The Economic Consequences of the Peace | Page 3

year by year a purchasing
power over an increasing quantity of food. It is possible that about the
year 1900 this process began to be reversed, and a diminishing yield of
Nature to man's effort was beginning to reassert itself. But the tendency
of cereals to rise in real cost was balanced by other improvements;
and--one of many novelties--the resources of tropical Africa then for
the first time came into large employ, and a great traffic in oil-seeds
began to bring to the table of Europe in a new and cheaper form one of
the essential foodstuffs of mankind. In this economic Eldorado, in this
economic Utopia, as the earlier economists would have deemed it, most
of us were brought up.
That happy age lost sight of a view of the world which filled with
deep-seated melancholy the founders of our Political Economy. Before
the eighteenth century mankind entertained no false hopes. To lay the
illusions which grew popular at that age's latter end, Malthus disclosed
a Devil. For half a century all serious economical writings held that
Devil in clear prospect. For the next half century he was chained up and
out of sight. Now perhaps we have loosed him again.
What an extraordinary episode in the economic progress of man that
age was which came to an end in August, 1914! The greater part of the
population, it is true, worked hard and lived at a low standard of
comfort, yet were, to all appearances, reasonably contented with this lot.
But escape was possible, for any man of capacity or character at all
exceeding the average, into the middle and upper classes, for whom life
offered, at a low cost and with the least trouble, conveniences, comforts,
and amenities beyond the compass of the richest and most powerful
monarchs of other ages. The inhabitant of London could order by
telephone, sipping his morning tea in bed, the various products of the
whole earth, in such quantity as he might see fit, and reasonably expect
their early delivery upon his doorstep; he could at the same moment
and by the same means adventure his wealth in the natural resources

and new enterprises of any quarter of the world, and share, without
exertion or even trouble, in their prospective fruits and advantages; or
be could decide to couple the security of his fortunes with the good
faith of the townspeople of any substantial municipality in any
continent that fancy or information might recommend. He could secure
forthwith, if he wished it, cheap and comfortable means of transit to
any country or climate without passport or other formality, could
despatch his servant to the neighboring office of a bank for such supply
of the precious metals as might seem convenient, and could then
proceed abroad to foreign quarters, without knowledge of their religion,
language, or customs, bearing coined wealth upon his person, and
would consider himself greatly aggrieved and much surprised at the
least interference. But, most important of all, he regarded this state of
affairs as normal, certain, and permanent, except in the direction of
further improvement, and any deviation from it as aberrant, scandalous,
and avoidable. The projects and politics of militarism and imperialism,
of racial and cultural rivalries, of monopolies, restrictions, and
exclusion, which were to play the serpent to this paradise, were little
more than the amusements of his daily newspaper, and appeared to
exercise almost no influence at all on the ordinary course of social and
economic life, the internationalization of which was nearly complete in
practice.
It will assist us to appreciate the character and consequences of the
Peace which we have imposed on our enemies, if I elucidate a little
further some of the chief unstable elements already present when war
broke out, in the economic life of Europe.
I. Population In 1870 Germany had a population of about 40,000,000.
By 1892 this figure had risen to 50,000,000, and by June 30, 1914, to
about 68,000,000. In the years immediately preceding the war the
annual increase was about 850,000, of whom an insignificant
proportion emigrated.[1] This great increase was only rendered possible
by a far-reaching transformation of the economic structure of the
country. From being agricultural and mainly self-supporting, Germany
transformed herself into a vast and complicated industrial machine,
dependent for its working on the equipoise of many factors outside

Germany as well as within. Only by operating this machine,
continuously and at full blast, could she find occupation at home for
her increasing population and the means of purchasing their subsistence
from abroad. The German machine was like a top which to maintain its
equilibrium must spin ever faster and faster.
In the Austro-Hungarian Empire, which grew from about 40,000,000 in
1890 to at least 50,000,000 at the outbreak of war, the same tendency
was