The Next Step: A Plan for Economic World Federation Part 3

3. The insuring of trading ventures.

The people which succeeded in obtaining the carrying trade quite generally secured the banking and insurance business, both of which until recent years, have been princ.i.p.ally concerned with trading.

The trade of the middle ages was small in volume, and was carried on, for the most part, in valuable commodities, since the cost of transporting bulky, cheap articles was generally prohibitive. With the emergence of modern industry, and its production of large amounts of surplus commodities, important industrial groups like Britain and Germany which depended for their prosperity on their ability to find foreign markets for their surplus commodities, have been driven to a fierce struggle for these markets.

Latterly the effort to dispose of surplus has taken a new form--the investment of capital in foreign enterprises. Instead of trying to sell an electrical plant to the city of Buenos Aires, a German business adventurer (enterpriser) secures a contract to build the plant, buys the equipment from the German General Electric Company, takes the bonds of the City of Buenos Aires in payment for the plant, and finances the transaction by selling the bonds to a German banking syndicate. Through this process, the German (or Belgian, or British) business world invests its funds in "undeveloped" countries.

At the outbreak of the World War, foreign investment had become a science, with the British leading all of the investing nations. C.K.

Hobson, in his book, "The Export of Capital," and in a later article in the "Annals of the American Academy" for November, 1916, throws some important side-lights on British foreign investments. He notes that for some years preceding the war, Britain had never invested less than 500 millions of dollars per year in foreign countries and that just before the outbreak of the war, the annual export of capital had reached a total of a billion dollars per year. In 1913 the British foreign investments were approximately 20 billions of dollars, distributed geographically in a most significant fas.h.i.+on. The largest investment (3,750 millions of dollars) was in the United States; then came Canada with 2,500 millions; following were India, 1,800 millions, South Africa, the same amount, Australia, 1,500 millions, and Argentina a like sum.

The British investments in Belgium, France, Germany and Austria were negligible. Thus it was in the new and undeveloped countries, not in the old and developed ones that Britain sought her investment opportunities.

In their efforts to play at this great game of imperialism, and to win their share of profitable business, Germany, France, j.a.pan, Belgium and the United States were d.o.g.g.i.ng the British heels.

Each of the important producing countries must provide itself with the essential raw materials--coal, iron, copper, cotton, rubber, wheat, etc., upon which the continuance of its industrial life depends.

Consequently each of these countries busies itself to secure the control of the largest possible reserves of the raw materials most needed by its own industries.

The case of petroleum is peculiarly instructive. When it became apparent, in the early years of the present century that oil burning s.h.i.+ps, motor vehicles and air craft were bound to play a determining part in the economic life of the immediate future, various interests such as the Sh.e.l.l Transport, Royal Dutch and the Standard Oil, with the open or tacit backing of their respective state departments, entered on a campaign to secure the world's supply of petroleum. In Mexico, Central America, the Near East, Russia and the United States this struggle has been waged, and it still continues to be one of the most active contests for economic power that has been fought in recent times.

Petroleum-hunger is only one of the many economic factors that drive modern nations. The efforts to control the coal and iron of Alsace and Lorraine, the Saar and the Ruhr undoubtedly played a leading role in making the War of 1914 and the Peace of 1919. The part.i.tion of Upper Silesia was based on the same contest for iron and coal. Wherever the coal veins or iron deposits are, there, likewise, are gathered together the representatives of industrial enterprise, which depends for its life upon iron and coal.

As the resources of the earth become better known, and their extent more definitely established, there is every reason to believe that, with the continuance of the present economic system, the necessity for exploiting them will become greater, and the attempts to dominate them will become more aggressive.

Whether the object of the contest be trade, markets, investment opportunities or resources, the result is the same--rivalry, antagonism, bitterness, hatred, conflict. Probably it is fair to say that these economic rivalries const.i.tute the largest single force now operating to keep people apart and to continue the economic desolation and chaos under which the world is suffering.

5. _Distribution of the World's Wealth_

There is another problem of world scope--the concentration of wealth in a very few countries. At the present moment the wealth of the world is distributed roughly as follows:

Great Britain 120 billions of dollars France 100 " " "

United States 330 " " "

---- Total 550 " " "

Germany 20 billions of dollars Russia 40 " " "

Italy 25 " " "

j.a.pan 40 " " "

Belgium 15 " " "

Argentina 25 " " "

Canada 25 " " "

---- Total 190 " " "

Probably all of the other nations combined could not show a wealth total of more than 100 billions. Great Britain, France and the United States have just about 12 per cent of the population of the world, yet they probably hold somewhere in the neighborhood of two-thirds of the world's wealth. The United States alone, at the moment, has nearly half of the world's gold supply and more than a third of the world's wealth. Of course these wealth estimates are not to be accepted in detail, particularly in view of the wide fluctuations in the exchange rate. They serve, however, to give an idea of the relative wealth positions of the leading countries.

The present economic position of the United States in particular, is a perilous one. The estimated wealth of the United States is greater than that of the four richest nations of the world combined. Within a decade, the country has become the world's chief money lender, the world's princ.i.p.al mortgage holder, the world's richest treasure house. The results are inevitable. The United States will be an object of envy, jealousy, suspicion, cajolery and hatred in the eyes of those peoples who concern themselves with the present system of compet.i.tion for economic supremacy. She holds the wealth and power that they desire and they cannot rest content until they secure it.

Past periods of civilization have witnessed the concentration of wealth and power in some great city, like Carthage, or in some isolated region, like Italy. All around were the "barbarians"--those who had less of the good things of life than were at the disposal of the citizens of the metropolis. Where two of these centres existed at the same time, they warred for supremacy until one or both were destroyed.

Before the war the centre of the world's economic power was Great Britain. To-day the economic centre has s.h.i.+fted to the United States, while Britain is still the world's greatest political power. The struggle between these two empires for the political suzerainty of the planet must continue until one is victorious, or until both have been reduced to impotence.

6. _The Livelihood Struggle_

Behind these struggles between various political and economic groups, there is a broader reality in the shape of a billion and three quarters of people, inhabiting the surface of the earth,--people of various races, religions, nationalities, who, with all of their differences, have this in common: that they are seeking life, striving to improve the opportunities for its enjoyment, yearning for its enrichment, and, despite the innumerable disappointments which they have suffered in the past, willing to pay handsomely, in vast and patient effort for each tiny gain that they secure.

One of the chief concerns of these human mult.i.tudes is the struggle for livelihood--for the means of continuing physical existence and of gaining the surplus and leisure out of which grow the higher life satisfactions.

All men have certain simple economic needs--for food and shelter. Denied these, they perish. Given them, they are able to devote their remaining energies to one of the many lines of activity that men have developed.

What are these other wants of men, aside from the primitive needs for food and shelter? Most prominent is the desire for human companions.h.i.+p, friends.h.i.+p, love. Again, mankind has acc.u.mulated a vast store of knowledge, of philosophy, of imagery, of artistic expression. Love, truth and beauty sound an appeal that finds some answering echo in each life. The leisure and the culture of the world, in the immediate past, have been the heritage of a favored few: to-day they are the objectives of the many. Heretofore it has been the belief of the aristocrats that the best of life was none too good for them. To-day that idea has spread among the people. Dimly, inarticulately, they feel that the world's advantages are for them and for their children.

Before the cultural advantages of life may be enjoyed by the many, wealth must be produced in sufficient quant.i.ties to provide food and shelter. This provision of the economic necessaries is not a far goal.

Livelihood, when secured, does not make of man either a saint or an artist, but it is a necessary step in the pursuit of either goodness or beauty. The body must be fed before it will function, just as the engine must be fed with fuel before it will run. The provision of a supply of economic essentials is not the ultimate object of life, but until some such provision is made, life in its fullest terms is impossible.

7. _Guaranteeing Livelihood_

The millions who inhabit the earth have a direct and immediate interest in organizing economic life in such a way that the supply of economic goods is made regular and certain. This is the premise on which all constructive thinking about economics is necessarily founded.

How is this hope to be realized? What means are at hand to insure the ultimate success of these efforts to guarantee livelihood?

Nature has provided an ample supply of the resources out of which the economic necessaries may be produced. These resources fall mainly into three general cla.s.ses:

1. Climate, including those conditions of light, air, rainfall and temperature that make possible the maintenance of life in its many forms.

2. Fertility, including those qualities of the earth that are useful to man in the pursuit of his economic activities.

3. Power, including those forces of nature which man may harness and compel to do his bidding.

Climate, fertility and power are variously distributed over the earth.

The heat near the equator and the cold of the arctic regions make any highly organized forms of economic life difficult. Consequently it is in the temperate zones that industrial civilizations have developed. The deposits of minerals and fuels are quite uneven. Take iron as an example. The available deposits of iron ore are concentrated mainly in Brazil, Cuba, the Appalachians and the Great Lake Basin, so that the Americas and particularly North America have far more than a proportionate share of the iron ore supply. Copper, coal and petroleum are distributed with even greater irregularity. Equally uneven is soil fertility. Beside a garden spot, like the Mississippi Valley, lies a great Colorado-Utah desert. Nature has provided those requisites upon which man must depend for his economic life. They are scattered it is true, and with the present political barriers holding peoples apart, many of them are politically unavailable but, economically, they are an open door to the future.

Men have met with considerable success in availing themselves of nature's bounty, and of converting it into useful and pleasing forms.

All of the tools, weapons, textiles, metals, wheels, machines, have been the result of human effort and ingenuity, spread over long periods of time, and gradually acc.u.mulated and concentrated. At last a day seems to have dawned when machinery, applied to nature's bounty, could produce the wealth necessary to support the world's existing population on a minimum standard of living. Certainly the energy and wealth which went into the five war years would have fed and clothed the people for that period.

8. _Distribution and the Social Revolution_

Men have succeeded in kindling fires, making wheels, separating the metal from the ore, harnessing electrical power and communicating their thoughts to one another and to their descendants, but they have not made themselves masters of those forces which work through fire and wheels.

Men have met the immediate economic problem by devising methods for producing food, clothes and roof-trees, but they have been overwhelmed by the social implications of these productive forces. Before the problem of sharing the proceeds of their labor, they have stopped, and the whole economic progress of the race now stands like an engine stalled, awaiting some solution of the problems of distribution.

Through the ages various methods of making a living were inaugurated successively. Medieval Europe had worked out a combination of herding, agriculture, craft industry and trade that made a stable life for an agricultural village a practical possibility.

This period of economic stability--this golden age--was followed by a series of events that threw the fat into the fire. First in England, and then in all of the important countries of Europe, the industrial revolution turned the simple grazing, farming, craft-industry life of the village topsy-turvy, by providing a new method of converting nature's bounty into goods and services calculated to meet the increasing needs and wants of mankind. So far-reaching was the change that it has compelled a reorganization of virtually all phases of social life, but for the present purpose, it has been felt chiefly in four fields: manufacturing, commerce, wealth-surplus and population.

The efficiency of the new manufacturing processes has provided a large surplus of goods that must be taken somewhere, exchanged for food and raw materials, which must, in turn, be brought to the producers of manufactured goods. In the course of these transactions, a generous share of the values produced goes, in the form of profit, to the owners of the industry, another considerable portion goes into reinvestment, thus swelling the volume of productive capital.

The increased wealth, the larger capital and the greater amount of surplus all make possible the maintenance of a larger population. Thus it has come about during the past century, that the production of goods, the transport of goods, and the population, have all been increasing at a rate unheard of during the previous thousand years.

The suddenness of these economic changes has swept the world away from its accustomed moorings, out upon an uncharted sea. Only yesterday the race was struggling to make a meagre living: to-day the centres of industry are glutted with bulging warehouses and equipped with idle machinery that will produce unheard of quant.i.ties of shoes and blankets and talking machine records, if the owners will but give the word to the workers who are eager to perform those services that yield them a living. Only yesterday the world was maintained by local production: to-day it depends upon transport and exchange. All of these changes in the accustomed ways and acts of men have been brought about in the course of an economic revolution.