Victor Wallace Germains.

The struggle for bread: a reply to The great illusion and enquiry into economic tendencies online

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BREAD: A Reply to '^The
Great Illusion" and Enquiry into
Economic Tendencies





I. Introductory: The Evolution of Commerce

II. The Economic Basis of War

III. The Present Economic Position in Europe

IV. The Conditions of Trade Rivalry

V. Can Military Conquest capture Trade ? .

VI. Is the Conquest of Territory Financially

Futile ?

VII. The Case of the Small States .

VIII. Colonies and Military Power .

IX. Economic Security and Military Power .

X. Is a Great European Conflict Inevitable ?

XI. Are the European Peoples too "soft" for

War ?

XII. The Prospects of Universal Peace

XIII. The Future

Appendix. Some Proposed Remedies for Industrial
















IT is an unfortunate result of our system of
education that the average EngHshman is
sadly lacking in a sound grasp of the
governing principles which regulate the com-
merce of our own country and of the world
in general. This sounds an extraordinary state-
ment, especially in view of the floods of diatribe
and clap-trap poured upon us by the re-opening
of the Fiscal Question, nevertheless it is a fact
which few will deny that the average " educated "
man forms his opinions rather from a few high-
sounding phrases caught up from general con-
versation, or the pages of reviews, than from
serious study of the works reviewed or of the
questions dealt with. This is a busy age, our
Public School system does not inculcate habits of
serious systematic original thought, and thus it
happens that we Englishmen are perhaps more



than any other nation slaves to words and catch-
phrases. Random expressions caught up in a
hasty glance at some periodical, generally accepted
conventions, and the prejudices wrought by early
surroundings form and govern the ideas of our
"educated " classes, with the inevitable result that
these are as a whole as ignorant and prejudiced as
the very illiterate classes and windy demagogues
they profess to despise. The fact that a parrot
talks does not give him intelligence to understand
his own utterances ; the fact that a man or woman
has learnt to speak of Darwin, Haeckel, Spencer,
or John Stuart Mill, at a Public School or
University does not imply that he has actually
read the works of the great writers in question,
and moreover understands them. Some people
there are who cherish the somewhat Utopian ideal
of a suffrage based neither upon property, sex, nor
age, but upon education ; if by some miracle such
a system could be brought into being : if an
examination were to be taken into the education
and intelligence of the inhabitants of these isles :
and if by a still greater miracle it should happen
that such an examination were to be intelligently
conducted, one wonders which would be found
to be most illiterate, the average product of our
Public Schools and Universities, or that of our
almost equally inefficient Secondary Schools ? It


would be a truly '* sporting " question to decide.
For this reason it appears to me necessary to
preface the arguments which follow by a brief
exposition of the fundamental principles of
Political Economy. Those people who are already
learned in the science are invited to pass on ; those,
however, who doubt their thorough grasp of these
fundamental principles, are warned that such a
clear comprehension is absolutely necessary to the
complete understanding of the chapters which

Very well then. First, all wealth and all
commerce is comprised in the possession and
exchange of surplus products. The farmer
exchanges his superfluous foodstuffs for such
manufactured articles, clothes, boots, etc., as he
requires ; the manufacturer equally exchanges his
surplus of manufactured articles, and so on
throughout every trade and industry. During
the dawn of civilization, and even now amongst
barbarous folk untouched by European influences,
this exchange of products was carried on direct
by barter. In those days men dwelt in scattered
villages isolated by roadless forests, and each little
village was a self-supporting community. The
men tilled the ground, hunted the game, and
fabricated their own rude weapons and agri-
cultural implements ; the women spun their own


rough cloth and helped with agriculture and
other duties. Three ties, however, linked these
scattered self-sufficing communities into a loose
tribal confederacy : a common religion, a common
tongue, and the influence of some great chieftain,
a mighty warrior and the descendant real or
fancied of some revered tribal leader half- forgotten
in the mist of antiquity, idealized by generations
of old men as old men love to idealize the heroes
of their boyhood, and finally crowned with super-
natural virtues and raised to the Pantheon of the
Gods. Hard by the tomb of his mighty ancestor
the tribal chieftain fixed his abode, and here at
certain seasons of the year the petty village chief-
tains accompanied by their retainers flocked to
pay worship to the tribal God, and homage to
the living chieftain. Games would follow and
feasting and merriment and along with all these
there would be trade. Some of the villages might
produce better pottery than others, others might
be more skilled in manufacturing weapons, whilst
others again might lie adjacent to richer hunting
grounds and acquire wealth in pelts. So in the
gathering of men and women from afar they
would cast eyes at one another's belongings,
exchanges would be made by the simple process
of " swop," and the reign of commerce would
have begun.


What had originated as religious and political
gatherings became fairs, which in some cases, out-
living change of religion and loss of political
significance, have survived even to the present

As the wealth and population of the scattered
communities increased exchange by barter was
found to present great difficulties. It was difficult
to appraise the value of two bulky heaps of mis-
cellaneous goods, and still more difficult to carry
these about in search of a purchaser. The primi-
tive merchant in fact found himself in a quandary,
if he left his goods unprotected whilst he sought
for what he wanted in exchange they would
probably get stolen ; at the same time no one
could come to him if he stood and guarded them
for precisely the same reason, in that primitive
state of society no one dared to leave his goods.
The solution of this difficulty was found in the
adoption of some article in general demand as a
common medium of exchange. For instance, if
the merchant exchanged his goods for some
readily portable object in general demand, he
could afterwards stroll around the fair and buy
at his leisure with the certainty that this article
would be promptly accepted. In just the same
fashion now penny-postage stamps are often used
as money simply because they are in general


demand. Now this common medium of exchange
first took the form of readily portable objects of
value purely from their own intrinsic worth. In
historic times we have example of this primitive
form of money in the West African Coast Trade.
The natives of West Africa were of course
ignorant of money when the Europeans first
began to trade with their country, they traded
therefore by barter. Iron, however, was greatly
desired by them, and a bar of that metal deemed
of great value. Thus a bar of iron became a
definite standard of value, and people spoke of
a "bar" of cotton, or any other trade-goods,
meaning the quantity of such goods a bar of iron
would purchase. Primitive money must have
been of an analogous type, small bars of iron,
copper, or silver coming into use as general
standards of value and mediums of exchange.
Our English pound still commemorates this form
of money, having originally signified a pound's
weight of silver. As civilization developed, how-
ever, money came to represent less an article of
intrinsic value than a means of exchange. People
as a whole, for instance, ceased to buy bars of
copper or silver (gold by that time was not available
in sufficient quantities to be used as money) with
the intention of melting it down for use in the
manufacture of ornaments or implements, but


desired it simply as a ready means of exchange.
Coined money developed gradually in consequence
at first rings of copper, silver, and gold, became a
general currency, being readily portable and in
universal demand as ornaments, there followed
circular discs of metal perforated by a hole so as
to be strung readily upon a string, finally money
assumed the form in which we now know it,
rudely engraved with the sovereign's head and
arms, alloyed with baser metals to give it strength
to resist wear and tear, and used purely as a
means of exchange. Lastly, the power of money
was enormously increased by the invention of the
credit system.

This was originated very simply. During the
Middle Ages when in every country in Europe
the roads swarmed with bands of robbers, generally
in league with the innkeepers. It was obviously
very dangerous for people to travel with large
sums of money ; accordingly it became the custom
for merchants travelling from one large city to
another to purchase letters of credit upon some
prominent merchant of the city to which they
were travelling. These letters, when they arrived,
they presented to the merchant upon whom they
were drawn, who at once paid them in cash.
Now the merchants who gave out these letters of
credit were generally goldsmiths and because of


the strong safes in which they guarded their
precious wares their neighbours who were less
secure against thieves brought them their treasure
to mind, and from these dual causes, the safes of
goldsmiths and the letters of credit, there grew up
the system of banks and banking. It was like
this, the goldsmiths being known to their fellow-
citizens and to the trading community at large as
honourable and wealthy men who were both able
and willing to redeem their obligations, letters
of credit drawn upon them came to be accepted
just as readily as money, nobody cared about the
risks of having a large stock of money on his own
premises, and thus so long as he had sufficient for
everyday use the average merchant preferred, as
we have seen, to deposit his superfluous treasure
in the strong vaults of the goldsmiths. But again,
it was extremely improbable that all the letters of
credit issued by these latter would be presented for
payment on one and the same day, so that they
were able to issue letters of credit — bank-notes —
for many times the value of the gold they actually
possessed, which bank-notes, as we have seen, had
come to be accepted just as readily as money. The
value of this latter has thus been enormously
cheapened. Great Britain, for instance, did
commerce to the value of ;^i, 212, 806,088 in 1910,
and yet during the same year to have realised that


sum in gold would, as every one knows, have been
impossible ; such a sum in coined gold simply does
not exist. It is by means of the paper-currency
issued by the numerous banks of the world that
this gigantic commerce was and is carried on,
were this paper-currency to suddenly collapse, the
value of the sovereign would leap up twenty-fold.
Lastly, to complete our glance at the banking
system it may be mentioned that the banker en-
courages people to bank permanently with him by
paying them interest upon their money, and uses
the sums thus deposited in speculations for his
own advantage.

We have traced the evolution of money and the
credit-system, we have seen that all commerce and
wealth is comprised in possession and exchange of
surplus values, we have now to consider how these
surplus values originated, are produced, and are

Returning to the tribal confederacy we find our-
selves in the England of the Heptarchy, of the
first century after the Saxon Conquest. We find
the country covered with dense forests in clearings
amid which dwelt the isolated communities we have
already described. In these villages the land was
held in common, the government was patriarchal,
and agriculture and handicrafts were of the simplest
kind. At each sowing of the crops the land was


parcelled out in strips allotted to each member of
the community by lot and the whole was tilled in
common, in all other respects the village was self-
supporting. The fairs already described, however,
slowly but surely exercised a modifying influence
upon this rough self-sufiicing civilisation. The
meeting of peoples from difi^erent villages led to
comparisons of products, the manufactured articles
of one village came to be preferred to those of the
others, and the inhabitants of this discovering a
general demand for their handicrafts came to
devote more and more of their attention to
these latter to the exclusion of agriculture and
hunting. Thus there began the specialisation of
industry, some villages favourably situated for such
a course devoted themselves to the weaving and
dyeing of cloth, others again to mining, smelting,
and working in metals, and others again to pottery.
Thus there grew up towns ; some situated on the
banks of navigable streams or otherwise centrally
situated, came to form centres for the exchange of
the commodities of the surrounding countryside,
others depended mainly upon their own manufac-
turing industries. Slowly but surely civilisation
developed, with individual property in goods there
originated individual property in land, the village
lands were first permanently parcelled out in strips,
and finally, with the natural tendency of wealth to


accumulate, passed into the hands of a single

Thus there developed our present system of
civilisation, cities, towns and landed estates grew
with even development until the latter half of the
eighteenth century and then with rapid bounds
there sprang into being our present economic
system. Up to this period our population had been
in the main agricultural and our villages self-
supporting units. The wool used by the towns
was spun by the wives and daughters of the agri-
cultural labourers, these also fabricated their own
garments, whilst boots and tools were wrought by
village mechanics. The invention of the spinning-
jenny, however, profoundly modified these con-
ditions. The new machines required factories, and
these again necessitated an influx of men and
women from countryside to towns to work them,
thus there sprung up the great manufacturing
towns of to-day.

Now let us consider how products are pro-
duced and distributed. All products are pro-
duced by Industrial Efficiency. This in its
broadest sense applies to all forms of human
effort, to the farm as to the factory, and expresses
the art of obtaining the maximum of result for
the minimum of effort. Taking the case of a
factory, for instance, to obtain this maximum of


result for the minimum of effort it is necessary
to reduce all expenses of production to the last
farthing whilst selling the products for highest
possible prices. The wage-bill, the cost of raw
materials, lighting, etc., must thus be reduced so
far as is commensurate with the highest possible
efficiency of production. And the same principle
applies, as we have seen, to all forms of human

Industrial efficiency, again, partakes of two
natures : capital and labour. Capital represents
the possession of a sufficient quantity of the
recognized medium of exchange to inaugurate an
enterprise. It may be and generally is derived
from inherited property in land, shares, or funds ;
on the other hand, men of character have acquired
capital by saving and self-denial, whereas " a fool
and his money are soon parted." Capital in-
augurates enterprises and organises and controls
commerce ; the richest mine is useless unless there
be sufficient capital available to pay for the initial
expenses of working, whilst the cleverest invention
is equally of no avail save there be a capitalist to
" push " it. Labour, however, is of course equally
necessary for all forms of industry, and this brings
us to the distribution of products. All commerce
is, as we have seen, comprised in the exchange of
surplus products, and the industrial enterprises


which produce these products are, as we have also
seen, inaugurated and controlled by capital.
Taking the case of a factory again, but for the
energy and foresight of a handful of men this
factory would never have come into being ; and
again, it is these men or their representatives who
secure a market for the produce of their factory,
who in fact arrange the exchange of commodities.
If, for instance, we take an English factory for
agricultural implements, we find that the capitalist-
founders by means of their agents sell these agri-
cultural implements to farmers either in this
country or abroad. And these farmers, who are
themselves capitalists, similarly obtain the money
or credits by which they purchase such imple-
ments by means of the sale of their surplus farm
produce to the manufacturing towns. Now in
both these instances the products were in the first
place originated by means of the energy and fore-
sight of the capitalist, and this latter again arranges
the exchange of products. Therefore the capitalist,
not being a large-hearted philanthropist but a mere
man working primarily for his own benefit, natu-
rally claims, and does his best to secure, the lion's
share of the products thus created and exchanged.
He acts, in fact, as middleman and takes the
middleman's profits. Of the money gained by
the sale of the agricultural implements or farm


produce the capitalist takes the largest possible
share for himself. He pays his working men
simply the lowest possible wage they will accept,
he equally reduces the other costs of production
to the last firthing ; the surplus between the costs
of production and the money gained by the sale
of the produce he calls profit, and part of this
profit is spent on articles of luxury, dress, ser-
vants, costly food, etc., for the comfort of the
capitalist and his family, and part goes to extend
the business or inaugurate new enterprises.

Now the share gained by labour in this dis-
tribution of products depends simply and solely
upon two influences, the supply of labour avail-
able and the degree of organization and physical
force possessed by the working class generally.
When labour is scarce wages go up, when labour
is plentiful wages fall, this is elementary ; the
second influence merits closer examination. This
in fact is the attempt by organised labour to
interpose an artificial, political, influence into the
economic situation. The capitalist seeks as usual
to pay the lowest wage permissible by the laws
of supply and demand. Organised labour en-
deavours to artificially raise this level by a com-
bined refusal to do labour save for a higher
wage (the "strike"), and when the capitalist en-
deavours to utilise labour unaffected by this strike


(" blacklegs") labour generally endeavours to inter-
pose with physical force, hence riots and bloodshed.
From the ethical standpoint there is singularly
little to choose between capital and labour during
one of these contests, the motives of both sides
are equally sordid. The capitalist certainly is no
philanthropist and to speak of wicked labour
agitators misleading the poor deluded working
people is simply silly. It is equally absurd to
speak of the selfish capitalist grinding the workers
down, both sides equally fight for their own hands
and it is brains and physical force which in the
long run prevail. Ethical questions have simply
no influence whatever with either side.

Lastly, it may be well to here consider the
sources of national wealth. This may be summed
up under three headings (i) the national character ;
(2) the raw materials and natural products of the
nation ; (3) the position of the nation with reference
to international commerce.

Upon the first of these headings depends, of
course, the use which will be made of the second
and third. National character varies as much as
does that of individuals and just as the thrifty
sober energetic man forges ahead and outstrips far
more richly equipped rivals, so we may discern
the same phenomenon among the nations. The
Jews, for instance, without country or national


resources whatsoever, scattered among many lands,
and remorselessly persecuted for centuries, have
yet by sheer force of character fought their way
to a leading position in the world's commerce ;
whilst the Scots, almost equally poorly circum-
stanced, have similarly forged to the front. In
Spain, however, and in the case of some South
American republics we see rich resources neg-
lected thanks to sloth and inertia.

The second heading speaks for itself, provided
a nation possesses the character to utilize such
advantages, rich mines, fertile fields, and wealthy
fisheries give the certainty of success in the race
for wealth.

The third heading is, however, of enormous
advantage when combined with the first and
second ; provided a nation be situated in a
central position, at that spot, in fact, from which
the surrounding nations are most readily accessible,
it will naturally form a general meeting place
where these nations traffic one another's wares.
England, for instance, lies midway between
America and India, at the very centre. In fact,
of the world's trade-routes, thus the merchants
from the various countries find it more convenient
to send their goods to be sold In England and
then re-sold either by English merchants or their
own agents, than to send goods direct to America


or the Far East. England, in fact, forms the
general meeting-place of the world's commerce,
a fact which in times past has enabled us to exact
enormous " middleman's " profits, and at the
same time dispose of our own productions to the
best advantage. The cutting of the Panama
canal, however, must inevitably materially affect
the world's trade-routes, and almost certainly
much to our disadvantage ; our consent to the
cutting of this canal was perhaps one of the most
foolish of the very many foolish things of which
even English " statesmen " have been guilty.
And now having glanced at the fundamental
principles of the political economy, their evolution
and present-day application, we will pass on to
the Struggle for Bread.



MANY years ago the Roman Empire
held sway over well-nigh the whole of
the then civilized world. They were
a very human people those old Romans and
very much like unto ourselves. They had
that peculiar and invaluable gift of self-
righteousness which some people possess in
extreme measure. We have all met him,
that man who is invariably in the right, and a
most unpleasant type of individual he is, self-
assertive, dogmatic, argumentative, he is from his
own shewing the most peaceful, charitable, mildest
man God ever created ! Perchance you may
know something of his past career, perchance
certain shady episodes may come to your mind
as you listen to his unctuous self-satisfaction, but
never a doubt of his own genuineness seems to
cross our friend's mind hint you never so darkly
what evil tongues have said. Virtuous indigna-
tion not the blush of shame crimsons his noble


brow, he raves and he rants but ever he is self-
righteous and at last you give up the attempt
in despair, not even a hammer and chisel could
drive into the head of such an individual that it
is just possible that during some period of what
appears to the average man a rather shady past
he may have been in the wrong. There are
nations very much like individuals and the Ancient
Roman shared with the present day Briton in an

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Online LibraryVictor Wallace GermainsThe struggle for bread: a reply to The great illusion and enquiry into economic tendencies → online text (page 1 of 14)