw materials close at hand and, even in such cases, the methods for preparing them were crude as compared with those of the present day.

The state policy which in general guided the statesmen of this period has been called mercantilism. Its chief principle was the use of the power of the state to gain economic and political prestige. Typical policies of the period were harsh navigation laws, high

tariffs, prohibition, trade restrictions and commercial wars. Colonies were desired because it was believed that they would add to the economic and political strength of nations. World affairs were directed from Europe and in the interests of European nations. The non-European world consisted of pawns in the game played by European states.

2. The Industrial Revolution

The second factor of great importance which lies at the basis of our modern life is the advance in production, science and business organization which began at the end of the 18th century. Its effects were felt first in Great Britain. In that country, the basis of the new industrialism was laid which now prevails in Western states and is spreading to Asia. The beginnings of this revolutionary change in our economic life were characterized by a series of great mechanical inventions. Steam was applied to machinery. The old spinning wheel began to give place to power spinning; the hand loom to the power loom. The cotton gin was invented. Technical methods handed down from father to son, and in their essentials centuries old, gave way gradually before the new machine production. The early inventions were but a beginning. As time went on, the complex structure of modern industry was reared. Machinery was gradually applied to practically every industry. Scientific discoveries increased the efficiency of industry. Chemistry and physics, biology and geology all contributed to laying the foundation of industry, which has led to the characterization of our life as a machine civilization.

Laborers no longer worked individually, but were gathered into factories where they obtained a share of the income of society from a wage. The

control of industry fell into the hands of a capitalistic class. Capital accumulated in large quantities and business organization was perfected. Production began on a large scale. Great quantities of standardized products were turned out so that things which had been luxuries for the rich became the comforts of the common

man.

In addition to capital, business organization and labor, large-scale production also required power to turn the machinery, large quantities of inexpensive raw materials and transportation. Coal became the very basis of industrial development. It was England's coal which contributed not the least to her rapid rise as an industrial power. Raw materials, frequently bulky, had to be transported long distances.

Soon after the middle of the 19th century this was made possible by a further improvement in the technique of our civilization. Steam had been applied to transportation and there was now rapidly developed a vast network of railroads and steamship lines. The character of transportation was changed. The carrying capacity had increased and now bulky foodstuffs and raw materials became important factors in the carrying trade of the world. Communication was improved. Not only was the useful postal service established, but electrical communication-cable and radiovirtually abolished time and space in the distribution of news and commercial information.1

During this period political philosophy, as well as other lines of thought, was dominated by the idea of individualism. This philosophy appealed to the prejudices and served the purpose of the new industrial and trading class

1 See page 240. The Effect of Cable and Radio Control on News and Commerce. Admiral W. L. Rodgers, United States Navy..

in Great Britain. It was a part of the general movement away from restraint ¿ in all lines, which characterized the latter part of the 18th century and the first part of the 19th century. It first was applied to domestic industry with disastrous social effects and later became the basis of the free-trade movement in England.

3. Modern Imperialism

A third factor which characterizes our modern world and which followed upon and is to some extent a consequence of the first two factors is the growth of a modern type of economic imperialism. The roots of this development are found in the nature of capitalism itself. The capitalistic organization of machine production tends to produce more goods than can be sold at a profit. Capital also tends to accumulate rapidly. In other words, conIsumption both of goods and of capital tends to lag behind production. The capitalistic class, therefore, which is in control of modern business, is constantly seeking new markets in which to dispose of goods and new opportunities for the investment of surplus capital.

These statements are not made in condemnation of capitalism. For the time being, no more successful organization of our economic life is available and capitalistic production is probably the best means for the development of world resources. However, it is necessary, if maladjustments and conflicts are to be avoided, that we understand fully the tendencies and possibilities of capitalistic expansion.

These tendencies of capitalism appeared first in Great Britain. Other nations, however, particularly the United States and Germany, soon realized that their political strength depended upon their economic strength and they began to follow England's ex

ample. They erected tariffs against English goods. The United States, being rich in natural resources and having a vast home market for its own industries, was at first little interested in foreign trade and in the development of a colonial empire. But Germany, like England, began to look abroad for markets and for sources of raw materials.

A second conquest of the non-European world, which began about 1880, was destined to be more thorough and far-reaching in its consequences than the conquest which followed the discoveries of the 15th and 16th centuries. European nations, barred from LatinAmerica by the Monroe Doctrine, turned their attention to Africa, Oceania and Asia. Africa was partitioned. France and Great Britain from old possessions on the coast pushed into the hinterland and preempted large areas of "unoccupied" land. Leopold launched his venture-a business venture in the Congo region. Portugal clung to those parts of her colonies that were left after the first impact of the colonial conquest of the continent. Germany, realizing that it was behind in the colonial race, annexed a million square miles of tropical Africa. A like scramble for territory went on in the Pacific. In Asia, spheres of influence were staked out within which the respective Western nations were to have first lien on commercial privileges and which were to become protectorates or colonies if the Asiatic governments continued to crumble before Western "civilizing" methods.

Along with this extension of European political control over Africa, Oceania and Asia went the development of trade. European industries sought larger profits in the sale of their products overseas. Enormous trading companies, in some cases with political power, were chartered and granted con