CHAPTER X
ECONOMIC AND SOCIAL DISINTEGRATION
Time as a Healer
There is a widespread impression that time is the great, indeed the only, healer. Notwithstanding the fact that nearly three years after the war European conditions are on the whole worse than ever, there are those who still count upon the mere lapse of time to effect an ultimate restoration of the shattered economic organization. Have not nations in the past always recovered from the ravages of war? Is not the march of civilization always onward?
The simple truth seems to be that time has not always wrought the precise cure which the doctors have desired. Something significant will in the course of time no doubt develop in Europe, even if conditions are allowed to drift. But what? Time did not save the ancient empires of Babylon and Nineveh. Time did not prevent the overthrow of the Greek and Roman civilizations. Time—six centuries of time—did ultimately bring the world out of the abyss of the Dark Ages. Time, after a period of fearful human decimation, stamped out the black death, virtually unaided by medical science. Time and the Thirty Years' War reduced the German population by one-third; and several generations of time ultimately restored this population. The fearful human costs involved in these tragedies of time are known to every student of history.
Those who are living in the midst of epoch-making changes, such as are now occurring, usually cannot conceive that the civilization which they have come to regard as established, could possibly disintegrate. It is unthinkable that the great industrial civilization of the nineteenth and twentieth centuries may possibly have reached its height in August, 1914, and may now be in the fateful processes of dissolution. At the conclusion of Chapter V on national budgets the statement was made that "national budgets, persistently unbalanced, will ultimately wreck the entire financial and becomes negligible. The moment has now arrived when we must show why and how.
Forces of Deterioration
We have seen that it is not at all impossible that the present business depression may continue for several years. If such proves to be the case it is clear that it will be found impossible in nearly every country in Europe to prevent a rapid increase in government debts. Business depression results in low profits and incomes, and low profits and incomes mean reduced taxes. At the same time, government expenditures tend to increase wherever unemployment insurance and subsidies are sinking deeper into misery."
The situation in the Balkan States, in Hungary, and subsidies for railroads, public utilities, education, etc., are, in fact, now found in practically every country in Europe. The result of several years of depression would therefore be progressive deterioration of national finances.
Looked at from the point of view of the economic system rather than from the angle of the national treasury, unbalanced budgets mean consumption in excess of current production and a consequent trenching upon accumulated capital resources. Not only is new capital not constructed, but existing houses, railroads, factories, and equipment are permitted to deteriorate. The result is relentless economic retrogression. Although the process may not be apparent to figures quoted by the casual eye, underneath the surface of things the forces of dissolution are irresistibly at work.
The Bolshevists of Russia chose a spectacular method of wrecking the economic organization of eastern Europe. Seizing the reins of political power, they forcibly dispossessed the existing owners of capital and proceeded to squeeze the industrial organism dry. Unbalanced budgets, with paper money issues to meet government expenses, accomplish the same end in more prosaic ways.
Austrian Debacle
An illustration is easy to pass brave resolutions that taxes should be found in the history of Austria since the war. Austria escaped Bolshevism; but she did not escape almost complete economic and other subsidies must be continued if social demoralization. The following graphic account is taken from the Report of the Provisional Economic and Financial Committee of the election of Nations Relative to the demoralization of economic and social conditions.
How difficult is the value of balancing budgets may be seen from 6.02 to .95 Swiss francs. The opposite upward tendency, which within a short period, increased internal prices 50, 60, and 75 times, disturbed the position very considerably; it became more and more unstable in proportion to these increases. All those whose assets were expressed in terms of money were ruined; persons with fixed incomes, pensioners—in short, the middle classes—have been utterly crushed, and are now in extreme poverty. Those who possessed or manufactured any kind of goods secured, nominally at least, considerable profits. Everyone, therefore, has attempted to make provision against this continual fall in the krone. Wage-earners and state employees, in order to counteract the rise in prices, exercised collective pressure and threatened to strike almost daily. But whatever success is obtained in this daily struggle to adapt conditions of life to state that in the event government loans can be marketed in Poland under present conditions—a remarkably courageous assumption—the government's financial obligations for the ensuing year will thereby only be increased. Additional government loans may be reduced to a fraction of their original value. It is thought better to satisfy the pleasures of employees and hangers-on who now clutter government offices and pay-rolls should be summarily reduced. But in many countries the governments dare not spent in unproductive consumption is invested as soon as possible in real securities and estate, goods, jewels, antiquities, industrial securities, etc. But this natural tendency towards thrift is becoming a speculative fever. In the apparent profits which result from the rise in prices, that portion which represents actual labor loses its importance and becomes negligible. The illusion is fostered that profits may be made by simply hoarding goods or representative securities. Capital is thus diverted from productive enterprise to speculative uses. Luxury is growing greater and greater amongst the classes which have profited most by this kind of speculation, whilst the old middle classes, which are the sources of tradition and social culture, are sinking deeper into misery."
The situation in the Balkan States, in Hungary, and domestic consumption is in Poland differs from that in Austria only in degree and time. Time, moreover, bids fair to reduce all to the same approximate level. Indeed, all the nations east of the Rhine—excepting the Scandinavian countries—have been traveling rapidly in the direction that Austria has given way to January, 1921, wages rose fivefold, while the cost of living advanced not quite four times."2 2From the (London) Economist, July 2, 1921.
Budgetary Difficulties
When once this process of financial retrogression has got well under way, it becomes practically impossible to check it. It is easy to pass brave resolutions that taxes should be increased and that expenditures should be rigidly curtailed, but it is the hardest task in the world to carry out such a fiscal policy. Unemployment insurance, pensions, and transport, public utility, and other subsidies must be continued if social unrest of central and eastern Europe for a serious nature is to be prevented. The least that can occur when such policy of retrenchment is instituted is the hands of fifteen or twenty speculative middlemen—each taking toll through price advances—before it reaches the party in power and the election of an opposition party that will restore the doles and subsidies. Moreover, to stop summarily all these expenditures would add to the demoralization of economic and social conditions.
How difficult is the task of balancing budgets may be seen from recent developments in Poland. The present Finance Minister is determined to institute rigid economy in government and check the process of inflation. The strength of his support from the business and financial press may be judged from the fact that when the Polish Cabinet recently voted a supplementary paper issue of 8 billion marks, and the Finance Minister resigned in protest, the Cabinet was bitterly attacked by the press. The result was the repeal of which depends upon the authorization of additional paper and the recall of the Minister to office. But further inflation either this year or next seems nevertheless certain, for one is amazed to learn that all the Finance Minister hopes to accomplish is to "balance the budget" by means of domestic and foreign loans. It is perhaps unnecessary to state that in the event government loans can be marketed in Poland under present conditions—a remarkably courageous assumption—the government's financial obligations for the ensuing year will thereby only be increased. Additional government loans may be a lesser evil than the issue of more paper money; but it is nevertheless an evil. Budgets are not merely necessary to restore finances, transport systems, etc. The moral foundations of commercial society must also be balanced by going still further into debt.
It is suggested in every country that the veritable host of employees and hangers-on who now clutter government offices and pay-rolls should be summarily reduced. But in many countries of continental Europe the situation now differs only in degree. The price that governments dare not follow such a policy, because it would probably result in unemployment and discontent of a revolutionary character. This would certainly be the result if it were accompanied by the cessation of doles, pensions, and subsidies. Government expenditures for such purposes and return to office on a platform that promised relief for the padding of official pay-rolls have been the price paid for saving eastern and central Europe—including Germany—from social revolution during the past three years. Industrial unrest is held in abeyance, it is true, but the cost mounts from month to month with never ending regularity.
Business Demoralization
Government deficits, price inflation, and fluctuating exchanges rapidly undermine business enterprise. Not only are the risks of ordinary industry greatly increased; but the sources of both private and government credit are in time dried up. No nation can pay its debts abroad so long as its budget remains unbalanced and domestic consumption is in excess of domestic production. And no private citizen can long maintain his credit standing in foreign countries when his government's finances are approaching irremediable disaster. Private and public credit are indissoluble linked together.
Domestic credit is, moreover, demoralized by the aspirations of central and eastern Europe for a commodity to pass through the hands of fifteen or twenty speculative middlemen—each taking toll through price advances—before it reaches the final consumer. Such business activity yields monetary profits, but it does not increase production. On the contrary it demoralizes industry.
The rapid mounting of living and the accompanying disorganization of industry intensify social unrest. Wages must be rapidly advanced under penalty of strikes, and unemployment insurance, pensions, educational subsidies, etc., were established. At the dominance of the masses over the number of working hours was reduced. The result was a government is steadily increased. This, of course, progressively complicates the difficulties of the situation and but paves the way for still further disorganization. Sooner or later certain basic industries, such as public utilities and transport, are broken down, and with this calamity disappears practically all hope of saving the whole complex industrial and commercial mechanism, the very existence of which depends upon the present policy for one of financial conservatism. Thus even Holland has been drawn into the current that contribute most to the demoralization of trade and industry when once a nation has started along the road we have been describing, is the rapid disappearance of that business or commercial morality which constitutes the very foundation of financial genius nominally succeeded in balancing the modern industrial and credit system. It is said that commercial honesty is almost unknown in eastern Europe today. Why should anyone be honest in his dealings, when the almost certain result is elimination from the field of business and starvation in the deficit. Now the only policy.
Here lies, moreover, one of the greatest obstacles to the reconstruction of the broken countries of eastern Europe. It is not merely necessary to restore finances, transport systems, etc. The moral foundations of commercial society must also be reconstructed. This is perhaps the most difficult task of any.
The Case of government employees f but it will be only a drop in the Netherlands
In the analysis thus far we have been describing the process of social and economic disintegration as it has already been illustrated in eastern Europe. In the other countries of continental Europe the situation now differs only in degree. The price that governments in power must everywhere pay, if they are to continue in office, is concerned with the continued increase of the government debt. No government, under present conditions, dares to curtail subsidies, unemployment insurance, etc., and no government dares to increase the burden of taxes sufficiently to cover present expenditures. The present government in power knows that politicians out of power would seize the opportunity created by such a policy and return to office on a platform that promised relief for the masses. It cannot be too strongly emphasized that political exigencies make thorough-going fiscal reform at the present time a practical impossibility.
Take the case of British liberalism; and for the Netherlands. Here was a neutral country—one that made tremendous profits during the war; one whose industrial and financial organization was not disrupted by huge war loans and issues of paper money. The army had to be greatly increased, it is true, and many thousands of refugees had to be cared for. But still the Netherlands was popularly supposed to have emerged from the war in a very strong financial position. Nevertheless, the hand of improvement. Indeed, if the business depression continues, it is foreseen that the deficit will rapidly increase. The Hollanders, like the people of other countries—not excluding those of time until the United States—naively assumed that the war had laid the basis for a period of unprecedented prosperity, and that the aspirations of mankind for a higher standard of living and a richer existence generally could now find immediate fulfilment.
A program of beneficent social legislation was accordingly undertaken, and unemployment insurance, pensions, educational subsidies, etc., were established. At the same time, the efficiency of labor declined—as in other countries—and the number of working hours was reduced. The result was a government fiscal deficit of serious proportions, even in the good year of 1920. This year, in consequence of the business depression, it will be greatly increased. Meanwhile the government in power is popular with the masses, and it knows only too well that the surest means of losing favor is to abandon the present policy for one of financial conservatism. Thus even Holland has been drawn into the current that leads to progressive financial deterioration. This in spite of the fact that virtual disarmament has been achieved.
British Situation
Take the case of Great Britain. Last year, as we have seen, this nation of financial genius nominally succeeded in balancing the government budget and in actually reducing the outstanding debt, though, as we have seen, it was necessary for the taxpayers to borrow a considerable portion of their tax money.
In consequence of the business depression Great Britain will this year in all probability be faced with an outright deficit. Now the tax burden cannot well be increased, and the present Coalition government, although it is being subjected to the strongest pressure from the financial and business interests and from the middle classes, is not disposed to make any radical reduction in expenditures. A little may be saved, however, by reducing the number of government employees; 3 but it will be only a drop in the bucket. Interest on the public debt, unemployment doles, and pensions are the major items, and these the government is afraid to reduce at the present time. New military expenses may, however, be reduced in another year. We shall return to this question in the last chapter which is concerned with the real remedies for the present situation.
The political future of England is shrouded in uncertainty. The present government is without any constructive policy and appears to be disliked all-around. But there is no leader in sight with the ability to reform the shattered ranks of British liberalism; and for the present at least, the Labor party appears to be too harried and too divided in counsel to carry an election. Immediately speaking, therefore, a new Coalition government appears to be the most likely political development.
But what would such a government do? If it should attempt to eliminate unemployment doles and pensions, the hand of the Labor party would be greatly strengthened and it would only be a question of time until the latter would win an election. If, on the other hand, such a government should confine its efforts merely to the aspirations of minor economies, it could not keep the national budget in balance—assuming a prolonged period of business depression. Even in Great Britain the general situation is therefore one of 1920. This year, in fact, greater than it was at the time of the Armistice.
In one important respect the situation in Europe, as noted in a previous chapter, appears to have improved materially since last year. "Labor unrest is rapidly subsiding." The business depression has proved no less a shock to European than to American labor. The workers in the nations of western Europe are now clearly on the defensive. But what will happen in case the business depression continues for several years? May labor be expected to remain quiescent, offering but a passive resistance to the forces of "detestable economic laws"? There is little ground for such a belief.
Labor has for some time believed—whether rightly or wrongly, we need not now inquire—that there is something fundamentally wrong with the existing system of wealth distribution. It is widely believed that "there is enough for everyone if only it were fairly divided." As a result of the war, labor has also been coming to believe that there is something fundamentally wrong with the system of wealth production. During the post-war industrial boom this conviction was somewhat in abeyance, but it is now cropping out again with renewed vigor, and the longer the business depression lasts, the more deeply rooted this conviction will become. Millions of men unable to procure work will sooner or later seek to find a remedy in political action. Not even unemployment doles can permanently allay the spirit of resentment against those who hold the reins of power and are apparently responsible for the condition of affairs. Witness, for example, our American greenback movement of the late seventies, and the populist and free-silver agitations of the nineties.
A prolonged period of hard times has seldom failed to produce mass political action in one form or another. It may not be bolshevism or communism; it may not even be state socialism, as that term has commonly been understood.
The movement would very likely assume different forms in different countries. But that inexperienced and perhaps injudicious leaders, backed by the masses, will in one way or another take control of government in practically every country in Europe in the event of a protracted business depression, is far from improbable.
Assuming Labor in Power in England
In England, it is more than possible that the Labor party would gain control of the government. In case this should occur it is interesting to speculate upon the probable drift of events. We have the greatest sympathy for the aspirations of British workers and their leaders. It is all too true that England's industrial greatness has been made possible through the payment of bare subsistence wages to labor. And as Mr. Lloyd George—in one of his earlier incarnations—so well said, "The average Englishman is but a trespasser in the land of his birth." Does it follow, however, that the coming to power at the present time of the British Labor party would be for the best interest of the world? It is very doubtful.
Whatever may be the present views of party leaders, there can be little doubt that present money wages would be maintained, and present subsidies and unemployment doles would be continued, if not increased. Labor would doubtless insist on maintaining, if not increasing, present standards of living. An attempt might well be made to impose a capital tax. But at this point capitalists would certainly revolt. There would be a great capital Hegira, similar to, but probably much more extensive than, that which already has occurred from Germany. Industry would shortly have to be taken over and operated by labor.
In view of the necessity for Englishmen to meet the industrial competition of other nations, there is little reason to believe that nationalized British industry—which would be expected to support the working population at "satisfactory" living standards—could compete effectively in world markets. If, however, similar developments were occurring simultaneously in other countries, the situation in this respect would of course be somewhat different, because in all countries labor would then be confronted with the practically impossible task of producing as much as "reasonable living standards" require. Budgets would in all probability be more seriously unbalanced than ever, and the printing press would appear to be the only way out. The process of price inflation might for a time create the impression that the "new day" had at last been ushered in, when in fact economic retrogression would be proceeding at an accelerated pace.
It is unnecessary here to conjecture what effect such a political outcome would have upon the unity of the British Empire. One thing is certain, however, that stability in world affairs would not be increased; and more than anything else the world needs stability, both economic and political. More than anything else, the co-operation of relatively strong governments, such as those of Great Britain and the United States, is required in promoting peace and in re-establishing trade and industry. Indeed, without the co-operation of these two great divisions of the Anglo-Saxon race, there is little hope for political and social stability in the world of the twentieth century.
Distribution of British National Income
We have said in a previous paragraph that a Labor party in power would attempt to maintain living standards unwarranted by the volume of production. If so, the accumulated supply of capital would be steadily depleted, the volume of production would gradually decrease, and the standard of living would gradually be forced to lower and lower levels.
This is exactly what has been occurring since the Armistice, even under the Coalition government; and the world is already beginning to pay the penalty. The following figures of the distribution of the national income in Great Britain in 1920 as compared with 1907 are little short of appalling. They are compiled by Edgar Crammond, the English statistician to whom reference has been made in a preceding chapter. 4
Percentage of Total Income
1907 1920
Food, drink, and tobacco 224 284
Dress 11.5 12.5
House 114 8.0
National services 8.5 23.0
Miscellaneous 8.6 8.0
Professional and domestic services, not comprised
in above items 4.6 4.5
Cost of distribution 9.3 10.2
Depreciation and maintenance of capital 8.3
New investments at home 7.4 \- S-4
New investments abroad 8.0
J
100.o 100.0
Three striking facts are revealed by these data: (1) In 1920 the British people spent 7 per cent more of the national income on food, drink, tobacco, and dress than they did in 1907. They lived substantially better. (2) Government expenditures (national services) were almost trebled. (3) The percentage devoted to the maintenance of existing railroads, warehouses, factories, equipment, etc., and to the creation of new capital equipment at home and abroad (the last three items in the table) has been reduced from a total of 23.7 to 5.4.
The grim truth is that in the boom year of 1920 England
4 Printed in the London Times, June 28, 1921. did not even maintain the supply of existing capital—the industrial machine was being allowed to run down. Note the 8.3 per cent spent in 1907 for depreciation and maintenance alone, as compared with the 5.4 per cent in 1920 for all capital purposes. These figures conclusively demonstrate that in the "prosperous" year of 1920 Great Britain was actually going backward. She was living much beyond her means. Mr. Crammond estimates that for 1921 the national income, in terms of money values, will be so greatly reduced that about 32 per cent will be required to meet government expenses. There is, moreover, not the slightest doubt that the percentage spent for capital replacement and new construction will be even less than a year ago. Comparable data on the distribution of national income in other European countries are not available. But the evidence afforded by trade statistics, national budgets, etc.—all indicates that in practically every continental country the situation in this respect is substantially worse than in Great Britain, or if not immediately worse, has been temporarily alleviated only by huge additions to the national debts. Everywhere those living on pensions, interest on government bonds, and unemployment insurance are being supported out of capital
Decline of European Capital Supply
Let it be understood that we are holding no particular group responsible for this condition of affairs. We are merely calling attention to the startling facts in the situation. No single group, indeed, is to be blamed. This whole situation was doubtless an inevitable aftermath of the war. i people—in any walk of life—would admit for a moment that post-war standards of living would have to be reduced. Indeed, the chorus proclaiming an era of improved living conditions for everyone was all but unanimous. It is one of the most amazing illustrations of the practical universality of economic ignorance that most people should have confidently believed that four years of concentrated wealth destruction had placed the world in a position to expand its scale of consumption. The bitter truth has not even yet come home to more than the merest fraction of the world's population, that the war means lowered standards of living for the world as a whole for at least a generation. Until this truth does penetrate to the masses of mankind, there is little hope of checking the progressive reduction of wealth-producing power that is now occurring.
The financial and industrial system of our day, if it is to endure, must annually effect such a distribution of the national income and of the national productive power that existing capital goods—railways, factories, equipment, etc.—are maintained in good repair. A failure to do so means, inevitably, persistent economic retrogression. If wealth production is to be increased as the years go by, and if the low existing standards of living are to be raised, additions must be made each year to the present depleted capital equipment of society. These are elemental economic principles, which no one can successfully controvert.
Now the truth is that the world as a whole—even in the halcyon days of the generation immediately preceding the war—did not possess much of a growing margin, did not annually add very much to the existing supply of capital goods. Estimates vary somewhat, but for the world as a whole the annual capital increment was probably somewhere between 5 and 10 per cent. In that great investing nation. Great Britain, in the excellent year 1907 it was only a little more than 15 per cent, according to Crammond's estimates given above. The incalculable economic costs of the war may in no way be better understood than by comprehending that in all Europe this margin of saving—this means of economic growth and progress—has been wiped out.
If the economic organization of the twentieth century is to survive, somehow this margin that constitutes progress must be restored; at the very minimum existing capital goods must annually be replaced. Where does one find assurance that this will occur? If the reply is that what the world needs is thrift—relentless, never-ceasing thrift—it will be well to reflect that if by thrift is meant rigid curtailment of consumption, the business depression will not thereby be quickly overcome. If prosperity is to be restored there must be a revival of demand—of consumptive demand. Additional factories, etc., will not be constructed unless there is an effective demand for the products which such factories would have for sale; nor will additional factories be constructed so long as the output of present factories cannot find a profitable market. The way to overcome depression is not by intensifying the present lack of demand for consumption goods.
On the other hand, lavish spending and extravagant consumption are equally disastrous, as events since the Armistice have clearly demonstrated. To make a long and far from simple story short, if the economic world is again to be set moving in the direction of material progress, we must somehow secure a return of prosperity, develop a high degree of industrial efficiency, expand output, and devote meanwhile a sufficient percentage of our social energy to the creation of capital to ensure the replacement of the productive wealth that is annually worn out, and to add a little—if ever so little—to the existing stock of capital goods. This is the supreme problem of the present generation.
If the business depression should in the near future be broken—either as the result of some fortuitous development or in consequence of co-operative international economic policy—the task of restoring the margin that spells progress will of course be rendered much easier. But let none assume that it would then automatically take care of itself. It will be well to recall that Great Britain, for example, had prosperity in the year 1920; yet, as we have seen, the existing supply of capital goods was not even maintained. A part of the problem is obviously that of somehow lessening the burden of taxation to the end that funds may be available for investment.
Change of Economic Systems
Moreover, even if the depression is shortly broken, it will still be true that society must for years be content with a lower standard of living than it had obtained in the latter years before the war. The economic machine has been so thoroughly disrupted and the producing power of the world so seriously reduced, that it will require many years to restore our former standards of living. It cannot be too strongly emphasized that the real economic costs of the war are yet to be borne by the world—borne through reduced income for nearly everyone; borne unfortunately (for society is thus organized) through downright privation for the great masses of people.
If the present economic system, whose many defects must be admitted, has broken down under the unprecedented shock of the war, why, it may be asked, attempt to restore it? Why not substitute a new system in which the defects of the old are eliminated? Aside from the failure of anyone to suggest a workable economic system to take the place of the present one, there is a fundamental objection to attempting any extreme social and industrial experiments at such a time as this. The present complex international industrial system is the result of a gradual growth of centuries. Not only is the complex machinery of wealth production and distribution in each country welded into this economic system; but the entire political and social organization is inextricably bound up with it.
Granted that the existing economic system has serious—nay, fundamental—deficiencies, what assurance can anyone give that an attempt in these disordered times to substitute some other conceivable system for it, would not result in utter disaster? The present depreciated and unstable exchanges of the world, to take a single example, work havoc with commerce and with production. But what would one suggest as a practicable and workable alternative? International barter has been tried since the war; and it has failed. No other suggestion of a substitute for the exchange mechanism has been advanced during the three years of need.
The extensive reforms of the existing economic order—which every intelligent student concedes to be necessary—must wait until a more propitious time. Experience teaches that violent changes and extreme experiments, particularly in a time of economic stress, are the surest means of destroying wealth production and of intensifying the disorders they are intended to overcome. The great requirement in the present world emergency is to restore, as well as may be, the normal functioning of the existing economic system.
Problem an International One
In concluding this analysis of the economic and social consequences of the war, the authors feel impelled to caution the reader against a not improbable misinterpretation. Since pre-Armistice days, various writers have suggested the possibility of an economic collapse in Europe following the war. They have spoken of the war as marking the end of an economic and social era. In nearly every case the meaning of this suggestion has been misunderstood. To the average person any suggestion of European economic and social disintegration carries with it the thought that all of Europe is overnight to sink beneath the waters of the sea, or to be consumed in some sort of gigantic social conflagration. Great bankers in sober addresses before staid business men have been known to insist with vehemence that Europe cannot possibly "go under." Europe, it is urged, has never gone down, however great the strain to which she has been subjected; and when all the present prophets of disaster are dead and gone, civilized men will still be living on the continent of Europe and in the islands west of the channel.
The point is not that Europe is to be plunged overnight into some unfathomable abyss, never to rise again. The point is not that every living being from the Bay of Biscay to the Ural Mountains, from the Arctic Ocean to the Mediterranean Sea, is to be destroyed. The point is only that in present conditions one may discern real possibilities of a long period of gradual decline in economic and social well-being—a slipping back to the conditions of a century or more ago.
Even Russia will survive. Many millions of people will continue to live in those vast agricultural steppes of eastern Europe, whatever may be the fate of Russian industrial life. But some millions of Russian city folk have already perished and Russian agriculture is rapidly reverting to the stage of hoe culture. It is not at all beyond the bounds of possibility that all of continental Europe might in the course of the next twenty-five years, or even sooner, go the way that Russia has already gone. It would not necessarily be through the instrumentality of bolshevism; it might as easily be in the Austrian way. But in any case it would mean a great decrease in urban population, through starvation and migration, mainly the former; and it would involve great reductions in living standards even for the agricultural communities.
This dire consummation may occur. Indeed, it is not at all unlikely that it will occur, unless the statesmen of the world—both political and industrial—unite in some comprehensive program of international economic reconstruction. We have faith to believe that it need not happen if the senseless optimism and narrow provincialism that has stood ever since the Armistice as a bar to the formulation of a constructive policy, be supplanted by an intelligent appreciation of the real gravity of the situation, and a statesmanlike recognition in each country of the necessity of viewing the problem as essentially an international one.