Post-War Europe

Here are six men—one economist, three political scientists, one journalist who is a distinguished expert on foreign affairs, and two historians. Like the fabled blind men who made a study of the elephant, they interpret to their readers this strange monster, the contemporary world.

The historians run true to traditional form in that they examine principally the political aspect of society. Sir John Marriott, in “Dictatorship and Democracy,” organizes the evidence of history from Greco-Roman times to the present on the nature of this contrast in government forms. He proceeds in quiet confidence that the English people are “stewards, in a special sense, of the mystery of government,” and yet he remains sympathetic with the less privileged peoples who have not been favored with the capacity to make democratic government work.

No one would suspect, in reading Sir John’s account of cabinet government in that country—an account which he cuts off because it is “trite”—that the English constitution has changed in any significant particular since the World War, or indeed since the time of the Hanoverians. The reader turns with surprise, then, to the analysis of the British government by Eugene P. Chase, in “Democratic Governments in Europe,” with its account of the formation of the National Government in 1931, and a quotation from the Law Journal, in which MacDonald’s conduct is described as “the greatest constitutional experiment since party government was introduced some two hundred years ago.” Professor Chase also makes note of certain developments that threaten what Sir John would regard as a tradition of liberty in England. The reorganization of the police force in 1931 may be a step toward the creation of a repressive instrument of government, manned by members of the upper classes and used against the lower classes. There is another menace to civil liberties inherent in the Incitement to Disaffection Bill of 1934. It would appear that Sir John is far better prepared to give enlightenment on the democracy of Athens in the time of Pericles, or the dictatorship of Rome in the time of Caesar, than on the government of England in 1935.

Mr. J. Hampden Jackson, another historian, in “The Post-War World, 1918-1934,” keeps his narrative and analysis closer to the contemporary date line. He takes the world for his field; his story is brilliantly set forth; its strength lies in its comprehensiveness.

Precisely, because, Mr. Jackson has the gift of narrative style, he sees the need of bringing some order, some dramatic sequence, into the confusion of post-war history. He finds this dramatic structure in the movement from war to depression. It would appear that the world was staggering out of the consequences of the World War when it was unexpectedly bowled over by a strange force that burst upon it out of the darkness. The explanations of the depression are those of the street and the tea table. Europe was “living on borrowed money”; American corporations paid out dividends recklessly and these were recklessly spent. Had Mr. Jackson been an economist, he would probably have reversed this explanation and written of the failure of corporations to pay out dividends, and the building up of corporate reserves as factors contributing to the dislocation of 1929. The political historian is a child in the field of economics. The reader can sense in Mr. Jackson’s narrative, no less than in Sir John’s, that events are examined from the standpoint of a “liberal,” that is to say, a disillusioned participant in the hopes of 1918. The Paris Peace Conference fares very badly in the author’s hands, but the recurrent notes of disappointment and irony that are spotted through the pages are not always consistent with each other. For instance, the victors are chided for treating their enemies as defeated powers, and not granting out equal justice regardless of the fortunes of war, but Rumania is rebuked for securing so large a territorial aggrandizement when her conduct in the war had not earned it for her.

While Mr. Jackson has only a few phrases of recrimination to describe the foreign policy of “the one nation that was in a position to make the League of Nations an immediate reality” but refused to sign the Covenant, Mr. Frank H. Simonds goes into the matter to the extent of a hundred and fifty forceful pages. American foreign policy since the war, as Mr. Simonds sees it, was an effort to get something for nothing, to enjoy the profits of world peace without paying for it. While Mr. Simonds admits the complete contradiction between a policy of protection and an effort to collect a foreign debt, he is doubtful whether America’s participation in the League would have made a decisive difference in the world situation. “The greater dangers to world peace today do not arise from issues which could have been exorcised, or from problems which might have been solved, had the United States accepted instead of rejected the program of Woodrow Wilson.” Mr. Simonds doubts whether the United States need participate in the next war, doubts whether American membership in the League would prevent another war, and is certain of only one thing—that there will always be open to the United States a policy that will insure its belligerency. But this policy—one of trying to protect foreign trade in time of war—is not one that the country needs to follow.

In the writings of the historians, political scientists, and journalists alike, there appear constant allusions to some aspects of the money and debt situation. Mr. Jackson tells about it in his story of the depression and of the effects the depression had on politics everywhere; Professors Chase and Valeur allude to the political crises over the revaluation of the pound sterling and the devaluation of the franc in their excellent monographs on democracy in England and France; Mr. Simonds has much to say of the difficulty of transferring the reparations payments and the inter-allied debt payments, and of the failure of the London Conference of 1933. To all of these writers, the monetary and financial facts are important accessory features of a political scene. But here comes an economist who can tell the monetary and financial history of the world in such a way that mere politics and government seem dwarfed and unimportant in the presence of the irresistible realities of economics.

For Mr. Paul Einzig, world history since 1914 has been a monetary evolution, a sequence of inflation, stabilization, deflation, and inflation. No country escaped from the cycle, however it might have struggled to avoid it. The War built up a tremendous aggregate of “fictitious wealth” or debt. In every country it became necessary, in one way or another, to diminish the proportion of the national production absorbed by the creditors. Some countries acted early, others late; some were forced by revolution or treaty-imposed burdens; others by the irresistible mathematics of the relation of productivity to debt. The big mistake of post-war policy was to check the rise of commodity prices in 1920; had this boom been fostered by easy credit, and the inflation prices of the time maintained, the commodity price structure would have come into line with the debt structure. Such is Einzig’s thesis.

The difference between his analysis and that of Mr. Simonds is illustrated in their respective appraisals of the inter-allied debt problem. Mr. Simonds seems to think that there was no difficulty in collecting the amount necessary to pay the inter-ally debts, but only in transferring that amount from one country to another; Mr. Einzig does not see how the money to pay that debt, together with other debts of equal status, could have been collected at all except in an economic system that functioned with a high commodity price level.

As compared with the historians’ analysis of the post-war era, this financial analysis seems remarkably unitary and profound. But after all, Mr. Einzig is only the representative of one school of economists, as economics itself is only one discipline among many. Doubtless another expert could explain the whole sequence of events since 1914 in terms of production and productive capacity, another in terms of psychology or psycho-pathology, and another in Marxian terms. These books are sound books; they are well worth reading, and each is adequate in its own way. And yet, taken together, they make no symphony, they point to no conclusion; they suggest rather the fatal inadequacies of our system of division of labor in the intellectual world.