Liberalism at Large

by Alexander Zevin

  Here the Economist played its best card on behalf of a liberal empire – for no better authority on the ebb and flow of capital within it existed. Asquith might respond to financiers complaining of Liberal mismanagement by pointing out that consols had fallen even further under the Unionists, or to his own strides in cutting the national debt. But the Economist had been eyeing overseas investment since before Lloyd George was born, putting even a relatively ‘flat’ period for foreign issues since the early 1890s into perspective.69 In it, readers found a careful breakdown of the interest on foreign and colonial government securities, as well as company dividends, income disclosed by bankers, coupon dealers, persons, firms, public companies and railways. Close tabs were kept on the top customers for debt, which, with the notable exception of the United States, were formal or informal colonies: India, South Africa, Australasia, Canada, and Argentina.70

  ‘Surely we can look composedly upon the exports of British capital as the surplus profits of an enormously wealthy country, whose trade spreads all over the world’, argued the Economist on Smithian lines, putting the total at over £3 billion in 1909. ‘There is no fear of our home industries being starved. Capital is cheaper here and credit more abundant than in any other country.’71 Unionist politicians, journalists and bankers attempting to smear the budget argued the opposite, using the Economist’s own figures to show that London sent abroad over eight times what it raised for domestic purposes. ‘They omit to explain that most sections of British industry are never publicly financed, but draw on private men’, syndicates, insurers and provincial banks, the paper retorted.72 It feigned surprise to hear Lord Revelstoke, head of Barings, bewail the ‘exodus’ of British capital on account of ‘wicked’ Lloyd George, ‘to quarters where it is more warmly welcomed’. ‘We fancy that the largest foreign loan in London since this Government came into office was issued by Baring Bros’ to Russia – where high risk and high returns, not security, had attracted it. It was poor countries that borrowed in London, and this was a boon for Britain, Hirst argued in step with Paish at the Statist, and with Hobson: pushing back distant frontiers would yield a new bounty of cheap food to workers (a rise in prices since the mid-1890s had hurt their buying power), raw materials to industry, and a steady demand for British exports.73

  Whatever stigma Hirst had ascribed to finance at the turn of the century had vanished by 1909, with the City emerging as a bastion of free trade dynamism and British ‘soft’ power – uniting the Empire and the world through investment and trade rather than brute force. The reissue of Bagehot’s Lombard Street in 1910 was a moment to savour the City’s global reach, and celebrate the great banker and editor who had anticipated its turn to foreign flotation and investment. The Boer War may have been a setback, swallowing £160 million, or two years of British savings, but

  Wall Street’s boastful anticipations that it would succeed London as the centre of the financial world were humbled to the dust by the crisis of 1907, when all the banks of the United States suspended payments. Never was the City of London’s hegemony more plainly demonstrated. The Bank of England’s rate controlled the world. London attracted gold from every part of the compass and doled it out to New York and Chicago as a good doctor distributes drugs to suffering patients.74

  In the Stock Exchange, an investment guide from 1911, Hirst beamed with pride at ‘the banking and financial centre of the world’, where ‘our merchants and shippers seek profit in every corner of the globe; our investors large and small have interests in every continent, and the London Stock Exchange List is itself a sort of key to the distribution of trade and capital’.75 While he might be accused of a bias in favour of small investors, he added, ‘I would beg to assure the reader that he and I have no better friends than the numberless bankers, brokers, dealers and promoters of new undertakings who practice callings so useful and so indispensable with the highest sense of honour’. The need to educate the public about this ‘vast and delicate’ system revolving around the City, he explained by way of an epigram from Burke: ‘great empires and little minds go ill together’.76

  Misreading the Tea Leaves: Liberal Imperialists and the Run-Up to War

  Taking on the Liberal Imperialists was always the more delicate task. Hirst found it hard to gain the true measure of his foes inside the party – in part because allies such as Morley turned out to be weak, or in the case of Churchill, Harcourt or Lloyd George, hardened imperialists themselves; in part because he and other radicals overestimated their own strength based on the outcome of key Cabinet debates, so that a curious optimism muted their alarm at the galloping naval budgets up to 1914.77 Campbell-Bannerman’s grant of self-government to the defeated Boers in 1906 showed ‘splendid courage’ and ‘magnanimity’, paving the way for the Union of South Africa in 1910. This was a ‘happy outcome’ – even if the state that resulted deprived black South Africans of all civil rights – because it rebuked Grey, Haldane, Asquith and other Liberal supporters of the Boer War and the policy of ‘unconditional surrender’ they had thought necessary to win it.78 India was another example of the liberal empire at work – at least once Hirst’s mentor John Morley was appointed Secretary of State for the subcontinent at the end of 1905. The Economist heartily approved his actions there, which combined severe repression of anti-British rioting in Bengal and the Punjab in 1907, with limited political concessions. The Morley-Minto reforms added a token layer of elite native representation in India in 1909: from zero to one on executive councils of the viceroy and governors, with separate appointed and elected spots for Hindus and Muslims on the legislative councils.79 The aim of these reforms was not to prepare the way for Indian self-government under the British flag – as in South Africa – but to make such demands redundant. For Hirst, they proved that liberalism could triumph over jingoism while still pursuing vital imperial work.80 The Raj was just as central to the economic side of this vision, and Hirst used it to poke holes in the case for imperial preference.81 Revealingly, on the issue of India, this defence of Morley put the Economist on the same side as Grey. For the foreign minister, that had been the point: Morley’s ‘unimpeachable’ record of hostility to ‘the Jingo’ as the ‘devil incarnate’, wrote Grey, shielded the government from ‘sentimental’ Liberal critics of imperialism and the repression of Indian nationalism.82

  To radicals, even the Agadir Crisis in 1911 could be made to look like a victory, once the dust had settled on this major diplomatic spat. When France landed troops in Morocco en route to Fez, nominally to restore order in violation of prior treaty obligations, the other European powers descended: Spain occupied Larache, and Germany dispatched a cruiser to the port of Agadir. Britain sent a battleship, not only to track this German boat, the Panther, but to stiffen the will of the French: even Cabinet radicals worried that the latter might, without consulting them, make damaging concessions to the Kaiser in the form of a naval base on the Mediterranean.83 At the height of the crisis on 21 July, Lloyd George delivered a hawkish, pro-French speech to a City crowd, which Hirst tried to minimize as ‘a few words taken out of context’. The Chancellor had concluded his remark that Britain had the greatest financial stake in the prosperity of other countries, and thus in peace, with a warning that followed from this premise: ‘It is essential in the highest interest not merely of this country but of the world, that Britain should at all hazards maintain her place and her prestige among the great powers.’ To be treated ‘as if she were of no account in the Cabinet of Nations’, continued Lloyd George, in a threat aimed at Germany lest it steamroll France and ignore British interests – ‘peace at that price would be a humiliation intolerable for a great country like ours to endure.’84

  In private, Hirst was shaken. Even as he assured readers that such a ‘notorious pacifist’ as Lloyd George had never intended war, Hirst built a sweeping case against what he had said in the Economist. Britain had less to fear from German imperialism than French. It occupied no moral high ground, having failed ‘to resist or protest
against the buccaneering expedition of the French to Fez’, and had no casus belli, ‘unless, indeed, this nation is to tie itself to the apron-strings of France, with whom our jingoes were not very long ago anxious to go to war over a miserable swamp in Fashoda’. Moreover, £54,864,811 of trade with Germany would cease in a dispute over Morocco, which took in £1,404,741, ‘less than half our exports to Java’. If a general war ensued, it would blanket the North Sea and Baltic shipping lanes, destroy eastern ports, shutter factories, double debt, and treble taxation. Liberty, humanity, justice, the mitigation of suffering, fostering civilization – all these might justify a call to arms; a ‘sordid squabble, a scramble for concessions and commercial monopolies’ on behalf of France did not.85

  The Economist saw another way out of the bitter rivalry between France and Germany, which linked its attack on the two imperialisms, protectionist and free trade. Given the financial panic that gripped Berlin that summer, attributed to French bank withdrawals – a stock market crash, bank runs, a drain of gold abroad – all but forcing the Kaiser to back down in North Africa,86 it was a remarkable suggestion: categorically rejecting the idea that Paris was intentionally turning a ‘financial screw’ on its German neighbour, the paper argued for more French capital to cross the Rhine.87 Throw open the Paris Bourse to German industrial listings, spinning ties of mutual interest not unlike those the City wove with the British Empire.88 As tensions over Agadir eased – France ceding patches of West Africa for effective control in Morocco – Hirst was emboldened, sensing radicals had drawn a line in the sand. Grey, whose approval of secret military talks with France surfaced soon after, agreed under intense pressure in Cabinet to suspend them, and to make no formal commitments to Paris or St Petersburg in the event of a war on the continent.89

  By the summer of 1914, the great danger to the liberal imperial order seemed to come from Ireland, where Hirst thought the radicals and Imperialists agreed. If so, neither produced a Home Rule Bill before 1910, when Liberals lost their majority and came to rely on the Irish Nationalists to form a government.90 The Economist now gave more space to the issue, seeing only a small minority of Ulster Protestants, or Orangemen, barring the route. In its view, the Anglo-Irish landed class was no longer a factor; many had turned into Home Rulers, along with ‘heroes of our imperialist press’ like Cecil Rhodes, as a scheme to buy land holdings, and enfranchise Irish peasants, took effect.91 The reality was far more contentious than the Economist made it seem.92 Home Rule’s passage through the Commons in 1914 set the stage for civil war – with a mutiny of officers at Curragh, fomented by generals in London, point blank refusing to enforce the bill. The words of the Conservative opposition leader Andrew Bonar Law, who warned Liberals of forces ‘stronger than parliamentary majorities’, echoed in the Tory press: loyalist volunteers must arm without delay to defend the Empire. Days before the outbreak of the First World War in Europe, the Economist was transfixed by ‘men with machine guns’ marching through Dublin and Belfast.93

  Great War, Great Illusions

  Archduke Franz Ferdinand, heir to the Austro-Hungarian throne, was assassinated along with his wife Sophie on a visit to Sarajevo on 28 June 1914. Nearly a month later, Austria issued an ultimatum to neighbouring Serbia, accusing it of sponsoring the nationalists who carried out the killings. Focused on Ireland, like most of the press and political elite in Britain, the Economist was slow to catch up with this new chapter of the Eastern crisis. Mary Agnes Hamilton recalled the atmosphere:

  There was an argument in the Economist office about the subject of the leader for the last week in July. The staff – at that time, Leonard Reid, Gilbert Layton, A.W. Wright and myself – thought it must be about Ireland, where armed rebellion seemed to be preparing and there had just been an affray in which the King’s Own Scottish Borderers were involved. F.W.H. insisted that it must be about the expiry of the Austrian ultimatum to Serbia – which we had forgotten. Even he, however, was calmly planning a summer holiday which was to take him to visit the battlefields of Europe. He was going to Waterloo, Sedan, and so on. I can see him, now, in the brown linen suit which a very hot day and the imminent prospect of departure made suitable.94

  On 1 August, the day Germany declared war on Russia, the Economist went to press predicting a short war in the Balkans, and found nothing outrageous in Austria’s readiness to fight given the gravity of the attack that had taken place in its wayward province of Bosnia-Herzegovina. Would Britain have reacted any differently to an Afghan plot to raise a rebellion in Northwest India? If the Prince and Princess of Wales had been slain, instead of the Archduke and his wife, ‘the cry for vengeance would have been raised’.95

  Yet the Economist’s tone was calm, arguing in the same vein as the bestselling author and peace campaigner Norman Angell, that global economic integration had gone so far as to make war suicidal for all involved. Hirst did cancel his vacation, on which he was due to stop at Lucerne for a special meeting of the Carnegie Endowment for Peace, having just produced an inquiry for it into the Balkan Wars of 1912–13.96 His fear that Britain might be dragged into the latest one, however, let alone a wider conflagration, was much less acute than it had been three years earlier during the Agadir Crisis. Warmongering by the Times and Daily Mail was typical, but as ‘utterly opposed to the interests of the business community’ as ‘the instincts of the working classes’. Churchill’s ‘sensational orders to the fleet to stand fast’ on 26 July were deplorable, but showy and absurd, ‘as if whatever happened, any British Government was entitled to plunge this nation into the horrors of war, in a quarrel which is no more of our making and no more our concern than would be a quarrel between Argentina and Brazil or between China and Japan’.97 Hirst concluded, based in part on information passed to him from the Cabinet, that British neutrality was assured.

  Britain entered the war three days later on 4 August 1914, ostensibly over Germany’s violation of Belgian neutrality en route to Paris – in reality over pledges to the latter, with Grey threatening to resign and bring down the government if these were not honoured.98 Hirst heard the news with John Burns, the only workingman in the Cabinet, who had resigned two days before, anticipating its decision for war. Both men burst into tears.99 Morley quit a day later, along with junior minister Charles Trevelyan, earning them emotional praise from Hirst.100 These defections were a far cry, however, from the eleven (out of nineteen) members another ally, Harcourt, had counted a week earlier, a ‘Peace Party which if necessary shall break up the Cabinet in the interest of our abstention’.101 To underscore the collapse of any such opposition, John Simon, Attorney General (and Hirst’s former marriage counsellor), tearfully withdrew his resignation less than twenty-four hours after submitting it, while Harcourt, the Peace Party’s supposed leader, had none to retract: he took the plunge just behind Grey and Asquith, drafting plans the next day to seize German East Africa and South-West Africa, Togoland, the Cameroons, New Guinea, Nauru and Samoa.102

  Bitterness and anger are etched in every line Hirst wrote for the Economist from this moment until his firing two years later. ‘Since last week millions of men have been drawn from the factory to slay one another by order of the warlords of Europe. It is perhaps the greatest tragedy of human history.’ The Economist had implored its own government to lead the way in halting the arms race. ‘It is now too late. The explosion has come. Look where you may you can see no ray of comfort. Death, anguish, starvation, and despair are written over Western Europe. It is the triumph of diplomacy over common sense, of force over reason, of brutality over humanity.’ By 8 August, Hirst accepted that war could not be avoided, and urged those who had tried to prevent it to ‘keep our tempers’ in the name of a ‘common patriotism’. Emphasizing thrift – deer parks into vegetable gardens, luxury taxes, competitive war contracts – he also nodded at Belgium: the defence of small nationalities was a ‘consolation’ to those looking for an honourable basis for the war. But he never endorsed this as an explanation of its cause, which was rathe
r ‘the deliberate policy of Ministers, undertaken from a sense of obligation to France’, nor that it was worth the loss of British life and treasure.103

  Until then a loyal propagandist for the Liberal Party, Hirst and the Economist now diverged sharply from it. The effective suspension of the Bank Act, the printing of small paper bills by the Treasury to shore up circulation, the closure of the Stock Exchange, a moratorium on repayment of bills of exchange and other contracts, direct subventions to banks unable to make or receive payments on far-flung and frozen balance sheets during the global panic of July–August – decisive measures that earned wild plaudits for Lloyd George in much of the City – simply confirmed the Economist’s dire predictions about the effects of a major war on the delicate architecture of world finance, and above all Britain’s hegemony over it.104 For the next two years the paper attacked one betrayal of liberalism after another, with the financial bailout of 1914 as original sin: martial law, censorship, tariffs, taxes, conscription, compulsion – all followed, like so many nails in the coffin.105

  Not only did the Economist criticize these domestic policies, it encouraged peace overtures from the moment French and British forces had halted the German advance towards Paris. On the last day of the Battle of the Marne, it urged the Allies to throw out the treaty they had signed, which enjoined each to ‘fight to the finish’. Negotiate separately, avoid preconditions: casualties were just too high, at 40,000 a day, to go on for a single year. Germans possessed ‘physical bravery and daemonical courage’, while fraternization between troops in facing trenches ‘bring home to the imagination the cruel absurdities of war, and suggest to some a hope that from the soldiers in the field there might come a protest against the indefinite prolongation of its horrors’.106