American Business in War and Peace
ECONOMIC PEACE ESSENTIAL TO POLITICAL PEACE
By THOMAS W. LAMONT, of J. P. Morgan & Co., Bankers
Before the Academy of Political Science, Hotel Astor—New York, November 15, 1939
Vital Speeches of the Day, Vol. VI, pp. 108-110
WHAT is the attitude of American businessmen towards War and Peace? Although I have no mandate to speak for them, I venture to say it is this: First, to avoid armed conflict. Second, to encourage, rather than to obstruct, the efforts of the democracies to purchase here supplies vitally needed for their defense. Third, to make our country's economic and financial strength impregnable, so that finally America may be in a position to render sound and wise cooperation towards an enduring Peace.
I speak first of the determination to keep out of war because a few years ago a loud outcry, largely political, was raised that American businessmen have favored war becauseof the fancied profits flowing from armed conflict. There was never a charge more unfounded. There is nothing that businessmen the world over fear and detest quite so much as war. They know that there is no possible future for any sort of business, big or little, unless we can have peace, orderly means of production and good faith. The whole business world on both sides of the water is clearly appalled at the thought of another war and of the disastrous social, financial and economic consequences that are almost bound to follow it. I wish someone would run down the sources of the idea that businessmen are inclined to war. For example, in recent years we have seen Japan's aggression in Asia, and Italy's in Africa, and Hitler's repeated forays inCentral Europe. Is there anyone in his right mind who would suggest that these acts of violence and of armed conflict have been favored or promoted by business interests?
The individuals and groups that have in recent years promoted this false legend, now clearly on the wane, seem to believe that businessmen think as a class and put their material interests above all else. They do not. They are human beings first of all, members of the general community. They love their country as warmly and in the same way as do our statesmen, our teachers, our professional men and our wage earners—no more, no less. Their reflections about war and peace and democracy and civilization are on the whole the same as those of any other cross section of the community.
Today 95% of our people, including businessmen, want to see the type of life and liberty that Britain and France are fighting for preserved from destruction. And at the same time 95% of our people want to avoid war itself. Adequate and vigorous defenses for our country; the restoration and strengthening of Americas domestic economy—these are the measures that will prove the best bulwark against War; the most helpful starting point for contribution to the Peace. For businessmen know that without economic peace in the world there can never come a stable political peace.
That lesson has, alas! been proved only too clearly by the history of Europe for the last twenty years. For the European world is not fighting a brand new war today. It is entering upon a third phase of the conflict that began in 1914. The second phase, the disastrous economic war, perhaps even more devastating than armed conflict, began almost the day after the Armistice in 1918 and, with only slight intermissions, continued for two decades. The third phase began with Germany's reentry into the Rhineland in 1936; its absorption of Austria in 1938; its breach of the Munich Pact in September a year ago; its crushing of Czechoslovakia last winter, and then finally the invasion of Poland last September. Perhaps, then, this present struggle is only the third phase of what in history may come to be known as the Second Thirty Years War.
Roughly, what were the fateful events in their sequence, beginning with 1919? First, then, as has so often been pointed out, America having intervened in the war and having fought the good fight, withdrew completely from the peace. I am not for a moment attempting to argue the wisdom or unwisdom of our rejection of the Versailles Treaty and the other peace treaties and of the League Covenant; or of our dropping the Tripartite Treaty, signed by President Wilson at Paris, undertaking with Britain to come to France's defense against future German aggression. The fact is simply that we did withdraw. And thus treaties, which depended for their amelioration and enforcement upon the continuing participation of the United States in world affairs, were largely shorn of their constructive features.
What next? With the tripartite treaty of defense gone with the wind, France said in effect: "Surely we shall find the Germans invading us again as in 1870 and 1914 unless we hold them down militarily and economically." Britain said, "No—to avoid trouble we should build Germany up." As the event showed, the three policies (America to withdraw, France to weaken Germany, Britain to strengthen it) all worked at calamitous cross purposes. I have perhaps oversimplified my history of the 1920's, but in essence I believe it is correct.
And as one of the consequences there was waged the thirteen-year economic war over German Reparations—what Germany should pay, what she could pay, what she should be forced to pay. That economic conflict, punctuated by the tragically unwise invasion of the Ruhr, had its disastrous repercussions not only throughout Europe, but to the further-
most corners of the globe, certainly including America. What marked its final phase was the complete financial breakdown of Central Europe in the spring of 1931. As a consequence in September of that year England was driven off the gold standard and its currency rendered so unstable that, after its payment to our Government of almost a billion and a half dollars in cash on its debt—a fact that seems frequently to have been overlooked—it was unable to continue its payments to Washington.
No less a calamity, both political and economic, was the break-up of the Austro-Hungarian Empire, as confirmed by the Treaty of St. Germain. For generations the political entity of Austria-Hungary, despite its disparate racial elements and consequent political instability, had been a prosperous region of free and uninterrupted trade which acted for Central and Southeastern Europe as a great and fertile oasis of economic security; at the same time serving as a political bulwark against German aggression to the South and Southeast. Vienna was the great entrepot for agricultural Hungary and industrial Bohemia. It was the centre of beneficent activities, an ancient city renowned for its progress in medicine, in music, and in the arts. The Allied victory brought a wild release of emotions among the various racial elements of the Empire, and under the several treaties, all this normally prosperous region was snipped into pieces, the remaining Austria being only a vestige of the old Empire, its glories gone, desolation and despair reigning in its doorways. On top of it all, separate tariff walls were set up, separate armies, air-forces, and all the expensive and burdensome paraphernalia that go with modern-day armament, plus the intensest and most dangerous kind of nationalism.
In this process of territorial and economic disintegration America must share some degree of responsibility with Britain, France and Italy for, while President Wilson's ideal principle of self-determination of nationalities looked fine on paper, in practice it proved an altogether different cup of tea, and the dregs were bitter and devastating. And so the treaty of St. Germain stands out stark and menacing alongside that of Versailles which, despite all the violent criticism it has suffered, contained all the elements and constitutional provisions for constant revision—revision which might well have been steadily availed of had the United States not felt impelled to withdraw completely from the machinery of the Peace.
However, I must not over-dramatize the past failures of the victorious powers, but rather turn to the ominous developments that took place inside Germany. The Empire of William II had laid the seeds for its economic downfall by attempting to finance its waging of the World War through loans rather than through heavy taxation. It had counted upon victory to bring rich financial fruits. Defeat intervening instead of victory, Germany made a desperate effort, before its currency faded into thin air, to foist its marks upon a rather naive and credulous outside world. Despite extraordinary progress made by the Germans in this field of high financial endeavor, there came the Great Inflation that wiped out the German bourgeoisie—that great, sober, hard working, middle class that, in an economic sense, had been the backbone of the Reich.
Thus what we have been witnessing in Germany since 1933 and even before, has been the progress of a violent and almost complete social revolution. A German friend described it to me in terms of a great tidal wave. It came rolling in, in great surges from the vasty deep and, overwhelming the country, bore out to sea and oblivion the stable elements of the community, leaving cast upon the shore all the strange creatures of the undersea world of society. They are the one that have been ruling the Third Reich with the strange and malevolent practices that have so shockedWestern civilization. They are the ones who have taught the German people to ignore the frightful losses which they chose to incur in waging the World War, calculated as something like the equivalent of 100 billion dollars, and to attribute all their troubles, financial and other, to the Versailles Treaty.
This, then, is a businessman's rough sketch of the economic sequences in Continental Europe for twenty years past. What for the future? First as to the war itself, the Allies must win. It is inconceivable that any man or nation should be able to compel the British and the French people to live in subjection to them and to adopt their mode of life. Man can never be both bond and free. It is against the nature of things that the Führer should be able to continue to overrun one sturdy and independent nation after another, declare it to be German whether it is or not, and expect it to remain a vassal state and part of the Reich. That cannot be done.
The very fact that the British and French seemed so slow in their preparations, their very reluctance to war, their perhaps almost naive efforts for appeasement—these are factors that have strengthened rather than weakened the moral forces of these two countries, have hardened their determination to preserve their way of life, and have enhanced the sympathy felt for them by so many powerful neutrals, including our own country.
No, today, I am one of those who believed that England is not decadent. It is the same old country that in Elizabeth's time destroyed the Spanish Armada; in Marlborough's day was the backbone of the coalition against Louis XIV; under leadership of the younger Pitt was the backbone of the coalition which destroyed Napoleon; and in the World War so besieged Germany by sea as to hasten that weariness and exhaustion which, after Germany had won almost all the battles, lost her the War.
Let us suppose then, that Britain's sea power and France's wonderful army, magnificently equipped and led—and backed by the calm determination of the whole French people, so clear to the whole world, will bring victory to the Allies. What then? What of the Peace? The suggestion that Britain and France should be able, with the knife at their throats, to sit down calmly and articulate in detail their peace aims is of course impossible. But in a larger sense many individuals and groups on both sides of the Atlantic are already asking the question and attempting to formulate the principle or idea of a new world order. In London questions are constantly being put in Parliament. The British press is filled with articles on the subject. Several important discussion groups in England and France are hard at work.
Whatever may prove to be the tenor of all these efforts, it is certain that there is one principle, to which I have already alluded, that must be worked out. As has been indubitably shown by the lessons of the last twenty years, there can be no world political peace unless we have world economic peace. And what American businessmen and statesmen must realize, what the whole American community must understand, is that there can be no world economic stability without continuing American cooperation to help bring it about and sustain it. Because of America's vast importance as a world power, economically and politically, and because it is a thousand times harder to make the Peace than to make the War, does it not follow that America'srole is clearly, not to enter the war, but to make a great and valuable contribution to the Peace?
What form of economic cooperation, necessary to establish peace, recovery and reemployment, may be essential for us Americans to render, I have no present idea, any more than you. But we can be sure that, whatever it may be, it will mean for us the only way of avoiding the heavy sacrifices which we shall have to undertake if we are obliged to meet the disasters of continuing and recurrent world conflict and world disintegration, in which sooner or later we might readily become actively involved.
It is the scheme of an economic United State of Europe, that, both abroad and here, is being constantly discussed—an economic union not perhaps inclusive at the start but designed ultimately to embrace Western Europe. Briand had this vision and worked for it. Stresemann saw it. And do you recall that on the wall of the room in the Place des Vosges in Paris where he died Victor Hugo wrote: "I represent a party which does not yet exist. This party will make the Twentieth Century. There will issue from it first the United States of Europe, then the United States of the World."
It is impossible to exaggerate the immensely stabilizing effects upon the world that a great free trade region in Europe would create. It would be measurably the counterpart of the great free trade area of our own United States, the most prosperous region on the earth. It would be creating a situation that tended strongly to remove at their very roots the causes of war. And the task of American economic cooperation to the end of an enduring Peace cannot be confined to our government authorities alone. To have any chance of success it must command the active and intelligent support of the leaders of business and labor. They must put aside their ancient prejudices, must consent to reduced tariffs, and must make their thoughtful and determined contribution. Can a greater challenge ever be made to the intelligence, the farsightedness and courage of our American community?
It there not hope of a better world to emerge from the confusion and strife of today? Even amidst the rigors and privations of the terrible Peloponnesian War, with Athens falling into ruins and Sparta bleeding to death, the Athenian philosophers and writers were yet dreaming of a better order, of a permanent peace, "A city", as Aristophanes styled it, "where rich and poor, man and woman, Athenian and Spartan, are equal and free; where there are no false accusers, and where men" — or at least the souls of men — "have wings." That dream of twenty-three and a half centuries ago failed. In 1919 it failed. Must it fail, always and forever? May it not be possible at the Peace that, with the European peoples, having the catastrophic failures of the last twenty years before their very eyes and willing as never before to place upon their sovereignties restrictions designed for a common good, the ultimate result even of this war will, despite the apparent paradox, mark a step forward in the evolution of Western civilization? May it not be possible that mankind will once more move onward and that General Smuts may at last, despite all intervening discouragement, be justified in that thrilling utterance of his twenty-one years ago: "The tents have been struck and the Great Caravan of Humanity is once more on the march"? Upon what America is willing and able to do at the Peace depends in very considerable measure the answer to these questions.