The Lost Fruits of Waterloo

by John Spencer Bassett

The strong part Germany has taken in saving Austria from Russia gives Germany a firm hold over the imagination of the Austrian people. It is possible that financial aid has also been extended to such an amount that Austria would be embarrassed if called on to pay back. Nor is the kaiser in Berlin in a mood to brook defiance from Vienna. If, therefore Kaiser Karl wishes to be free of his too intimate dependence on Kaiser Wilhelm, he will find it to his advantage to conceal his desire for the time being. It is probable that we shall not know the present true state of feelings in Austria for several years after the war. But unless she is very well Germanized, it would seem that she must soon realize that she is playing a losing game in the combined movement. The real advantages of this war, if any are obtained, are German advantages. It is German trade, German kultur, and German prestige that are being enhanced by the war. Austria as Austria is not reaping advantages commensurate with the gains of her greater partner.

The financial argument seems to be much on the side of the peace advocate. Let us consider the situation in which the European states will find themselves after the return of peace. Bankruptcy is a relative term, if we so interpret it. That is to say, if the people are willing to bear patiently their great burdens they will bear them, and the debts that have been acquired will be shouldered. If one nation repudiates this debt, or scales it down, it is probable that the others will do the same, since to continue to carry the debt would leave the faithful nation at a disadvantage with the other nations in reference to future struggles with one another.

No one knows as yet just who owns the bonds in the several nations. From Germany we hear that they are widely held. It is the policy of the government of any nation to distribute a heavy debt as widely as possible; and we have in recent history instances of great patriotism in assuming debts of this kind. Now it is fair to say that the more widely the debt is distributed, the greater its likelihood of permanency. The larger the number of poor people who own it, the harder it will be to lessen the burden of the nation. It follows that in this case the immense interest charge is likely to persist as a permanent encumbrance on the economic life of the country.

On the other hand, let us say that it turns out that the debt is not very widely distributed after all, or that after the war it follows the course of most national debts and passes into the hands of the rich. Then we have the situation likely to promote class friction. The taxes necessary to pay the interest will fall on the mass of people, who will probably come to believe that they are taxed for the benefit of the wealthy. Class jealousy will lead to suggestions of repudiation. Such a course is more than ordinarily easy in Germany, France, and Russia, where there are well organized socialist parties, already keenly suspicious of the capitalists.

Thus, whether the debt is widely distributed or not, it contains a menace to society. In one case it constitutes such a burden that it absorbs the financial strength of the government. In the other it invites the most formidable struggle of the poor against the rich that the world has seen in a century.

Such a situation is bad enough in itself, but it does not directly affect the question of peace, our main consideration at this time; for the debt will exist as a result of the war, and nothing in the view of the friends of peace can prevent it. But through whichever of the two contingent courses it goes, the state will have difficulty in continuing the old system.

Let us say that we have a permanent great debt with a huge interest fund, and the state wishes to add to the taxes in order to keep up its measures of preparedness. The result must be to produce uneasiness in the minds of the taxpayers. In Germany, for example, the interest charge and the provision for pensions on account of the present war will probably be considerably more than a billion dollars a year. Added to the ordinary expenses of government it will make a burden more than double that of 1913. Can the government go on providing armaments, that may lead to another war, without jeopardizing the loans that are already issued? In the face of such heavy taxation it would not be surprising if the people sold their holdings of bonds to the capitalists and later turned toward repudiation. On the other hand, it would be to the interest of the capitalists to favor moderate expenditures for armaments and armies, lest the patience of the people under their burdens might be exhausted.

But suppose the debt was not distributed widely in the first place, and suppose it was repudiated after a class struggle, or for any other reason scaled down. The result would be a severe blow to credit, and in the future it might be so difficult to raise funds that war could not be carried on. No nation can afford to contemplate war if it has not borrowing capacity. If the debts of one war are repudiated those of another may also be repudiated. It behooves the capitalists, therefore, to support a policy which will make armed conflict impossible. While bonds benefit the banker when issued up to a certain point, they can in some conditions become his most serious difficulty. So many perils await the capitalist from a renewal of struggles like the present, that it is not too much to count upon him as a supporter of peace until the financial situation in Europe shall become better than it will be for many a day. It is his true interest to support a federated peace, which will tend to make his bonds secure.

As to the influence of autocracy, the advocate of peace must admit that it is by nature hostile to his system of coöperative peace. Such coöperation must depend on mutual confidence and trust between nations; and it is natural for distrust to exist between republican and autocratic states. The whole trend of autocracy is to self-assertion. As it exists in Germany today it could hardly be relied on to take its place in any union of states which would involve the subordination of individual national interests to the common good.

Granting this, the advocate of peace can assert that Germany must eventually give up autocracy. As the only great nations that hold to this relic of a departed age Germany and Austria-Hungary are becoming anachronisms. They are set against the spirit of the twentieth century. If they tide over the crisis that now confronts them they will encounter more furious storms at a later time, and eventually autocracy must be broken down. The argument rests on faith in progress. It is the result of confidence in the innate qualities of human nature. So many times in the past ages have the people risen against bad government, that it is safe to say they will repeat the process until all inequality shall have been reduced.