“We have a bad habit of spoiling the chances of peace by premature actions intended to help it on and to prepare the way for it. Just think of what we did in Poland! In the same way we deliberately diminished the great value of the important asset which we possess in the shape of Belgium when we set up the Council of Flanders and introduced the administrative partition of that country.
“Besides these political matters there are others which were better left alone for the present. I am thinking of the steps taken to regulate our economic restoration after the war. War corporations are springing from the ground like mushrooms after rain, and the preparations made in order to solve the difficult economic post-war problems have an ugly tendency toward establishing too many Government-controlled organizations. To my mind the appointment of a ‘Government Commissioner for the period of Economic Transition’ is altogether superfluous. We must refrain from all attempts at interfering by artificial means with the natural development of events. This, however, is precisely what the Commissioner would have to do. He would have to act according to instructions received from the Bank of Germany or from some specially created body dealing with the question of the foreign exchanges and the provision of foreign bills.
“My belief is that our foreign exchanges which have so completely got out of order will prove an excellent means of diminishing the hatred against us and of making our enemies less disinclined to resume business with us. The Americans who are now able to obtain goods to the value of M 6.20 for their dollar, instead of M 4.20, as they used to do, will soon discover their liking for us again.
“Another point is that the coming peace, even if we derive no other gain from it, will enormously raise German prestige all over the world. Prussia became a European Power after the Seven Years’ War, in spite of the fact that the peace treaty brought her neither a territorial nor a financial gain, merely confirming the right of Frederick the Great to the possessions he had defended in the war. Prestige, however, means credit, and this circumstance makes me believe that all these anxious discussions of the foreign exchange question and of the need for controlling German payments abroad are just as superfluous as the Government control of our economic activities during the period of transition.
“The nations now at war will be impoverished after the war, and the state of our exchange and the high prices of raw material will compel us to live from hand to mouth as far as the importation of raw material is concerned. Pending the return of normal conditions, no sensible manufacturer will want to import more raw material than he urgently requires.
“I therefore think we ought to try to induce the Government to desist from its proposed control of trade and industries, and to restore the old conditions. If the Government’s proposal to carry on under its own management large sections of our import and export trade—in order to make these valuable sources of profit available for the reduction of its debts—were allowed to materialize, our economic doom would be certain, however attractive the plan might be in view of the huge national debt. One must be careful not to ignore the fact that the flourishing state of trade and manufactures is always largely due to the existence of personal relations.
“If I think of the lessons of the past forty years—a period during which the freedom of trade, the freedom of industrial enterprise, and the freedom of shipping have led to marvellous successes and to the accumulation of huge wealth—I ask myself: ‘How is it possible that a wise statesman could seriously occupy himself with the plan of establishing a Government-bound system in place of it?’ How, I ask you, can a State-managed industrial organization avail itself of the advantages to be had when trade is booming, or to guard itself against the losses when there is a slump? What will be the attitude of such an organization towards dealings in futures and speculation, both of which are indispensable forms of modern business enterprise? True, it has been suggested that these difficulties could be overcome if some business men were requested to accept appointments under this system, and if so-called ‘mixed’ concerns worked by the co-operation of public funds and private capital were established. May Heaven grant that this will never be done! I am sure you have had even more to do than I with business men who had been promoted to the higher dignity of Government officials. Most of them have turned out complete failures in their new spheres; they have become more bureaucratic than our bureaucrats themselves; their initiative and their eagerness to take upon themselves responsibilities have never lasted very long. Let there always be a fair field and no favour! Personal relations and personal efficiency are all that we need for the rebuilding of our national economic system. The ‘mixed’ concerns are bad because they lack the necessary elasticity, because they disregard the personal equation, and because they impede the indispensable freedom of action.
“I am quite prepared for these views of mine to meet with much criticism. People will say: ‘All that is very well, but the Government’s huge indebtedness compels it to take recourse to extraordinary measures.’ Quite right, but would it not be much wiser to reduce this indebtedness by increasing direct and indirect taxation, instead of depriving those who have proved during the past few decades what they can do of the means that have made them so efficient?
“Even among the efficient business men, unless they be born geniuses, a distinction must be drawn between those who can make profits and those who can organize. The former kind—who are, moreover, but few and far between—will never submit to the personal restrictions to which they would be subjected in state-managed or ‘mixed’ concerns. The second kind alone, however, would never make any concern prosper.
“Another consideration is that the enemy countries would view with much suspicion any such institutions controlled partly or wholly by the Government. I remember quite well the scant respect with which the French delegates were treated at the International Shipping Conferences before the war. Everyone knew that the big French shipping companies, owing to the huge Government subsidies, had to put up with a great deal of supervision on the part of the Government, and that they could often vote neither for nor against the most important proposals with which the Conference had to deal, because they had first to obtain the consent of the Government commissioner. They were, therefore, simply ignored, as it was clear that they could raise no counter-proposals at their own initiative.