TRAGEDY AND HOPE Chapters I-IV
by Dr. Carroll Quigley
ISBN 0913022-14-4
CONTENTS
I. INTRODUCTION: WESTERN CIVILIZATION IN ITS WORLD SETTING
II. WESTERN CIVILIZATION TO 1914
III. THE RUSSIAN EMPIRE TO 1917
IV. THE BUFFER FRINGE
Back cover
TRAGEDY AND HOPE is a lively, informed and always readable view
of our not quite One World of today, seen in historical perspective.
Quigley has already shown his command of the kind of historical
perspective seen in the a world like that of Toynbee and Spengler; but
unlike them he does not so much concern himself with projections from
a distant past to a distant future as he does with what must interest
us all much more closely - our own future and that of our immediate
descendants. He uses the insights, but in full awareness of the
limitations of our modern social sciences, and especially those of
economics, sociology, and psychology. Not all readers will agree with
what he sees ahead of us in the near future, nor with what he thinks
we should do about it. But all will find this provocative and
sometimes provoking book a stimulus to profitable reflection.
David Brinton
Inside cover
TRAGEDY AND HOPE shows the years 1895-1950 as a period of
transition from the world dominated by Europe in the nineteenth
century to the world of three blocs in the twentieth century. With
clarity, perspective and cumulative impact, Professor Quigley examines
the nature of that transition through two world wars and a worldwide
economic depression. As an interpretative historian, he tries to show
each event in the full complexity of its historical context. The
result is a unique work, notable in several ways. It gives a picture
of the world in terms of the influence of different cultures and
outlooks upon each other; it shows, more completely than in any
similar work, the influence of science and technology on human life;
and it explains, with unprecedented clarity, how the intricate
financial and commercial patterns of the West prior to 1914 influenced
the development of today's world.
Carroll Quigley, professor of history at the Foreign Service
School of Georgetown University, formerly taught at Princeton and at
Harvard. He has done research in the archives of France, Italy and
England, and is the author of the widely praised "Evolution of
Civilizations." A member of the editorial board of the monthly Current
History, he is a frequent lecturer and consultant for public and semi-
public agencies. He is a member of the American Association for the
Advancement of Science, the American Anthropological Association, and
the American Economic Association, as well as various historical
associations. He has been lecturer on Russian history at the
Industrial College of the Armed Forces since 1951 and on Africa at the
Brookings Institution since 1961, and has lectured at many other other
places including the U.S. Naval Weapons Laboratory, the Foreign
Service Institute of the State Department, and the Naval College at
Norfolk, Virginia. In 1958, he was a consultant to the Congressional
Select Committee which set up the present national space agency. He
was collaborator in history to the Smithsonian Institution after 1957,
in connection with the establishment of its new Museum of History and
Technology. In the summer of 1964 he went to the Navy Post-Graduate
School, Monterey, California, as a consultant to project Seabed, which
tried to visualize what American weapons systems would be like in
twelve years.
CHAPTER I: INTRODUCTION: WESTERN CIVILIZATION IN ITS WORLD SETTING
Page 3
Each civilization is born in some inexplicable fashion and, after
a slow start, enters a period of vigorous expansion, increasing its
size and power, both internally and at the expense of its neighbors,
until gradually a crisis of organization appears... It becomes
stabilized and eventually stagnant. After a Golden Age of peace and
prosperity, internal crises again arise. At this point, there appears
for the first time, a moral and physical weakness.
Page 5
The passage from the Age of Expansion to the Age of Conflict is
the most complex, most interesting and most critical of all periods of
the life cycle of a civilization. It is marked by four chief
characteristics: it is a period:
a) of declining rate of expansion;
b) of growing tensions and class conflicts;
c) of increasingly frequent and violent imperialist wars;
d) of growing irrationality.
Page 8
When we consider the untold numbers of other societies, simpler
than civilizations, which Western Civilization has destroyed or is now
destroying, the full frightening power of Western Civilization becomes
obvious.
This shift from an Age of Conflict to an Age of Expansion is
marked by a resumption of the investment of capital and the
accumulation of capital on a large scale.
In the new Western civilization, a small number of men, equipped
and trained to fight, received dues and services from the overwhelming
majority of men who were expected to till the soil. From this
inequitable but effective defensive system emerged an inequitable
distribution of political power and, in turn, an inequitable
distribution of the social economic income. This, in time, resulted in
an accumulation of capital, which, by giving rise to demand for luxury
goods of remote origin, began to shift the whole economic emphasis of
the society from its earlier organization in self-sufficient agrarian
units to commercial interchange, economic specialization, and, a
bourgeois class.
Page 9
At the end of the first period of expansion of Western
Civilization covering the years 970-1270, the organization of society
was becoming a petrified collection of vested interests and entered
the Age of Conflict from 1270-1420.
In the new Age of Expansion, frequently called the period of
commercial capitalism from 1440 to 1680, the real impetus to economic
expansion came from efforts to obtain profits by the interchange of
goods, especially semi-luxury or luxury goods, over long distances. In
time, profits were sought by imposing restrictions on the production
or interchange of goods rather than by encouraging these activities.
Page 10
The social organization of this third Age of Expansion from 1770-
1929 following upon the second Age of Conflict of 1690-1815 might be
called "industrial capitalism." In the last of the nineteenth century,
it began to become a structure of vested interests to which we might
give the name "monopoly capitalism."
We shall undoubtedly get a Universal Empire in which the United
States will rule most of the Western Civilization. This will be
followed, as in other civilizations, by a period of decay and
ultimately, as the civilizations grows weaker, by invasions and the
total destruction of Western culture.
EUROPE'S SHIFT TO THE TWENTIETH CENTURY
Page 24
The belief in the innate goodness of man had its roots in the
eighteenth century when it appeared to many that man was born good and
free but was everywhere distorted, corrupted, and enslaved by bad
institutions and conventions. As Rousseau said, "Man is born free yet
everywhere he is in chains."
Obviously, if man is is innately good and needs but to be freed
from social restrictions, he is capable of tremendous achievements in
this world of time, and does not need to postpone his hopes of
personal salvation into eternity.
Page 25
To the nineteenth century mind, evil, or sin, was a negative
conception. It merely indicated a lack or, at most, a distortion of
good. Any idea of sin or evil as a malignant force opposed to good,
and capable of existing by its own nature, was completely lacking in
the typical nineteenth century mind. The only evil was frustration and
the only sin, repression.
Just as the negative idea of the nature of evil flowed from the
belief that human nature was good, so the idea of liberalism flowed
from the belief that society was bad. For, if society was bad,the
state,which was the organized coercive power of society, was doubly
bad, and if man was good, he should be freed, above all, from the
coercive power of the state.
"No government in business" was commonly called "laissez faire"
and would have left society with little power beyond that required to
prevent the strong from physically oppressing the weak.
This strange, and unexamined, belief held that there really
existed, in the long run, a "community of interests" between the
members of a society. It maintained that, in the long run, what was
good for one was bad for all. It believed that there did exist a
possible social pattern in which each member would be secure, free and
prosperous.
Page 26
Capitalism was an economic system in which the motivating force
was the desire for private profit as determined in a price system with
the seeking of aggrandization of profits for each individual.
Nationalism served to bind persons of the same nationality
together into a tight, emotionally satisfying, unit. On the other
side, it served to divide persons of different nationalities into
antagonistic groups, often to the injury of their real mutual
political, economic or cultural advantages.
The event which destroyed the pretty dream world of 1919-1929
were the stock market crash, the world depression, the world financial
crisis.
Page 28
The twentieth century came to believe that human nature is, if
not innately bad, at least capable of being very evil. Left to
himself, man falls very easily to the level of the jungle or even
lower and this result can be prevent only by the coercive power of
society. Along with this change from good men and bad society to bad
men and good society has appeared a reaction from optimism to
pessimism. The horrors of Hitler's concentration camps and Stalin's
slave-labor units are chiefly responsible for this change.
CHAPTER II: WESTERN CIVILIZATION TO 1914
WESTERN CIVILIZATION TO 1914
Page 39
The financial capitalist sought profits from the manipulation of
claims on money; and the monopoly capitalist sought profits from
manipulation of the market to make the market price and the amount
sold such that his profits would be maximized.
Page 41
Karl Marx,about 1850, formed his ideas of an inevitable class
struggle in which the groups of owners would become fewer and fewer
and richer and richer while the mass of workers became poorer and
poorer but more and more numerous.
Mass production required less labor. But mass production required
mass consumption.
EUROPEAN ECONOMIC DEVELOPMENT
Page 42
Investments in railroads, steel mills and so on could not be
financed from the profits and private fortunes of individual
proprietors. New instruments for financing industry came into
existence in the form of limited-liability corporations and investment
banks. These were soon in a position to control the chief parts of the
industrial system since they provided the capital to it. This gave
rise to financial capitalism.
Page 43
Great industrial units, working together either directly or
through cartels and trade associations, were in a position to exploit
the majority of the people. The result was a great economic crisis
which soon developed into a struggle for control of the state - the
minority hoping to use the state to defend their privileged position,
the majority hoping to use the state to curtail the power and
privileges of the minority.
Capitalism, because it seems profits as its primary goal, is
never primarily seeking to achieve prosperity, high production, high
consumption, political power, patriotic improvement, or moral uplift.
Page 44
Goods moved from low-price areas to high-price areas and money
moved from high-price areas to low-price areas because goods were more
valuable where prices were high and money was more valuable where
prices were low.
Thus, clearly, money and goods are not the same thing but are, on
the contrary, exactly opposite things. Most confusion in economic
thinking arises from failure to recognize this fact. Goods are wealth
which you have, while money is a claim on wealth which you do not
have. Thus goods are an asset; money is a debt. If goods are wealth;
money is non-wealth, or negative wealth, or even anti-wealth.
Page 45
In time, some merchants turned their attention from exchange of
goods to the monetary side of the exchange. They became concerned with
the lending of money to merchants to finance their ships and their
activities, advancing money for both, at high interest rates, secured
by claims on ships or goods as collateral for repayment and made it
possible for people to concentrate on one portion of the process and,
by maximizing that portion, to jeopardize the rest.
Page 46
Three parts of the system, production, transfer, and consumption
of goods were concrete and clearly visible so that almost anyone could
grasp them simply examining them while the operations of banking and
finance were concealed, scattered, and abstract so that they appeared
to many to be difficult. To add to this, bankers themselves did
everything they could to make their activities more secret and more
esoteric. Their activities were reflected in mysterious marks in
ledgers which were never opened to the curious outsider.
Changes of prices, whether inflationary or deflationary, have
been major forces in history for the last six centuries at least.
Page 47
Hundreds of years ago, bankers began to specialize, with richer
and more influential ones associated increasingly with foreign trade
and foreign-exchange transactions. Since these were richer and more
cosmopolitan and increasingly concerned with questions of political
significance, such as stability and debasement of currencies, war and
peace, dynastic marriages, and worldwide trading monopolies, they
became financiers and financial advisers of governments. Moreover,
they were always obsessed with the stability of monetary exchanges and
used their power and influence to do two things:
1) to get all money and debts expressed in terms of strictly limited
commodity - ultimately gold; and
2) to get all monetary matters out of the control of governments and
political authority, on the ground that they would be handled better
by private banking interests in terms of such a stable value of gold.
INDUSTRIAL CAPITALISM, 1770-1850
Page 48
Britain's victories had many causes such as its ability to
control the sea and its ability to present itself to the world as the
defender of the freedoms and rights of small nations and of diverse
social and religious groups. Also, financially, England had discovered
the secret of credit and economically, it had embarked on the
Industrial Revolution.
Credit had been known to the Italians and Netherlanders long
before it became one of the instruments of English world supremacy.
Nevertheless, the founding of the Bank of England by William Paterson
and his friends in 1694 is one of the great dates in world history.
For generations, men had sought to avoid the one drawback of gold, its
heaviness, by using pieces of paper to represent specific pieces of
gold. Today, we call such pieces of paper gold certificates which
entitles its bearer to exchange it for its piece ofgold on demand, but
in view of the convenience of paper, only a small fraction of
certificate holders ever did make such demands. It early became clear
that gold need be held on hand only to the amount needed to cover the
fraction of certificates likely to be presented for payment;
accordingly, the rest of the gold could be used for business purposes,
or, what amounts to the same thing, a volume of certificates could be
issued greater than the volume of gold reserved for payment of demands
against them. such an excess volume of paper claims against reserves
we now call bank notes.
In effect, this creation of paper claims greater than the
reserves available means that bankers were creating money out of
nothing. The same thing could be done in another way, not by note-
issuing banks but by deposit banks. Deposit bankers discovered that
orders and checks drawn against deposits by depositors and given to
third persons were often not cashed by the latter but were deposited
to their own accounts. Thus there were no actual movements of funds,
and payments were made simply by bookkeeping transactions on the
accounts. Accordingly, it was necessary for the banker to keep on hand
in actual money (gold, certificates and notes) no more than the
fraction of deposits likely to be drawn upon and cashed; the rest
could be used for loans and if these loans were made by creating a
deposit for the borrower, who in turn would draw checks upon it rather
than withdraw it in money, such "created deposits" or loans could also
be covered adequately by retaining reserves to only a fraction of
their value. Such created deposits also were a creation of money out
of nothing, although bankers usually refused to express their actions,
either note issuing or deposit lending, in these terms. William
Paterson, on obtaining the charter of the Bank of England, said "the
Bank hath benefit of interest on all moneys it creates out of
nothing." This is generally admitted today.
This organizational structure for creating means of payment out
of nothing, which we call credit, was not invented by England but was
developed by her to become one of her chief weapons in the victory
over Napoleon in 1815. The emperor, could not see money in any but
concrete terms, and was convinced that his efforts to fight wars on
the basis of "sound money" by avoiding the creation of credit, would
ultimately win him a victory by bankrupting England. He was wrong
although the lesson has had to be relearned by modern financiers in
the twentieth century.
FINANCIAL CAPITALISM 1850-1931
Page 50
The third stage of capitalism is of such overwhelming
significance in the history of the twentieth century, and its
ramifications and influences have been so subterranean and even
occult, that we may be excused if we devote considerate attention to
this organization and methods.
Essentially, what it did was to take the old disorganized and
localized methods of handling money and credit and organize them into
an integrated system, on an international basis, which worked with
incredible and well-oiled facility for many decades. The center of
that system was in London, with major offshoots in New York and Paris
and it has left, as its greatest achievement, an integrated banking
system and a heavily capitalized - if now largely obsolescent -
framework of heavy industry, reflected in railroads, steel mills, coal
mines and electrical utilities.
This system had its center in London for four chief reasons.
First was the great volume of savings in England. Second was England's
oligarchic social structure which provided a very inequitable
distribution of incomes with large surpluses coming to the control of
a small, energetic upper class. Third was that this upper class was
aristocratic but not noble, quite willing to recruit both money and
ability from lower levels and even from outside the country, welcoming
American heiresses and central-European Jews to its ranks almost as
willingly as it welcomed monied, able and conformist recruits from the
lower classes of Englishmen. Fourth (and by no means last) in
significance was the skill in financial manipulation, especially on
the international scene, which the small group of merchant bankers of
London had acquired.
In time, they brought into their financial network the provincial
banking centers as well as insurance companies to form all of these
into a single financial system on an international scale which
manipulated the quantity and flow of money so that they were able to
influence, if not control, governments on one side and industries on
the other.
The men who did this, looking backward toward the period of
dynastic monarchy in which they had their own roots, aspired to
establish dynasties of international bankers and were at least as
successful at this as were many of the dynastic political rulers. The
greatest of these dynasties, of course, were the descendants of Meyer
Amschel Rothschild (1743-1812) whose male descendants for at least two
generations, generally married first cousins or even nieces.
Rothschild's five sons, established at branches in Vienna, London,
Naples and Paris as well as Frankfort, cooperated together in ways
which other international banking dynasties copied but rarely
excelled.
In concentrating, as we must, on the financial or economic
activities of international bankers, we must not totally ignore their
other attributes. They were cosmopolitan rather than nationalistic;
they were a constant, if weakening, influence for peace, a pattern
established in 1830 and 1840 when the Rothschilds threw their whole
tremendous influence successfully against European wars.
They were usually highly civilized, cultured gentlemen, patrons
of education and of the arts, so that today, colleges, professorships,
opera companies, symphonies, libraries, and museum collections still
reflect their munificence. For these purposes they set a pattern of
endowed foundations which still surround us today.
The names of some of these banking families are familiar to all
of us and should be more so. They include Baring, Lazard, Erlanger,
Warburg, Schroder, Seligman, Speyers, Mirabaud, Mallet, Fould and
above all Rothschild and Morgan. Even after these banking families
became fully involved in domestic industry by the emergence of
financial capitalism, they remained different from ordinary bankers in
distinctive ways:
1) they were cosmopolitan and international;
2) they were close to governments and were particularly concerned with
questions of government debts, including foreign government debts,
even in areas which seemed, at first glance, poor risks, like Egypt,
Persia, Ottoman Turkey, Imperial China and Latin America;
3) their interests were almost exclusively in bonds and very rarely in
goods since they admired "liquidity";
4) they were fanatical devotees of deflation (which they called
"sound" money from its close association with high interest rates and
a high value of money) and of the gold standard;
5) they were almost equally devoted to secrecy and the secret use of
financial influence in political life. These bankers came to be called
"international bankers" and were known as "merchant bankers" in
England, "private bankers" in France and "investment bankers" in the
United States.
Everywhere, they were sharply distinguishable from other, more
obvious, kinds of banks, such as savings banks or commercial banks.
One of their less obvious characteristics was that they remained
as private unincorporated firms offering no shares, no reports, and
usually no advertising to the public until modern inheritance taxes
made it essential to surround such family wealth with the immortality
of corporate status for tax-avoidance purposes. This persistence as
private firms continued because it ensured the maximum of anonymity
and secrecy to persons of tremendous public power who dreaded public
knowledge of their activities as an evil almost as great as inflation.
Page 53
Firms like Morgan, like others of the international banking
fraternity, constantly operated through corporations and governments,
yet remained itself an obscure private partnership.
The influence of financial capitalism and the international
bankers who created it was exercised both on business and on
governments, but could have neither if it had not been able to
persuade both these to accept two "axioms" of its own ideology. Both
of these were based on the assumption that politicians were too weak
and too subject to temporary public pressures to be trusted with
control of the money system; accordingly, the soundness of money must
be protected in two ways: by basing the value of money on gold and by
allowing bankers to control the money supply. To do this it was
necessary to conceal, even mislead, both governments and people about
the nature of money and its methods of operation.
Page 54
Since it is quite impossible to understand the history of the
twentieth century without some understanding of the role played by
money in domestic affairs and in foreign affairs, as well as the role
played by bankers in economic life and in political life, we must take
a least a glance at each of these four subjects:
DOMESTIC FINANCIAL PRACTICES
In each country, the supply of money took the form of an inverted
pyramid or cone balanced on its point. In the point was the supply of
gold and its equivalent certificates; on the intermediate levels was a
much larger supply of notes; and at the top, with an open and
expandable upper surface, was an even greater supply of deposits. Each
level used the levels below it as its reserves and these lower levels
had smaller quantities of money, they were "sounder."
Notes were issued by "banks of emission" or "banks of issue" and
were secured by reserves of gold or certificates held in some central
reserve. The fraction held in reserve depended upon banking
regulations or statute law. Such banks, even central banks, were
private institutions, owned by shareholders who profited by their
operations.
Deposits on the upper level of the pyramid were called by this
name, with typical bankers' ambiguity, in spite of the fact that they
consisted of two utterly different kinds of relationships:
1) "lodged deposits" which were real claims left by a depositor in a
bank on which a depositor might receive interest; and
2) "created deposits" which were claims created by the bank out of
nothing as loans from the bank to "depositors" who had to pay interest
on them.
Both form part of the money supply. Lodged deposits as a form of
savings are deflationary while created deposits, being an addition to
the money supply, are inflationary.
Page 55
The volume of deposits banks can create, like the amount of notes
they can issue, depends upon the volume of reserves available to pay
whatever fraction of checks are cashed rather than deposited. In the
United States, deposits were traditionally limited to ten times
reserves notes and gold. In Britain it was usually nearer twenty times
such reserves. In most countries, the central bank was surrounded
closely by the almost invisible private investment banking firms.
These, like the planet Mercury, could hardly be seen in the dazzle
emitted by the central bank, which they, in fact, often dominated. Yet
a lost observer could hardly fail to notice the close private
associations between these private, international bankers and the
central bank itself. In France, in 1936, the Board of the Bank of
France was still dominated by the names of the families who had
originally set it up in 1800.
In England, a somewhat similar situation existed. In a secondary
ring are the "joint stock banks." Outside this secondary ring are the
savings banks, insurance firms, and trust companies.
In France and England the private bankers exercised their powers
through the central bank and had much more influence on the government
and foreign policy and less on industry. In the United States, much
industry was financed by investment bankers directly and the power of
these both on industry and government was very great.
Page 57
The various parts of the pyramid of money were but loosely
related to each other. Much of this looseness arose from the fact that
the controls were compulsive in a deflationary direction and were only
permissive in an inflationary direction. This last point can be seen
in the fact that the supply of gold could be decreased but could
hardly be increased. If an ounce of gold was added to the point of the
pyramid, it could permit an increase in deposits equivalent to $2067
on the uppermost level. If such an ounce of gold were withdrawn from a
fully expanded pyramid of money, this would compel a reduction of
deposits by at least this amount, probably by a refusal to renew
loans.
Throughout modern history, the influence of the gold standard has
been deflationary, because the natural output of gold each year,
except in extraordinary times, has not kept pace with the increase in
the output of goods. Only new supplies of gold or the development of
new kinds of money have saved our civilization over the last couple of
centuries. The three great periods of war ended with an extreme
deflationary crisis (1819, 1873, 1921) as the influential Money Power
persuaded governments to re-establish a deflationary monetary unit
with a high gold content.
The obsession of the Money Power with deflation was partly a
result of their concern with money rather than with goods but was also
founded on other factors, one of which was paradoxical. The paradox
arose from the fact that the basic economic conditions of the
nineteenth century were deflationary, with a monetary system based on
gold and an industrial system pouring out increasing supplies of goods
but in spite of falling prices, the interest rate tended to fall
rather than rise. Moreover, merchant banking continued to emphasize
bonds rather than equity securities (stocks), to favor government
issues rather than private offerings.
Another paradox of banking practice arose from the fact that
bankers, who loved deflation, often acted in an inflationary fashion
from their eagerness to lend money at interest. Since they make money
out of loans, they are eager to increase the amounts of bank credit on
loan. But this is inflationary. The conflict between the deflationary
ideas and inflationary practices of bankers had profound repercussions
on business. The bankers made loans to business so that the volume of
money increased faster than the increase of goods. The result was
inflation. When this became clearly noticeable, the bankers would flee
to notes or specie by curtailing credit and raising discount rates.
This was beneficial to the bankers in the short run (since it allowed
them to foreclose on collateral for loans) but it could be disastrous
to them in the long run (by forcing the value of the collateral below
the amount of the loans it secured). But such bankers' deflation was
destructive to business and industry in the short run as well as the
long run.
Page 59
The resulting fluctuation in the supply of money, chiefly
deposits, was a prominent aspect of the "business cycle." The quantity
of money could be changed by changing reserve requirements or discount
(interest) rates. Central banks can usually vary the amount of money
in circulation by "open market operations" or by influencing the
discount rates of lesser banks. In open market operations, a central
bank buys or sells government bonds in the open market. If it buys, it
releases money into the economic system; it if sells it reduces the
amount of money in the community. If the Federal Reserve Bank buys, it
pays for these by checks which are soon deposited in a bank. It thus
increases this bank's reserves with the Federal Reserve Bank. Since
banks are permitted to issue loans for several times the value of
their reserves with the FED, such a transaction permits them to issue
loans for a much larger sum.
Central banks can also change the quantity of money by raising
the discount rate which forces the lesser banks to raise their
discount rates; such a raise in interest rates tends to reduce the
demand for credit and thus the amount of deposits (money). Lowering
the discount rate permits an opposite result.
It is noted that the control of the central bank over the credit
policies of local banks are permissive in one direction and compulsive
in the other. They can compel these local banks to curtail credit and
can only permit them to increase credit. This means that they have
control powers against inflation and not deflation - a reflection of
the old banking idea that inflation was bad and deflation was good.
Page 60
The powers of governments over the quantity of money are:
a) control over a central bank;
b) control over public taxation;
c) control over public spending;
Since most central banks have been (technically) private
institutions, this control is frequently based on custom rather than
on law.
Taxation tends to reduce the amount of money in a community and
is usually a deflationary force. Government spending is usually an
inflationary force.
On the whole, in the period up to 1931, bankers, especially the
Money Power controlled by the international investment bankers, were
able to dominate both business and government. They could dominate
business because investment bankers had the ability to supply or
refuse to supply such capital. Thus Rothschild interests came to
dominate many of the railroads of Europe, while Morgan dominated at
least 26,000 miles of American railroads. Such bankers took seats on
the boards of directors of industrial firms, as they had already done
on commercial banks, savings banks, insurance firms, and finance
companies. From these lesser institutions, they funneled capital to
enterprises which yielded control and away from those who resisted.
These firms were controlled through interlocking directorships,
holding companies, and lesser banks.
Page 61
As early as 1909,Walter Rathenau said, "Three hundred men, all of
whom know one another, direct the economic destiny of Europe and
choose their successors from among themselves."
The power of investment bankers over governments rests on the
need of governments to issue short-term treasury bills as well as
long-term government bonds. Just as businessmen go to commercial banks
for current capital advances, so a government has to go to merchant
bankers to tide over the shallow places caused by irregular tax
receipts. As experts in government bonds, the international bankers
provided advice to government officials and, on many occasions, placed
their own members in official posts. This was so widely accepted even
today, that in 1961 a Republican investment banker became Secretary of
the Treasury in a Democratic administration in Washington without
significant comment from any direction.
Naturally, the influence of bankers over governments during the
age of financial capitalism (roughly 1850-1931) was not something
about which anyone talked about freely, but it has been admitted
freely enough by those on the inside, especially in England. In 1842,
Gladstone, chancellor of the Exchequer, declared "The hinge of the
whole situation was this: the government itself was not to be the
substantive power in matters of Finance, but was to leave the Money
Power supreme and unquestioned." On Sept. 26, 1921, the Financial
Times wrote, "Half a dozen men at the top of the Big Five Banks could
upset the whole fabric of government finance by refraining from
renewing Treasury Bills." In 1924, Sir Drummond Fraser, vice-president
of the Institute of Bankers, stated, "The Governor of the Bank of
England must be the autocrat who dictates the terms upon which alone
the Government can obtain borrowed money."
Page 62
In addition to their power over government based on government
financing and personal influence, bankers could steer governments in
ways they wished them to go by other pressures. Since most government
officials felt ignorant of finance, they sought advice from bankers
whom they considered experts in the field. The history of the last
century shows that the advice given to governments by bankers, like
the advice they gave to industrialists, was consistently good for
bankers but was often disastrous for governments, businessmen and the
people generally.
Such advice could be enforced if necessary by manipulation of
exchanges, gold flows, discount rates, and even levels of business
activity. Thus Morgan dominated Cleveland's second administration by
gold withdrawals, and in 1936-13 French foreign exchange manipulators
paralyzed the Popular Front governments. The powers of these
international bankers reached their peak in 1919-1931 when Montagu
Norman and J.P. Morgan dominated not only the financial world but
international relations and other matters as well. On Nov. 11, 1927,
the Wall Street Journal called Mr. Norman "the currency dictator of
Europe." This was admitted by Mr. Norman who said, "I hold the
hegemony of the world."
The conflict of interests between bankers and industrialists has
resulted in the subordination of the bankers (after 1931) to the
latter by the adoption of "unorthodox financial policies" - that is,
financial policies not in accordance with the short-run interests of
the bankers.
THE UNITED STATES TO 1917
Page 71
The civil service reform began in the federal government with the
Pendleton Bill of 1883. As a result, the government was controlled
with varying degrees of completeness by the forces of investment
banking and heavy industry from 1884 to 1933. Popularly known as
"Society," or the "400," they lived a life of dazzling splendor.
Page 72
The structure of financial control created by the tycoons of "Big
Banking" and "Big Business" in the period 1880-1933 was of
extraordinary complexity, one business fief being built upon another,
both being allied with semi-independent associates, the whole rearing
upward into two pinnacles of economic and financial power, of which
one, centered in New York, was headed by J.P. Morgan and Company, and
the other, in Ohio, was headed by the Rockefeller family. When these
two cooperated, as they generally did, they could influence the
economic life of the country to a large degree and could almost
control its political life, at least on the federal level.
The influence of these business leaders was so great that the
Morgan and Rockefeller groups acting together, or even Morgan acting
alone, could have wrecked the economic system of the country merely by
throwing securities on the stock market for sale, and having
precipitated a stock market panic, could then have bought back the
securities they had sold but at a lower price. Naturally, they were
not so foolish as to do this, although Morgan came very close to it in
precipitating the "panic of 1907," but they did not hesitate to wreck
individual corporations, at the expense of holders of common stock, by
driving them to bankruptcy. In this way, Morgan wrecked the New York,
New Haven and Hartford railroad before 1914 and William Rockefeller
wrecked the Chicago, Milwaukee, St. Paul and Pacific Railroad before
1925.
Page 73
The discovery by financial capitalists that they made money out
of issuing and selling securities rather than out of production,
distribution and consumption of goods accordingly led them to the
point where they discovered that the exploiting of an operating
company by excessive issuance of securities or the issuance of bonds
rather than equity securities not only was profitable to them but made
it possible for them to increase their profits by bankruptcy of the
firm, providing fees and commission of reorganization as well as the
opportunity to issue new securities.
When the business interests pushed through the first installment
of the civil service reform in 1881, they expected to control both
political parties equally. Some intended to contribute to both and to
allow an alternation of the two parties in public office in order to
conceal their own influence, inhibit any exhibition of independence by
politicians, and allow the electorate to believe that they were
exercising their own free choice.
The inability of the investment bankers to control the Democratic
Party Convention of 1896 was a result of the agrarian discontent of
the period 1868-1896. This discontent was based very largely on the
monetary tactics of the banking oligarchy. The bankers were wedded to
the gold standard and at the end of the Civil War, persuaded the Grant
administration to curb the postwar inflation and go back on the gold
standard (crash of 1873 and resumption of specie payment in 1875).
Page 74
This gave the bankers a control of the supply of money which they
did not hesitate to use for their own purposes. The bankers'
affection for low prices was not shared by farmers, since each time
prices of farm products went down, the burden of farmers' debts became
greater. As farmers could not reduce their costs or modify their
production plans, the result was a systematic exploitation of the
agrarian sectors of the community by the financial and industrial
sectors. This exploitation took the form of high industrial prices and
discriminatory railroad rates, high interest charges, low farm prices
and very low level of farm services.
Unable to resist by economic weapons, the farmers turned to
political relief. They tried to work on the state political level
through local legislation (so-called Granger Laws) and set up third-
party movements (like the Greenback Party of 1878 or the Populist
Party in 1892). By 1896, the capture of the Democratic Party by the
forces of discontent under William Jennings Bryant who was determined
to obtain higher prices by increasing the supply of money on a
bimetallic rather than a gold basis, presented the electorate with an
election on a social and economic issue for the first time in a
generation. Though the forces of high finance were in a state of near
panic, by a mighty effort involving very large-scale spending they
were successful in electing McKinley.
Though the plutocracy were unable to control the Democratic Party
as they controlled the Republican Party, they did not cease their
efforts to control both and in 1904 and 1924, Morgan was able to sit
back with a feeling of satisfaction to watch presidential elections in
which the candidates of both parties were in his sphere of influence.
Page 75
The agrarian discontent, the growth of monopolies, the oppression
of labor, and the excesses of Wall Street financiers made the country
very restless between 1890-1900. All this could have been alleviated
merely by increasing the supply of money sufficiently to raise prices
somewhat, but the financiers were determined to defend the gold
standard no matter what happened.
In looking for some issue to distract public discontent from
domestic issues, what better solution than a crisis in foreign
affairs? Cleveland had stumbled upon this alternative in 1895 when he
stirred up controversy with England over Venezuela. The great
opportunity came with the Cuban revolt against Spain in 1895. While
the "yellow press" roused public opinion, Henry Cabot Lodge and
Theodore Roosevelt plotted how they could best get the United States
into the fracas. They got the excuse they needed when the American
battleship Maine was sunk by a mysterious explosion in Havana Harbor
in 1898. In two months, the United States declared war on Spain to
fight for Cuban independence. The resulting victory revealed the
United States as a world naval power, established it as an imperialist
power with possession of Puerto Rico, Guam, and the Philippines.
America's entrance upon the stage as a world power continued with
the annexation of Hawaii in 1898, the intervention in the Boxer
uprising in 1900, the seizure of the Panama canal in 1903, the
diplomatic intervention in the Russo-Japanese war in 1905, the
military occupation of Nicaragua in 1912, the military intervention in
Mexico in 1916.
Page 76
As an example of the more idealistic impulse we might mention the
creation of various Carnegie foundations to work for universal peace.
As an example of the more practical point of view, we might mention
the founding of "The New Republic," a liberal weekly paper, by an
agent of Morgan financed with Whitney money (1914).
The combined forces of the liberal East and the agrarian West
were able to capture the Presidency under Woodrow Wilson in 1912.
Wilson roused a good deal of popular enthusiasm with his talk of "New
Freedom" and the rights of the underdog, but his program amounted to
little more than an amateur attempt to establish on a federal basis
those reforms which agrarian and labor discontent had been seeking on
a state basis for many years. Wilson was by no means a radical and
there was a good deal of unconscious hypocrisy in many of his
resounding public speeches. His political and administrative reforms
were a good deal more effective than his economic or social reforms.
The establishment of an income tax and the Federal Reserve System
justified the support which Progressives had given to Wilson. Wilson
did much to extend equality of opportunity to wider groups of American
people.
CHAPTER III: THE RUSSIAN EMPIRE TO 1917
Page 88
The abolition of serfdom made it necessary for the landed
nobility to cease to regard the peasants as private property. Peter
the Great (1689-1725) and Catherine the Great (1762-1796) were
supporters of westernization and reform. Paul I (1796-1801) was
reactionary. Alexander I (1801-1825) and Alexander II (1855-1881) were
reformers while Nicholas I (1825-1855) and Nicholas II (1855-1881)
were reactionaries. By 1864, serfdom had been abolished, and a fairly
modern system of law, of justice, and of education had been
established; local government had been somewhat modernized; a fairly
good financial and fiscal system had been established; and an army
based on universal military service (but lacking in equipment) had
been created. On the other hand, the autocracy continued in the hands
of weak men and the freed serfs had no adequate lands.
Page 93
The first Russian railroad opened in 1838 but growth was slow
until 1857. At that time, there were only 663 miles of railroads, but
this figure went up over tenfold by 1871, doubled again by 1881 with
14,000 miles, reached 37,000 by 1901 and 46,000 by 1915.
Page 94
In 1900, Russia had 48% of the total world production of
petroleum products. The State Bank was made a bank of issue in 1897
and was required by law to redeem its notes in gold, thus placing
Russia on the international gold standard.
Page 97
In 1902, a cartel created by a dozen iron and steel firms handled
almost three-fourths of all Russian sales. It was controlled by four
foreign banking groups.
Page 100
Until 1910, Stolypin continued his efforts to combine oppression
with reform, especially agrarian reform. Rural credit banks were
established; various measures were taken to place larger amounts of
land in the hands of the peasants; restrictions of immigration of
peasants, especially to Siberia, were removed; participation in local
government was opened to lower social classes previously excluded;
education, especially technical education, was made more accessible;
and certain provisions for social insurance were enacted into law. He
was assassinated in the presence of the Tsar in 1911.
The fourth duma (1912-1916) was elected by universal suffrage.
CHAPTER IV: THE BUFFER FRINGE
THE NEAR EAST TO 1914
Page 111
The Ottoman Empire was divided into 21 governments and subdivided
into seventy vilayets, each under a pasha. The supreme ruler in
Constantinople was not only sultan (head of the empire) but was also
caliph (defender of the Muslim creed).
Page 121
The Great Powers showed mild approval of the Baghdad Railway
until about 1900. Then, for more than ten years, Russia, Britain and
France showed violent disapproval and did all they could the obstruct
the project. They described the Baghdad Railway as the emerging wedge
of German imperialist aggression seeking to weaken and destroy the
Ottoman Empire and the stakes of the other powers in the area.
Page 122
The Germans were not only favorably inclined toward Turkey; their
conduct seems to have been completely fair in regard the
administration of the railway itself. At a time when the American and
other railways were practicing wholesale discrimination between
customers, the Germans had the same rates and same treatment for all,
including Germans and non-Germans. They worked to make the railroad
efficient and profitable although their income from it was guaranteed
by the Turkish government. In consequence, the Turkish payments to the
railroad steadily declined, and the government was able to share in
its profits to the extent of almost three million francs in 1914.
Moreover, the Germans did not seek to monopolize control of the
railroad, offering to share equally with France and England and
eventually with the other Powers. France accepted this offer in 1899,
but Britain continued to refuse and placed every obstacle in the path
of the project.
When the Ottoman government sought to raise their customs duties
from 11% to 14% in order to continue construction, Britain prevented
this. In order to carry on the project, the Germans sold their
railroad interests in the Balkans and gave the Ottoman building
subsidy of $275,000 a kilometer. In striking contrast, the Russians
demanded arrears of 57 million francs under the Treaty of 1878. The
French, in spite of investments in Turkey, refused to allow Baghdad
Railway securities to be handled on the Paris Stock Exchange.
Page 123
In 1903, Britain made an agreement for a joint German, French,
and British control of the railroad. Within three weeks this agreement
was repudiated because of newspaper protests against it. When the
Turkish government tried to borrow, it was summarily rebuffed in Paris
and London, but obtained the sum unhesitatingly in Berlin. The growth
of German prestige and the decline in favor of the Western Powers at
the sultan's court is not surprising and goes far to explain the
Turkish intervention on the side of the Central powers in the war of
1914-1919.
Britain withdrew her opposition to the Baghdad Railway in return
for promises that:
1) it would not be extended to the Persian Gulf;
2) British capitalists would be given a monopoly on the navigation of
the Euphrates and Tigris rivers and exclusive control over their
irrigation projects;
3) 2 British subjects would be given seats on the Board of directors;
4) Britain would have exclusive control over commercial activities in
Kuwait, the only good port on the upper Persian Gulf;
5) a monopoly over the oil resources given to a new corporation: Royal
Dutch Shell Company in which British held half interest, the Germans
and French a quarter interest each;
THE BRITISH IMPERIAL CRISIS TO 1926
Page 127
In England, the landed class obtained control of the bar and the
bench and were, thus, in a position to judge all disputes about real
property in their favor. Control of the courts and of the Parliament
made it possible for this ruling group to override the rights of
peasants in land, to eject them from the land, to enclose the open
fields of the medieval system, to deprive the cultivators of their
manorial rights and thus reduce them to the condition of landless
rural laborers or tenants.
Page 130
Until 1870, there was no professorships of Fine Arts at Oxford,
but in that year, thanks to a bequest,John Ruskin was named to such a
chair. He hit Oxford like an earthquake, not so much because he talked
about fine arts but because he talked about the empire and England's
downtrodden masses as moral issues. Until the end of the nineteenth
century, the poverty-stricken masses in the cities lived in want,
ignorance and crime much like described by Charles Dickens. Ruskin
spoke to the Oxford undergraduates as members of the privileged ruling
class. He told them that they were the possessors of a magnificent
tradition of education, beauty, rule of law, freedom, decency, and
self-discipline but that this tradition could not be saved and did not
deserve to be saved, unless it could be extended to the lower classes
and to the non-English masses throughout the world. If not extended to
these classes, the minority upper-class would be submerged and the
tradition lost.
Ruskin's message had a sensational impact. His inaugural lecture
was copied out in longhand by one undergraduate, Cecil Rhodes. Rhodes
feverishly exploited the diamond and gold fields of South Africa, rose
to be prime minister of Cape Colony, contributed money to political
parties, controlled parliamentary seats both in England and South
Africa.
With financial support from Lord Rothschild, he was able to
monopolize the diamond mines as De Beers Mines and Gold Fields. In the
mid 1890s, Rhodes had a personal income of a least a million pounds
(then five million dollars) a year which was spent so freely for his
mysterious purposes that he was usually overdrawn on his account.
These purposes centered on his desire to federate the English-speaking
peoples and to bring all the habitable portions of the world under
their control.
Page 131
Among Ruskin's most devoted disciples at Oxford were a group of
intimate friends who devoted the rest of their lives to carrying out
his ideas. They were remarkably successful in these aims.
In 1891, Rhodes organized a secret society with members in a
"Circle of Initiates" and an outer circle known as the "Association of
Helpers" later organized as the Round Table organization.
Page 132
In 1909-1913, they organized semi-secret groups know as Round
Table Groups in the chief British dependencies and the United States.
In 1919, they founded the Royal Institute of International Affairs.
Similar Institutes of International Affairs were established in the
chief British dominions and the United States where it is known as the
Council on Foreign Relations. After 1925, the Institute of Pacific
Relations was set up in twelve Pacific area countries.
Page 133
They were constantly harping on the lessons to be learned from
the failure of the American Revolution and the success of the Canadian
federation of 1867 and hoped to federate the various parts of the
empire and then confederate the whole with the United Kingdom
EGYPT AND THE SUDAN TO 1922
Disraeli's purchase, with Rothschild money, of 176,602 shares of
Suez Canal stock for #3,680,000 from the Khedive of Egypt in 1875 was
motivated by concern for communications with India just as the
acquisition of the Cape of Good Hope in 1814 had resulted from the
same concern.
Page 135
As a result of complex and secret negotiations in which Lord
Rosebery was the chief figure, Britain kept Uganda, Rhodes was made a
privy councilor, Rosebery replaced his father-in-law, Lord Rothschild,
in Rhodes secret group and was made a trustee under Rhodes' next and
last will.
Page 137
By 1895, the Transvaal Republic presented an acute problem. All
political control was in the hands of a rural, backward, Bible-
reading, racist minority of Boers while all economic wealth was in the
hands of a violent, aggressive majority of foreigners, (Utlanders)
most of whom lived in Johannesburg. The Utlanders, who were twice as
numerous and owned two thirds of the land and nine-tenths of the
wealth of the country, were prevented from participating in political
life or from becoming citizens (except after 14 years residence) and
were irritated by President Paul Kruger's intriguing to obtain some
kind of German intervention and protection.
At this point, Rhodes made his plans to overthrow Kruger's
government by an uprising in Johannesburg, financed by himself and led
by his brother Frank, followed by an invasion led by Frank Jameson
from Rhodesia. Flora Shaw used The Times to prepare public opinion in
England while others negotiated for the official support necessary.
When the revolt fizzled, Jameson raided anyway and was easily
captured by the Boers. The public officials involved denounced the
plot, loudly proclaimed their surprise at the event, and were able to
whitewash most of the participants in the subsequent parliamentary
inquiry. A telegram from the German Kaiser to Kruger congratulating
him on his success "in preserving the independence of his country,"
was built up by The Times into an example of brazen German
interference in British affairs, and almost eclipsed Jameson's
aggression.
Rhodes was stopped only temporarily. For almost two years, he and
his friends stayed quiet waiting for the storm to blow over. Then they
began to act again. Propaganda, most of it true about the plight of
the Utlanders flooded England from Flora Shaw. Milner was made British
High Commissioner to South Africa; his friend Brett worked his way
into the confidence of the monarchy to become its chief political
advisor. Milner made provocative British troop movements on the Boer
frontiers in spite of the vigorous protests of his commanding general
in South Africa, who had to be removed; and finally, war was
precipitated when Smuts drew up an ultimatum insisting that the
British troop movements cease and when this was rejected by Milner.
Page 138
The Boer War (1899-1902) was one of the most important events in
British imperial history. The ability of 40,000 Boer farmers to hold
off ten times as many British for three years, inflicting a series of
defeats on them over that period, destroyed faith in British power.
Although the Boer republics were defeated and annexed in 1902,
Britain's confidence was so shaken that it made a treaty with Japan
providing that if either became engaged in war with two enemies in the
Far East, the other would come to the rescue. This treaty allowed
Japan to attack Russia in 1904.
Page 138
Milner's group, known as "Milner's Kindergarten" reorganized the
government. By 1914, the Smuts government passed a law excluding
natives from most semi-skilled or skilled work or any high-paying
positions.
Page 139
By the Land Act of 1913, 7% was reserved for purchases by natives
and the other 93% by whites. The wages of natives were about one tenth
of those of whites.
Page 141
These natives lived on inadequate and eroded reserves or in
horrible urban slums and were drastically restricted in movements,
residence, or economic opportunities and had almost no political or
even civil rights. By 1950 in Johannesburg, 90,000 Africans were
crowded into 600 acres of shacks with no sanitation with almost no
running water and denied all opportunity except for animal survival
and reproduction.
Page 142
In 1908, the Milner Round Table group worked a scheme to reserve
the tropical portions of Africa north of the Zambezi river for natives
under such attractive conditions that the blacks south of that river
would be enticed to migrate northward. Its policy would be to found a
Negro dominion in which Blacks could own land, enter professions, and
stand on a footing of equality with Whites. Although this project has
not been achieved, it provides the key to Britain's native policies
from 1917 onward.
Page 143
In 1903, when Milner took over the Boer states, he tried to
follow the policy that native could vote. This was blocked by the
Kindergarten because they considered reconciliation with the Boers to
be more urgent.
In South Africa, the three native protectorates of Swaziland,
Bechuanaland, and Basutoland were retained by the imperial authorities
as areas where native rights were paramount and where tribal forms of
living could be maintained at least partially.
MAKING THE COMMONWEALTH 1910-1926
Page 144
Back in London, they founded the Round Table and met in conclaves
presided over by Milner to decide the fate of the empire. Curtis and
others were sent around the world to organize Round Table groups in
the chief British dependencies to give them, including India and
Ireland, their complete independence.
Page 146
The creation of the Round Table groups was so secretive that,
even today, many close students of the subject are not aware of its
significance.
Page 147
Curtis said, "The task of preparing for freedom the races which
cannot as yet govern themselves is the supreme duty of those who can.
Personally, I regard this challenge to the long unquestioned claim of
the white man to dominate the world as inevitable and wholesome,
especially to ourselves. Our whole race has outgrown the merely
national state and will pass either to a Commonwealth of Nations or
else to an empire of slaves. And the issue of these agonies rests with
us."
EAST AFRICA 1910-1931
Page 149
Publicity for their views on civilizing the natives and training
them for eventual self-government received wide dissemination.
Page 150
By 1950 Kenya had discontented and detribalized blacks working
for low wages on lands owned by whites. It had about two million
blacks and only 3,400 whites in 1910. Forty years later, it had about
4 million blacks and only 30,000 whites. The healthful highlands were
reserved for white ownership as early as 1908. The native reserves had
five times as much land although they had 150 times as many people.
The whites tried to increase the pressure on natives to work on
white farms rather than to seek to make a living on their own lands
within the reserves, by forcing them to pay taxes in cash, by
curtailing the size or quality of the reserves, by restricting
improvements in native agricultural techniques and by personal and
political pressure and compulsion.
The real crux of the controversy before the Mau Mau uprising of
1948-1955 was the problem of self-government; Pointing to South
Africa, the settlers in Kenya demanded self-rule which would allow
them to enforce restrictions on non-whites.
Page 151
From this controversy came a compromise which gave Kenya a
Legislative Council containing representatives of the imperial
government, the white settlers, the Indians, the Arabs, and a white
missionary to represent the blacks. Most were nominated rather than
elected but by 1949, only the official and Negro members were
nominated.
Page 152
As a result of the 1923 continued encroachment of white settlers
on native preserves, the 1930 Native Land Trust Ordinance guaranteed
native reserves but these reserves remained inadequate.
Page 153
Efforts to extend the use of native courts, councils and to train
natives for an administrative service were met with growing suspicion
based on the conviction that the whites were hypocrites who taught a
religion that they did not obey, were traitors to Christ's teachings,
and were using these to control the natives and to betray their
interests under cover of religious ideas which the whites themselves
did not observe in practice.
INDIA TO 1926
Although the East India Company was a commercial firm, it had to
intervene again and again to restore order, replacing one nominal
ruler by another and even taking over the government of those areas
where it was more immediately concerned and to divert to their own
pockets some of the fabulous wealth they saw flowing by. Areas under
rule expanded steadily until by 1858 they covered three-fifths of the
country.
Page 154
In 1857-1858, a sudden, violent insurrection of native forces,
known as the Great Mutiny, resulted in the end of the Mogul empire and
of the East India Company, the British government taking over their
political activities.
Page 157
Numerous legislative enactments sought to improve the conditions
but were counterbalanced... by the growing burden of peasant debt at
onerous terms and at high interest rates. Although slavery was
abolished in 1843, many of the poor were reduced to peonage by
contracting debts at unfair terms and binding themselves and their
heirs to work for their creditors until the debt was paid. Such a debt
could never be paid, in many cases, because the rate at which it was
reduced was left to the creditor and could rarely be questioned by the
illiterate debtor.
Page 158
In spite of India's poverty, there was a considerable volume of
savings arising chiefly from the inequitable distribution of income to
the landlord class and to the moneylenders (if these two groups can be
separated in this way).
Page 161
Hinduism was influenced by Christianity and Islam so that the
revived Hinduism was really a synthesis of these three religions.
Played down was the old and basic Hindu idea of Karma where each would
reappeared again and again in a different physical form and in a
different social status, each difference being a reward or punishment
for the soul's conduct in at it's previous appearance. There was no
real hope of escape from this cycle, except by a gradual improvement
through a long series of successive appearances to the ultimate goal
of complete obliteration of personality (Nirvana) by ultimate mergence
in the soul of the universe (Brahma). This release (moksha) from the
endless cycle of existence could be achieved only by the suppression
of all desire, of all individuality and of all will to live.
IRELAND TO 1939
Page 173
The Cromwellian conquest of Ireland in the seventeenth century
had transferred much Irish land, as plunder of war, to absentee
English landlords. In consequence, high rents, insecure tenure, lack
of improvements and legalized economic exploitation, supported by
English judges and English soldiers, gave rise to violent agrarian
unrest and rural atrocities against English lives and properties.
THE FAR EAST TO WORLD WAR I
THE COLLAPSE OF CINA TO 1920
Page 176
The destruction of traditional Chinese culture under the impact
of Western Civilization was considerably later than the similar
destruction of Indian culture by Europeans
The upper-most group derived its income as tribute and taxes from
its possession of military and political power the middle group
derived its incomes from sources such as interest on loans, rents from
lands and the profits from commercial enterprises. Although the
peasants were clearly an exploited group, this exploitation was
impersonal and traditional and thus more easily borne.
Page 179
Only in the late nineteenth and early twentieth century did
peasants in China come to regard their positions as so hopeless that
violence became preferable to diligence or conformity. This change
arose from the fact that the impact of Western culture on China did,
in fact, make a peasant's position economically hopeless.
Page 180
Chinese society was too weak to defend itself against the West.
When it tried to do so, as in the Opium Wars of 1840-1861 or in the
Boxer uprising of 1900, such Chinese resistance to European
penetration was crushed by armaments of the Western Powers and all
kinds of concessions to these Powers were imposed on China.
Until 1841, Canton was the only port allowed for foreign imports
and opium was illegal. As a consequence of Chinese destruction of
illegal Indian opium and the commercial exactions of Cantonese
authorities, Britain imposed on China the treaties of Nanking (1842)
and of Tientsin (1858). These forced China to cede Hong Kong to
Britain and to open sixteen ports to foreign trade, to impose a
uniform import tariff of no more than 5%, to pay an indemnity of about
$100 million, to permit foreign legations in Peking, to allow a
British official to act as head of the Chinese customs service, and to
legalize the import of opium. China lost Burma to Britain, Indochina
to France. Also Formosa and the Pescadores to Japan, Macao to
Portugal, Kiaochow to Germany, Liaotung (including Port Arthur) to
Russia, France took Kwangchowan and Britain took Kowloon and
Weihaiwei. Various Powers imposed on China a system of
extraterritorial courts under which foreigners in judicial cases could
not be tried in Chinese courts or under Chinese law.
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