Carl Axel Helmer Key - Revival: European Bankruptcy and Emigration (1924)

First published in 1924 by Methuen & Co. Ltd.

This edition first published in 2018 by Routledge
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ISBN 13: 978-1-138-55755-0 (hbk)
ISBN 13: 978-1-315-12398-1 (ebk)

T HE truth is gradually dawning on the general public that continental Europe is practically ruined, and that most of the talk about indemnities and payment of war debts is misleading. It recalls an argument in medival times between scholastics about the colour of the Popes beard. The Pope in question had no beard, and in the case of debts where nothing is left even Csar gets nothing. As proof of this one may point to the present state of Russia and Austria, where we no longer expect payment of debts, but are preparing to grant or discuss credits to restore the stability of trade and money.

With regard to the German indemnity, a heated controversy is still raging as I write. If any person thinks the time is ripe for a settlement, it is not because a practical solution of the problem has been found; it is rather because its insolubility is becoming generally recognized. However deplorable from many points of view it may appear, nevertheless the occupation of the Ruhr has done some little good, inasmuch as it has begun to open the eyes of the French. According as they have been compelled to take a more practical view of this question, they have gradually been reducing their claim. For my own part I am convinced that in the event of a definite agreement between Germany and France, the value of the paper debts concerned will prove small, but such a settlement might on the other hand have a psychological effect of the greatest importance. One may hope that subsequently some confidence in the stability of the political situation will at last return, and will, as one of its consequences, have a healthy reaction on the economic situation. But the European nations must first proceed to a more or less complete cancellation of paper debts and other assets depreciated by the war. When they have once realized that this is unavoidable, one may perhaps hope that people will begin to work and with renewed energy start to build up again from the very beginning.

So far all the talk about the discharge of debts and reparation has done a good deal of harm, as it has largely contributed to a dangerous illusion. It is often better to build a new house than to try to repair an old and ramshackle one. The same argument applies to the economic reconstruction of Europe. A good deal is not worth reconstructing. It may be better to invest in other continents the money required for European reconstruction, and thereby allow the population of Europe to emigrate instead of trying to retain it at all costs in countries where the people can no longer exist at anything like a pre-war standard.

It is often asserted that before the war continental Europe was able to feed a population as large as that which it now maintains, and that it should, therefore, be able to do so now. But this is surely a mistake. The conditions existing before the Great War will never return, not even if so-called reconstruction be achieved successfully. Before the war European industry on a large scale was confined mainly to Great Britain, Germany and Austria, and outside Europe there was only one big industrial country, viz. the United States of North America. Certain other countries, such as France and Sweden, maintained industries highly developed and specialized, though limited, and therefore of less importance. Before the Great War European industry, like that of North America, had steady and organized markets which paid by the export of raw material or in some other way. In other words, there existed a certain distribution of labour between the different nations which was upset by the Great War. Several countries, such as Russia, can no longer be depended on as customers, if indeed they have not entirely disappeared. Even the great overseas continents have been unable to purchase on the scale they did before the war. This is due, partly, to their reduced purchasing power, which may only be temporary, and partly to the fact that the competition for markets has become keener. The fact is that many countries were induced during the war to develop industries of their own if they possibly could. Many of these war-time industries have now flickered out, but some have continued. In any case the endeavours to be self-supporting and the attempts of most countries to protect a more or less artificial production of their own by means of high tariffs constitute one factor in the demoralization of markets.

At present, not only individual countries, but entire continents, show a tendency towards protection. They now make efforts to produce a little of everything at home, in the belief that during the next war they can avoid a shortage of certain products such as they suffered from during the last one. This struggle for industrial independence proceeds even on such continents as Australia and New Zealand, and, though the programme of complete self-supply may not be fully realized, considerable competition in nearly every sphere of industry must be expected in the future.

It is, too, a very serious matter for Europe that industrial production in the United States under the stress of war increased in so many branches and very often to such an extent that it has now become a question of vital importance for the industry of that country to sell its surplus production abroad. Before the Great War they were largely content with their home market.