For the present we are concerned with the benefits of international finance, which have been shown to begin with its enormous importance as the handmaid of international trade. Trade between nations is desirable for exactly the same reason as trade between one man and another, namely, that each is, naturally or otherwise, better fitted to grow or make certain things, and so an exchange is to their mutual advantage. If this is so, as it clearly is, in the case of two men living in the same street, it is evidently very much more so in the case of two peoples living in different climates and on different soils, and so each of them, by the nature of their surroundings, able to make and grow things that are impossible to the other. English investors, by developing the resources of other countries, through the machinery of international finance, enable us to sit at home in this inclement isle, and enjoy the fruits of tropical skies and soils. It may be true that if they had not done so we should have developed the resources of our own country more thoroughly, using it less as a pleasure ground, and more as a farm and kitchen garden, and that we should have had a larger number of our own folk working for us under our own sky. Instead of thriving on the produce of foreign climes and foreign labour that comes to us to pay interest, we should have lived more on home-made stuff and had more healthy citizens at work on our soil. On the other hand, we should have been hit hard by bad seasons and we should have enjoyed a much less diversified diet. As it is, we take our tea and tobacco and coffee and sugar and wine and oranges and bananas and cheap bread and meat, all as a matter of course, but we could never have enjoyed them if international trade had not brought them to our shores, and if international finance had not quickened and cheapened their growth and transport and marketing. International trade and finance, if given a free hand, may be trusted to bring about, between them, the utmost possible development of the power of the world to grow and make things in the places where they can be grown and made most cheaply and abundantly, in other words, to secure for human effort, working on the available raw material, the greatest possible harvest as the reward of its exertions.
All this is very obvious and very material, but international finance does much more, for it is a great educator and a mighty missionary of peace and goodwill between nations. This also is obvious on a moment's reflection, but it will be rejected as a flat mis-statement by many whose opinion is entitled to respect, and who regard international finance as a bloated spider which sits in the middle of a web of intrigue and chicanery, enticing hapless mankind into its toils and battening on bloodshed and war. So clear-headed a thinker as Mr. Philip Snowden publicly expressed the view not long ago that "the war was the result of secret diplomacy carried on by diplomatists who had conducted foreign policy in the interests of militarists and financiers," Now Mr. Snowden may possibly be right in his view that the war was produced by diplomacy of the kind that he describes, but with all deference I submit that he is wholly wrong if he thinks that the financiers, as financiers, wanted war either here or in Germany or anywhere else. If they wanted war it was because they believed, rightly or wrongly, that their country had to fight for its existence, or for something equally well worth fighting for, and so as patriotic citizens, they accepted or even welcomed a calamity that could only cause them, as financiers, the greatest embarrassment and the chance of ruin. War has benefited the working classes, and enabled them to take a long stride forward, which we must all hope they will maintain, towards the improvement in their lot which is so long overdue. It has helped the farmers, put fortunes in the pockets of the shipowners, and swollen the profits of any manufacturers who have been able to turn out stuff wanted for war or for the indirect needs of war. The industrial centres are bursting with money, and the greater spending power that has been diffused by war expenditure has made the cheap jewellery trade a thriving industry and increased the consumption of beer and spirits in spite of restrictions and the absence of men at the front. Picture palaces are crammed nightly, furs and finery have had a wonderful season, any one who has a motor car to sell finds plenty of ready buyers, and second-hand pianos are an article that can almost be "sold on a Sunday." But in the midst of this roar of humming trade, finance, and especially international finance, lies stricken and still gasping from the shock of war. When war comes, the price of all property shrivels. This was well known to Falstaff, who, when he brought the news of Hotspur's rebellion, said "You may buy land now as cheap as stinking mackerel," To most financial institutions, this shrivelling process in the price of their securities and other assets, brings serious embarrassment, for there is no corresponding decline in their liabilities, and if they have not founded themselves on the rock of severest prudence in the past, their solvency is likely to be imperilled. Finance knew that it must suffer. The story has often been told, and though never officially confirmed, it has at least the merit of great probability, that in 1911 when the Morocco crisis made a European war probable, the German Government was held back by the warning of its financiers that war would mean Germany's ruin. It is more than likely that a similar warning was given in July, 1914, but that the war party brushed it aside. And now that war is upon us, we are being warned that high finance is intriguing for peace. Mr. Edgar Crammond, a distinguished economist and statistician, published an article in the Nineteenth Century of September, 1915, entitled "High Finance and a Premature Peace," calling attention to this danger and urging the need for guarding against it. First too bellicose and now too pacific, High Finance is buffeted and spat upon by men of peace and men of war with a unanimity that must puzzle it. It can hardly err on both sides, but of the two accusers I think that Mr. Crammond is much more likely to be right. But my own personal opinion is that both these accusers are mistaken, that the financiers never wanted war, that if (which I beg to doubt) diplomacy conducted in their interests produced the war, that was because diplomacy misunderstood and bungled their interests, and that now that the war is upon us, the financiers, though all their interests urge them to want peace, would never be parties to intrigues for a peace that was premature or ill-judged.
Quoted by the Financial News of September 28, 1915.