Other industrial factors tended also to bring about a change in our national ideals. We were beginning to believe in the economic efficiency of trust organisation, and our industry, conducted on a larger scale, was being increasingly concentrated. A new class was in financial control of our great industries. The trust magnate, the new conductor of vast industrial enterprises, was looking forward toward a strong unified banking control over industries and a definite expansion of American trade in foreign countries. American capitalists were beginning to believe that their economic needs were the same as those of the European capitalists, who were enticing their nations into imperialism.
Psychologically, also, we were ripe for any imperialistic venture, for we enormously exaggerated the progress we had made towards industrialisation, and were thinking in terms of Europe. We suddenly believed that we too were over-filled with capital and compelled to find an outlet for investments and trade. Innumerable editorials appeared, presenting the arguments for imperialism that had been urged ad nauseam in Europe. We could not resist, it was argued, the ubiquitous economic tendency toward expansion. In all countries, including America, capital was to become congested. An over-saving of capital, invested in manufacturing plants, produced far in excess of the possible consumption of the people. We had reached a stage of chronic over-production, in which increased saving and increased investment of capital would permanently outstrip consumption. Everywhere wealth was being heaped up; the savings-banks overflowed; the rate of interest fell and capital sought desperately for new investments. The capitalist system must either expand or burst.
Certain superficial developments in the United States formed the groundwork of these gloomy prophecies. We had just passed through a commercial depression, during which prices and interest rates fell and great numbers of workers were left unemployed. These facts were exploited by political leaders and industrial magnates, who thought in terms of the subordination of American foreign policy to the needs of big business. It is not surprising therefore that they became infected with the new imperialism, which in Europe had been growing steadily for over fifteen years, and that they came to the conclusion that America could not hold hands off while the markets and investment fields of the world were divided up among her rivals.
"The United States," wrote Charles A. Conant, one of the intellectual leaders of this movement (in 1898), "cannot afford to adhere to a policy of isolation while other nations are reaching out for the command of new markets. The United States are still large users of foreign capital, but American investors are not willing to see the return upon their investments reduced to the European level. Interest rates have greatly declined here within the last five years. New markets and new opportunities for investment must be found if surplus capital is to be profitably employed."
Like so many of the pamphleteers of 1898, Mr. Conant was convinced that imperialism offered the only cure "for the enormous congestion of capital." No civilised state, he contended, would accept the doctrine that saving should be abandoned. And while human desires were expansible, he doubted whether the demand for goods could possibly increase with sufficient rapidity to absorb the new productive capacities of the nation. "There has never been a time," he writes, "when the proportion of capital to be absorbed has been so great in proportion to possible new demands. Means for building more bicycle factories than are needed, and for laying more electric railways than are able to pay dividends, have been taken out of current savings within the last few years, without producing any marked effect upon their amount and without doing more, at the most, than to stay the downward course of the rate of interest."
It therefore follows conclusively that the American conquest of markets and fields for investment must go on. The method of such a conquest is of little importance. "In pointing out," he says, "the necessity that the United States shall enter upon a broad national policy, it need not be determined in just what manner that policy shall be worked out. Whether the United States shall actually acquire territorial possessions, shall set up captain generalships and garrisons, whether they shall adopt the middle ground of protecting sovereignties nominally independent, or whether they shall content themselves with naval stations and diplomatic representations as the basis for asserting their rights to the free commerce of the East, is a matter of detail."
I have quoted Mr. Conant at length because he is so largely typical of the state of mind of the American plutocracy in the year 1898. It would have been easily possible, however, to have presented any amount of confirmatory material of exactly the same nature. An article by W. Dodsworth in the October, 1898 number of the Nineteenth Century is along the same lines. Here again we read of an unprecedented industrial revolution during the preceding half century and a vast increase in foreign trade and accumulated wealth. Again we read of the falling rate of interest and of the failure of trusts and combines to resist the outside pressure of necessitous capital, seeking to force its way into industries. It was held quite impossible for consumption to absorb the products of an over-fertile industry. "I am no pessimist," writes Mr. Dodsworth, "but I cannot conceal my deep conviction that, if this relief is not forthcoming, a stage of grave industrial collapse, attended with the agitation of equally grave political issues, becomes only too probable, and the energies of our seventy-five millions of producers may have to be restrained until we learn to appreciate the penalty of our neglect of foreign enterprise."
Such were the arguments with which in 1898 the United States plunged into imperialism. We were to break out of the narrow circle which confined our economic life to become the work-shop of the world as England had once been, to export and export and ever increasingly export until all the nations should be our debtors. Our capital, like our wares, was to go to all countries. It flattered our pride when, a few years later, Europe trembled at the spectre of an American commercial invasion and even England wondered whether she could withstand the flood of cheap manufactured American goods, dumped on her shores. We pictured a vastly increasing trade with our new colonial possessions and with China; we envisaged opportunities, not only of an immense American investment, but of an even greater American trade.
What we believed of ourselves, Europe only too credulously believed of us. Leading European economists and publicists were completely convinced that the United States was irrevocably embarked on "the sea of imperialism." "The recent entrance of the powerful and progressive nation of the United States of America upon imperialism," wrote Prof. John A. Hobson in 1902, "... not only adds a new formidable competitor for trade and territory, but changes and complicates the issue. As the focus of political attention and activity shifts more to the Pacific States, and the commercial aspirations of America are more and more set upon trade with the Pacific Islands and the Asiatic coast, the same forces which are driving European States along the path of territorial expansion seem likely to act upon the United States."[[3]] Professor Hobson and other foreign observers believed that our great trusts, which were being formed with reckless suddenness, would enormously increase the capital seeking an outlet, and that new imperialistic ventures would result. "Cuba, the Philippines, Hawaii," he insisted, "are but the hors d'oeuvre to whet an appetite for an ampler banquet."[[4]]