Part 13 (1/2)
England can stand upon a gold basis because she commands the gold promises to pay, but in war time she can threaten the stability of the monetary systems of many countries. The United States saved its gold base by closing the Stock Exchange, but the South American countries were quickly in distress for gold.
To put India on a gold basis a few years ago, a tax was levied on Indian silver imports with the result that India has absorbed $400,000,000 in gold from England in the last five or six years, and where payments to India were formerly one-quarter gold and three-quarters silver, they are now one-quarter silver and three-quarters gold.
All these matters are being sharply watched by the English economists.
A fifth lesson we may draw from the war is the necessity for a larger official representation abroad. It was fortunate that before the outbreak of the war the American emba.s.sy in London had been moved to larger quarters by the gardens west of Buckingham Palace.
The strain that was thrown upon that emba.s.sy for information, pa.s.sports, transportation, etc., was something terrific. United States statutes allow this emba.s.sy only three secretaries, but it had to use eight, and the work continued until 3 A.M., and sometimes 5 A.M. There was only one relief in the situation and that was in a study of the queer characters one finds abroad, insisting that they are representative Americans. Some of the people demanding free transportation back to America declared their residence to be in Hoboken, but could not tell if Hoboken were nearer New York City than to San Francisco. It was a great temptation for some people to get out of the war zone and into America at the expense of Uncle Sam. The amount of business transacted by this emba.s.sy may be ill.u.s.trated by the fact that the cable tolls alone for several months cost more than the former total expenses of the emba.s.sy.
Still another lesson from the war that America must learn is that food supplies are now not national, but international. We have seen the price of sugar in the United States jumping up and down in a commercial battle between England and Germany almost before their clash at arms.
Before the war, 80 per cent of the sugar consumed in England was produced in Germany. England, under her free trade policy, had permitted German beet sugar interests, fattened upon a government bounty, to destroy the refinery interests in the south of England. The Island gained by the trade because her refineries were turned into sugar canneries. Jams and marmalades therefrom expanded her foreign trade. Germany, however, at the outbreak of this war, proposed to cut off, or tax heavily, England's sugar supply. Into the markets of the world went the British Treasury and in a few days the government was in command of an eighteen months' supply of sugar for the whole of Great Britain. Down went the price of sugar in Germany, and now the government is taking measures to restore prosperity to her sugar interests by a reduction in beet-sugar plantings. The English government is selling sugar in England at a loss, as a war measure, and will not permit sugar purchases in any country where Germany sells her sugar.
Nothing but the strain of war could have induced the Bank of England to count a hundred million dollars in gold sent from New York into Canada as a part of the Bank's metal reserve.
There is now no reason why this relation should not continue. Why should fifty or a hundred million in gold be sent across the ocean in the spring, to be returned in the fall? The world is going to be still more a unit in finance hereafter. It has taken a generation to educate the world to the right of the individual in the common fund of money, so far as money is needed to effect transfer of credits. This is the keynote in our Federal Reserve act: that business has just as much right to regulation promoting safe and smooth credits as it has to national regulation promoting safe and sound transportation.
Out of this war must arise better international relations, and they comprise not alone the relations of peace, but closer relations to international transportation, as respects both s.h.i.+ps, international money, and international credit.
While many people are looking for financial independence between nations, the United States taking back from Europe in the next three years the larger part of the $6,000,000,000 of American securities owned abroad, it is quite possible that the opposite will take place: a greater interrelation, not only in credits but in investments.
If nations are to be more closely knit together hereafter, it will be not alone in alliances of peace, but in financial alliances in security owners.h.i.+p.
It is far better for both Europe and America that, instead of Europe selling its American securities, America should buy European securities--first, acceptances, making a basis for credits and international purchases in connection with the war; and later, American investment in the funds of foreign nations. It may be that before this war is over many European nations will have to appeal to America with their loans.
If France could see her way clear to put out a long-term loan at 5 per cent instead of short-term loans at this rate, there should be a good investment field for it in America.
Russia is an unconquerable country, and her securities at a good rate should be attractive for some American capital.
There is no reason why the 3 per cent bonds of Germany should not soon be investigated for investment purposes in America. The German debt is very small and, however long the war may continue, German bonds will ultimately be paid. They are quoted now at about 70, and, with the discount on exchange, they may be purchased from America at nearly 60, or to get 5 per cent on the investment, to say nothing of possible appreciation toward par in the future.
One may well believe the Germans to be misled in this war, and yet properly await opportunity to purchase at the right time their outstanding national bonds when these can be purchased so much more advantageously toward the end of the war than in the beginning of the era of peace, which must in time follow. Is it not just as neutral to purchase German bonds from the Germans as to purchase s.h.i.+ps or our own railroad shares from Germany?
A great and primary lesson for the United States is in a thorough understanding that this war was caused by tariffs. The United States is the home of protective tariffs. The sentiment under a protective tariff is national selfishness. England has bought in other markets wherever she could buy cheapest, and has kept her ports open to the cheapest markets. This may be her selfishness.
It may, however, remain for the United States, while maintaining a protective tariff, to look to larger international relations and admit reciprocal trade-relations. There is a wide field for study here in connection with this war, for the same spirit--the wresting of commercial advantages by tariffs without regard to the fellow nation--is in many countries.
We aim in this country to boycott foreign manufactures with the declaration that we should give all the advantages to labor in this country, and keep our money at home. But what do we think when we find that Germany has for years run a boycott against every American enterprise?
America's great International Harvester Company, which has made and promoted the great agricultural inventions of the world; the Singer Sewing-Machine Company, that spreads its manufactures over the earth, and brings back the returns to the United States; all American motor-car companies, all American tobacco interests, and, in fact, all foreign companies, are boycotted, or barred, or worked against, throughout Germany. Placards in shop windows say, ”Don't buy foreign goods. Keep the money in Germany!”
The horrors of backing such a policy by a war machine, that would impose German goods upon other countries and keep the products of those countries out of Germany, is something to contemplate; but the deepest lesson from it is in America, which has the tariffs and not even a defensive war machine.
With the Monroe Doctrine so interpreted that no European government can enforce security for its citizens or for the property of its citizens in Mexico, and with a protective tariff under which we can invite countries to send us goods for a series of years and then suddenly bar them out, the United States may be dwelling in a fool's paradise from the political, military, and economic points of view.
A united Europe cannot be expected to lay down its arms, while arms are international arbiters, until there is a better understanding of the Monroe Doctrine and European relations to Mexico.
There is only one safety for America, and that is the rule of right and of reason. Tariffs should be neighborly; life and property made secure wherever the United States extends its sphere of influence; and arbitration should take the place of all wars.