There is no certainty that Great Britain will be able to maintain her present standard of export trade, apart altogether from increasing it. In various classes of goods, in which for half a century the British people had something like a monopoly in foreign markets, there is no longer that advantage. India is boycotting cotton fabrics made in Lancashire and has her own mills hard at work. Italy is producing cotton goods at much lower prices than she could formerly buy them in England, owing to the development of water power which relieves her of the price of British coal—a severe loss to the Welsh coalfields—and cheap labour. In steel and iron England is losing her supremacy. Germany and France separately have eaten into this big industry. Together, by a working arrangement between the Ruhr and Lorraine, they will put up a combination of power which may deal a knock-out blow to British steel works. Already, owing to the cheapness of German contracts, many British blast furnaces are closing down and the ugly notice is going up: “No hands wanted.” It is discouraging to read the statistics of British trade each month recording “stagnation” or “quietude” or “a gloomy outlook” in many great industries. It is alarming to an Englishman to have a vision of future years when conditions may be worse than this owing to the conditions of labour in competing nations.
The Price of Labour
The price of labour is at the root of the problem. Even before the war the rate of wages in England, as calculated in purchasing power, were far higher than in Germany, Belgium, Italy, France, and most other continental nations, though very much less than in the United States. During the war Labour, seeing its chance, demanded fantastic rates of pay and received them. During the last two years there has been a readjustment to the cost of living so that wages have been reduced, but they still stand in nearly all trades, except that of agriculture, at a higher level than in 1913.
But the men are not satisfied. During the war they learnt their power and their value. Since the war they have become intensely class-conscious and demand better wages, shorter hours, decent conditions of housing, security in sickness and unemployment, old-age pensions from sixty years on, more money to be spent on their education, and a bigger margin beyond the bare needs of life for leisure and amusement. I am not one of those who blame them. I am all—or nearly all—on their side. The conditions of the slums in England and Scotland are still a disgrace to civilisation. The housing accommodation of working men in villages as well as in cities is often abominable. I do not believe in a great Empire or a luxurious civilisation built on the wreckage of men’s lives, on slave labour, on the killing of souls, as the British Empire was built during the industrial period after the Napoleonic Wars, when the manufacturers of Great Britain grew rich out of sweated labour in factories and homes before the Trades Unions, the Factory Acts, and democratic reform blotted out the black shame of 1830 to 1850. I think it good and right that men who help to save their country should be given the reward of good wages for good work and some chance of joy in life. The point of trouble is not the justice of that but its possibility. Is it possible for these labouring classes in England, Scotland, and Wales to get high wages and work for shorter hours when their export trade is diminishing, when the competition of cheap labour will become more and more severe during the next few years, and when the taxation of the wealthy classes is already extinguishing their wealth?
Labour in the mass, especially the political extremists who accuse Ramsay MacDonald of being a “bourgeois” and Philip Snowden a “reactionary,” believe that it is possible. They believe that there is still a vast source of untapped wealth in England which should be redistributed in their favour. They believe that they would get far higher wages and work much less if they owned and controlled the machinery and material of labour by some system of nationalisation or communism. They believe that it is only the selfishness of the “upper classes” and the greed of the great employers and Trusts which prevent them from receiving far greater rewards in return for their toil. They have not yet realised, or refuse to believe, that England is not in possession of inexhaustible wealth, that the rich people in the country—with only few exceptions—are already taxed beyond their power to pay without crippling industry itself and slowing down the adventure of trade, and that if a nation loses its markets for the only goods it can produce no amount of social legislation or social revolution will benefit the individual.
The awful failure of the Russian Communism, its abandonment by its own leaders, is either unknown or ignored by many British working men. Some of them would like to try the experiment in Great Britain. They do not understand the extreme delicacy of that machinery of international trade and credit by which the industrial life of Great Britain has been maintained. Russia lost its international trade, but its life was secure from the soil, apart from drought. All factories might close down in Petrograd, as they did, but the workers returned to the land and scraped along. In Great Britain if the factories close for lack of markets or credit or capital, the population will surely die unless America comes to the rescue with the A.R.A.
I don’t think it will be as bad as that. Before such things could happen madness would have to overtake the British people and they are, as a nation, remarkably sane. Communism is not a spreading disease in the heart of England, though it lurks in cities where trade is worst. But even with full sanity, the moderation of such a Labour Government as that led by Ramsay MacDonald, and a gradual redistribution of wealth already taking place, there is bound to be trouble ahead. In my judgment England must steel herself to endure lean years, heavier burdens, fiercer competition, less luxury all round, harder work for less pay.
German Competition
It is uncertain yet whether the London Agreement embodying the Dawes Report will actually be fulfilled by Germany. In my belief it will not be fulfilled. It is impossible for me to believe that Germany is capable of paying a hundred and twenty-five million pounds sterling and more in a rising scale for an indefinite number of years. England could not do so, and England is richer than Germany. The American debt, which is being paid off at the rate of £35,000,000 a year, is a burden which makes Great Britain breathe hard. That is hardly more than one quarter of what the German people are expected to pay, and I do not think they can do so for more than a few years. They can only do so, as I have pointed out, in one way: by creating a trade balance in their favour which would enable them to transfer that sum to their creditors after paying for the essential services of their own nation. If they are able to get such a trade balance it will mean that they are overwhelming the world markets with German goods. Who is going to let them do so? The United States would surely put up barriers against their manufactured articles. Great Britain will not admit them in such an overpowering quantity, whatever her theoretical allegiance to Free Trade. In other markets these cheap German goods will oust British and American competitors. The factories of Great Britain will be producing articles at a price which other nations will refuse to pay when Germany is canvassing for contracts. Germany will default again, I am certain, unless by a miracle of industry her people, on slave wages, capture the world’s trade, which would be worse than default to British manufacturers and in a less degree to those in America.
Whatever happens it is a serious outlook, because default would mean a new political crisis in Europe—all the old wounds open again—and success would ruin those who have imposed the Agreement. The horns of that dilemma were seen years ago by M. Loucheur, the greatest expert of economics in France. Speaking before the Senate he said: “Germany cannot pay these indemnities. If she were able to pay it would make her master of the world’s trade. Let us therefore insist on security rather than on reparations.”