The Great Illusion

the action of the British Government, therefore, renders the stock all but valueless, and in the case of the shares of the private companies entirely so. The paper becomes unsaleable. But it is held in various forms⁠—as collateral and otherwise⁠—by many important banking concerns, insurance companies, and so on, and this sudden collapse of value shatters their solvency. Their collapse not only involves many credit institutions in Germany, but, as these in their turn are considerable debtors of London, English institutions are also involved. London is also involved in another way. As explained previously, many foreign concerns keep balances in London, and the action of the British Government having precipitated a monetary crisis in Germany, there is a run on London to withdraw all balances. In a double sense London is feeling the pinch, and it would be a miracle if already at this point the whole influence of British finance were not thrown against the action of the British Government. Assume, however, that the Government, making the best of a bad job, continues its administration of the property, and proceeds to arrange for loans for the purpose of putting it once more in good condition after the ravages of war. The banks, however, finding that the original titles have through the action of the British Government become waste paper, and British financiers having already burned their fingers with that particular class of property, withhold support, and money is only procurable at extortionate rates of interest⁠—so extortionate that it becomes quite evident that as a Governmental enterprise the thing could not be made to pay. An attempt is made to sell the property to British and German concerns. But the same paralyzing sense of insecurity hangs over the whole business. Neither German nor British financiers can forget that the bonds and shares of this property have already been turned into waste paper by the action of the British Government. The British Government finds, in fact, that it can do nothing with the financial world unless first it confirms the title of the original owners to the property, and gives an assurance that titles to all property throughout the conquered territory shall be respected. In other words, confiscation has been a failure.

It would really be interesting to know how those who talk as though confiscation were still an economic possibility would proceed to effect it. As material property in the form of that booty which used to constitute the spoils of victory in ancient times, the gold and silver goblets, etc., would be quite inconsiderable, and as Britain cannot carry away sections of Berlin and Hamburg, she could only annex the paper tokens of wealth⁠—the shares and bonds. But the value of those tokens depends upon the reliance which can be placed upon the execution of the contracts which they embody. The act of military confiscation upsets all contracts, and the courts of the country from which contracts derive their force would be paralyzed if judicial decisions were thrust aside by the sword. The value of the stocks and shares would collapse, and the credit of all those persons and institutions interested in such property would also be shaken or shattered, and the whole credit system, being thus at the mercy of alien governors only concerned to exact tribute, would collapse like a house of cards. German finance and industry would show a condition of panic and disorder beside which the worst crises of Wall Street would pale into insignificance. Again, what would be the inevitable result? The financial influence of London itself would be thrown into the scale to prevent a panic in which London financiers would be involved. In other words, British financiers would exert their influence upon the British Government to stop the process of confiscation.

But the intangibility of wealth can be shown in yet another fashion. I once asked an English chartered accountant, very subject to attacks of Germanophobia, how he supposed the Germans would profit by the invasion of England, and he had a very simple programme. Admitting the impossibility of sacking the Bank of England, they would reduce the British population to practical slavery, and make them work for their foreign taskmasters, as he put it, under the rifle and lash. He had it all worked out in figures as to what the profit would be to the conqueror. Very well, let us follow the process. The population of Great Britain are not allowed to spend their income, or at least are only allowed to spend a portion of it, on themselves. Their dietary is reduced more or less to a slave dietary, and the bulk of what they earn is to be taken by their “owners.” But how is this income, which so tempts the Germans, created⁠—these dividends on the railroad shares, the profits of the mills and mines and provision companies and amusement concerns? The dividends are due to the fact that the population eat heartily, clothe themselves well, travel on railroads, and go to theatres and music-halls. If they are not allowed to do these things, if, in other words, they cannot spend their money on these things, the dividends disappear. If the German taskmasters are to take these dividends, they must allow them to be earned. If they allow them to be earned, they must let the population live as it lived before⁠—spending their income on themselves; but if they spend their income on themselves, what is there, therefore, for the taskmasters? In other words, consumption is a necessary factor of the whole thing. Cut out consumption, and you cut out the profits. This glittering wealth, which so tempted the invader, has disappeared. If this is not intangibility, the word has no meaning. Speaking broadly and generally, the conqueror in our day has before him two alternatives: to leave things alone, and in order to do that he need not have left his shores; or to interfere by confiscation in some form, in which case he dries up the source of