ABSTRACT
As a matter of fact, this sort of talk is miles away from the real issue. It is not generally appreciated that the “Haves” must buy the work of the “Have-nots” before the “Have-nots” can buy from the “Haves,” and that lending is only putting off the issue; that if the creditor countries are unable or unwilling to buy or import from the debtor countries, still less are the debtor countries able or willing to buy or import from the creditor countries; and that the inability of the creditor countries to buy is due to the disproportion between “Haves” and “Have-nots” in these countries, the “Haves” being unwilling to buy because they already possess far more than they can utilise, and the “Have-nots” being unable to buy. The “Haves” of America can only sell provided there are other people in America who are able to buy from them directly or indirectly. Selling abroad,—exporting-by America is impracticable unless there are people in America able and willing to buy goods imported in exchange for those exported. Once the “Haves” in any country are in possession of all they require and consequently refuse to buy, for that same reason, selling by them, either at home or abroad, is impossible. When the “Haves” refuse to buy and the “Have-nots” cannot buy, all trade stops regardless of political boundaries. The present trade depression, like every trade depression, as well as the German indemnity and international debt muddles, are due to a defective system of distribution. The defect is small as compared with the whole system; but it ruins the whole system just as a sparking plug missing fi re ruins the running of a fi ne motor engine. The defect is that workers are not receiving their just share of consumers’ surplus. The purchasing power or income that producers together receive for their work is insuffi cient to keep the objective economic system running. The workers produce more than they are allowed to consume; and although those who have wrongfully secured the legal right to enjoy this consumers’ surplus may use some of it for fi nal consumption or deferred utilisation of commodities and services, a colossal quantity of it is held up by them and never utilised so far as the objective economic system is concerned. In so far as it is not utilised for the fi nal consumption or deferred utilisation of commodities and services, it mainly accumulates towards a stagnant surplus, to the particular disadvantage of all grades and kinds of producers, and to the general disadvantage of humanity which becomes a spectator of its cancellation, or belated gradual consumption, at the cost of misery and death of the poor and at the expense of those who, for their own reasons, refuse15 to utilise it properly. Moreover, those who have the power to buy in excess of their requirements, when they employ this power, usually only buy what is scarce; and, therefore, whenever there is a visible surplus of any sort the trade machine cannot function properly. The Abuse of Surplus in Relation to Indemnities.—The German indemnity muddle arises from an attempt on the part of the victors to appropriate the consumers’ surplus of the German people; and, as a result, the whole of it vanishes in accordance with the law of consumers’ surplus. The payments can, in effect, only be received by the victors through the proceeds of the sale of German goods in the countries of the victors or in the foreign markets of the victors. But those who have the reserves of purchasing power in these countries refuse to buy the goods because they do not require them; and
those who have no reserves of purchasing power, lose whatever purchasing power they have to the extent in which German payment consignments deprive them of their employment. It is claimed that Germany has paid over £500,000,000, and no doubt this is correct; but, whilst it is very debatable whether Germany is any the worse by reason of the payments made by her, the rest of the world are very much the worse for it. [. . .] Thus, the net amount received by the victors was only £212,000,000. Nevertheless, when the payments are considered from the point of view of the receivers, the whole lot together are worse than valueless. The deliveries in kind, so far as England is concerned, were a real disaster. The £20,000,000 of German shipping would have been much better at the bottom of the sea from the point of the British shipbuilding and shipping trade, and whatever advantage consumers got from lower freights they lost by lower wages and lower profi ts or actual losses. Had the victors paid for the £161,000,000 miscellaneous deliveries in kind received from Germany, their production and exports would have been increased at least by this amount; or, had they not received the deliveries in kind at all, their home production and earnings thereon, with the exception perhaps of coal, would have been increased at least by this amount. Coal we may allow as a real payment, but even coal is extremely debatable, and full of proviso and exception. It is no exaggeration to say “at least,” for deliveries in kind have turned the trade machine upside down. As for cash payments, they consist of part of the profi ts made by the sale of German marks. Thousands of millions of German marks were sold to the world at what proved to be wonderful prices. Everybody, all the world over, bought German marks hand over fi st. Every section of society bought, from the biggest bankers to the smallest newspaper boys. They were as hungry for German marks in Yokohama, Singapore, Valparaiso, and even Paraguay, as they were in London, Paris and New York. Everybody wanted to become millionaires. On the other hand, had no cash profi ts been made by somebody on German marks, there would have been no cash to pay-unless German exports of commodities and services had been further increased or the exports of the victors to Germany reduced. Even if the necessary gold had been miraculously showered into Germany, the cash so created would have been almost valueless. Property ceded by Germany is valued at £127,000,000; but who does that make any richer in the victor countries? When all is above board, ceded property is more a question for the politician than the fi nancier; but, when all is not above board, the fi nanciers of the country ceding the property can do as well out of it as anybody else. We know that Germany had made payments to the value of over £400,000,000 at the time when the economic position of the world became equivalent to a refusal to receive further payments on the part of the victors. Only then did the payments cease, and only then did the serious troubles of Germany begin; for up to that time she had paid her way by increased production. But once the victors were refusing to receive the payments, Germany was helpless; and, only when M. Poincaré pranced
into the Ruhr, she started to crumple up. On the other hand, the receipt of the payments actually made were not merely of no value to the victors, even as an offset to the expenditure on the armies of occupation, but they were a disaster to the victors. The essential causes of non-payment are neither “International Interdependence” nor “Inability of Germany to pay”; but inability of the victors to receive. The enormous production that took place in England during the war, in spite of the fact that one-seventh of the population-and the most effective seventhwere under arms, gives some idea of potential production in the coal countries to-day. Given proper incentives, Germany could produce a far greater quantity of commodities and services of every class than is thought possible; and from such increased production, given ability of victors to receive, she could rapidly pay the indemnity. The proper incentives, however, are the very last things that the victors wish her to have; because, whatever form these incentive take, they would cause Germany to create colossal assets for herself in addition to any payments made. The non-payment by Germany of the amount demanded by the victors is largely put down to some phenomenal adroitness on the part of the Germans, who seem widely to be attributed with the power of thinking with superhuman accuracy and imagination as well as collectively, harmoniously and simultaneouslythe whole 70,000,000 of them. One is so often asked by those who look upon the so-called “trickery” of Germany as equivalent to a fundamental force, how France paid in 1870. The reply is that, then as now, the payment of an indemnity up to £200,000,000 or £300,000,000 by one big nation to another costs the victims nothing to pay and the victors quite a lot to receive. Between 1870 and 1880, trade was never better and prosperity never greater in France; whilst in Germany, with the exception of a short period in 1872, things were never worse. Bismarck, speaking in the Reichstag in 1879, said:
“We see that France has managed to face the actual fi nancial diffi culties of the civilised world with greater success than ourselves . . . and, as a matter of fact, the French are complaining less of the hard times.”
