Glimpses of World History

by Jawaharlal Nehru

  All this sounds monstrous and incredible, and so it is. Not even a monster would like to do it. But incredible things happen when people are thoroughly afraid and are fighting a life-and-death struggle. The very fear that the enemy country might adopt such unfair and monstrous methods induces each country to be first in the field. For the weapons are so terrible that the country that uses them first has a great advantage. Fear has big eyes!

  Indeed, poison gas was used extensively during the last war, and it is well known that all the great Powers have now got large factories to manufacture this gas for war purposes. A curious result of all this is that the real fighting in the next big war will take place not at the front, where some armies might dig themselves in and face each other, but behind the fronts, in the cities and homes of the civilian population. It may even be that the safest place during the war will be the front, for the troops will be fully protected there from air attacks and poison gases and infection! There will be no such protection for the men left behind, or the women, or the children.

  What will be the result of all this? Universal destruction? The end of the fine structure of culture and civilization that centuries of effort have built up?

  What will happen no one knows. We cannot tear the veil from the future. We see two processes going on today in the world, two rival and contradictory processes. One is the progress of co-operation and reason, and the building up of the structure of civilization; the other a destructive process, a tearing up of everything, an attempt by mankind to commit suicide. And both go faster and faster, and both arm themselves with the weapons and technique of science. Which will win?

  184

  The Great Depression and World Crisis

  July 19, 1933

  The more one thinks of the powers that science has placed at the disposal of man, and the use that man is putting them to, the more one wonders. For the plight of the capitalist world today is indeed an astonishing one. By means of the radio, science carries our voices to distant lands, by wireless telephone we speak to people at the other ends of the earth, and soon we shall be able to see them by means of the “television”. By its wonderful technique science can produce all that mankind needs in abundance, and rid the world forever of the ancient curse of poverty. From the earliest days in the dawn of history, men had tried to find some relief from their daily toil which crushed them, giving little return, in dreams of an El Dorado, a land flowing with milk and honey and with every kind of plenty. They had imagined a golden age that was past, and they had looked forward to a paradise to come where they would at last have peace and joy. And then came science and placed the means of creating plenty at their disposal, and yet in the midst of this actual and possible plenty, the majority of mankind still lived in misery and destitution. Is this not an amazing paradox?

  Our present-day society is actually embarrassed by science and its abundant gifts. They do not fit in with each other; there is conflict between the capitalist form of society and the latest scientific technique and methods of production. Society has learnt how to produce but not how to distribute what it has produced.

  After this little preamble, let us have a look at Europe and America again. I have told you something already of their troubles and difficulties during the first ten years after the World War. The defeated countries— Germany and the small countries of central Europe—were very badly hit by the post-war conditions, and their currencies collapsed, ruining their middle classes. The victor and creditor Powers of Europe were little better off. Each of them owed money to America and had a tremendous internal national war debt, and the burden of these two debts made them stumble and stagger. They lived in the hope of getting money from Germany as Reparations, and using this for payment of their foreign debts at least. This hope was not a very reasonable one, for Germany was not even a solvent country. But the difficulty was got over by America lending money to Germany, who then paid England, France, etc., their share of the Reparations, and they in their turn paid America part of their debts.

  The United States was the only country during this decade, that was prosperous. It seemed to be overflowing with money, and this very prosperity led to extravagant hopes and gambling in securities and shares.

  The general impression in the capitalist world was that the economic crisis would pass as previous slumps had done, and that the world would gradually settle down to another period of prosperity. Indeed, the life of capitalism seems to have been an alternation between prosperity and crisis. It had been pointed out long ago that this was in the very nature of the unplanned and unscientific methods of capitalism. Prosperity in industry led to a boom period, and then everybody wanted to produce as much as possible to take advantage of this. The result was that there was over-production—that is, more was produced than could be sold. Stocks mounted up, there was a crisis, and industry slowed down again. After a period of stagnation, during which the accumulated stocks were gradually disposed of, industry woke up again, and soon there was another period of prosperity. This was the usual cycle, and most people hoped that some time or other prosperity would come back.

  In 1929, however, came a sudden change for the worse. America stopped lending money to Germany and the South American States, and thus put an end to the paper structure of loans and debt payments. It was obvious that the American capitalists would not go on lending money for ever, for this only increased their debtors’ liabilities, and made it impossible for the debts ever to be paid. They had only lent money so far because of the abundance of cash with them for which they had no use. This superfluity of spare money also led them to tremendous speculation in the Stock Exchange. There was a regular gambling fever and every one wanted to get rich quickly.

  The stoppage of loans to Germany immediately brought on a crisis, and some German banks failed. Gradually the circle of payments of reparations and debts stopped. Many of the South American governments and other small States began to default. President Hoover of the United States, observing with alarm that the whole structure of credit was collapsing, declared a year’s moratorium in July 1931. This meant that all inter-governmental debt and reparation payments were to cease for a year in order to give relief to all the debtors.

  Meanwhile, in October 1929, a striking event had taken place in America. The gambling on the Stock Exchange led to ridiculously high prices of shares, etc., and then to sudden collapse. There was a great crisis in financial circles in New York, and from that day America’s period of prosperity ended. The United States lined up with the other nations who were suffering from the slump. The depression of trade and industry now became the Great Depression, which spread all over the world. Do not think that the Stock Exchange gambling or financial crisis in New York brought on the fall of America or the depression. That was just the last straw on the camel’s back. The real reasons went far deeper.

  Trade began to shrink all over the world, and prices, especially of agricultural produce, to fall rapidly. There was said to be overproduction of almost everything, which really meant that people had no money to buy the goods produced; there was underconsumption. As manufactured articles could not be sold, they accumulated, and, naturally, the factories making them had to be closed. They could not go on making things which did not sell. This led to a great and unprecedented growth in unemployment in Europe and America and elsewhere. All industrial countries were hard hit. So also were agricultural countries which supplied food-stuffs or raw materials for industries to the world market.

  Thus India’s industries suffered to some extent, but far greater suffering was caused to the agricultural classes by the fall in prices. Ordinarily such a fall in the price of food-stuffs would have been a great boon to the people, for they could get their food cheap. But this is a topsy-turvy world under the capitalist system, and this boon turned out to be a scourge. The peasantry had to pay their rent to their landlord or revenue to the government in cash, and to get this cash they had to sell their produce. Prices were so extraordinarily low that
they could not raise enough money sometimes even by selling all the stuff they had produced. And often they were turned out of their lands and their mud huts, and even their few household goods were auctioned to provide the rent. And in this way, even when food was very cheap, they, who had produced it, starved and were made homeless.

  The very interdependence of the world made this depression worldwide. Only a place like Tibet, cut off from the outside world, was, I suppose, free from it. Month by month the depression spread and trade declined. It was like paralysis creeping along and incapacitating the whole social structure. Perhaps the best way to form an idea of this decline is to examine the actual figures for world trade which the League of Nations has published. The figures represent millions of gold dollars and they are for the first three months of each year:

  These figures show us how world trade progressively declined and was, in the first quarter of 1933, 35 per cent, or about one-third, of what it had been four years earlier.

  What do these abstract figures about trade tell us in human terms? They tell us that the mass of the people are so poor that they cannot buy what they produce. They tell us that vast numbers of workers are unemployed and, with the best will in the world, cannot find work. In Europe and the United States alone there were 30,000,000 unemployed workers, Britain having as many as 3,000,000 and the United States 13,000,000. Nobody knows how many unemployed there are in India or in other countries of Asia. Probably in India alone they far exceed the total for Europe and America. Think of the vast numbers of these unemployed all over the world, and their family members who depend on them, and then you will have some idea of the human suffering caused by the trade depression. In many European countries a system of State insurance gave a subsistence allowance to all the registered unemployed; in the United States charity was doled out to them. But these allowances and doles did not go far, and many did not even get them and starved. In some parts of central and eastern Europe conditions became terrible.

  Of all the great industrial countries America was hit last by the depression, but the reaction there was greater than elsewhere. The people of America were not used to long-continuing trade depression and hardship. Proud, purse-proud America was stunned by the blow, and as the number of unemployed increased, million after million, and hunger and slow starvation became a common sight, the morale of the nation began to crack up. Confidence in banks and investments was shaken, and money was drawn out from banks and hoarded. Banks exist on the basis of confidence and credit: if this confidence goes, so does the bank. There were thousands of bank failures in the United States, and each failure added to the crisis and generally made matters worse.

  Large numbers of unemployed men and women took to vagrancy and wandered about from town to town in search of employment. They walked along the high roads, asking passing motorists to give them a lift, or often hung on to the foot-boards of slow goods-trains. Even more striking were the numbers of young boys and girls, and even children, wandering alone or in small groups up and down the huge country. Meanwhile, grown-up and able-bodied men sat idle, waiting and hoping for work, and model factories were closed down. Yet such is the nature of capitalism that, at this very time, dark and filthy sweat-shops grew up, and children of twelve and sixteen were made to work there as much as ten or twelve hours a day for a small wage. Some employers took advantage of the tremendous pressure of unemployment on these young boys and girls and made them work hard and long in their mills and factories. The depression thus brought back child labour to America, and labour laws prohibiting this as well as other abuses were openly flouted.

  Remember that there was no lack of food or manufactured goods in America or in the rest of the world. The complaint was that there was too much, there was over-production. A well-known English economist, Sir Henry Strakosch, stated that in July 1931—that is, in the second year of the depression—there were, in the markets of the world, goods sufficient to maintain the people of the world, on the standards to which they had been accustomed, for two years and three months following, supposing that not a stroke of work was done during this interval. And yet during this very period there was privation and starvation on a scale that the modern industrial world had never seen. Side by side with this privation took place an actual destruction of food-stuffs. Crops were not gathered and were allowed to rot in the fields, fruit was left on the trees, and many articles were actually destroyed. To give you just one instance: From June 1931 to February 1933 over 14,000,000 bags of coffee were destroyed in Brazil. As each bag contains 132 lb., over 1,848,000,000 lb. of coffee were thus destroyed! This was more than enough for the total population of the world, giving every person a pound to himself. And yet we know that millions of people who would welcome coffee cannot afford it.

  Besides coffee, wheat was destroyed, and cotton, and many other things. Steps were also taken to lessen production in future by restricting the sowing of cotton, rubber, tea, etc. All this destruction and restriction was done to raise prices of agricultural produce, so that a shortage might create a demand and push prices up. For the farmer who sells his goods in the market this would no doubt be profitable, but for the consumers? Truly, this world of ours is curious. If there is under-production, prices are so high that most people cannot afford to buy, and there is privation. If there is over-production, prices fall so low that industry and agriculture cannot function, and there is unemployment, and how can the unemployed buy anything, for they have no money to buy with! In either event, whether there is scarcity or abundance, the lot of the masses is privation.

  As I have said, there was no lack of goods in America or elsewhere during the depression. The farmers had agricultural produce which they could not dispose of, and the city people had manufactured goods which they could not sell. And yet each wanted the other’s goods. The process of exchange got held up because of the lack of money on either side. And then, in highly industrialized, advanced, capitalistic America, many people took to the ancient method of barter, which had existed in the old days before money came into use. Hundreds of barter organizations developed in America. As the capitalistic system of exchange broke down for lack of money, people began to do without money and to exchange goods and services. Exchange associations arose to help this barter by issuing certificates. An interesting instance of barter was that of a dairyman who gave milk, butter, and eggs to a university in exchange for the education of his children.

  Barter also developed to some extent in other countries. There were also many instances of barter between nations as the complicated system of international exchanges broke down. Thus England bartered coal for Scandinavian timber; Canada gave aluminium for Soviet oil; the United States bartered wheat for Brazilian coffee.

  The farmers in America were hard hit by the slump, and they could not pay back the money they had borrowed from banks on mortgages on their farms. The banks thereupon tried to realize the money by getting the farms sold up. But the farmers would not allow this, and they organized themselves in committees of action to prevent such sales. The result was that no one dared to bid for a farmer’s property at such an auction and the banks were forced to agree to the farmers’ terms. This farmers’ revolt spread in the Middle-West agricultural regions of America and was significant as showing how the development of the crisis was making these conservative farmers of old American stock, who had long been the backbone of the country, more aggressive and revolutionary in outlook. Their movement was native to the country and had no connection with socialism or communism. Economic distress was changing these middle-class farmers with property rights into peasants who are just tillers of the soil and own little property. Among their slogans were: “Human rights are above legal and property rights”, and “Wives and children have the first mortgage”.

  I have dealt at some length with conditions in the United States because America is in many ways a fascinating country. It is the most advanced of capitalist countries, and it has no feudal roots in the past such as Europe and Asia
have. Changes there are thus apt to be rapid. Other countries are more used to privation for the masses; in America this was a new and staggering phenomenon on such a big scale. You can judge the state of other countries during the depression from what I have told you about America. Some were far worse, others were a little better. On the whole, agricultural and backward countries were not so badly hit as advanced industrial ones. Their very backwardness saved them to some extent. Their chief trouble was the collapse of agricultural prices, which brought great hardship to the peasantry. Australia, which is mainly agricultural, could not pay her debts to the English banks, and was on the verge of bankruptcy because of this fall in prices. To save herself she had to agree to hard conditions from the English bankers. In a depression the class which flourishes and dominates over others is the banker class.

  In South America the stoppage of loans from the United States and the depression brought a crisis which upset most of the republican governments, or rather the dictators that ruled there. There were revolutions all over the south, including the three leading countries— the ABC countries—Argentine, Brazil, and Chile. These revolutions were, like all South American revolutions, palace affairs, just changing dictators and governments at the top. The person or group that controls the army and police governs the country. All the South American governments were heavily in debt and most of them defaulted.

  185

  What Caused the Crisis

  July 21, 1933

  The great depression held the world by the throat and strangled or slowed up almost all activities. The wheels of industry stopped running in many places; fields that used to produce food and other crops lay fallow and untilled; rubber-trees oozed out rubber, but there was none to collect it; hillsides that were covered with well-looked-after tea-bushes ran wild and there was no one to tend them. And those who used to do all this work joined the great armies of the unemployed and waited for work and employment that did not come and, helpless and almost hopeless, faced hunger and privation. In many countries the number of suicides greatly increased.