The Economic Consequences of the Peace | Page 6

end, and men, secure of the comforts and necessities of the
body, could proceed to the nobler exercises of their faculties. One
geometrical ratio might cancel another, and the nineteenth century was
able to forget the fertility of the species in a contemplation of the dizzy
virtues of compound interest.
There were two pitfalls in this prospect: lest, population till
outstripping accumulation, our self-denials promote not happiness but
numbers; and lest the cake be after all consumed, prematurely, in war,
the consumer of all such hopes.
But these thoughts lead too far from my present purpose. I seek only to
point out that the principle of accumulation based on inequality was a
vital part of the pre-war order of Society and of progress as we then
understood it, and to emphasize that this principle depended on
unstable psychological conditions, which it may be impossible to
recreate. It was not natural for a population, of whom so few enjoyed
the comforts of life, to accumulate so hugely. The war has disclosed the
possibility of consumption to all and the vanity of abstinence to many.

Thus the bluff is discovered; the laboring classes may be no longer
willing to forego so largely, and the capitalist classes, no longer
confident of the future, may seek to enjoy more fully their liberties of
consumption so long as they last, and thus precipitate the hour of their
confiscation.
IV. The Relation of the Old World to the New The accumulative habits
of Europe before the war were the necessary condition of the greatest
of the external factors which maintained the European equipoise.
Of the surplus capital goods accumulated by Europe a substantial part
was exported abroad, where its investment made possible the
development of the new resources of food, materials, and transport, and
at the same time enabled the Old World to stake out a claim in the
natural wealth and virgin potentialities of the New. This last factor
came to be of the vastest importance. The Old World employed with an
immense prudence the annual tribute it was thus entitled to draw. The
benefit of cheap and abundant supplies resulting from the new
developments which its surplus capital had made possible, was, it is
true, enjoyed and not postponed. But the greater part of the money
interest accruing on these foreign investments was reinvested and
allowed to accumulate, as a reserve (it was then hoped) against the less
happy day when the industrial labor of Europe could no longer
purchase on such easy terms the produce of other continents, and when
the due balance would be threatened between its historical civilizations
and the multiplying races of other climates and environments. Thus the
whole of the European races tended to benefit alike from the
development of new resources whether they pursued their culture at
home or adventured it abroad.
Even before the war, however, the equilibrium thus established
between old civilizations and new resources was being threatened. The
prosperity of Europe was based on the facts that, owing to the large
exportable surplus of foodstuffs in America, she was able to purchase
food at a cheap rate measured in terms of the labor required to produce
her own exports, and that, as a result of her previous investments of
capital, she was entitled to a substantial amount annually without any

payment in return at all. The second of these factors then seemed out of
danger, but, as a result of the growth of population overseas, chiefly in
the United States, the first was not so secure.
When first the virgin soils of America came into bearing, the
proportions of the population of those continents themselves, and
consequently of their own local requirements, to those of Europe were
very small. As lately as 1890 Europe had a population three times that
of North and South America added together. But by 1914 the domestic
requirements of the United States for wheat were approaching their
production, and the date was evidently near when there would be an
exportable surplus only in years of exceptionally favorable harvest.
Indeed, the present domestic requirements of the United States are
estimated at more than ninety per cent of the average yield of the five
years 1909-1913.[5] At that time, however, the tendency towards
stringency was showing itself, not so much in a lack of abundance as in
a steady increase of real cost. That is to say, taking the world as a
whole, there was no deficiency of wheat, but in order to call forth an
adequate supply it was necessary to offer a higher real price. The most
favorable factor in the situation was to be found in the extent to which
Central and Western Europe was being fed from the exportable surplus
of Russia and Roumania.
In short, Europe's claim on the