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of its constitution and working. They would say that it was “better than nothing”, whereas a false start is very much worse than nothing. In the post-war decade, the amount of vigorous constructive thought in the general mind about world politics was extraordinarily small. It was only when the insufficiency of the League had passed beyond any possibility of dispute that men began to take up the abandoned search for world unification again.

      A dozen years later the Modern State movement was still only foreshadowed in sketchy attempts to find a comprehensive set of general formulæ for liberal progressive effort. The pacificists, communists, socialists and every other sort of “ists” who gave a partial and confused expression to human discontent had still to be drawn together into understanding and cooperation. Most of their energy was wasted in obscure bickerings, mutual suspicion and petty and partial tentatives. The middle of the century had been passed before there was any considerable body of Modern State propaganda and education on earth.

      12. The Breakdown of “Finance” and Social Morale after Versailles

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      The unprecedented range and destruction of the World War were, we have pointed out, largely ascribable to the hypertrophy of the world’s iron and steel industry relatively to the political and social concepts of the race. But in the first “post-war” decade the stresses of other disproportionate developments began to make themselves manifest at various other weak points in the loosely linked association of our species. The war from the economic point of view had been the convulsive using up of an excess of production that the race had no other method of distributing and consuming. But the necessities of the struggle, and particularly its interference with international trading, which had evoked factories and finishing processes in many undeveloped regions hitherto yielding only raw or unfinished materials, had added greatly to the gross bulk of productive plant throughout the world, and so soon as the open war-furnaces ceased to burn up the surplus and hold millions of men out of the labour market, this fact became more and more oppressively apparent. The postwar increase in war preparation, which went on in spite of endless palavering about disarmament, did not destroy men, nor scrap and destroy material, in sufficient quantity to relieve the situation.

      Moreover, the expansion of productive energy was being accompanied by a positive contraction of the distributive arrangements which determined consumption. The more efficient the output, the fewer were the wages-earners. The more stuff there was, the fewer consumers there were. The fewer the consumers, the smaller the trading profits, and the less the gross spending power of the shareholders and individual entrepreneurs. So buying dwindled at both ends of the process and the common investor suffered with the wages-earner. This was the “Paradox of Overproduction” which so troubled the writers and journalists of the third decade of the twentieth century.

      It is easy for the young student to-day to ask “Why did they not adjust?” But let him ask himself who there was to adjust. Our modern superstructure of applied economic science, the David Lubin Bureau and the General Directors’ Board, with its vast recording organization, its hundreds of thousands of stations and observers, directing, adjusting, apportioning and distributing, had not even begun to exist. Adjustment was left to blind and ill-estimated forces. It was the general interest of mankind to be prosperous, but it was nobody’s particular interest to keep affairs in a frame of prosperity. Manifestly a dramatic revision of the liberties of enterprise was necessary, but the enterprising people who controlled politics, so far as political life was controlled, were the very last people to undertake such a revision.

      With the hypertrophy of productive activities there had been a concurrent hypertrophy of banking and financial organization generally, but it had been a flabby hypertrophy, a result of the expansion of material production rather than a compensatory and controlling development.

      It is so plain to us to-day that the apportionment of the general product of the world for enterprise or consumption is a department of social justice and policy, and can be dealt with only in the full light of public criticism and upon grounds of claim and need, that it is difficult for us to understand the twentieth century attitude to these things. We should no more dream of leaving the effectual control in these matters in private profit-seeking hands than we should leave our law courts or our schools to the private bidder. But nothing of the sort was plain in 1935 C.E. That lesson had still to be learnt.

      The story of banking and money in the early twentieth century has so much in it verging upon the incredible, that it has become one of the most attractive and fruitful fields for the student of historical psychology. The system had grown up as a tangle of practice. It was evolved, not designed. There was never any attempt to gauge the justice or the ultimate consequences of any practice, so long as it worked at the time. Men tried this and that, did this and that, and concealed their opinions of what the results might be. Reserve was essential in the system. So little was the need for publicity in this universal interest understood, that the most fundamental decisions affecting the common man’s purchasing power and the credit of industrial undertakings were made in secret, and the restriction and stimulation of trade and work went on in the profoundest obscurity. Neither in the ordinary courses of the schools and universities was there any instruction in these essential facts. The right of private enterprise to privacy was respected in the Churches, the law courts and private practice alike. Men found themselves employed or unemployed, cheated of their savings or better off, they knew not why. Instead of the clear knowledge of economic pressures and movements that we have to-day, strange Mystery Men were dimly visible through a fog of baffling evasions and mis-statements, manipulating prices and exchanges.

      Prominent among these Mystery Men was a certain Mr. Montagu Norman, Governor of the Bank of England from 1920 to 1935. He is among the least credible figures in all history, and a great incrustation of legends has accumulated about him. In truth the only mystery about him was that he was mysterious. His portrait shows a slender, bearded man, dressed more like a successful artist or musician than the conventional banker of the time. He was reputed to be shy and, in the phraseology of the time, “charming”, and he excited the popular imagination by a habit of travelling about under assumed names and turning up in unexpected places. Why he did so, nobody now knows. Perhaps he did it for the fun of doing it. He gave evidence before an enquiry into finance in 1930 (the Macmillan Committee), and from that and from one or two of his public speeches that have been preserved, it is plain that he had what we should now consider an entirely inadequate education for the veiled activities in which he was engaged. Of human ecology he betrays no knowledge, and his ideas of social and economic processes are not what we should now recognize as adequate general ideas even for an ordinary citizen. Indeed his chief qualification for his darkly responsible post was some practical experience acquired in association with various private banking firms before he entered the service of the Bank of England. This experience was acquired during what we know now to have been a period of quite accidental and transitory expansion of human wealth. Plainly he did not even bring a blank mind to his task. He had a mind warped and prejudiced by gainful banking under abnormal conditions. Yet for a time he was regarded as an “expert” of almost magical quality, and during the convulsions of the post-war period he was able to dictate or defeat arrangements that enriched or impoverished millions of people in every country in Europe.

      Another big obscure financial force in the war and post-war periods was the complex of great private banking ganglia, of which Morgan and Co., with its associated firms, was the most central and most typical. This particular firm carried on its business upon a scale that completely overshadowed many minor governments. The loans it made or refused, confirmed or shattered régimes. Its founder, J. P. Morgan, a queer combination of Yankee “gentleman” and German junker, whose innate acquisitiveness overflowed in great collections of pictures and “art” objects generally, had died before the outbreak of the war, but a phrase he used in a dispute with President Roosevelt the First was taken up later and made into a deadly critical weapon against the whole private banking world. “Roosevelt”, he protested, “wants all of us to have glass pockets!”

      A second President Roosevelt was presently to revive that demand.

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