THE LIVING AGE VOL. 329-JUNE 5, 1926 — NO. 4274 THE LIVING AGE BRINGS THE WORLD TO AMERICA AROUND THE WORLD IN MAY Now that the British general strike, into which the country seems to have muddled rather than plunged, and which both parties have conducted with an eye on the next general election as well as the immediate industrial issue, has dwindled to a prosaic medley of dispersed negotiations between employers and workers, the Transatlantic world has returned to its chronic preoccupation with currency crises at home and trade problems abroad. Economics is trumps at the European card table, although unruly, unpredictable, and apparently irrational emotional impulses continue to unsettle both domestic and foreign politics. Rather broad hints have appeared in English journals, as well as in our cable dispatches, to the effect that the British strike was precipitated by a flash of temper at the midnight meeting of the Cabinet, whose members grew impatient at the time taken by the Labor representatives to agree upon the precise wording of a formula already accepted in principle, and resented the snap strike, unauthorized by the tradeunion leaders, that occurred at the Daily Mail office. Mr. Luther's Cabinet has been overthrown in Germany over what seems to an outsider a largely sentimental question as to what colors shall fly over German consulates. Pilsudski's last adventure in Poland, though ultimately due to deeper causes, was probably prompted by personal piques and jealousies. Italian Fascism seems to be largely an emotional phenomenon, and France and Spain would hardly be fighting in the Rif if questions of prestige, rather than more substantial issues, were not at stake there. Nevertheless, Europe's economic rehabilitation is her first and foremost concern. Late in April a committee of experts appointed by the League of Nations met in Geneva to prepare the way for a world economic conference. Such gatherings are principally opinion-making affairs, to be sure, but then opinion is something in the world. Two basic questions will come before the proposed conference the control and allotment of raw materials in the international market, and the removal of artificial trade barriers between naCopyright 1926, by the Living Age Co. tions. The policy of self-sufficiency, of the international allotment of certain restricting trade with one's neighbors, colonial commodities. which was in such high repute immediately after the war, has admittedly broken down in Europe. A Continental Customs Union is not yet an actual issue, but the pendulum of business and political opinion abroad is beginning to swing toward freer trade, after its recent plunge in the ultra-protectionist direction. Professor Cassel, the Swedish economist, argues in a widely quoted article: 'Countries have suffered from depression and unemployment and have done everything in their power to protect themselves against foreign competition, with the result that depression has become still worse, whereupon new protective measures have been resorted to. . . . People now begin to see the necessity of military disarmament, but equally urgent is disarmament in international trade policy.' England, of course, has been groping, though cautiously and deviously, toward a new protection, but if British wages are to be lowered and that seems to be in the air after the strike the country's fiscal policies must aim to make the cost of living as low as possible. At the conference which it is proposed to hold, Italy, backed by other countries that are short on raw materials and colonies, will doubtless plead for compulsory world distribution of raw materials. Even nations well endowed with natural resources, like the United States, experience unpleasant scarcities at times, as we have witnessed recently in case of rubber, nitrates, and other essential industrial commodities. Through its appellate jurisdiction over the mandated territories, the League exercises some concrete authority here; and should Germany become a member, additional weight may be thrown into the scales in favor of far-reaching arrangements for But the most spectacular economic issue facing Europe at the moment is the currency collapse in France, Belgium, Poland, several of the newer and smaller States, less markedly in Italy, and somewhat disguised in Russia. The tumbling of francs, lire, zloty, chervontsy, dinars, and the rest, can be explained by a dozen causes, but the most popular one abroad, and therefore the most important psychologically, is Uncle Sam's insistence upon collecting what Europe owes him. Auguste Gauvain, editor of Journal des Débats, puts this argument in a nutshell. After explaining that England is obliged to exact enough from her debtors to pay her obligations to America, he exclaims: 'To the United States, therefore, flow all the gold and bills of exchange of Europe - in other words, the products of the labor of Europe's workers. Victors and vanquished have become tributaries to America, who is the only beneficiary of the war. The collapse of the French and the Belgian francs within the past few days is the result of England's violent struggle to keep the sovereign on a par with the dollar. Struck to the very heart of her economic life by a general strike of revolutionary intention, Great Britain has been able to keep the pound at par only by buying dollars with her francs and her lire. That is why, contrary to the general prediction of the exchanges, the agreement between Beranger and Mellon at Washington has not steadied the franc, any more than the settlement of the Belgian debt to the United States and the stabilization of the franc of that country has prevented her money from falling. The dollar is king.' This is not the universal opinion, however. The London Statist analyzes the setbacks to currency reconstruction in France, Belgium, Poland, and Russia as 'isolated incidents and not connected developments symptomatic of the outbreak of a new inflation epidemic on the Continent.' France owes her troubles to her delay in adopting a sound financial programme, to her war in Morocco, and to her unsettled political situation at home. In Belgium and Poland similar conditions prevail, while in Russia the currency breakdown is due to easily recognizable economic causes peculiar to that country. The editor adds: It is noteworthy that the countries now experiencing inflation are those which were unable or unwilling to obtain outside help. In contrast, the reconstruction schemes launched by the League of Nations have everywhere proved a success. In the countries mentioned above stability would have been equally assured if an external loan to aid in establishing Budget equilibrium could have been obtained. In two of the countries, Belgium and Poland, there is a strong case for intervention by the League of Nations, and it is to be hoped that their difficulties will be tackled without delay, lest they come to jeopardize the hard-won stability of other Continental nations. The same journal, in a review of an interesting book entitled British War Budgets, draws an illuminating parallel between the present condition of Great Britain and Europe and that following the Napoleonic Wars. As happened in 1919-1920, the triumphal close of hostilities in 1815 led to an outburst of speculation. But this semblance of prosperity soon merged into a commercial depression which had its roots in 'excessive taxation, the exhaustion of our foreign customers, and the unfortunate occurrence of bad harvests.' Recovery was exceedingly slow, although conditions were in some respects more favorable for prompt recuperation than they are at present. "The Peace Treaty of 1815 made little disturbance in the map of Europe, and the vanquished nation (France) retained her pre-war boundaries. Indemnities were light, and the war debts to Britain from her allies were not claimed. There was a real disarmament and a real peace, and consequently retrenchments in national expenditure were undertaken on a courageous and substantial scale.' Nevertheless, the reviewer goes on to say, 'after 1815 twenty-five years of more or less continuous depression were experienced. The wars which had preceded and caused this depression involved a degree of destruction and waste that must appear insignificant in comparison with the price that had to be paid for the Great War. Further, Great Britain took twentyfive years to recover, although she was the acknowledged and undisputed "workshop of the world." Our industrial supremacy has been seriously encroached upon during the intervening century, and now many of our industries are fighting for their existence in the competitive markets of the world. The stage that has been set for our economic recovery is beset with difficulties, with the impedimenta of tariff barriers, of fluctuating exchanges, of impaired international confidence. In an absolute sense we may be immeasurably better equipped to recover, commercially and industrially, than we were in 1815, but, speaking relatively, we are not.' Stéphane Lauzanne, reviewing in Matin the recent fall of the Belgian franc after it had been stabilized for several months, explains that the Belgians had done all the things supposed to be necessary to put their currency on a sound basis. They had balanced their budget, settled their foreign debt, and for six months had kept the franc at the same point on the exchanges. When the unexpected collapse occurred, some attributed it to differences of opinion between M. Janssen, the Minister of Finance, and the leading bankers of Belgium; others ascribed it to an eleventh-hour refusal of American lenders, frightened by the failure of the Italian loan in their country, to advance the funds upon which the Government had depended; still others blamed the Socialist members of the Cabinet for alleged radical statements that had disquieted foreign financiers. M. Lauzanne proceeds to show that all these rumors were false. The Belgian bankers had raised no serious difficulties; American financiers had merely made the reasonable demand that certain needed administrative reforms be made on the Government railways. Neither were the Socialists to blame. What, then, is the explanation? M. Lauzanne quotes a 'practical' financier to this effect: 'Stabilization is a product of nature and not of alchemy.' In other words, he reaches the agnostic conclusion of many of his countrymen, that there is no panacea, no single legislative or financial remedy, for Europe's economic ills. They can be cured only by the healing hand of time. The Preparatory Conference on Disarmament had a lukewarm press. The London Times thus expressed the prevailing attitude toward it in a leader printed prior to the meeting: 'Disarmament is not a subject that profoundly moves European opinion in the present condition of new and vague uncertainty. It appears to be a little remote from the most burning issues.' Nevertheless, it is more than ever clearly necessary that the most powerful nations should at least begin seriously and practically to consider a task that it will take some years to accomplish. There is no need to let the impulse to reduce armaments die because of momentary political difficulties. . . . The guaranties of a wide security are within the grasp of a courageous statesman ship.' Europe appears to be more interested at the moment in another Geneva meeting that of the Commission to consider changes in the League Council that will ensure Germany's admission next September. Three measures have been suggested · to keep the Council as it is, to increase the number of permanent seats, or to revise the Covenant. To leave the Council as it is would not help Germany, for, even if Brazil and Spain were not reëlected in September, their terms hold over until December, and they could therefore again veto Germany's admission. Moreover, to refuse to elect either country might lead to its withdrawal, and perhaps to the secession of other Governments from the League. To enlarge the Council is merely to invite new difficulties, for competition for the additional seats will be as keen as it is for the smaller number at present. A revision of the Covenant, while admittedly desirable in itself, cannot be accomplished promptly, and might defer Germany's admission indefinitely, with all the hazards that implies. Meanwhile the Commission is sitting, and its decision may be made before these lines reach our readers. Financial intrigue is behind some of the alarmist political news from Europe, if we are to believe the Italian Government's vigorous denial of the sedulously circulated reports concerning its warlike designs in the Levant and elsewhere. Rome's official statement stigmatized these stories as ‘absolutely false and devoid of any basis whatsoever,' and attributed them to speculators who are trying to depress the lira in international exchange. Germany seems headed toward a plebiscite spree. First is the referendum on expropriating the property of the Princes, already called for by petition. Next is the demand for a popular vote upon the flag question. The Weimar Constitution provided for a new banner at home and for the retention of the old Imperial banner at sea; a plebiscite is now called for to decide which colors shall finally represent the Republic. The champions of the two flags respectively are not necessarily Republicans on the one hand and Monarchists on the other. In fact, Ebert, Germany's Socialist President, favored retaining the old colors. The third controversy is over a new scaling law, to replace the present statute fixing the value of securities, issued before and during the deflation of the currency, at a radically reduced figure. The owners of these securities want the rate revised upward; but that would upset the estimates of Germany's ability to pay Reparations, upon which the Dawes Plan is based. The most dramatic development of the month in Europe is Pilsudski's seizure of power in Poland. This crisis has been hovering over the country for several months. Its ultimate background is dissatisfaction with the financial programme of the late Skrzynski Ministry, which contemplated no reduction in Government expenditures, but proposed to add ten per cent to existing taxes, to levy an excise on flour, and to increase passenger fares and freight rates on the Government railways. French objections are held responsible for the defeat of a proposal to reduce the army appropriations. Krakow has been for some time a focus of financial discontent in Poland. Prominent publicists and financiers in that city, with the support of certain Warsaw bankers, have even advocated requesting the League to establish a sort of receivership over the country, as it has done over Austria and Hungary a proposal that provoked an outburst of indignant protest from the Nationalists. cost of living, would save the country financially by heavy export taxes, which would rest mostly upon the peasants' produce, or else by a Government monopoly of the export trade. Witos, the peasant leader whose Cabinet was turned out of office by Pilsudski, represented the policies of the Right and Centre, though he has shifted in the past from one wing to another as political expediency seemed to demand. Pilsudski, who is probably the most popular man in Poland among the masses, has Socialist traditions behind him, but he has hitherto been regarded in Government circles as a person who never does anything decisive. During his term as National Regent and subsequently he had repeated opportunities to abolish Parliament and to take authority into his own hands. Party leaders of very different complexions wanted him to do so, and the people would have consented; but he steadfastly refused to resort to a measure to which he was averse by both temperament and principle. Nevertheless, he was a violent critic of the Skrzynski Government, and since the present economic crisis, which has made the people intensely dissatisfied with their factious Parliament, and ergo with all parliamentary institutions, a large element has turned toward him as the country's only hope. The Marshal is bitterly hated by the Conservatives and Monarchists, however, and it has been an open secret for several weeks that a political committee had been organized sub rosa in Posen to set up a Conservative countergovernment if he should seize power. The driving element there is the 'Union of ExReserve Officers,' and with the exception of the garrison at Bromberg the army in those provinces will back the Conservatives against Warsaw. A similar situation exists in Galicia, where The Socialists, who want to lower the Sikorski, one of Pilsudski's bitterest |