The Power of Money

IN his treatise on money, J. M. Keynes, the English economist, is said to have written a book which will dominate the discussion of money and credit for years to come. Certainly the condition of Europe, Russia, and the United States to-day calls for firm understanding of the political and economic power of wealth.

DURING the past decade the nations of Europe have for the first time been compelled to deal with an extraEuropean power, and to deal with it for the most part on terms which the newcomer dictated. This turn of affairs disturbs the Old World. In The United States of Europe, by Édouard Herriot (Viking Press, $3.50), the ex-Premier of France sets forth the situation frankly. ‘The changes of fortune since the great war . . . have robbed Europe of her ancient supremacy and given a new centre of gravity to the world, from some points of view she has already come to appear like a young colony of America, her god-daughter.’ To Europe this rise of the United States is more than a challenge to her leadership; it seems to threaten her very life. Briand s proposal for a United States of Europe is her answer to the threat.

M. Herriot gives a detailed presentation of the plan and of the arguments for its adoption. The changes which have crowded Europe out of her place of leadership are economic; and her inferiority is due to two causes — the frequent wars in which she has taken part, and the spread of the industrial régime.

Wars have reduced the economic power of Europe, largely through the loss of man power. Eipon this fact the author dwells in dramatic sentences; he reminds us that ‘we cannot too often bring forward the sinister balance sheet of butchery, for death is silent . Rut he gives less evidence of understanding the exact nature of the new industrial regime which has been evolved in America. The plight of agriculture in France and in Europe generally impresses him; but nowhere is there any evidence that he realizes the backward state of then agricultural method. Nor does he seem to realize the wide gulf that is fixed between the American industrialist and the European in their attitude toward research and the obsolescence of plant, which is the inevitable accompaniment and cost of technical progress.

When he deals with polities the author’s touch is more certain. The major portion of the book deals with the immediate political events which led up to Briand s proposal. The discussion of the customs problem on the continent, of Europe is especially lull and illuminating: M. Herriot is convinced that the suppression of tariff barriers must be regarded as the end and not the beginning of the economic organization of Europe. He supports the plan for a United States of Europe with all his powers of logic and persuasion. He realizes that the plan has no chance of adoption unless it preserves the sovereignty of the various countries that will be invited into the federation. He also realizes that any organization which promised to leave each state its absolute sovereignty would be futile. Perhaps the power of money will be strong enough to overcome the historic prejudices that still cluster about the idea of sovereignty in Europe.

While Europe is asking how it can organize itself to resist the encroachment of American economic power, the authors of Giant of the Western World,Francis and Helen Hill Miller (Morrow, $3.00), are estimating the effect of this development upon American foreign policy. To them ‘the last decades, and particularly the ten years since the war, have seen the rise of a new unity which may properly be called a North Atlantic civilization.’ Neither Europe nor America is accustomed to think in terms of such a civilization.

The authors are in possession of a wide range of facts, industrial, financial, and political, and they muster them intelligently and convincingly. The invasion of European markets by American goods and of European factories by American technique has made completely obsolete the old assumptions upon which the political theories of the two continents were based. Mr. and Mrs, Miller conceive of their world in terms of process, and the implications of a changing industrial technique are well understood. They see how far the technical advance which science has produced runs ahead of the social institutions which at present dominate the world. They believe that the most urgent problem is the discovery of the conditions upon which America may exercise its power without disturbing the peace of the world. They have definite notions as to how this should be done, both with respect to principle and as to technique of organization. To them ‘the way of peace is perfectly plain. It requires a complete separation between the activities of private economic interests and the functions of the sovereign state. ... It. means getting international business out of the international politics of sovereign states and keeping it out.'

In the past, international business has been involved in international politics. It has been one of the most, fertile causes of war. This was especially true of international loans. In Europe: the World’s Bunker, 1870-1914, by Herbert Feis (Yale University Press, $5.00), we have a study of the main trends of the migrations of capital from Germany, France, and England to the backward nations of the earth.

The book is a scholarly and thoroughly documented account of the capital movements which occurred during the forty years which preceded the World War. He estimates not only the direction of the flow, but its amount and the uses to which the capital was put. But the book does not stop with this mere description of the economic side of these movements, the author is even more interested in the way in which political interests have determined the course of international loans and how these have in turn reacted upon political events. The latter half of his book describes the process of investment by the three powers above named in Russia, the Balkans, Turkey, Persia, North Africa, and China. It is an enthralling story of diplomatic intrigue. The chapter on ‘The Financing of Imperial Russia is a tale which no American interested in international finance or in peace should miss reading.

Anyone who reads the book, or even this chapter, will inevitably ask himself whether all this bartering of financial favors for political preferment was worth while. And he will certainly come to the conclusion that the international investments of America must be handled in such manner that they will not repeat the sorry and sordid tale, and will not lead, in the end, to the same holocaust which befell the world in 1914. To prevent that, America must, as the author says, ‘possess a policy, or at least a carefully defined attitude, toward this process of foreign investments and the situations it creates.’ We have now entered upon this process of lending our capital abroad in full tilt. America owes it to herself to study the experiences of those who came before her during these years which Mr. Feis has covered in his admirable volume.

DAVID FRIDAY