The World Situation
WE FACE A STATE OF THINGS MOST GRAVE
By DR. PAUL VAN ZEELAND, Former Prime Minister of Belgium
Delivered before the Chamber of Commerce of the United States, Washington, D. C., April 29, 1940
Vital Speeches of the Day, Vol. VI, pp. 506-510
THE difference between the atmosphere in Europe and that which one finds here in the United States is most striking. I am struck by it every time I cross the Atlantic. There, impoverishment and increasing hardships of life show themselves in every way. Here, one truly finds another world. The ease of the material life, the liberty of spirit, the security of the home, and the conviction that one continues to progress steadily along the paths of civilization, all this strikes you the minute you land, in a wave of sentiments, made up of satisfaction, regret and envy.
Yet, America also has its problems. At a conference of businessmen meeting under the auspices of the International Chamber of Commerce, I don't imagine anyone will contradict me if I recall once again that no country, no matter how large, can believe itself safe from disorder, if disorder should spread out over the rest of the world. The shadow of war finds the oceans no barriers; it reaches the two hemispheres. At this point, I should enter into my subject and talk to you, under an effort towards objectivity and impartiality, of some of the inevitable consequences of the war, in the period which will follow the future peace treaty. But at the very moment of beginning, I feel a sort of hesitation. As we are talking here, in the security of "America the lucky," mass slaughter goes on over there; horrors follow, day after day. Men fall, are drowned, shed their blood. Small countries cave in under the boot of the invader. The Norwegians renew the combat of David and Goliath. While the belligerents struggle in the battle, is this the moment to think of the difficulties of the after-the-war? Should not all efforts be consecrated to winning the war?
Also, it does not rest on us to assure the triumph of right and to regain "peace with justice." But we, who have had up to now the good fortune to stay out of the turmoil, we too have our tasks to perform.
The problems which the war presents are problems which themselves directly concern all mankind. It is indifferent to nobody to know which is the concept of all life that will win; what will become tomorrow of our ideal of peace andliberty, of justice, of respect for the given word,—of this ideal which demands that every nation, small or great, enjoy equally its place under the sun. Impartiality does not consist in putting on the same plane the good and the bad; but, rather, in acknowledging the right where it is found and proclaiming it; in distinguishing the wrong where it is and condemning it.
The hardships of those who fight do not leave our heart cold. For my part, I cannot keep calm, when I think of Norway, and I am constantly recalling the parallel between its fate and the fate of my country under the invasion of 1914.
But war is only made in order to obtain peace. There is no victory if the ensuing peace does not satisfy the desire of those who sacrificed themselves to get it. It is in the period which follows the war that the efforts of the heros show fruit or are wasted and lost. That is why we must, from this point on, think of that period. In trying to prepare the way for a better world, we serve the same ideal, to which so many are ready to offer, at this very moment, the supreme sacrifice.
Without forgetting either the war or those who are suffering from it, let us therefore try to pass and see beyond the struggle.
I. The Post War Crisis
Whatever its horrors; no matter what its length,—short or long,—a day will come when the war will have come to an end.
On that day, mankind will find itself faced with a formidable series of problems.
Their number and their weight will depend, for a large part, upon the result of the war—that is to say, which side is victorious—and which peace treaty will result.
But I want to put this aspect of the problem carefully aside. It is too early to discuss it, even in the most general way. In any way, those who will have fought, will have paid a price big enough to have the right to make peace themselves.
But once the peace is made, there will be problems which will present themselves before the entire world, no matter what type the treaty itself will be, even if, as I hope, it conforms to our most noble aspirations.
II. The Problems
1. Firstly, we will find ourselves once again confronted with the problems that presented themselves before the war and which we had not solved,—problems which concern the development of a civilization becoming every day more complex. They will not have disappeared with the war, because war never solves basic problems. The only difference is that they will be probably more acute and more urgent.
They resulted from the deep contradiction into which our civilization felt itself being driven.
For one thing the world found itself growing smaller and smaller; distances decreased every day in value or significance; technical progress increased the range of markets, the dispersal of products and the importance of the basic raw materials.
On the other hand, there was a constant growth of nationalism, as much economical as political, of partitioning the world in all realms—political, economic, moral or emotional.
One arrived as a result at an impasse where man destroyed with one hand what he had built with the other.
The present war in its far-reaching causes is perhaps the tragic fruit of this profound contradiction too long tolerated.
2. But these fundamental problems will be joined by those which are the outcome of the war itself. They will have to reintegrate into the cadres of the productive economy, the millions of soldiers who will be demobilized. Thousands and perhaps hundreds of thousands of young people on whom the war will have marked its dangerous imprint shall have to be re-adapted socially and economically. Plants used for war purposes will have to be transformed so as to produce again useful economic goods.
B. The Depth of the Crisis
It would be a great mistake to try to deceive oneself as regards the extent of the crisis of general re-adaptation which the end of the war will bring about. All great shocks that impress themselves upon mankind call for reaction. The one which followed the war of 1914 was so profound, that our civilization is still shaking from it. The present war is the outcome of our incapacity to recover our equilibrium, so dangerously upset by this reaction.
But one hears expressed currently in Europe the most pessimistic views on the future of the world, of capitalism, and of our civilization. "If this war prolongs itself and if its destructive forces go further, Europe will be ruined, and whoever is the victor will become the prey of a devastating communism." That is the prophecy which one finds on many lips.
To my mind, this is false. I do not mean that this will not happen. It might happen. Anything is possible in a time of chaos. But, it is not true that Europe, and behind Europe, the civilized world, will find itself in front of an insurmountable wall, condemned to suffer passively the worst.
The truth is that at the end of the war, just as at any great moment, we will hold our destiny in our own hands; it will be up to us to decide what it will be.
There is no doubt that under any condition the crisis will be grave. This will be more so, the longer the war, the murder, and the destruction, both moral and material, go on.
Without doubt, the world after the war will in no way resemble that which it was before the war. The war will
not be a parenthesis after which all will go again as before. The profound adaptations which will be inevitable will not be made without recourse to radical methods. But what does all that mean?
Only one thing actually counts: Will humanity succeed in reestablishing a new equilibrium on a stable basis? Will it be able to insure a better life to people? That is the question.
I do not know the answer. But this much I do know: It is, that it depends on us whether the future will be favorable or not.
C. The Character of the Crisis; The Choice between Good and Bad
In brief, at the end of the war, mankind will find itself once again at the cross-roads; upon the choice that will be taken will rest the future of mankind for better or for worse, for a long time.
I say: for "better" as well as for "worse!" in spite of everything!
Of course, there will be an abyss to overcome!
Already after only a few months of war, the signs of impoverishment, of emaciation, and of recession, are visible all over Europe.
But there is a new fact in the world: It is the extraordinary advance that has been made in the past few decades in the technique of production. Human genius has so well improved his grip on material things that if men could use to the full, in peace and order, the present possibilities for producing wealth, the result would be extraordinary.
I would remind you of an example after the previous war: Even in the most affected countries such as Belgium, France or England, after a few years the level of material wealth had equalled and passed that of 1914.
Of course, the importance of the necessary effort will be proportionate to the extent of the distraction. It is well evident that if the war in its destructive folly destroys the system of production itself, in the large belligerent countries, nation reconstruction will be even more loaded down, and the danger of the intermediate period made greater. But even in putting things in a pessimistic light, the effort of reconstruction, if it is well directed, cannot fail to erase the worst scars in a limited number of years.
The whole question, therefore, is how this effort of reconstruction will be made.
II. The Economic Reconstruction After the War
Nobody in the present confusion and in the face of such formidable problems would dare venturing to plan a program in details.
But the size and difficulty of the problem is one more reason to study it with care and without delay.
The International Chamber of Commerce understands that. The businessmen who make its ranks are aware that in the solution of such a problem lies the kern of our future, —its threats as well as its hopes.
And I beg to be allowed to take this occasion to underline the fact that it will suffice for the International Chamber of Commerce to remain faithful to the economic policy which it has followed for many years, in order to find, step by step, the elements for a comprehensive solution of the economic problems of the post-war period.
A. Policy of Economic Expansion
I shall limit myself to select a few points of general bearing.
1. Common sense shows that the policy to adopt is a policy of expansion; the purpose of which is to bring about the augmentation of production.
There will be, in fact, an enormous hole to fill in. One will have to reconstitute stocks, renew machines, rebuild bridges and houses, re-equip factories. . . . It will be some time before they will talk again of over-production.
2. However, it is not enough to produce. One must produce wisely, and produce in an ordered way. There is never general over-production. There is often a congestion of production in one or another particular domain. At the end of the cycle of intermediate exchanges, one always pays for one product with another product. One must organize production in the particular field, so as to establish equilibrium between them; goods must be produced in such a way that every product finds another product to be exchanged with.
So, it would not be enough just to increase production; it will be necessary to organize that effort towards increased production, so as to avoid stalling of the engine!
3. All the experience acquired between the two wars allows us to affirm that such an effort can only succeed if made not only on the national plan, but also on the international one. In other words, to reach its objective, this effort must bring about a thorough reorganization of international economic relations.
B. The Overcoming of Obstacles in the Circulation ofWealth
Here we find again the traditional policy which the International Chamber of Commerce has rightly followed for years.
The first care must be to suppress or abate artificial obstacles which hamper the circulation of wealth,—of goods, capital, and men.
All methods which lead towards such an end are useful and should be retained. Amongst them I will only point out one,—because of its merits; it is the policy of reduction of tariffs by reciprocal trade agreements,—the very policy which bears the print of the Secretary of State, Mr. Cordell Hull.
But, on the whole, let us be careful. We find ourselves facing a state of things more grave than it would at first appear: this policy of free exchanges is supported, in theory, by the greater majority of the people concerned; but despite this theoretical support and thousands of platonic pious wishes, it has for years only recessed instead of progressed; why is it so? Because it meets and crosses complex interests, profound needs, new problems, and opposing forces, which it would be useless to pretend to ignore. Such needs must be met; such forces must be made useful.
One must, therefore, adopt a policy which goes further than simply suppressing obstacles to international trade. Moreover, even if tomorrow, by the wave of a magician's wand, complete freedom of exchange in all fields would be granted to the world, the difficulty would only have started. How could one use this liberty? How could one prevent its abuse? How could one use these refound opportunities? How could one control these liberated forces? And how could one preserve equilibrium and order between the elements of production?
It is not at all sufficient to extol in a general and theoretical way the return to past conditions. The real work consists in redoing, step by step, the elements of economic reorganization, and in searching there, in the light of our recent experience, positive solutions of a practical character.
C. Practical Reorganization
When one comes across those whose duty it is to prepare for the future, one is struck by the change in the frame of mind which the war has brought about; they are ready to accept any solution, even the most radical, provided it looks effective.
1. The idea of creating in the world vast economic groups, which would unite in complementary and solid blocks national economies up to now separated by absurd customs frontiers, is a forceful idea; it is impressing an increasing number of people; it is becoming familiar!
There are already some accomplished facts: The intimate union between the French and British Empires is one whose importance could become paramount in the future evolution of world economy. No doubt, this union has been brought about by the war and for the war. But many people desire its continuation and work for it. On the other hand, let us not underestimate the power of inertia. Many interests have already adapted themselves to the new situation. On all sides one hears talk of the possibility of making out of this double united economic empire the core of a new and powerful world regrouping.
No matter what the case may be, one thing is evident: The idea of creating groups vaster than the national economies of the present day is getting current. Inside such groups, the exchange of goods and capital will obviously be done with increasing freedom, a definite advantage for all those concerned.
2. No matter how important this may be, it is only one stage! The economy of tomorrow will be much more an international economy than that of yesterday. The problem could not be solved if the newly constituted groups would fall, once again, into the same errors of isolation and opposition between each other. The state that must follow,— greatly eased by the preceding one but just as necessary,— will consist of coordinating and organizing economic relation between the groups themselves, throughout the world.
The same rules, the same difficulties, the same aspirations, and the same needs, will mark this most general plan just as well as the intermediate ones, only on a higher scale.
III. The Analysis of Certain Points
I will limit myself here to a few particular points out of the whole problem.
A. The Circulation of Capital
Free circulation of capital is one of the essential factors of a healthy international economic life. Excess capital in wealthy markets should go to revivify the poorer ones. Such a transfer is in the common interest of he who loans and of he who borrows. Obviously the movement must operate in both directions. This can only be done under ordered condition if loans are related to corresponding transfers of goods.
Moreover, these movements of capital will only take place if monetary conditions are themselves clear-cut and well regulated.
The restoration of an international monetary unit functioning with sufficient flexibility is one of the essential problems to solve.
The danger of inflation, the race for monetary depreciation, might reappear, with all the symptoms of misery and disorder. How can it be prevented?
Personally, I have confidence in gold. I am convinced, that, unless great and unforeseeable mistakes should be made, gold will maintain its value. But in order to function properly as an international standard, gold must be distributed sufficiently widely.
I have no definite solution to offer; but it seems evident that one could not at the same time pretend to keep gold as an international standard and concentrate it in one corner of the globe.
Of the many new aspects in the international monetary situation, I will only discuss one briefly.
The union between the French and British empires extends to money. As the two national monetary units are exchanged indefinitely for each other at a fixed rate, through the two banks of issue, they do in fact form one true unit. If one takes into account the extent of these two empires, the number and the volume of the raw material which they produce or control, one can see that the influence of this double-money is, or could easily become, a determining factor in the fixing of prices of several of the great commodities enjoying a world market. It is not impossible to imagine circumstances in which this double-money could be more stable than gold itself. If this were so in fact, it would influence the eventual conditions in which gold could be redistributed. If this redistribution were done through loans, then these loans might have to be made under better conditions for the borrower I
This is only one of the numerous hypotheses that should be examined. I don't wish to draw any other conclusion than the following: The problem confronts us; one can't suppress it by pretending to ignore it; the better one studies it, the greater are the chances of finding a just solution.
B. Movements of People; Migrations
There is another aspect of the vast problem of international economic reorganization. Maybe this one is not as direct as the preceding; nevertheless it seems to me to be connected with the others and I think its solution is a necessary element towards the success of the whole. I am speaking of the migration problem as a whole.
The spirit of freedom and expansion should not be limited to goods and capital; it should extend also to movements of people, of population.
The problem is complex and just as old as the world. But many of its component parts are new. For the first time in its history, the world is "legally" occupied; there is no longer any "frontier" in the American sense of the word; there is no longer any absolutely free territory where pioneers, persecuted, adventurers, unsatisfied, could go and build themselves, just by conquering nature, a home, a life, a land.
For centuries, profound reasons, social, economic, political or moral, have forced men to emigrate; all these factors will always exist. They have in recent years adopted new forms of special rudeness and cruelty; these, we hope, will soon disappear; but the problem itself will not.
We must therefore find new methods for the organization of these inevitable migrations, methods which should serve both interests of the immigrants and those of the countries of immigration.
This is not impossible; to the contrary! Of course, there are series of problems that present themselves,—some political, other technical,—such as agricultural methods and health conditions—and also financial. But all are capable of a solution, if there is the will to do so.
Here are two observations, which show how and why the interests of both sides can be reconciled.
The movements of populations have a direct influence upon any national economy. A number of economic phenomena change as a result of any increase, decrease or stabilization of the population of a country; the aging of a population can have grave consequences on the capacity of production and on the charges of a given community.
Home economics are based, in their functioning, upon the idea of continuous expansion; such communities could not, without injury or damage, be adapted to a new trend, especially to a stagnation or receding of the population. In economies of this type, it seems to me that a stopping of the growth of population might be one of the indirect but most profound causes of the growth of unemployment.
Whatever the case may be, a great effort toward economic expansion and increase in wealth does not go hand in hand with a decreasing population.
In itself—and all other factors remaining unchanged,—an increase of population is an enriching factor. This was never more true than today, when technical progress has so greatly increased our means of producing wealth.
One can, I believe, lay down this rule, that when a country which is not over-peopled,—and "over-peopled" is always a relative expression,—opens its doors to properly selected immigrants, capable of work, with a high moral character, and the necessary capital, this country enriches itself 1 Such an immigration is not a liability, but an asset to the community.
And when these immigrants form new communities, thus vitalizing a land that was previously unoccupied, it is an obvious enrichment for the country that has taken them in; but, moreover, at the same time a new market will have been created, which means, one more factor towards the maintenance and development of an active and prosperous international economy.
Such is one more step in the right direction!
C. Capitalism and the Raising of the Standard of Living of the Masses
So you see how naturally we are brought back to the general conditions underlying the future international economic reconstruction.
Capitalism is a regime of movement. It is incompatible with stagnation; it would die from it! This is its nobility and the very condition of its existence: to live, capitalism must go on producing, creating new markets, increasing useful wealth, raising the standard of living of the masses. Between the essentials of capitalism and the interest of the masses, not only is there no opposition, but a complete, necessary and total liaison.
The question of the regime itself has often been put in recent years; it will come up again, without doubt, under the shadow of greater difficulties. But it seems to me that the failures suffered by the other alternative regimes are reinforcing its position. The communist experience in Russia has pushed that country, despite tense and cruel efforts, into an impasse, a dead end, economic and social as well as political; an impasse which becomes day by day more narrow. One has the impression that its leaders, lost in their contradictions, do not know how to get out of it!
But to look ahead, to maintain its equilibrium in progressing, the capitalistic regime must return to certain essential notions, whose vision sometimes seems to have been lost.
A regime in its essential principles and conditions should not be assimilated to some temporary forms which it has adopted in certain periods of its evolution. Capitalism in 1830 did not at all resemble that of 1870, and similarly, that of 1870 was no longer the same in 1914. Strong and active regimes renew themselves. They fear neither the fights nor the storms. They accept challenges in order to overcome difficulties and to begin a new era.
The entrepreneur must take risks. He must remain a pioneer. If he fails to do so, or to do it often enough, fast enough or well enough, then he will be beaten and others will take his place. This place may be less well-occupied perhaps, but, sure, it won't be left open!
The regime must renew itself by audacity and initiative; it must triumph over all obstacles, no matter what they are: the most just of reasons and the best of explanations do never turn a defeat into a victory! Capitalism should reappear again before the eyes of all social classes as the supporter of a big forward move. To that the regime mustdemonstrate, in fact, thanks to the greatness of results actually and effectively obtained, the value of its methods and principles.
So it is absolutely necessary that tomorrow's economic policy be more than ever directed towards the raising of the standard of life of the masses. With that end in view, we must find the ways to create and open new markets. We must, in due course, bring back into the circle of active economic life, the great human masses who are waiting in other continents, such as Asia.
We must build up new communities, where those who no longer feel at ease with the old, can find another chance to raise their standards, and in doing so, contribute to others' progress.
In speaking like that, I know very well that I am proposing purposes to be attained, rather than methods for reaching them. But these means are not so difficult to discover. The 19th century learned how to find them despite thousands of obstacles.
The obstacles of tomorrow are no doubt different from those of yesterday, but they will be no more insurmountable if we really will it.
D. Great Public Works and International Companies
Tentative plans have already been drawn up. Men of good-will are, at this very moment, establishing new communities to resettle European refugees. It is only a modest beginning but altogether a step in the right direction.
International organizations such as the L.O.N., the I.C.C., and the I.L.O., are among many others, themselves active in studying the possible solutions.
From among hundreds of constructive ideas let me remind you of one, by way of example, since it was you, yourselves, who brought it to light at the Copenhagen Congress just before the war.
We should start, once again, throughout the world, the creation of great public works, ports, lines of communications, draining and irrigation schemes—works whose greatness could rival those of the past century, such as the Suez or Panama Canals. To carry this out, big companies of an international character should be formed; they should have at their disposal large amounts of capital; in fact, as much as it should appear necessary; and they should be assured of getting the full collaboration of public authorities, while, of course, the necessary precautions should be taken in order to keep their activity within the bounds of public service.
Such a suggestion, which was, in my opinion, just and useful, when it was expressed in Copenhagen, is gaining more weight and importance when we think of the post-war period.
Many difficulties related to the redistribution of capital— and raw materials might find, in the creation and functioning of such big international companies conceived as semi-public organizations, a practical and effective solution.
But this, of course, is only one possibility among thousands of others. These all would probably spring forth and mature rapidly, if general conditions, brought about by wise and sound economic policy, would appear as favorable to economic progress.
There are the general observations I wanted to make before you tonight.
Let me try to draw a conclusion out of it, in summarizing the position.
It seems highly probable that at the end of the war, mankind will be confronted with heavy and grave problems of re-adaptation. Social movements are likely to occur. Theyform the usual reaction to the horrors and strain of the war. The masses who have been the witnesses and the artisans of an immense collective effort directed towards the production of arms, could not understand and would not admit that a similar effort be not attempted towards the production of goods economically useful, which means towards an improvement in their standard of living.
A formidable economic problem will present itself in order to meet the demobilization of millions of men; in order to divert economic production from war to peace aims.
The true and only remedy to social difficulties, consists in meeting their cause and so satisfying the legitimate aspirations of peoples towards a better living in all fields.
At the same time, by creating material conditions for this better life; by increasing wealth to be distributed; by extending to new races the possibilities of material progress; by creating new centers of development and civilization; just by such action will capitalism find again the better chances of keeping its balance in moving.
If this is so, the end of the war will not only bring to us a serious crisis, a grave danger, but also maybe, a great opportunity. If we fall short of our duties, maybe we will enter a period of chaos and recession; but if we can raise ourselves up to the task which circumstances will present to us, then we might begin an era of renewed progress, in which the exceptional discoveries in the technique of the production will finally produce their full effects, for the benefit of millions of human beings.
No doubt, every great step, economic or social, in the field of international action, requires as a preliminary condition, a strong reorganization of political relations, a reorganization which would assure us for a long period the required minimum of peace and stability.
Altogether, political, economical and social factors are today, more than ever, so closely connected in fact, that it would be useless to try to exert an influence upon one without intervening with the other.
But if it is true that economics depend on politics, it is also absolutely true that the success of any attempt towards economic reconstruction will depend in the highest measure on the attitude which business leaders themselves will adopt, So you see how far your own responsibility will be directly engaged in the outcome of the war.
After all, don't you think that it is a real comfort in the darkness of anxiety of this period, to think that in spite of everything, men continue to be the masters of their destinies?
America has been built by men who have never accepted the thought of despair, who have never admitted fatalism, who have never doubted the power of the will. The result lies today before our eyes as one of the big achievements of human energy.
The greatness of the United States, their wealth, the importance of their interests all over the world, their preponderance in all the fields of the technique, all this leads to the conclusion that their role in the coming reorganization of the economic world after the war will be of the highest, and maybe of a decisive, importance. Their collaboration will be required as much by their own interest as by the preoccupation of collaborating to the recovery of others.
May the Americans of today face the tasks of tomorrow with the same unyielding assurance over fate as their ancestors did; this is the best method to force destiny to be favorable, in spite of everything.
If it is so, our children will be allowed to enjoy a world which will have found again with peace and material progress, not only the "joie de vivre," but also the meaning and the care for the highest spiritual destinies of man.