ECONOMIC IMPERIALISM
Evil of “spheres of influence.” “Spheres” become “dependencies.”
The evils of an unrestricted competition for concessions and monopolies between rival financial groups backed by their Governments, are so notorious that diplomacy has found several typical formulæ for bringing them to an end. The obvious method of resolving such conflicts is the demarcation of spheres of “influences,” “interest” or “penetration” within which each of the competing Powers enjoys a monopoly respected by the others. This method is open to two grave objections. In the first place, it is rarely adopted before a ruinous conflict has exhausted the competitors. For years or decades they carry on a trial of strength which affects not merely their local relationship, but their attitude to one another in Europe, and is measured year by year in their military and naval estimates. If we were to take the sum by which British and German armaments have increased in the present century, it would be possible to allocate the increase, roughly, somewhat as follows: 50 per cent. or less for the settlement of the question, Who shall exploit Morocco?; 25 per cent. or more for the privilege of building a railway to Bagdad and beyond it; 25 per cent. or more for the future eventualities which remain unsettled—the fate of the Portuguese colonies in Africa, and the destinies of China. In the second place, the delimitation of spheres of interest is almost inevitably fatal to the national existence of the country partitioned, and as inevitably adds a vast burden to the commitments of the Imperial Power. Persia furnishes the obvious illustration. Sir Edward Grey is clearly resolved that he will not allow himself by the march of events to be drawn into the assumption of any direct responsibility for the administration of the British sphere. It is a laudable resolve, but Russia may at any moment frustrate it. She deals with her own sphere on the opposite principle, and her sphere happens to include the seat of the central government. That government is already a puppet of Russian policy, enjoying only a simulacrum of independence. How much longer can a government which is not a government continue to rule the southern sphere? Sooner or later a choice must be made. Either Russia must withdraw, or some separate government under British protection must be created for the south. Turkey is drifting rapidly towards a dissolution in which the spheres which the Great Powers already claim will be formally delimited. It is easy to predict what that will mean. There will be first provincial loans, then provincial advisers, and finally a military control, under which each of these “spheres” will become what Egypt already is, a dependency of a European Power.
How to avoid the evil. Must preserve peace without destroying victim nationality.
The method of avoiding financial competition by marking off zones of monopoly, is clearly the worst which can be pursued. There are alternatives. Let us consider what methods might be followed if the Powers were sage enough to shrink from the terrific conflict which may one day overtake them for the partition of China. China is so thickly peopled that crude conquest presents few attractions. Even Japan could not settle her surplus population in a country where every hill is terraced and every field subjected to intensive cultivation. But there is here a field which capital is already eager to exploit, and every year diminishes the resistance of prejudice and inertia to its ambitions. The attempts to mark out spheres of influence have so far been tentative and unsuccessful. Our own claim to the lion’s share, the Yangtse Valley, is admitted by no other Power, and it is doubtful whether the Foreign Office still maintains it. There are several principles which might be adopted if the Powers desired to avoid the jealous and dangerous struggle for concessions. In the first place, the simplest plan and the best would be the adoption of a self-denying ordinance by all the chief competitors. Let it be understood that British, French, and German banks may compete among themselves for railways and loans, but that none of them shall receive any aid or countenance whatever from the embassies or consulates of their respective countries. If that could be decided, the allotment of concessions would be settled either by the merits of the competitors or more probably by their skill and audacity in bribing Chinese officials. One may doubt, however, whether any of the Powers has sufficient faith in the honor of its competitors to enter on such an undertaking. A second and more hopeful plan might be borrowed from the undertaking negotiated by France and Germany over Morocco. They agreed to promote cooperation among their subjects, who were to share in agreed percentages in the coveted opportunities for public works. A vast “pool” or syndicate in which all the rival financial groups were represented, might be left to internationalize all the opportunities of monopoly in China on a plan which would give to each its allotted share in the risks and profits. The scheme worked badly in Morocco, and indeed created the friction which led to the Agadir incident. Something of the kind existed in China while the alliance of the banks of the Six Powers subsisted, and it eventually broke down. By this method friction may be avoided among the Great Powers, but China would be subjected to an intolerable financial dictation, which would be none the less oppressive because it was cosmopolitan. There exists, however, in the Ottoman Public Debt, a model which might be followed elsewhere. Its council represents all the bondholders of every nationality, and usually maintains good relations with the Porte. If the railways of Turkey, China, and Persia could be amalgamated, each in a single system under a cosmopolitan administration, the risk of partition and all the danger to peace, which this risk entails, might be removed. The obvious step is to confer on these syndicates of capitalists an international legal personality, which would enable them to sue or be sued before the Hague Tribunal. Some disinterested council nominated by The Hague should be interposed between the syndicate and the State in which it operates, so that the intervention of diplomacy may be as far as possible eliminated.
The Drago Doctrine.
The problems raised by the export of capital have been considered in this chapter mainly from the standpoint of the creditor State, which sees its diplomacy involved in the process. We have found, so far, no solution which is satisfactory from the standpoint of the debtor nation. The inroad of foreign capital always means for it some loss of independence, and it has nothing to gain by agreements among competing Empires. It may, indeed, keep its independence by playing on their rivalries. Its shadowy autonomy vanishes when they come to terms. The pacifist and the nationalist are here divided in their sympathies. The former, thinking only of European peace, rejoices when Russia and Britain end their differences by the partition of Persia. The latter, seeing only that a nation has been destroyed, regards the agreement as a peculiarly evil development of Imperialism. Both are right, and both are wrong. The ideal expedient would preserve European peace without destroying the victim nationality. To propose that expedient requires an excursion into the realms of Utopian construction. We can propose nothing which seems feasible to-day, but a solution is conceivable which requires only an easy step in the organization of the civilized world for peace. The motives for the partition of Persia were rather political than financial. The object-lesson of Egypt, where the occupation had its origin in debt, is a more typical instance of modern processes. It happens that the Hague Conference has laid down a principle which is capable of fruitful extension for dealing with such cases as these. The Drago Doctrine, put forward by Señor Drago, a jurist and statesman of the Argentine Republic, supported by the United States and eventually adopted by all the Powers, provides that no creditor State may use arms to enforce a liability upon a debtor State, unless a decision of the Hague Tribunal has recognized the liability and prescribed the method of payment. This doctrine, even as it stands, is of immense value to minor but civilized States like the South American republics, Portugal and Greece, which may find themselves obliged to defer payment of an external debt. The Hague Tribunal would in such a case, if it realized its opportunities, act as a good County Court Judge would do at home—refuse to admit a merely usurious claim, and lay down terms and dates of payment which would admit of the debtor’s recovery from any temporary difficulty.
Permanent Credit Bureau.
But to defeat the more unscrupulous methods of the international usurer, this idea requires some amplification. It may be necessary for a debtor State, some grades below the level of Portugal and Greece in civilization, to mortgage some part of its revenues, and to accept, at least over part of them, some degree of foreign control. That means, if the creditor country has also political ambitions, the almost certain loss of its independence. There are also States like Turkey which stand in need of expert advice for the reorganization of their finances, but dread the consequences of admitting any foreigner, who may perhaps think more of the interests of European finance and of his own motherland, than of those of the country which employs him. To draw the full advantage from the international machinery at The Hague, there ought to be evolved a permanent Credit Bureau to which weak and timid States might apply. It might conduct enquiries into their solvency, lend them experts to reorganize their finances, help them to negotiate loans in neutral markets on fair terms, and in case of need provide the commissioners who would control their mortgaged revenues. It would act as a trustee or as a Court of Chancery towards its wards. It could have no political ambitions to further, and the country which applied to it need not tremble for its independence. Persia or Egypt, had this Bureau existed, might have turned to The Hague for help. If, in the end, owing to civil war, or the hopeless incapacity of native statesmen, forcible intervention became inevitable, it would lie not with any interested Power, but with The Hague itself, to take the initiative of summoning a European Conference to prescribe the nature and limits of the interference. It is even possible that the Bureau might be used as an arbitrator at the request of a State like China, hard pressed by the rivalry of Empires competing for concessions, to decide between them in its name, and to appoint a neutral adviser or board of advisers, who would stand between it and the greedy Powers in the allotment of its financial patronage.
Export of capital must be made servant of humane diplomacy.