Introductory
Nationalism and Imperialism

Amid the welter of vague political abstractions to lay one's finger accurately upon any "ism" so as to pin it down and mark it out by definition seems impossible. Where meanings shift so quickly and so subtly, not only following changes of thought, but often manipulated artificially by political practitioners so as to obscure, expand, or distort, it is idle to demand the same rigour as is expected in the exact sciences. A certain broad consistency in its relations to other kindred terms is the nearest approach to definition which such a term as Imperialism admits. Nationalism, internationalism, colonialism, its three closest congeners, are equally elusive, equally shifty, and the changeful overlapping of all four demands the closest vigilance of students of modern politics.

During the nineteenth century the struggle towards nationalism, or establishment of political union on a basis of nationality, has been a dominant factor alike in dynastic movements and as an inner motive in the life of masses of population. That struggle, in external politics, has sometimes taken a disruptive form, as in the case of Greece, Servia, Roumania, and Bulgaria breaking from Ottoman rule, and the detachment of North Italy from her unnatural alliance with the Austrian Empire. In other cases it has been a unifying or a centralising force, enlarging the area of nationality, as in the case of Italy and the Pan-Slavist movement in Russia. Sometimes nationality has been taken as a basis of federation of States, as in United Germany and in North America.

It is true that the forces making for political union have sometimes gone further, making for federal union of diverse nationalities, as in the cases of Austria-Hungary, Norway and Sweden, and the Swiss Federation. But the general tendency has been towards welding into large strong national unities the loosely related States and provinces with shifting attachments and alliances which covered large areas of Europe since the break-up of the Empire. This has been the most definite achievement of the nineteenth century. The force of nationality, operating in this work, is quite as visible in the failures to achieve political freedom as in the successes; and the struggles of Irish, Poles, Finns, Hungarians, and Czechs to resist the forcible subjection to or alliance with stronger neighbours brings out in its full vigour the powerful sentiment of nationality.

The middle of the century was especially distinguished by a series of definitely "nationalist" revivals, some of which found important interpretation in dynastic changes, while others were crushed or collapsed. Holland, Poland, Belgium, Norway, the Balkans, formed a vast arena for these struggles of national forces.

The close of the third quarter of the century saw Europe fairly settled into large national States or federations of States, though in the nature of the case there can be no finality, and Italy still looks to Trieste, as Germany to Austria, for the fulfilment of her manifest destiny.

This passion and the dynastic forms it helped to mould and animate are largely attributable to the fierce prolonged resistance which peoples, both great and small, were called on to maintain against the imperial designs of Napoleon. The national spirit of England was roused by the tenseness of the struggle to a self-consciousness it had never experienced since "the spacious days of great Elizabeth." Jena made Prussia into a great nation; the Moscow campaign brought Russia into the field of European nationalities as a constant factor in politics, opening her for the first time to the full tide of Western ideas and influences.

Turning from this territorial and dynastic nationalism to the spirit of racial, linguistic, and economic solidarity which has been the underlying motive, we find a still more remarkable movement. Local particularism on the one hand, vague cosmopolitanism upon the other, yielded to a ferment of nationalist sentiment, manifesting itself among the weaker peoples not merely in a sturdy and heroic resistance against political absorption or territorial nationalism, but in a passionate revival of decaying customs, language, literature, and art; while it bred in more dominant peoples strange ambitions of national "destiny" and an attendant spirit of Chauvinism.

The true nature and limits of nationality have never been better stated than by J. S. Mill.

It is a debasement of this genuine nationalism, by attempts to overflow its natural banks and absorb the near or distant territory of reluctant and unassimilable peoples, that marks the passage from nationalism to a spurious colonialism on the one hand, Imperialism on the other.

Colonialism, where it consists in the migration of part of a nation to vacant or sparsely peopled foreign lands, the emigrants carrying with them full rights of citizenship in the mother country, or else establishing local self-government in close conformity with her institutions and under her final control, may be considered a genuine expansion of nationality, a territorial enlargement of the stock, language and institutions of the nation. Few colonies in history have, however, long remained in this condition when they have been remote from the mother country. Either they have severed the connection and set up for themselves as separate nationalities, or they have been kept in complete political bondage so far as all major processes of government are concerned, a condition to which the term Imperialism is at least as appropriate as colonialism. The only form of distant colony which can be regarded as a clear expansion of nationalism is the self-governing British colony in Australasia and Canada, and even in these cases local conditions may generate a separate nationalism based on a strong consolidation of colonial interests and sentiments alien from and conflicting with those of the mother nation. In other "self-governing" colonies, as in Cape Colony and Natal, where the majority of whites are not descended from British settlers, and where the presence of subject or "inferior" races in vastly preponderating numbers, and alien climatic and other natural conditions, mark out a civilisation distinct from that of the "mother country," the conflict between the colonial and the imperial ideas has long been present in the forefront of the consciousness of politicians. When Lord Rosmead spoke of the permanent presence of the imperial factor as "simply an absurdity," and Mr. Rhodes spoke of its "elimination," they were championing a "colonialism" which is more certain in the course of time to develop by inner growth into a separate "nationalism" than in the case of the Australasian and Canadian colonies, because of the wider divergence, alike of interests and radical conditions of life, from the mother nation. Our other colonies are plainly representative of the spirit of Imperialism rather than of colonialism. No considerable proportion of the population consists of British settlers living with their families in conformity with the social and political customs and laws of their native land: in most instances they form a small minority wielding political or economic sway over a majority of alien and subject people, themselves under the despotic political control of the Imperial Government or its local nominees. This, the normal condition of a British colony, is well-nigh universal in the colonies of other European countries. The "colonies" which France and Germany establish in Africa and Asia are in no real sense plantations of French and German national life beyond the seas; nowhere, not even in Algeria, do they represent true European civilisation; their political and economic structure of society is wholly alien from that of the mother country.

Colonialism, in its best sense, is a natural overflow of nationality; its test is the power of colonists to transplant the civilisation they represent to the new natural and social environment in which they find themselves. We must not be misled by names; the "colonial" party in Germany and France is identical in general aim and method with the "imperialist" party in England, and the latter is the truer title. Professor Seeley well marked the nature of Imperialism. "When a State advances beyond the limits of nationality its power becomes precarious and artificial. This is the condition of most empires, and it is the condition of our own. When a nation extends itself into other territories the chances are that it cannot destroy or completely drive out, even if it succeeds in conquering, them. When this happens it has a great and permanent difficulty to contend with, for the subject or rival nationalities cannot be properly assimilated, and remain as a permanent cause of weakness and danger." 2

The novelty of the recent Imperialism regarded as a policy consists chiefly in its adoption by several nations. The notion of a number of competing empires is essentially modern. The root idea of empire in the ancient and mediæval world was that of a federation of States, under a hegemony, covering in general terms the entire known or recognised world, such as was held by Rome under the so-called pax Romana. When Roman citizens, with full civic rights, were found all over the explored world, in Africa and Asia, as well as in Gaul and Britain, Imperialism contained a genuine element of internationalism. With the fall of Rome this conception of a single empire wielding political authority over the civilised world did not disappear. On the contrary, it survived all the fluctuations of the Holy Roman Empire. Even after the definite split between the Eastern and Western sections had taken place at the close of the fourth century, the theory of a single State, divided for administrative purposes, survived. Beneath every cleavage or antagonism, and notwithstanding the severance of many independent kingdoms and provinces, this ideal unity of the empire lived. It formed the conscious avowed ideal of Charlemagne, though as a practical ambition confined to Western Europe. Rudolph of Habsburg not merely revived the idea, but laboured to realise it through Central Europe, while his descendant Charles V. gave a very real meaning to the term by gathering under the unity of his imperial rule the territories of Austria, Germany, Spain, the Netherlands, Sicily, and Naples. In later ages this dream of a European Empire animated the policy of Peter the Great, Catherine, and Napoleon. Nor is it impossible that Kaiser Wilhelm III. holds a vision of such a world-power.

Political philosophers in many ages, Vico, Macchiavelli, Dante, Kant, have speculated on an empire as the only feasible security for peace, a hierarchy of States conforming on the larger scale to the feudal order within the single State.

Thus empire was identified with internationalism, though not always based on a conception of equality of nations. The break-up of the Central European Empire, with the weakening of nationalities that followed, evoked a new modern sentiment of internationalism which, through the eighteenth century, was a flickering inspiration in the intellectual circles of European States. "The eve of the French Revolution found every wise man in Europe—Lessing, Kant, Goethe, Rousseau, Lavater, Condorcet, Priestley, Gibbon, Franklin—more of a citizen of the world than of any particular country. Goethe confessed that he did not know what patriotism was, and was glad to be without it. Cultured men of all countries were at home in polite society everywhere. Kant was immensely more interested in the events of Paris than in the life of Prussia. Italy and Germany were geographical expressions; those countries were filled with small States in which there was no political life, but in which there was much interest in the general progress of culture. The Revolution itself was at bottom also human and cosmopolitan. It is, as Lamartine said, 'a date in the human mind,' and it is because of that fact that all the carping of critics like Taine cannot prevent us from seeing that the character of the men who led the great movements of the Revolution can never obliterate the momentous nature of the Titanic strife. The soldiers of the Revolution who, barefooted and ragged, drove the insolent reactionaries from the soil of France were fighting not merely for some national cause, but for a cause dimly perceived to be the cause of general mankind. With all its crudities and imperfections, the idea of the Revolution was that of a conceived body of Right in which all men should share." 3

This early flower of humane cosmopolitanism was destined to wither before the powerful revival of nationalism which marked the next century. Even in the narrow circles of the cultured classes it easily passed from a noble and a passionate ideal to become a vapid sentimentalism, and after the brief flare of 1848 among the continental populace had been extinguished, little remained but a dim smouldering of the embers. Even the Socialism which upon the continent retains a measure of the spirit of internationalism is so tightly confined within the national limits, in its struggle with bureaucracy and capitalism, that "the international" expresses little more than a holy aspiration, and has little opportunity of putting into practice the genuine sentiments of brotherhood which its prophets have always preached.

Thus the triumph of nationalism seems to have crushed the rising hope of internationalism. Yet it would appear that there is no essential antagonism between them. A true strong internationalism in form or spirit would rather imply the existence of powerful self-respecting nationalities which seek union on the basis of common national needs and interests. Such a historical development would be far more conformable to laws of social growth than the rise of anarchic cosmopolitanism from individual units amid the decadence of national life.

Nationalism is a plain highway to internationalism, and if it manifests divergence we may well suspect a perversion of its nature and its purpose. Such a perversion is Imperialism, in which nations trespassing beyond the limits of facile assimilation transform the wholesome stimulative rivalry of varied national types into the cut-throat struggle of competing empires.

Not only does aggressive Imperialism defeat the movement towards internationalism by fostering animosities among competing empires: its attack upon the liberties and the existence of weaker or lower races stimulates in them a corresponding excess of national self-consciousness. A nationalism that bristles with resentment and is all astrain with the passion of self-defence is only less perverted from its natural genius than the nationalism which glows with the animus of greed and self-aggrandisement at the expense of others. From this aspect aggressive Imperialism is an artificial stimulation of nationalism in peoples too foreign to be absorbed and too compact to be permanently crushed. We have welded Africanderdom into just such a strong dangerous nationalism, and we have joined with other nations in creating a resentful nationalism hitherto unknown in China. The injury to nationalism in both cases consists in converting a cohesive, pacific, internal force into an exclusive, hostile force, a perversion of the true power and use of nationality. The worst and most certain result is the retardation of internationalism. The older nationalism was primarily an inclusive sentiment; its natural relation to the same sentiment in another people was lack of sympathy, not open hostility; there was no inherent antagonism to prevent nationalities from growing and thriving side by side. Such in the main was the nationalism of the earlier nineteenth century, and the politicians of Free Trade had some foundation for their dream of a quick growth of effective, informal internationalism by peaceful, profitable intercommunication of goods and ideas among nations recognising a just harmony of interests in free peoples.

The overflow of nationalism into imperial channels quenched all such hopes. While co-existent nationalities are capable of mutual aid involving no direct antagonism of interests, co-existent empires following each its own imperial career of territorial and industrial aggrandisement are natural necessary enemies. The full nature of this antagonism on its economic side is not intelligible without a close analysis of those conditions of modern capitalist production which compel an ever keener "fight for markets," but the political antagonism is obvious.

The scramble for Africa and Asia has virtually recast the policy of all European nations, has evoked alliances which cross all natural lines of sympathy and historical association, has driven every continental nation to consume an ever-growing share of its material and human resources upon military and naval equipment, has drawn the great new power of the United States from its isolation into the full tide of competition; and, by the multitude, the magnitude, and the suddenness of the issues it throws on to the stage of politics, has become a constant agent of menace and of perturbation to the peace and progress of mankind. The new policy has exercised the most notable and formidable influence upon the conscious statecraft of the nations which indulge in it. While producing for popular consumption doctrines of national destiny and imperial missions of civilisation, contradictory in their true import, but subsidiary to one another as supports of popular Imperialism, it has evolved a calculating, greedy type of Macchiavellianism, entitled "real-politik" in Germany, where it was made, which has remodelled the whole art of diplomacy and has erected national aggrandisement without pity or scruple as the conscious motive force of foreign policy. Earth hunger and the scramble for markets are responsible for the openly avowed repudiation of treaty obligations which Germany, Russia, and England have not scrupled to defend. The sliding scale of diplomatic language, hinterland, sphere of interest, sphere of influence, paramountcy, suzerainty, protectorate, veiled or open, leading up to acts of forcible seizure or annexation which sometimes continue to be hidden under "lease," "rectification of frontier," "concession," and the like, is the invention and expression of this cynical spirit of Imperialism. While Germany and Russia have perhaps been more open in their professed adoption of the material gain of their country as the sole criterion of public conduct, other nations have not been slow to accept the standard. Though the conduct of nations in dealing with one another has commonly been determined at all times by selfish and short-sighted considerations, the conscious, deliberate adoption of this standard at an age when the intercourse of nations and their interdependence for all essentials of human life grow ever closer is a retrograde step fraught with grave perils to the cause of civilisation.

Part I, Chapter I: The Measure of Imperialism

Quibbles about the modern meaning of the term Imperialism are best resolved by reference to concrete facts in the history of the last thirty years. During that period a number of European nations, Great Britain being first and foremost, have annexed or otherwise asserted political sway over vast portions of Africa and Asia, and over numerous islands in the Pacific and elsewhere. The extent to which this policy of expansion has been carried on, and in particular the enormous size and the peculiar character of the British acquisitions, are not adequately realised even by those who pay some attention to Imperial politics.

The following lists, giving the area and, where possible, the population of the new acquisitions, are designed to give definiteness to the term Imperialism. Though derived from official sources, they do not, however, profess strict accuracy. The sliding scale of political terminology along which no-man's land, or hinterland, passes into some kind of definite protectorate is often applied so as to conceal the process; "rectification" of a fluid frontier is continually taking place; paper "partitions" of spheres of influence or protection in Africa and Asia are often obscure, and in some cases the area and the population are highly speculative.

In a few instances it is possible that portions of territory put down as acquired since 1870 may have been ear-marked by a European Power at some earlier date. But care is taken to include only such territories as have come within this period under the definite political control of the Power to which they are assigned. The figures in the case of Great Britain are so startling as to call for a little further interpretation. I have thought it right to add to the recognised list of colonies and protectorates the "veiled Protectorate" of Egypt, with its vast Soudanese claim, the entire territories assigned to Chartered Companies, and the native or feudatory States in India which acknowledge our paramountcy by the admission of a British Agent or other official endowed with real political control.

All these lands are rightly accredited to the British Empire, and if our past policy is still pursued, the intensive as distinct from the extensive Imperialism will draw them under an ever-tightening grasp.

In a few other instances, as, for example, in West Africa, countries are included in this list where some small dominion had obtained before 1870, but where the vast majority of the present area of the colony is of recent acquisition. Any older colonial possession thus included in Lagos or Gambia is, however, far more than counterbalanced by the increased area of the Gold Coast Colony, which is not included in this list, and which grew from 29,000 square miles in 1873 to 39,000 square miles in 1893.

The list is by no means complete. It takes no account of several large regions which have passed under the control of our Indian Government as native or feudatory States, but of which no statistics of area or population, even approximate, are available. Such are the Shan States, the Burma Frontier, and the Upper Burma Frontier, the districts of Chitral, Bajam, Swat, Waziristan, which came under our "sphere of influence" in 1893, and have been since taken under a closer protectorate. The increase of British India itself between 1871 and 1891 amounted to an area of 104,993 square miles, with a population of 25,330,000, while no reliable measurement of the formation of new native States within that period and since is available. Many of the measurements here given are in round numbers, indicative of their uncertainty, but they are taken, wherever available, from official publications of the Colonial Office, corroborated or supplemented from the "Statesman's Year-book." They will by no means comprise the full tale of our expansion during the thirty years, for many enlargements made by the several colonies themselves are omitted. But taken as they stand they make a formidable addition to the growth of an Empire whose nucleus is only 120,000 square miles, with 40,000,000 population.

For so small a nation to add to its domains in the course of a single generation an area of 4,754,000 square miles, 4 with an estimated population of 88,000,000, is a historical fact of great significance.

Accepting Sir Robert Giffen's estimate 5 of the size of our Empire (including Egypt and the Soudan) at about 13,000,000 square miles, with a population of some 400 to 420 millions (of whom about 50,000,000 are of British race and speech), we find that one-third of this Empire, containing quite one-fourth of the total population of the Empire, has been acquired within the last generation. This is in tolerably close agreement with other independent estimates. 6

The character of this Imperial expansion is clearly exhibited in the list of new territories.

Though, for convenience, the year 1870 has been taken as indicative of the beginning of a conscious policy of Imperialism, it will be evident that the movement did not attain its full impetus until the middle of the eighties. The vast increase of territory, and the method of wholesale partition which assigned to us great tracts of African land, may be dated from about 1884. Within fifteen years some three and three-quarter millions of square miles have been added to the British Empire. 7

Nor does Great Britain stand alone in this enterprise. The leading characteristic of modern Imperialism, the competition of rival Empires, is the product of this same period. The close of the Franco-German war marks the beginning of a new colonial policy in France and Germany, destined to take effect in the next decade. It was not unnatural that the newly-founded German Empire, surrounded by powerful enemies and doubtful allies, and perceiving its more adventurous youth drawn into the United States and other foreign lands, should form the idea of a colonial empire. During the seventies a vigorous literature sprang up in advocacy of the policy 8 which took shape a little later in the powerful hands of Bismarck. The earliest instance of official aid for the promotion of German commerce abroad occurred in 1880 in the Government aid granted to the "German Commercial and Plantation Association of the Southern Seas." German connection with Samoa dates from the same year, but the definite advance of Germany upon its Imperialist career began in 1884, with a policy of African protectorates and annexations of Oceanic islands. During the next fifteen years she brought under her colonial sway about 1,000,000 square miles, with an estimated population of 14,000,000. Almost the whole of this territory is tropical, and the white population forms a total of a few thousands.

Similarly in France a great revival of the old colonial spirit took place in the early eighties, the most influential of the revivalists being the eminent economist, M. Paul Leroy-Beaulieu. The extension of empire in Senegal and Sahara in 1880 was followed next year by the annexation of Tunis, and France was soon actively engaged in the scramble for Africa in 1884, while at the same time she was fastening her rule on Tonking and Laos in Asia. Her acquisitions since 1880 (exclusive of the extension of New Caledonia and its dependencies) amount to an area of over three and a half million square miles, with a native population of some 37,000,000, almost the whole tropical or sub-tropical, inhabited by lower races and incapable of genuine French colonisation.

Italian aspirations took similar shape from 1880 onwards, though the disastrous experience of the Abyssinian expeditions has given a check to Italian Imperialism. Her possessions in East Africa are confined to the northern colony of Eritrea and the protectorate of Somaliland.

Of the other European States, two only, Portugal 9 and Belgium, enter directly into the competition of the new Imperialism. The African arrangements of 1884-6 assigned to Portugal the large district of Angola on the Congo Coast, while a large strip of East Africa passed definitely under her political control in 1891. The anomalous position of the great Congo Free State, ceded to the King of Belgium in 1883, and growing since then by vast accretions, must be regarded as involving Belgium in the competition for African empire.

Spain may be said to have definitely retired from imperial competition. The large and important possessions of Holland in the East and West Indies, though involving her in imperial politics to some degree, belong to older colonialism: she takes no part in the new imperial expansion.

Russia, the only active expansionist country of the North, stands alone in the character of her imperial growth, which differs from other Imperialism in that it has been principally Asiatic in its achievements and has proceeded by direct extension of imperial boundaries, partaking to a larger extent than in the other cases of a regular colonial policy of settlement for purposes of agriculture and industry. It is, however, evident that Russian expansion, though of a more normal and natural order than that which characterises the new Imperialism, comes definitely into contact and into competition with the claims and aspirations of the latter in Asia, and has been advancing rapidly during the period which is the object of our study.

The recent entrance of the powerful and progressive nation of the United States of America upon Imperialism by the annexation of Hawaii and the taking over of the relics of ancient Spanish empire not only adds a new formidable competitor for trade and territory, but changes and complicates the issues. As the focus of political attention and activity shifts more to the Pacific States, and the commercial aspirations of America are more and more set upon trade with the Pacific islands and the Asiatic coast, the same forces which are driving European States along the path of territorial expansion seem likely to act upon the United States, leading her to a virtual abandonment of the principle of American isolation which has hitherto dominated her policy.

The following comparative table of colonisation, compiled from the "Statesman's Year-book" for 1900 by Mr. H. C. Morris, 10 marks the present expansion of the political control of Western nations:—

The political nature of the new British Imperialism may be authoritatively ascertained by considering the governmental relations which the newly annexed territories hold with the Crown.

Officially, 11 British "colonial possessions" fall into three classes—(1) "Crown colonies, in which the Crown has the entire control of legislation, while the administration is carried on by public officers under the control of the Home Government; (2) colonies possessing representative institutions, but not responsible government, in which the Crown has no more than a veto on legislation, but the Home Government retains the control of public affairs; (3) colonies possessing representative institutions and responsible government, in which the Crown has only a veto on legislation, and the Home Government has no control over any officer except the Governor."

Now, of the thirty-nine separate areas which have been annexed by Great Britain since 1870 as colonies or protectorates, not a single one ranks in class 2 or 3. The new Imperialism has established no single British colony endowed with responsible government or representative institutions. Nor, with the exception of the three new States in South Africa, where white settlers live in some numbers, is it seriously pretended that any of these annexed territories is being prepared and educated for representative, responsible self-government; and even in these South African States there is no serious intention, either on the part of the Home Government or of the colonists, that the majority of the inhabitants shall have any real voice in the government.

It is true that some of these areas enjoy a measure of self-government, as protectorates or as feudatory States, under their own native princes. But all these in major matters of policy are subject to the absolute rule of the British Government, or of some British official, while the general tendency is towards drawing the reins of arbitrary control more tightly over protectorates, converting them into States which are in substance, though not always in name, Crown colonies. With the exception of a couple of experiments in India, the tendency everywhere has been towards a closer and more drastic imperial control over the territories that have been annexed, transforming protectorates, company rule, and spheres of influence into definite British States of the Crown colony order.

This is attributable, not to any greed of tyranny on the part of the Imperial Government, but to the conditions imposed upon our rule by considerations of climate and native population. Almost the whole of this new territory is tropical, or so near to the tropics as to preclude genuine colonisation of British settlers, while in those few districts where Europeans can work and breed, as in parts of South Africa and Egypt, the preoccupation of the country by large native populations of "lower races" precludes any considerable settlement of British workers and the safe bestowal of the full self-government which prevails in Australasia and Canada.

The same is true to an even more complete extent of the Imperialism of other continental countries. The new Imperialism has nowhere extended the political and civil liberties of the mother country to any part of the vast territories which, since 1870, have fallen under the government of Western civilised Powers. Politically, the new Imperialism is an expansion of autocracy.

Taking the growth of Imperialism as illustrated in the recent expansion of Great Britain and of the chief continental Powers, we find the distinction between Imperialism and colonisation, set forth in the opening chapter, closely borne out by facts and figures, and warranting the following general judgments:—

First—Almost the whole of recent imperial expansion is occupied with the political absorption of tropical or sub-tropical lands in which white men will not settle with their families.

Second—Nearly all the lands are thickly peopled by "lower races."

Thus this recent imperial expansion stands entirely distinct from the colonisation of sparsely peopled lands in temperate zones, where white colonists carry with them the modes of government, the industrial and other arts of the civilisation of the mother country. The "occupation" of these new territories is comprised in the presence of a small minority of white men, officials, traders, and industrial organisers, exercising political and economic sway over great hordes of population regarded as inferior and as incapable of exercising any considerable rights of self-government, in politics or industry.

Part I, Chapter II: The Commercial Value of Imperialism

The absorption of so large a proportion of public interest, energy, blood and money in seeking to procure colonial possessions and foreign markets would seem to indicate that Great Britain obtains her chief livelihood by external trade. Now this is not the case. Large as is our foreign and colonial trade in volume and in value, essential as is much of it to our national well-being, nevertheless it furnishes a small proportion of the real income of the nation.

Although the volume and value of home industries are not directly calculable, the total income of the nation, comprising profits, wages, rents, and other gains from all sources, is approximately estimated at £1,700,000,000 per annum. This sum, of course, covers all payments, not only for productive services of land, capital and labour in the making and distributing of material wealth, but for professional and personal services as well. Real income in the shape of goods or services to this amount is consumed or saved within the year.

Now the total value of the import and export trade of Great Britain in 1898 (we take this year as the latest normal one for the purpose, later years being disturbed by the war factor) amounted to £765,000,000. If we were to take the very liberal allowance of 5 per cent. as profit upon this turnover of trade, the annual income directly derived from our external trade would amount to a little over £38,000,000, or about one forty-fifth part of our total income.

If one is estimating the total income directly derived from taking part in processes of external trade, it would be necessary to add the salaries of commercial clerks, rents of offices, c., paid by British mercantile firms engaged in this trade. Even then the total income derived from external trade would only play a small part in the total income of Great Britain.

"But surely," it will be said, "you do not restrict the worth of our foreign trade to gains derived from the trading processes. The whole of the value of the exports of home produce, amounting in 1898 to £233,000,000 should be reckoned as income derived from or dependent on external trade for the purpose of this comparison, for it represents payments in the shape of profits, wages, rents, c., made to persons in Great Britain who have produced the goods that are exported: destroy this export trade and you annihilate all this income." This plausible presentation of the matter rests, however, upon shallow economic analysis. It is an excellent thing to have a wide and various foreign market, but we cannot admit that the capital and labour which made the export goods must have remained without employment if this foreign outlet for the goods they made had not existed. It is an advantage to our manufacturers that foreigners are willing to compete with home consumers for the purchase of their manufactures, and particular industries have grown and thriven by this enlargement of their market. The particular direction in which large quantities of capital and labour have been employed has been determined by these external markets. But we are not entitled to conclude that if this export trade had not grown up this capital and labour would have been without productive employment, though some of it must have been differently employed. The assumption that home demand is a fixed amount, and that any commodities produced in excess of this amount must find a foreign market or remain unsold, is quite unwarranted. On the contrary, there is no necessary limit to the quantity of capital and labour which can be employed in producing goods for the home market, if the productive power is disposed in industries which meet the rising demands of the consumer. Whatever quantity of wealth is produced in this country can be bought and consumed in this country, because with everything that is produced a corresponding power to purchase and consume is created. The pressure to find external markets, though urgent enough in many trades, is not based on any natural economic necessity. There is no natural limit to the quantity of wealth which can be produced, exchanged, and consumed within Great Britain except the limits imposed by restricted natural resources and the actual condition of the arts of industry. 12 Without, then, disputing the great utility of foreign trade to us, I would insist that the money income regarded as derived from foreign trade ought to be confined to the sum of the superior prices obtained for the goods sold abroad over those which could have been obtained for them (or for the goods which could have been produced in their place by the same factors of production) in the home market.

Whatever value such considerations justify us in setting upon the external trade of Great Britain, they do not justify the weight this trade exercises as a determinant of our commercial policy.

Moreover, it should be borne in mind that whereas during the first seven decades of the century, before any strong, definite, or continuous imperialistic policy was maintained, England's foreign trade was advancing faster than her home trade, the three decades during which our public policy has been consciously dominated by a struggle for external markets show no increase in the value of our external trade comparable with the increase of our home trade. Between 1870 and 1898 the total income of the nation from all sources has grown from about £1,200,000,000 to £1,700,000,000. The following table gives the yearly figures of our import and export trade during that same period, the quinquennial average, and the value per head of the population:—

Although the real increase in volume of external trade is considerable when the fall of general prices since 1870 is taken into account, it is quite evident that neither the volume nor the value of external trade has kept pace during this period with the volume and the value of internal trade. While the total income per head of the population has certainly increased by as much as 20 per cent., the value of external trade per head has actually shrunk.

Next, let us inquire whether the vast outlay of energy and money upon imperial expansion is attended by a growing trade within the Empire as compared with foreign trade. In other words, does the policy tend to make us more and more an economically self-sufficing Empire? Does trade follow the flag?

The following figures represent the proportion which our trade with our colonies and possessions bears to our foreign trade during the latter half of the nineteenth century:—

A longer period has here been taken as a basis of comparison in order to bring out clearly the central truth, viz.that our modern imperialist policy has had no appreciable influence whatever upon the determination of our external trade. The proportion of our exports and our imports, as between foreign countries and our own possessions, is virtually the same in the first period, 1855-59, and the last period, 1895-98, nor, with one exception, has it varied widely during the entire half-century. That exception consists in a notable drop in the proportion of exports to our possessions in the period 1865-74; after the recovery from that depression, in 1875-79, there is no considerable change. Although since 1870 such vast additions have been made to British possessions, involving a corresponding reduction in the number or size of "foreign countries," this imperial expansion is attended by no increase in the proportion of intra-imperial trade as represented in the imports and exports of Great Britain.

A somewhat closer study of the trade statistics of the last decade of the nineteenth century emphasises the recent tendency.

The elaborate statistical investigation of Professor Alleyne Ireland into the trade of our colonial possessions strikes a still heavier blow at the notion that trade follows the flag. Taking the same period, he establishes the following two facts:—

The following table 15 shows the gradual decline in the importance to the colonies of the commercial connection with Great Britain since 1872-75, as illustrated in the proportion borne in the value of their exports from and their imports to Great Britain as compared with the value of the total imports and exports of the British colonies and possessions:—

In other words, while Great Britain's dependence on her Empire for trade is stationary, the dependence of her Empire upon her for trade is rapidly diminishing.

Closer attention to the special period when imperial expansion has been in full activity—1894 to the end of the century—enforces the lesson still more powerfully.

The actual condition of British trade with foreign countries and with the chief groups of the colonies respectively may be indicated by the following statement 16 for the year ending December 1901:—

It is thus clearly seen that while imperial expansion is attended by no increase in the value of our trade with our colonies and dependencies, a considerable increase in the value of our trade with foreign nations has taken place. Did space permit, it could be shown that the greatest increase of our foreign trade is with that group of industrial nations whom we regard as our industrial enemies, and whose political enmity we are in danger of arousing by our policy of expansion—France, Germany, Russia, and the United States.

Our import trade with the United States alone is greater than with the whole of our colonies. In 1898, the last normal year, the aggregate trade with foreign countries in British produce was £520,877,107, with our possessions £182,660,716. In 1898 the imports from the United States were £126,062,155, and from our possessions £99,433,995. The total imports were £470,544,702, so that the imports from our possessions constituted about one-fifth of the whole.

One more point of supreme significance in its bearing on the new Imperialism remains. We have already drawn attention to the radical distinction between genuine colonialism and Imperialism. This distinction is strongly marked in the statistics of the progress of our commerce with our foreign possessions.

The following table indicates the movement of our commerce during the last three decades of the nineteenth century with India, the technically self-governing colonies, and the other colonies respectively:—

Professor Flux thus summarises the chief result of this comparison: "The great source of growth of Britain's colonial trade is very clearly shown to be the growth of trade with the colonies to which self-government has been granted. Their foreign trade has nearly doubled, and the proportion of it which is carried on with the mother country has increased from about 56½ per cent. to 65 per cent. " This testimony of trade to the virtues of self-government cannot, however, be pressed very far, as is proved by classifying the same set of facts upon another fundamentum divisionis.

The distinction of self-governing and other colonies is almost identical with that between tropical and non-tropical colonies. The latter distinction, however, does not admit so much exactitude, though it is even more important in the instructive light it throws upon the economic character of Imperialism.

Regarded in a specifically political manner, Imperialism would seem confined to those colonies and possessions to which responsible self-government is denied, and which are governed by the will of Great Britain. But if due weight is assigned to economic as well as to formally political conditions, all possessions where the mass of the inhabitants enjoy no real share in such self-government as is accorded must be included. This extends the imperialist area so as to make it cover the important cases of Cape Colony and Natal, where the conditions are essentially lacking in popular self-government.

In this table the "other colonies" consist of Australasia, Canada, Newfoundland, the Channel Islands, Gibraltar, and Malta.

While the export trade to the whole number of colonies and possessions shows a slight absolute growth of value, having risen from £80,875,946 in 1884 to £83,426,761 in 1898, that between the mother country and the non-tropical possessions shows a considerable decline, more than compensated by the growth of trade with the tropical colonies. But further investigation makes it quite evident that this result and various others depend entirely upon the classification of Cape Colony and Natal, which rank for statistical purposes as pivotal colonies, carrying with them the balance of advantage to tropical and non-tropical, self-governing and imperialist States, according as we place them.

For during this period the exports to these South African colonies show an increase from £4,102,281 to £12,199,810. Hence, if these colonies, with their quite abnormal conditions, are excluded, the small rise of colonial exports as a whole becomes a considerable decline. If, having regard to the semi-tropical character of Natal, destined in all probability to be exploited chiefly by Coolie and Kaffir labour, and the great tropical hinterland fed by the trade of Cape Colony, we reckon these colonies in the tropical class, that entire class presents a favourable appearance as compared with the non-tropical colonies.

A strict interpretation of self-government will, by including Cape Colony and Natal (though the latter only obtained full self-government in 1893), throw the advantage on the side of the self-governing colonies, as against the imperially governed colonies. If, however, having regard to the virtual exclusion from all political power of the great majority of the population of these South African colonies, we refuse to rank them with Canada and Australasia, this argument for self-government on economic grounds disappears.

The real distinction which the facts and figures serve to emphasise is that between the tropical and the nontropical colonies; and their political bearing rests upon the fact that the new Imperialism is perforce driven more and more into the annexation and administration of tropical countries. Taking under survey our whole Empire, we reach the conclusion that, excluding our commerce with India, the smallest, least valuable, and most uncertain trade is that done with our tropical possessions, and in particular with those which have come under imperial control since 1870. The only considerable increase of our import trade since 1884 is from our genuine colonies in Australasia, North America, and Cape Colony; the trade with India has been stagnant, while that with our tropical colonies in Africa and the West Indies has been in most cases irregular and dwindling. Our export trade exhibits the same general character, save that Australia and Canada show a growing resolution to release themselves from dependence upon British manufactures; the trade with the tropical colonies, though exhibiting some increase, is very small and very fluctuating.

As for the territories acquired under the new Imperialism, except in one instance, no serious attempt to regard them as satisfactory business assets is possible. 17 Egypt alone yields a trade of some magnitude; of the other possessions, three only—Lagos, Niger Coast Protectorate, and North Borneo—are proved to do a trade with Great Britain exceeding one million pounds in value. In fact, excluding Egypt, the whole volume of this trade, so far as it is officially recorded, does not amount to ten million pounds; and though the actual trade is doubtless in excess of this sum, it forms an infinitesimal addition to the commercial resources of our nation. Apart from its quantity, the quality of the new tropical export trade is of the lowest, consisting for the most part, as the analysis of the Colonial Office shows, of the cheapest textile goods of Lancashire, the cheapest metal goods of Birmingham and Sheffield, and large quantities of gunpowder, spirits, and tobacco.

Such evidence leads to the following conclusions bearing upon the economics of the new Imperialism. First, the external trade of Great Britain bears a small and diminishing proportion to its internal industry and trade. Secondly, of the external trade, that with British possessions bears a diminishing proportion to that with foreign countries. Thirdly, of the trade with British possessions, the tropical trade, and in particular the trade with the new tropical possessions, is the smallest, least progressive, and most fluctuating in quantity, while it is lowest in the character of the goods which it embraces.

Part I, Chapter III: Imperialism as an Outlet for Population

There is a widely prevalent belief that imperial expansion is desirable, or even necessary, in order to absorb and utilise the surplus of our ever-growing population. "The reproductive powers of nature," runs the argument, "brook no restraint: the most dominant force in history is the tendency of population to overflow its ancient banks, seeking fuller and easier subsistence. Great Britain is one of the most congested areas in the world; her growing population cannot find enough remunerative occupation within these islands; professional and working-classes alike find it more and more difficult to earn a decent and secure living, every labour market is overstocked, emigration is a prime economic necessity. Now; those who under such pressure leave our shores consist largely of the strongest and most energetic stuff the nation contains. Many of these people, whose permanent alienation would be a heavy loss, have been saved to the Empire by the policy of imperial expansion: they have settled either in vacant places of the earth which they have seized and kept under British rule, or in places where they have set up a definitely British supremacy over lower races of existing inhabitants. It is our most urgent national interest that this surplus emigrant population shall settle in lands which are under the British flag, and we must therefore maintain a constant policy of extending the political control of Great Britain so as to cover the new homes to which these people betake themselves in pursuit of employment." This motive is closely linked with other economic motives relating to trade and investments. The establishment of British trade, and especially of British capital, in foreign lands naturally attracts a certain British population; traders, engineers, overseers, and mechanics are needed as entrepreneurs and managers. So wherever a new area is opened up to our trade and capital the nucleus of an outlander population is formed. Hence, of necessity, springs up a crop of political issues, an outlander problem: the British outlanders not satisfied with the foreign rule demand the intervention of their home Government. Thus the duty of protecting British subjects in a foreign country is identified with the duty of protecting British property, not merely the personal property of the outlanders, often a trivial matter, but the far larger stakes of the home investors. But apart from these cases of special interest, wherever any considerable number of British subjects settles in a savage or semi-civilised country they have a "right" to British protection, and since that protection can seldom be made effective without the exercise of direct British authority, the imperial ægis of Great Britain must be spread over all such areas, when a convenient occasion for such expansion presents itself.

Such is the accepted theory and practice. What validity does it possess as an argument for recent imperial expansion? Let me first ask: Is England over-populated now, and is the prospect of further increase such as to compel us to "peg out claims for posterity" in other parts of the world? The facts are these. Great Britain is not so thickly populated as certain prosperous industrial areas in Germany, the Netherlands, and China: along with every recent growth of population has come a far greater growth of wealth and of the power to purchase food and other subsistence. The modern specialisation of industry has caused a congestion of population upon certain spots which may be injurious in some ways to the well-being of the nation, but it cannot be regarded as over-population in the sense of a people outgrowing the means of subsistence. Nor have we reason to fear such over-population in the future. It is true that our manufactures and commerce may not continue to grow as rapidly as in the past, though we have no clear warrant from industrial statistics for this judgment: but if this be so, neither is our population likely to increase so fast. Of this we have clear statistical evidence: the diminution of the rate of growth of our population, as disclosed by the two latest censuses, is such as to justify the conclusion that, if the same forces continue to operate, the population of Great Britain will be stationary by the middle of the century.

There exists, then, no general necessity for a policy of expansion in order to provide for over-population, present or prospective. But supposing it were necessary for an increasing surplus of our population to emigrate, is it necessary for us to spend so large a part of our national resources, and to incur such heavy risks, in seizing new territory for them to settle upon?

The total emigration of Britons represents no large proportion of the population; that proportion during the recent years of imperial expansion has perceptibly diminished: of the emigrants a small proportion settles in British possessions, and an infinitesimally small fraction settles in the countries acquired under the new Imperialism. These most instructive facts are established by the following official table, giving the statistics of emigration from 1884, the year from which the full tide of imperial expansion is to be dated:—

Regarded as a measure of the outflow of "surplus" population, even these figures are excessive in two ways. In the first place, they include considerable numbers of travellers and casual visitors who are not real emigrants. Secondly, to measure aright the net emigration, we must set against these figures the immigration figures. The net reduction of our population by emigration is thus reduced to an average, during the last five years, of 87,224 per annum.

Considering that the term "other places" includes the entire non-European world, outside Canada, Australasia, and South Africa, it is clear that the rest of our Empire absorbs at most a very few thousands, while the number of industrial settlers in our new tropical dominions must be a mere handful. A certain quantity of military and official employment is afforded by the new Imperialism to the influential upper classes, a few engineers, missionaries, prospectors, and overseers of trading and industrial undertakings get temporary posts, but as a contribution towards the general field of employment the new Imperialism is an utterly insignificant factor.

No substantial settlement of Britons is taking place upon any of the areas of the Empire acquired since 1870, excepting the Transvaal and the Orange River Colony, nor is it likely that any such settlement will take place. The tropical character of most lands acquired under the new Imperialism renders genuine colonisation impossible: there is no true British settlement in these places; a small number of men spend a short broken period in precarious occupations as traders, engineers, missionaries, overseers. The new Empire is even more barren for settlement than for profitable trade.

Part I, Chapter IV: Economic Parasites of Imperialism

Part I, Chapter V: Imperialism Based on Protection

A business man estimating the value of an extension of his business will set the increased costs against the increased takings. Is it unreasonable that a business nation should adopt the same course? From this standpoint our increased military and naval expenditure during recent years may be regarded primarily as insurance premiums for protection of existing colonial markets and current outlay on new markets.

In order to test the finance of the new Imperialism, let us compare the growth of expenditure on armaments and wars since 1884 with the increased value of colonial trade:—

Now, though there are no means of ear-marking the expenditure which might rank as insurance upon old markets or that which is spent upon acquiring new markets, it is not unreasonable to saddle the new Imperialism with the whole of the increase and to set against it the value of the trade of the new acquisitions. For though it might be claimed that the aggressive commercialism of rival European States has raised the insurance rate upon the old markets, it cannot be contended that Great Britain's expenditure on armaments need have increased had she adopted firmly and consistently the full practice of Cobdenism, a purely defensive attitude regarding her existing Empire and a total abstinence from acquisition of new territory. The increased hostility of foreign nations towards us may be regarded as entirely due to the aggressive Imperialism of the last thirty years, and the increased expenditure on armaments may, therefore, reasonably rank in a business balance-sheet as a cost of that policy.

So taken, this new expenditure is nothing else than a huge business blunder. An individual doing business in this fashion could not avoid bankruptcy, and a nation, however rich, pursuing such a policy is loaded with a millstone which must eventually drag her down.

In total contravention of our theory that trade rests upon a basis of mutual gain to the nations that engage in it, we have undertaken enormous expenses with the object of "forcing" new markets, and the markets we have forced are small, precarious, and unprofitable. The only certain and palpable result of the expenditure has been to keep us continually embroiled with the very nations that are our best customers, and with whom, in spite of everything, our trade makes the most satisfactory advance.

Not only are these markets not worth what they cost us, but the assumption that our trade would have been proportionately less had they fallen into the hands of rival and Protectionist nations is quite groundless. If, instead of squandering money upon these recent territorial acquisitions, we had let any or all of them pass into the possession of France, Germany, or Russia, in order that these countries might spend their money, instead of us spending our money, in acquiring and developing them, is it certain that our foreign trade would not have grown by at least as much as our colonial trade might have shrunk? The assumption that there is only a given quantity of trade, and that if one nation gets any portion of it another nation loses just so much, shows a blind ignorance of the elements of international trade. It arises from a curiously perverse form of separatism which insists upon a nation keeping a separate account with every other nation, and ignoring altogether the roundabout trade which is by far the most important business of an advanced industrial nation.

France seizing Madagascar practically extirpates direct British trade with the Malagasy; Germany, by her occupation of Shan-tung, deprives us of all possibility of trade with this Chinese province. But it by no means follows that France and Germany can or will keep to themselves the whole advantage of these new markets. To make any such supposition implies a complete abandonment of the principles of Free Trade. Even were the whole of China portioned out among the other industrial nations, each imposing tariffs which virtually prohibited direct trade between Great Britain and China—the most extreme assumption of a hostile attitude—it by no means follows that England would not reap enormous benefits from the expansion of her foreign trade, attributable in the last resort to the opening up of China. Even the feeblest recognition of the intricacies of foreign trade should make us aware that an increased trade with France, Germany, or Russia, either directly or through other nations trading with them, might give us our full share of the wealth of Chinese trade, and prove as beneficial as any direct share of trade with China which at great expense and peril we might secure. The assignment of spheres of influence in China or in Africa to France, Germany, or Russia, which they may seek to monopolise for purposes of trade, does not imply, as seems to be believed, a corresponding loss of markets to England. The intricate and ever-growing industrial co-operation of the civilised nations through trade does not permit any nation to keep to herself the gain of any market she may hold. It is not difficult to conceive cases where another nation might enjoy a larger share of the results of a trade than the nation which owned the private markets of this trade.

These are or were the commonplaces of the economics of Free Trade, the plainest lessons of enlightened common sense. Why are they forgotten?

The answer is that Imperialism repudiates Free Trade, and rests upon an economic basis of Protection. Just in so far as an Imperialist is logical does he become an open and avowed Protectionist.

If the fact of France or Germany seizing for its exclusive use a market which we might have seized necessarily reduces our aggregate external trade by the amount of this market, it is only reasonable that when we seize a territory we should take the same means to keep its market for ourselves. Imperialism, when it has shaken off the "old gang" of politicians who had swallowed Free Trade doctrine when they were young, will openly adopt the Protectionism required to round out this policy.

Imperialism naturally strives to fasten to the mother country the markets of each new territorial acquisition, convinced that only by such separate increments can the aggregate of our trade grow; and by the success of this policy it must justify the enormous national outlay which Imperialism involves. Free Trade trusts for the increase of our foreign trade to the operation of the self-interest of other trading nations. Her doctrine is that, though it were better for us and for them that they should give us free admission to their colonial and home markets, their protective tariff, even though it prohibits us from trading directly with their colonies, does not shut us out from all the benefits of their colonial development. Through the ordinary operation of competition in European markets the rubber trade which France does in East Africa helps to increase the supply and to keep down the price of "rubber" for English consumers, just as the bounties which continental countries pay to sugar producers enable British boys and girls to enjoy cheap sweets.

There is, then, nothing vaguely hypothetical about these indirect gains. Every business man can trace certain concrete advantages of goods and prices which come to us from the development of colonies by Protectionist countries. The "open door" is an advantage to our trade, but not a necessity. If we have to spend vast sums and incur vast risks in keeping "doors open" against the wishes of our best customers, it is more profitable to let them close these doors and take our gain by the more indirect but equally certain processes of roundabout trade. At present Great Britain is in a stronger position than any other nation to practise this policy of abstinence, because she possesses in her carrying trade by sea a most effective guarantee that she will obtain an adequate share of the net gains from new markets opened up by foreign nations. Though no complete statistics are available, it is known that a very large proportion of the trade, not only between England and foreign countries, but between foreign countries trading among themselves and with their possessions, is carried by British ships. So long as this continues, England, apart from her share obtained in roundabout trade, must participate directly and in a most important manner in the trade advantages of foreign markets belonging to our European trade competitors.

These considerations ought to make us willing that other nations should do their share of expansion and development, well contented to await the profit which must accrue to us from every increase of world-wealth through ordinary processes of exchange. We have done our share, and more, of the costly, laborious, and dangerous work of opening up new countries to the general trade of Western industrial nations; our recent ventures have been more expensive and less profitable to us than the earlier ones, and any further labours of expansion seem to conform to a law of diminishing returns, yielding smaller and more precarious increments of trade to a larger outlay of material and intellectual capital. Have we not reached, or even passed, the limit of the most profitable outlay of our national energy and resources? Will not enlightened self-interest impel us to leave to other active and ambitious nations—France, Russia, Germany, America—the work of developing new tropical or sub-tropical countries? If it is necessary that Western industrial civilisation shall undertake the political and commercial management of the whole world, let these nations take their share. Why should we do all the work and get so little from it? On the assumption that backward countries must be developed by foreign countries for the general good, a reasonable economy of power will apportion the work which remains to the "Imperialism" of other nations. Even if these other nations were disposed to shirk their share, it would pay us better to persuade them to undertake it rather than further to load our overladen shoulders. Since these other nations are not only eager to do their share, but by their jealousy at our undertaking their work continually threaten to wreck the peace of Europe, it seems sheer madness for Great Britain to weaken herself politically and financially by any further process of expansion.

Part I, Chapter VI: The Economic Taproot of Imperialism

No mere array of facts and figures adduced to illustrate the economic nature of the new Imperialism will suffice to dispel the popular delusion that the use of national force to secure new markets by annexing fresh tracts of territory is a sound and a necessary policy for an advanced industrial country like Great Britain. It has indeed been proved that recent annexations of tropical countries, procured at great expense, have furnished poor and precarious markets, that our aggregate trade with our colonial possessions is virtually stationary, and that our most profitable and progressive trade is with rival industrial nations, whose territories we have no desire to annex, whose markets we cannot force, and whose active antagonism we are provoking by our expansive policy.

But these arguments are not conclusive. It is open to Imperialists to argue thus: "We must have markets for our growing manufactures, we must have new outlets for the investment of our surplus capital and for the energies of the adventurous surplus of our population: such expansion is a necessity of life to a nation with our great and growing powers of production. An ever larger share of our population is devoted to the manufactures and commerce of towns, and is thus dependent for life and work upon food and raw materials from foreign lands. In order to buy and pay for these things we must sell our goods abroad. During the first three-quarters of the century we could do so without difficulty by a natural expansion of commerce with continental nations and our colonies, all of which were far behind us in the main arts of manufacture and the carrying trades. So long as England held a virtual monopoly of the world markets for certain important classes of manufactured goods, Imperialism was unnecessary. During the last thirty years this manufacturing and trading supremacy has been greatly impaired: other nations, especially Germany, the United States, and Belgium, have advanced with great rapidity, and while they have not crushed or even stayed the increase of our external trade, their competition is making it more and more difficult to dispose of the full surplus of our manufactures at a profit. The encroachments made by these nations upon our old markets, even in our own possessions, make it most urgent that we should take energetic means to secure new markets. These new markets must lie in hitherto undeveloped countries, chiefly in the tropics, where vast populations live capable of growing economic needs which our manufacturers and merchants can supply. Our rivals are seizing and annexing territories for similar purposes, and when they have annexed them close them to our trade. The diplomacy and the arms of Great Britain must be used in order to compel the owners of the new markets to deal with us: and experience shows that the safest means of securing and developing such markets is by establishing 'protectorates' or by annexation. The present value of these markets must not be taken as a final test of the economy of such a policy; the process of educating civilised needs which we can supply is of necessity a gradual one, and the cost of such Imperialism must be regarded as a capital outlay, the fruits of which posterity will reap. The new markets may not be large, but they form serviceable outlets for the overflow of our great textile and metal industries, and, when the vast Asiatic and African populations of the interior are reached, a rapid expansion of trade may be expected to result.

"Far larger and more important is the pressure of capital for external fields of investment. Moreover, while the manufacturer and trader are well content to trade with foreign nations, the tendency for investors to work towards the political annexation of countries which contain their more speculative investments is very powerful. Of the fact of this pressure of capital there can be no question. Large savings are made which cannot find any profitable investment in this country; they must find employment elsewhere, and it is to the advantage of the nation that they should be employed as largely as possible in lands where they can be utilised in opening up markets for British trade and employment for British enterprise.

"However costly, however perilous, this process of imperial expansion may be, it is necessary to the continued existence and progress of our nation; 22 if we abandoned it we must be content to leave the development of the world to other nations, who will everywhere cut into our trade, and even impair our means of securing the food and raw materials we require to support our population. Imperialism is thus seen to be, not a choice, but a necessity."

The practical force of this economic argument in politics is strikingly illustrated by the recent history of the United States. Here is a country which suddenly breaks through a conservative policy, strongly held by both political parties, bound up with every popular instinct and tradition, and flings itself into a rapid imperial career for which it possesses neither the material nor the moral equipment, risking the principles and practices of liberty and equality by the establishment of militarism and the forcible subjugation of peoples which it cannot safely admit to the condition of American citizenship.

Is this a mere wild freak of spread-eaglism, a burst of political ambition on the part of a nation coming to a sudden realisation of its destiny? Not at all. The spirit of adventure, the American "mission of civilisation," are, as forces making for Imperialism, clearly subordinate to the driving force of the economic factor. The dramatic character of the change is due to the unprecedented rapidity of the industrial revolution in the United States during the last two decades. During that period the United States, with her unrivalled natural resources, her immense resources of skilled and unskilled labour, and her genius for invention and organisation, has developed the best equipped and most productive manufacturing economy the world has yet seen. Fostered by rigid protective tariffs, her metal, textile, tool, clothing, furniture, and other manufactures have shot up in a single generation from infancy to full maturity, and, having passed through a period of intense competition, are attaining, under the able control of great trust-makers, a power of production greater than has been attained in the most advanced industrial countries of Europe.

An era of cut-throat competition, followed by a rapid process of amalgamation, has thrown an enormous quantity of wealth into the hands of a small number of captains of industry. No luxury of living to which this class could attain kept pace with its rise of income, and a process of automatic saving set in upon an unprecedented scale. The investment of these savings in other industries helped to bring these under the same concentrative forces. Thus a great increase of savings seeking profitable investment is synchronous with a stricter economy of the use of existing capital. No doubt the rapid growth of a population, accustomed to a high and an always ascending standard of comfort, absorbs in the satisfaction of its wants a large quantity of new capital. But the actual rate of saving, conjoined with a more economical application of forms of existing capital, has exceeded considerably the rise of the national consumption of manufactures. The power of production has far outstripped the actual rate of consumption, and, contrary to the older economic theory, has been unable to force a corresponding increase of consumption by lowering prices.

This is no mere theory. The history of any of the numerous trusts or combinations in the United States sets out the facts with complete distinctness. In the free competition of manufactures preceding combination the chronic condition is one of "over-production," in the sense that all the mills or factories can only be kept at work by cutting prices down towards a point where the weaker competitors are forced to close down, because they cannot sell their goods at a price which covers the true cost of production. The first result of the successful formation of a trust or combine is to close down the worse equipped or worse placed mills, and supply the entire market from the better equipped and better placed ones. This course may or may not be attended by a rise of price and some restriction of consumption: in some cases trusts take most of their profits by raising prices, in other cases by reducing the costs of production through employing only the best mills and stopping the waste of competition.

For the present argument it matters not which course is taken; the point is that this concentration of industry in "trusts," "combines," c., at once limits the quantity of capital which can be effectively employed and increases the share of profits out of which fresh savings and fresh capital will spring. It is quite evident that a trust which is motived by cut-throat competition, due to an excess of capital, cannot normally find inside the "trusted" industry employment for that portion of the profits which the trust-makers desire to save and to invest. New inventions and other economies of production or distribution within the trade may absorb some of the new capital, but there are rigid limits to this absorption. The trust-maker in oil or sugar must find other investments for his savings: if he is early in the application of the combination principles to his trade, he will naturally apply his surplus capital to establish similar combinations in other industries, economising capital still further, and rendering it ever harder for ordinary saving men to find investments for their savings.

Indeed, the conditions alike of cut-throat competition and of combination attest the congestion of capital in the manufacturing industries which have entered the machine economy. We are not here concerned with any theoretic question as to the possibility of producing by modern machine methods more goods than can find a market. It is sufficient to point out that the manufacturing power of a country like the United States may grow so fast as to exceed the demands of the home market. No one acquainted with trade will deny a fact which all American economists assert, that this is the condition which the United States has reached within the last few years, so far as the more developed industries are concerned. Her manufactures are saturated with capital and can absorb no more. One after another they are seeking refuge from the waste of competition in "combines" which secure a measure of profitable peace by restricting the quantity of operative capital. Industrial and financial princes in oil, steel, sugar, railroads, banking, c., are faced with the dilemma of either spending more than they know how to spend, or forcing markets outside the home area. Two economic courses are open to them, both leading towards an abandonment of the political isolation of the past and the adoption of imperialist methods in the future. Instead of shutting down inferior mills and rigidly restricting output to correspond with profitable sales in the home markets, they may employ their full productive power, applying their savings to increase their business capital, and, while still regulating output and prices for the home market, may "hustle" for foreign markets, dumping down their surplus goods at prices which would not be possible save for the profitable nature of their home market. So likewise they may employ their savings in seeking investments outside their country, first repaying the capital borrowed from Great Britain and other countries for the early development of their railroads, mines and manufactures, and afterwards becoming themselves a creditor class to foreign countries.

It is this sudden demand for foreign markets for manufactures and for investments which is avowedly responsible for the adoption of Imperialism as a political policy and practice by the Republican party to which the great industrial and financial chiefs belong, and which belongs to them. The adventurous enthusiasm of President Roosevelt and his "manifest destiny" and "mission of civilisation" party must not deceive us. It is Messrs. Rockefeller, Pierpont Morgan, Hanna, Schwab, and their associates who need Imperialism and who are fastening it upon the shoulders of the great Republic of the West. They need Imperialism because they desire to use the public resources of their country to find profitable employment for the capital which otherwise would be superfluous.

It is not indeed necessary to own a country in order to do trade with it or to invest capital in it, and doubtless the United States can find some vent for their surplus goods and capital in European countries. But these countries are for the most part able to make provision for themselves: most of them have erected tariffs against manufacturing imports, and even Great Britain is being urged to defend herself by reverting to Protection. The big American manufacturers and financiers will be compelled to look to China and the Pacific and to South America for their most profitable chances; Protectionists by principle and practice, they will insist upon getting as close a monopoly of these markets as they can secure, and the competition of Germany, England, and other trading nations will drive them to the establishment of special political relations with the markets they most prize. Cuba, the Philippines, and Hawaii are but the hors d'œuvre to whet an appetite for an ampler banquet. Moreover, the powerful hold upon politics which these industrial and financial magnates possess forms a separate stimulus, which; as we have shown, is operative in Great Britain and elsewhere; the public expenditure in pursuit of an imperial career will be a separate immense source of profit to these men, as financiers negotiating loans, shipbuilders and owners handling subsidies, contractors and manufacturers of armaments and other imperialist appliances.

The suddenness of this political revolution is due to the rapid manifestation of the need. During a period of ten years the United States has nearly trebled the value of its manufacturing export trade, and, if the rate of progress of the last few years continues, within this decade it will overtake our more slowly advancing export trade, and stand first in the list of manufacture-exporting nations. 23

This is the avowed ambition, and no idle one, of the keenest business men of America; and with the natural resources, the labour and the administrative talents at their disposal, it is quite likely they will achieve their object. 24 The stronger and more direct control over politics exercised in America by business men enables them to drive more quickly and more straightly along the line of their economic interests than in Great Britain. American Imperialism is the natural product of the economic pressure of a sudden advance of capitalism which cannot find occupation at home and needs foreign markets for goods and for investments.

The same needs exist in European countries, and, as is admitted, drive Governments along the same path. Over-production in the sense of an excessive manufacturing plant, and surplus capital which cannot find sound investments within the country, force Great Britain, Germany, Holland, France to place larger and larger portions of their economic resources outside the area of their present political domain, and then stimulate a policy of political expansion so as to take in the new areas. The economic sources of this movement are laid bare by periodic trade-depressions due to an inability of producers to find adequate and profitable markets for what they can produce. The Majority Report of the Commission upon the Depression of Trade in 1885 put the matter in a nut-shell. "That, owing to the nature of the times, the demand for our commodities does not increase at the same rate as formerly; that our capacity for production is consequently in excess of our requirements, and could be considerably increased at short notice; that this is due partly to the competition of the capital which is being steadily accumulated in the country." The Minority Report straightly imputes the condition of affairs to "over-production." Germany is at the present time suffering severely from what is called a glut of capital and of manufacturing power: she must have new markets; her Consuls all over the world are "hustling" for trade; trading settlements are forced upon Asia Minor; in East and West Africa, in China and elsewhere the German Empire is impelled to a policy of colonisation and protectorates as outlets for German commercial energy.

Every improvement of methods of production, every concentration of ownership and control, seems to accentuate the tendency. As one nation after another enters the machine economy and adopts advanced industrial methods, it becomes more difficult for its manufacturers, merchants, and financiers to dispose profitably of their economic resources, and they are tempted more and more to use their Governments in order to secure for their particular use some distant undeveloped country by annexation and protection.

The process we may be told is inevitable, and so it seems upon a superficial inspection. Everywhere appear excessive powers of production, excessive capital in search of investment. It is admitted by all business men that the growth of the powers of production in their country exceeds the growth in consumption, that more goods can be produced than can be sold at a profit, and that more capital exists than can find remunerative investment.

It is this economic condition of affairs that forms the taproot of Imperialism. If the consuming public in this country raised its standard of consumption to keep pace with every rise of productive powers, there could be no excess of goods or capital clamorous to use Imperialism in order to find markets: foreign trade would indeed exist, but there would be no difficulty in exchanging a small surplus of our manufactures for the food and raw material we annually absorbed, and all the savings that we made could find employment, if we chose, in home industries.

There is nothing inherently irrational in such a supposition. Whatever is, or can be, produced, can be consumed, for a claim upon it, as rent, profit, or wages, forms part of the real income of some member of the community, and he can consume it, or else exchange it for some other consumable with some one else who will consume it. With everything that is produced a consuming power is born. If then there are goods which cannot get consumed, or which cannot even get produced because it is evident they cannot get consumed, and if there is a quantity of capital and labour which cannot get full employment because its products cannot get consumed, the only possible explanation of this paradox is the refusal of owners of consuming power to apply that power in effective demand for commodities.

It is, of course, possible that an excess of producing power might exist in particular industries by misdirection, being engaged in certain manufactures, whereas it ought to have been engaged in agriculture or some other use. But no one can seriously contend that such misdirection explains the recurrent gluts and consequent depressions of modern industry, or that, when over-production is manifest in the leading manufactures, ample avenues are open for the surplus capital and labour in other industries. The general character of the excess of producing power is proved by the existence at such times of large bank stocks of idle money seeking any sort of profitable investment and finding none.

The root questions underlying the phenomena are clearly these: "Why is it that consumption fails to keep pace automatically in a community with power of production?" "Why does under-consumption or over-saving occur?" For it is evident that the consuming power, which, if exercised, would keep tense the reins of production, is in part withheld, or in other words is "saved" and stored up for investment. All saving for investment does not imply slackness of production; quite the contrary. Saving is economically justified, from the social standpoint, when the capital in which it takes material shape finds full employment in helping to produce commodities which, when produced, will be consumed. It is saving in excess of this amount that causes mischief, taking shape in surplus capital which is not needed to assist current consumption, and which either lies idle, or tries to oust existing capital from its employment, or else seeks speculative use abroad under the protection of the Government.

But it may be asked, "Why should there be any tendency to over-saving? why should the owners of consuming power withhold a larger quantity for savings than can be serviceably employed?" Another way of putting the same question is this, "Why should not the pressure of present wants keep pace with every possibility of satisfying them?" The answer to these pertinent questions carries us to the broadest issue of the distribution of wealth. If a tendency to distribute income or consuming power according to needs were operative, it is evident that consumption would rise with every rise of producing power, for human needs are illimitable, and there could be no excess of saving. But it is quite otherwise in a state of economic society where distribution has no fixed relation to needs, but is determined by other conditions which assign to some people a consuming power vastly in excess of needs or possible uses, while others are destitute of consuming power enough to satisfy even the full demands of physical efficiency. The following illustration may serve to make the issue clear. "The volume of production has been constantly rising owing to the development of modern machinery. There are two main channels to carry off these products—one channel carrying off the product destined to be consumed by the workers, and the other channel carrying off the remainder to the rich. The workers' channel is in rock-bound banks that cannot enlarge, owing to the competitive wage system preventing wages rising pro rata with increased efficiency. Wages are based upon cost of living, and not upon efficiency of labour. The miner in the poor mine gets the same wages per day as the miner in the adjoining rich mine. The owner of the rich mine gets the advantage—not his labourer. The channel which conveys the goods destined to supply the rich is itself divided into two streams. One stream carries off what the rich 'spend' on themselves for the necessities and luxuries of life. The other is simply an 'overflow' stream carrying off their 'savings.' The channel for spending, i.e. the amount wasted by the rich in luxuries, may broaden somewhat, but owing to the small number of those rich enough to indulge in whims it can never be greatly enlarged, and at any rate it bears such a small proportion to the other channel that in no event can much hope of avoiding a flood of capital be hoped for from this division. The rich will never be so ingenious as to spend enough to prevent over-production. The great safety overflow channel which has been continuously more and more widened and deepened to carry off the ever-increasing flood of new capital is that division of the stream which carried the savings of the rich, and this is not only suddenly found to be incapable of further enlargement, but actually seems to be in the process of being dammed up." 25

Though this presentation over-accentuates the cleavage between rich and poor and over-states the weakness of the workers, it gives forcible and sound expression to a most important and ill-recognised economic truth. The "overflow" stream of savings is of course fed not exclusively from the surplus income of "the rich"; the professional and industrial middle classes, and to some slight extent the workers, contribute. But the "flooding" is distinctly due to the automatic saving of the surplus income of rich men. This is of course particularly true of America, where multi-millionaires rise quickly and find themselves in possession of incomes far exceeding the demands of any craving that is known to them. To make the metaphor complete, the overflow stream must be represented as re-entering the stream of production and seeking to empty there all the "savings" that it carries. Where competition remains free, the result is a chronic congestion of productive power and of production, forcing down home prices, wasting large sums in advertising and in pushing for orders, and periodically causing a crisis followed by a collapse, during which quantities of capital and labour lie unemployed and unremunerated. The prime object of the trust or other combine is to remedy this waste and loss by substituting regulation of output for reckless over-production. In achieving this it actually narrows or even dams up the old channels of investment, limiting the overflow stream to the exact amount required to maintain the normal current of output. But this rigid limitation of trade, though required for the separate economy of each trust, does not suit the trust-maker, who is driven to compensate for strictly regulated industry at home by cutting new foreign channels as outlets for his productive power and his excessive savings. Thus we reach the conclusion that Imperialism is the endeavour of the great controllers of industry to broaden the channel for the flow of their surplus wealth by seeking foreign markets and foreign investments to take off the goods and capital they cannot sell or use at home.

The fallacy of the supposed inevitability of imperial expansion as a necessary outlet for progressive industry is now manifest. It is not industrial progress that demands the opening up of new markets and areas of investment, but mal-distribution of consuming power which prevents the absorption of commodities and capital within the country. The over-saving which is the economic root of Imperialism is found by analysis to consist of rents, monopoly profits, and other unearned or excessive elements of income, which, not being earned by labour of head or hand, have no legitimate raison d'être. Having no natural relation to effort of production, they impel their recipients to no corresponding satisfaction of consumption: they form a surplus wealth, which, having no proper place in the normal economy of production and consumption, tends to accumulate as excessive savings. Let any turn in the tide of politico-economic forces divert from these owners their excess of income and make it flow, either to the workers in higher wages, or to the community in taxes, so that it will be spent instead of being saved, serving in either of these ways to swell the tide of consumption—there will be no need to fight for foreign markets or foreign areas of investment.

Many have carried their analysis so far as to realise the absurdity of spending half our financial resources in fighting to secure foreign markets at times when hungry mouths, ill-clad backs, ill-furnished houses indicate countless unsatisfied material wants among our own population. If we may take the careful statistics of Mr. Rowntree 26 for our guide, we shall be aware that more than one-fourth of the population of our towns is living at a standard which is below bare physical efficiency. If, by some economic readjustment, the products which flow from the surplus saving of the rich to swell the overflow streams could be diverted so as to raise the incomes and the standard of consumption of this inefficient fourth, there would be no need for pushful Imperialism, and the cause of social reform would have won its greatest victory.

It is not inherent in the nature of things that we should spend our natural resources on militarism, war, and risky, unscrupulous diplomacy, in order to find markets for our goods and surplus capital. An intelligent progressive community, based upon substantial equality of economic and educational opportunities, will raise its standard of consumption to correspond with every increased power of production, and can find full employment for an unlimited quantity of capital and labour within the limits of the country which it occupies. Where the distribution of incomes is such as to enable all classes of the nation to convert their felt wants into an effective demand for commodities, there can be no over-production, no under-employment of capital and labour, and no necessity to fight for foreign markets.

The most convincing condemnation of the current economy is conveyed in the difficulty which producers everywhere experience in finding consumers for their products: a fact attested by the prodigious growth of classes of agents and middlemen, the multiplication of every sort of advertising, and the general increase of the distributive classes. Under a sound economy the pressure would be reversed: the growing wants of progressive societies would be a constant stimulus to the inventive and operative energies of producers, and would form a constant strain upon the powers of production. The simultaneous excess of all the factors of production, attested by frequently recurring periods of trade depression, is a most dramatic exhibition of the false economy of distribution. It does not imply a mere miscalculation in the application of productive power, or a brief temporary excess of that power; it manifests in an acute form an economic waste which is chronic and general throughout the advanced industrial nations, a waste contained in the divorcement of the desire to consume and the power to consume.

If the apportionment of income were such as to evoke no excessive saving, full constant employment for capital and labour would be furnished at home. This, of course, does not imply that there would be no foreign trade. Goods that could not be produced at home, or produced as well or as cheaply, would still be purchased by ordinary process of international exchange, but here again the pressure would be the wholesome pressure of the consumer anxious to buy abroad what he could not buy at home, not the blind eagerness of the producer to use every force or trick of trade or politics to find markets for his "surplus" goods.

The struggle for markets, the greater eagerness of producers to sell than of consumers to buy, is the crowning proof of a false economy of distribution. Imperialism is the fruit of this false economy; "social reform" is its remedy. The primary purpose of "social reform," using the term in its economic signification, is to raise the wholesome standard of private and public consumption for a nation, so as to enable the nation to live up to its highest standard of production. Even those social reformers who aim directly at abolishing or reducing some bad form of consumption, as in the Temperance movement, generally recognise the necessity of substituting some better form of current consumption which is more educative and stimulative of other tastes, and will assist to raise the general standard of consumption.

There is no necessity to open up new foreign markets; the home markets are capable of indefinite expansion. Whatever is produced in England can be consumed in England, provided that the "income," or power to demand commodities, is properly distributed. This only appears untrue because of the unnatural and unwholesome specialisation to which this country has been subjected, based upon a bad distribution of economic resources, which has induced an overgrowth of certain manufacturing trades for the express purpose of effecting foreign sales. If the industrial revolution had taken place in an England founded upon equal access by all classes to land, education and legislation, specialisation in manufactures would not have gone so far (though more intelligent progress would have been made, by reason of a widening of the area of selection of inventive and organising talents); foreign trade would have been less important, though more steady; the standard of life for all portions of the population would have been high, and the present rate of national consumption would probably have given full, constant, remunerative employment to a far larger quantity of private and public capital than is now employed. 27 For the over-saving or wider consumption that is traced to excessive incomes of the rich is a suicidal economy, even from the exclusive standpoint of capital; for consumption alone vitalises capital and makes it capable of yielding profits. An economy that assigns to the "possessing" classes an excess of consuming power which they cannot use, and cannot convert into really serviceable capital, is a dog-in-the-manger policy. The social reforms which deprive the possessing classes of their surplus will not, therefore, inflict upon them the real injury they dread; they can only use this surplus by forcing on their country a wrecking policy of Imperialism. The only safety of nations lies in removing the unearned increments of income from the possessing classes, and adding them to the wage-income of the working classes or to the public income, in order that they may be spent in raising the standard of consumption.

Social reform bifurcates, according as reformers seek to achieve this end by raising wages or by increasing public taxation and expenditure. These courses are, not essentially contradictory, but are rather complementary. Working-class movements aim, either by private co-operation or by political pressure on legislative and administrative government, at increasing the proportion of the national income which accrues to labour in the form of wages, pensions, compensation for injuries, c. State Socialism aims at getting for the direct use of the whole society an increased share of the "social values" which arise from the closely and essentially co-operative work of an industrial society, taxing property and incomes so as to draw into the public exchequer for public expenditure the "unearned elements" of income, leaving to individual producers those incomes which are necessary to induce them to apply in the best way their economic energies, and to private enterprises those businesses which do not breed monopoly, and which the public need not or cannot undertake. These are not, indeed, the sole or perhaps the best avowed objects of social reform movements. But for the purposes of this analysis they form the kernel.

Trade Unionism and Socialism are thus the natural enemies of Imperialism, for they take away from the "imperialist" classes the surplus incomes which form the economic stimulus of Imperialism.

This does not pretend to be a final statement of the full relations of these forces. When we come to political analysis we shall perceive that the tendency of Imperialism is to crush Trade Unionism and to "nibble" at or parasitically exploit State Socialism. But, confining ourselves for the present to the narrowly economic setting, Trade Unionism and State Socialism may be regarded as complementary forces arrayed against Imperialism, in as far as, by diverting to working-class or public expenditure elements of income which would otherwise be surplus savings, they raise the general standard of home consumption and abate the pressure for foreign markets. Of course, if the increase of working-class income were wholly or chiefly "saved," not spent, or if the taxation of unearned incomes were utilised for the relief of other taxes borne by the possessing classes, no such result as we have described would follow. There is, however, no reason to anticipate this result from trade-union or socialistic measures. Though no sufficient natural stimulus exists to force the well-to-do classes to spend in further luxuries the surplus incomes which they save, every working-class family is subject to powerful stimuli of economic needs, and a reasonably governed State would regard as its prime duty the relief of the present poverty of public life by new forms of socially useful expenditure.

But we are not here concerned with what belongs to the practical issues of political and economic policy. It is the economic theory for which we claim acceptance—a theory which, if accurate, dispels the delusion that expansion of foreign trade, and therefore of empire, is a necessity of national life.

Regarded from the standpoint of economy of energy, the same "choice of life," confronts the nation as the individual. An individual may expend all his energy in acquiring external possessions, adding field to field, barn to barn; factory to factory—may "spread himself" over the widest area of property, amassing material wealth which is in some sense "himself" as containing the impress of his power and interest. He does this by specialising upon the lower acquisitive plane of interest at the cost of neglecting the cultivation of the higher qualities and interests of his nature. The antagonism is not indeed absolute. Aristotle has said, "We must first secure a livelihood and then practise virtue." Hence the pursuit of material property as a reasonable basis of physical comfort would be held true economy by the wisest men; but the absorption of time, energy, and interest upon such quantitative expansion at the necessary cost of starving the higher tastes and faculties is condemned as false economy. The same issue comes up in the business life of the individual: it is the question of intensive versus extensive cultivation. A rude or ignorant farmer, where land is plentiful, is apt to spread his capital and labour over a large area, taking in new tracts and cultivating them poorly. A skilled, scientific farmer will study a smaller patch of land, cultivate it thoroughly, and utilise its diverse properties, adapting it to the special needs of his most remunerative markets. The same is true of other businesses; even where the economy of large-scale production is greatest there exists some limit beyond which the wise business man will not go, aware that in doing so he will risk by enfeebled management what he seems to gain by mechanical economies of production and market.

Everywhere the issue of quantitative versus qualitative growth comes up. This is the entire issue of empire. A people limited in number and energy and in the land they occupy have the choice of improving to the utmost the political and economic management of their own land, confining themselves to such accessions of territory as are justified by the most economical disposition of a growing population; or they may proceed, like the slovenly farmer, to spread their power and energy over the whole earth, tempted by the speculative value or the quick profits of some new market, or else by mere greed of territorial acquisition, and ignoring the political and economic wastes and risks involved by this imperial career. It must be clearly understood that this is essentially a choice of alternatives; a full simultaneous application of intensive and extensive cultivation is impossible. A nation may either, following the example of Denmark or Switzerland, put brains into agriculture, develop a finely varied system of public education, general and technical, apply the ripest science to its special manufacturing industries, and so support in progressive comfort and character a considerable population upon a strictly limited area; or it may, like Great Britain, neglect its agriculture, allowing its lands to go out of cultivation and its population to grow up in towns, fall behind other nations in its methods of education and in the capacity of adapting to its uses the latest scientific knowledge, in order that it may squander its pecuniary and military resources in forcing bad markets and finding speculative fields of investment in distant corners of the earth, adding millions of square miles and of unassimilable population to the area of the Empire.

The driving forces of class interest which stimulate and support this false economy we have explained. No remedy will serve which permits the future operation of these forces. It is idle to attack Imperialism or Militarism as political expedients or policies unless the axe is laid at the economic root of the tree, and the classes for whose interest Imperialism works are shorn of the surplus revenues which seek this outlet.

Part I, Chapter VII: Imperialist Finance

The analysis of economic forces in the foregoing chapter explains the character which public finance assumes in States committed to an imperialist policy. Imperialism, as we see, implies the use of the machinery of government by private interests, mainly capitalist, to secure for them economic gains outside their country. The dominance of this factor in public policy imposes a special character alike upon expenditure and taxation.

The accompanying diagram brings into clear light the main features of the national expenditure of Great Britain during the last three decades of the nineteenth century.

The first feature is the rate of growth of national expenditure taken as a whole. This growth has been far faster than the growth of foreign trade. For whereas the average yearly value of our foreign trade for 1870-75 amounting to £636,000,000 increased in the period 1895-98 to £737,000,000, the average public expenditure advanced over the same period from £63,160,000 to £94,450,000. It is faster than the growth of the aggregate national income, which, according to the rough estimates of statisticians, advanced during the same period from about £1,200,000,000 to £1,700,000,000. The rate of growth has greatly quickened during the later half of the period in question, for, leaving out of consideration war expenditure, the rise of ordinary imperial expenditure has been from £87,423,000 in 1888 to £128,600,000 in 1900.

The most salient feature of the diagram is the small proportion of the national revenue expended for what may be regarded as directly productive purposes of government. Roughly speaking, three-quarters of the money goes for naval and military expenditure, and for the payment of military debts, about five shillings in the pound being available for education, civil government, and the dubious policy of grants in aid of local taxation. 28

The only satisfactory incident disclosed by the table is the growing amount and proportion of public money spent on education. A substantial part of the sum expended as aid to local taxation has simply gone as a dole to landowners.

The direct military and naval expenditure during the period has increased faster than the total expenditure, the growth of trade, of national income, or any other general indication of national resources. In 1875 the army and navy cost less than a 24½ millions out of a total expenditure of 65 millions; in 1898 they cost nearly 43 millions out of a total of 99 millions.

The enormous expenditure upon the South African war will admittedly be followed by a demand for a large permanent increase in these branches of expenditure, amounting to an addition of not less than £15,000,000 per annum.

This growth of naval and military expenditure from about a 5 to 60 millions in a little over a quarter of a century is the most significant fact of imperialist finance. The financial, industrial, and professional classes, who, we have shown, form the economic core of Imperialism, have used their political power to extract these sums from the nation in order to improve their investments and open up new fields for capital, and to find profitable markets for their surplus goods, while out of the public sums expended on these objects they reap other great private gains in the shape of profitable contracts, and lucrative or honourable employment.

The financial and industrial capitalists who have mainly engineered this policy, employing their own genuine convictions to conceal their ill-recognised business ends, have also made important bribes or concessions to other less directly benefited interests in order to keep their sympathy and ensure their support.

This explains the large and growing grants in aid of local taxation, almost the whole of which, interpreted by a scientific regard to incidence of taxation, must be considered as a subsidy to landowners. The support of the Church and of the liquor trade has been more cheaply purchased; the former by relief of rates on tithes and increased grants for Church schools, the latter by a policy of masterly inaction in the matter of temperance reforms and special consideration in regard to taxation.

In making the capitalist-imperialist forces the pivot of financial policy, I do not mean that other forces, industrial and political, have no independent aims and influences, but simply that the former group must be regarded as the true determinant in the interpretation of actual policy.

We have identified almost all the organised interests, commonly summed under the head of Capitalism, including land capital, with Imperialism. Most of them participate directly in one or other of the two sorts of gain which attend this policy: the interest, trade profits, or employment furnished by the imperialist policy; or the interest, profit, or employment connected with military and civil expenditure itself.

It cannot be too clearly recognised that increasing public expenditure, apart from all political justification, is a direct source of gain to certain well-organised and influential interests, and to all such Imperialism is the chief instrument of such increasing expenditure.

While the directors of this definitely parasitic policy are capitalists, the same motives appeal to special classes of the workers. In many towns most important trades are dependent upon Government employment or contracts; the Imperialism of the metal and shipbuilding centres is attributable in no small degree to this fact. Members of Parliament freely employ their influence to secure contracts and direct trade to their constituents; and every growth of public expenditure enhances this dangerous bias.

The clearest significance of imperialist finance, however, appears on the side, not of expenditure, but of taxation. The object of those economic interests which use the public purse for purposes of private gain is in large measure defeated if they have first to find the money to fill that purse. To avert the direct incidence of taxation from their own shoulders on to those of other classes or of posterity is a natural policy of self-defence.

A sane policy of taxation would derive the whole or the main part of the national revenue from unearned increments of land values and from profits in trades which, by virtue of some legal or economic protection screening them from close competition, are able to earn high rates of interest or profit. Such taxation would be borne most easily, falling upon unearned elements of incomes, and would cause no disturbance of industry. This, however, would imply the taxation of precisely those elements which constitute the economic taproot of Imperialism. For it is precisely the unearned elements of income which tend towards an automatic process of accumulation, and which, by swelling the stream of surplus capital seeking markets of investment or markets for the surplus goods it helps to make, direct political forces into Imperialism. A sound system of taxation would, therefore, strike at the very root of the malady.

On the other hand, were the capitalist-imperialist forces openly to shift the burden of taxation on to the shoulders of the people, it would be difficult under popular forms of government to operate such an expensive policy. The people must pay, but they must not know they are paying, or how much they are paying, and the payment must be spread over as long a period as possible.

To take a concrete example from recent history. The medley of financial and political interests which inveigled Great Britain into spending some two hundred millions of public money, in order to obtain for them control of the land and mineral resources of the South African Republics, could not possibly have achieved their object if they had been compelled to raise the money by sending round a tax-gatherer to take from every citizen in hard cash the several pounds which constituted his share of the taxes—the share which by more crooked ways was to be got out of him.

To support Imperialism by direct taxation of incomes or property would be impossible. Where any real forms of popular control existed, militarism and wars would be impossible if every citizen was made to realise their cost by payments of hard cash. Imperialism, therefore, makes everywhere for indirect taxation; not chiefly on grounds of convenience, but for purposes of concealment. Or perhaps it would be more just to say that Imperialism takes advantage of the cowardly and foolish preference which the average man everywhere exhibits for being tricked out of his contribution to the public funds, using this common folly for its own purposes. It is seldom possible for any Government, even in the stress of some grave emergency, to impose an income-tax; even a property-tax is commonly evaded in all cases of personal property, and is always unpopular. The case of England is an exception which really proves the rule.

The repeal of import duties and the establishment of Free Trade marked the political triumph of the new manufacturing and commercial plutocracy over the landowning aristocracy. Free Trade was so profitable to the former classes in securing cheap importation of raw materials and in cheapening the subsistence of labour at a time when England's priority in new industrial methods offered an indefinitely rapid expansion of trade that they were willing to support the reimposition of the income-tax which Peel proposed in 1842 in order to enable him to repeal or reduce the import duties. When the sudden financial stress of the Crimean war came on the country the Free Trade policy was in the prime of its popularity and success, and a Liberal ministry, in preference to a reversion to Protection which would otherwise have been inevitable, gave permanency to the tax, extending the area of its application and making its removal more difficult by further repeals of import duties. No Government could now remove it, for the new unpopularity caused by finding adequate substitutes would have outweighed the credit gained by its removal, while its productivity and calculability are advantages shared in an equal degree by no other mode of taxation.

Some allowance may also be made for the principles and personal convictions of political financiers trained in the English science of political economy, and still more for the temptation of competing parties to seek the favour of the newly enfranchised populace by a well-paraded policy of class taxation. The seething revolutionism of the mid-century throughout Europe, the rapid growth of huge industrial centres throughout England, with their masses of ill-explored poverty and their known aptitude for ignorant agitation, made the establishment of formal democracy seem a most hazardous experiment, and both parties were in a mood to conciliate the new monster by doles or bribery. When the break-up of the old Liberal party in 1885-86 had for the first time thrown the vast preponderance of personal property on to the same side as real property, a genuinely democratic budget with a progressive income-tax and a substantial death duty became possible and seemed expedient. It is not necessary to deny that Sir William Harcourt and his colleagues were sincerely convinced of the justice as well as the expediency of this policy; but it must be remembered that no alternative was open, in face of the need of increased funds for Imperialism and education, except a volte face upon the Free Trade principles they had most stoutly championed, and a dangerous attack upon trade interests which might recoil upon the working classes, whose cause they were anxious to espouse. The financial attack on "property," embodied in the progressive income-tax and death duties, must be regarded, then, as an exceptional policy, due mainly to a combination of two causes—the difficulty of reverting suddenly to the abandoned practice of Protection, and the desire to conciliate the favour of the new unknown democracy.

Hence the anomaly of Imperialism attended by direct taxation. In no other country have the political conditions operated so. Upon the Continent Militarism and Imperialism have thriven upon indirect taxation, and have enabled the agricultural and manufacturing interests to defeat easily any movement towards Free Trade by urging the needs of revenue through tariffs. In Great Britain it seems unlikely that the policy of direct taxation upon property and income for imperial purposes will be carried any further. The Government of the propertied classes has almost shaken itself free from the traditions of Free Trade; many of the leaders and the overwhelming majority of the rank and file are avowed Protectionists so far as agriculture and certain staple industries are concerned. They are no longer seriously frightened by the power of the people as implied by a popular franchise, nor are they prepared to conciliate it by further taxes upon property; they have experimented with the temper of "the monster," and they think that by the assistance of "the trade" and the Church he is quite manageable, and can be cajoled into paying for Imperialism through protective duties. "Panem et circenses" interpreted into English means cheap booze and Mafficking. Popular education, instead of serving as a defence, is an incitement towards Imperialism; it has opened up a panorama of vulgar pride and crude sensationalism to a great inert mass who see current history and the tangled maze of world movements with dim, bewildered eyes, and are the inevitable dupes of the able organised interests who can lure, or scare, or drive them into any convenient course.

Had the Liberal party stood by the principles of peace, retrenchment, and reform, refusing to go beyond the true "colonialism" of such men as Molesworth, and rejecting the temptations to a "spirited foreign policy" dictated by bond-holders, they might now be able to resist the attack upon Free Trade which seems inevitable. But a Liberal party committed to a militant Imperialism whose rapidly growing expense is determined chiefly by the conduct of foreign Powers and the new arts of scientific warfare is in a hopeless dilemma. Its position as a buffer party between the propertied classes organised as Conservatism and the unorganised pressure of a loose set of forces striving to become a socialist Labour party dictates moderation, and the personnel of its leaders still drawn from the propertied classes prevents it from making any bold attempt to work Imperialism upon a basis of direct taxation upon property, raising the income and property taxes to cover every increasing need of imperialist finance. It has neither the pluck nor the principle to renounce Imperialism or to insist that the classes who seek to benefit by it shall pay for it.