PEACE THROUGH ECONOMIC PRESSURE HOW COMMERCE CAN BE AN EFFECTIVE FORCE BEHIND THE WORLD COURT—ADDRESS DELIVERED BEFORE THE WORLD COURT CONGRESS IN CLEVELAND ON MAY 14TH

BY

HERBERT S. HOUSTON

DELEGATE TO THE CONGRESS FROM

THE CHAMBER OF COMMERCE OF THE UNITED STATES

The President of the United States has spoken in strong, sane words, in the message to Germany published this morning, and the country will be behind him and with him to a man. In the clear logic of a great mind the distinction is made that no agency of warfare should be employed that, by its own limitations, cannot respect the accepted rules of war. That argument I believe will be accepted by the neutral nations and ultimately by the world. In effect, it is a declaration that if there is to be war it must be conducted according to the rules of the game, according to the rules and limitations which Germany and the other nations of the world have set up through the centuries.

TO ESTABLISH A WORLD COURT

But, gentlemen, this Congress stands for a bigger thing than the rules of war—it stands for the rules of peace. It represents a serious endeavor to establish a World Court that shall ultimately bring about the end of war. The thing that has struck me in this Congress from the opening day is its upright downright seriousness. It is essentially a Congress of ways and means. The desirability of peace, the absolute necessity of peace in a world that claims to be civilized is taken for granted—no one discusses it. What everyone is discussing instead is a sane, wise plan of securing peace. Ex-President Taft in his unusually able state-paper has proposed a plan for a World34 Court; Judge Parker has endorsed it in his address; a great banker like Emerson McMillan has outlined a plan by which the members of such a Court can be chosen; William Dudley Foulke in his scholarly paper last night proposed a plan of orderly progress for a League of the Nations, following the analogy of our own Confederation and our own Constitution; and James Brown Scott, in the able address we have just heard this morning, has pointed out the present status of the Hague Tribunal and shown how we can go forward from the point of great accomplishment that the world has already reached.

THE FORCE TO PUT BEHIND THE COURT

In much of this discussion reference has been made to the power to put behind a World Court in order to make it effective. Now I wish to speak briefly of economic pressure as the most truly international force and as the most efficient possible force to put behind this proposed World Court. That great leader and teacher of Ohio and the country, Dr. Washington Gladden, said to me yesterday, “The world on the old basis is bankrupt. It must be reorganized on a new basis.” Appreciation of that fact, it seems to me, is the chief significance of this Congress. And the world can be reorganized on a new basis if it will avail itself of one of its greatest forces, the force of international commerce, which can be applied as economic pressure to establish justice and to serve civilization.

GREAT POWER OF ECONOMIC PRESSURE

Let us briefly examine economic pressure. Of what does it consist and how could it be applied? The most effective factors in world-wide economic pressure, such as would be required to compel nations to take justiciable issues to a World Court for decision and to submit to its decrees, are a group of international forces. To-day money is international because in all civilized countries it has gold as the common basis. Credit based on gold is international. Commerce based on money and on credit is international. Then the amazing network of agencies by which money and credit and commerce are employed in the world are also international. Take the stock exchanges, the cables, the wireless, the international postal service and the wonderful modern facilities for communication and inter-communication—all these are international forces. They are common to all nations. In the truest sense they are independent of race, of language, of religion, of culture, of government and of every other human limitation. That is one of their chief merits in making them the most effective possible power, used in the form of economic pressure to put behind a World Court.

INTERNATIONAL CLEARING HOUSE PROPOSED

Business to-day is really the great organized life of the world. The agencies through which it is carried forward have created such a maze of interrelations that each nation must depend on all the others. A great Chicago banker, John J. Arnold, Vice-President of the First National Bank of that city, said to me this week that so closely drawn and interwoven had become the economic net in which the world was immeshed that if the great war could have been postponed four or five years it would never have swept down upon men like a thunderbolt of destruction. As an additional strand of great strength in the warp and woof of modern progress, Mr. Arnold believes that an International Clearing House will come—in fact that it is an inevitable development in international finance. It was my privilege to hear him make a notable address before the last meeting of the American Investment Bankers’ Association in Philadelphia in which he proposed such a Clearing House for settling balances between nations, just as our modern Clearing Houses now settle balances between Banks in cities in which they are located. Beyond question such an International Clearing House, when established, would quickly become an invaluable auxiliary to a World Court, helping to give it stability and serving, when occasion arose, as a mighty agency35 through which economic pressure could be applied.

And I believe Mr. Arnold is right in his view that an International Clearing House is bound to come. Business, finance and commerce are now so truly international that there is a manifest need of it. As a strong proof of this let me remind you that when this war broke, forty per cent. of the securities of the world were held internationally.

HOW ENGLAND AND FRANCE PREVENTED WARS

Now economic pressure is not a new thing in the world. It has been used before by one nation against another and usually with tremendous effectiveness. When Philip was organizing the great armada the merchants of London persuaded the merchants of Genoa to withhold credit and moneys from the Spanish King. The result was that the armada was delayed for over a year, and then the English were prepared to meet the shock. What could be done three centuries ago for a year to delay a Power so great as Spain then was could be done in this century far more effectively. And it has been employed in this century. When the German Emperor dispatched the gunboat to Agadir bringing on the acute crisis with France, I happened to be in Paris. On the fourth day of the crisis I was having luncheon at the Grand Hotel with a young French banker of the Credit Lyonnais. I remarked on the fact that the crisis was becoming less acute and inquired the reason. “We are withdrawing our French investments from Germany,” was the rejoinder, “and that economic pressure is relieving the situation.” As we all know, it not only relieved the situation but it served as a definite means to prevent a war that seemed imminent. Now I submit that a force which England could use against Spain in the Sixteenth Century and that France could use against Germany in the Twentieth Century—in each case let me remind you a single nation was applying force against another single nation and that nation its enemy—I submit that that force can be applied by all nations collectively against another nation that refuses to settle in a World Court a justiciable issue.

THREE WAYS TO APPLY ECONOMIC PRESSURE

Economic pressure could be applied in three ways:

First: To compel nations to submit justiciable questions to the World Court.

Second: To compel nations to submit to the decrees of the World Court.

Third: To serve as a penalty against an offending nation for breaking a Hague Convention.

A nation that should decline to take justiciable questions to the World Court, after having agreed with other nations to do so, would manifestly become an outlaw. Why shouldn’t other nations immediately declare an embargo of non-intercourse with an outlaw nation, refusing to buy from that nation or sell to that nation or have any intercourse whatsoever with that nation? In this connection I should like to read the resolution that I offered yesterday.

Believing that commerce as the organized business life of the world is interdependent because international, and believing that it can become a great conservator of the world’s peace, therefore be it

Resolved, by this World Court Congress that the next Hague Conference be urged in the interest of peace, to provide as a penalty for the infraction of its conventions or for a refusal to submit all justiciable issues to arbitration, that an embargo shall be declared against the offending nations by the other signatory nations, as follows:

1—Forbidding an offending nation from buying or selling within their territory or territory under their control.

2—Forbidding an offending nation from raising money through the sale of bonds, or of any other forms of debt,36 within their territory or territory under their control. Be it further

Resolved that the President and officers of this World Court Congress be instructed to take all possible and proper means to secure the adoption by the next Hague Conference of this proposal to apply the economic pressure of commerce as the most efficient, humane and civilized means of insuring the world’s peace by making the proposed World Court effective.

ADVANTAGES OVER INTERNATIONAL POLICE FORCE

One of the great advantages of economic pressure is that it can be applied from within, rather than from without. You will recall that Mr. Marburg, in his very interesting address yesterday, spoke of the question that has arisen in many minds as to whether military force should be put behind a World Court. As you know there has been a standing proposal for an international police force. Colonel Roosevelt has often urged the necessity for such a force with his wonted vigor. But after all isn’t this proposal, stripped, likely to turn out to be merely militarism masquerading under another name? The fighting armies abroad are composites from different countries, an actual and destructive international police force in operation right now. No gentle euphemism can disguise the grim front of Mars. Unless an international police force is subjected to the most drastic control and used under the most compelling limitations it is in danger of provoking the very war it is organized to avoid. War breeds war, as all history shows. The epigram of David Starr Jordan in a speech at the Economic Club in New York a few weeks ago, envisaged a fact, for it is true, as he said, that “when every one is loaded, some one is going to explode.” I will admit that an international police force may serve some good purpose as an international sheriff to aid in carrying forward the due and orderly processes of a World Court. But when it comes to enforcing the decrees of such a Court, I would set over against an international police force, as being incomparably more powerful and of incomparably greater ease in use, the compelling and world-wide force of commerce. Economic pressure touches the war chest of every country. Instead of fighting with bullets let us fight with the money and credit that must be behind bullets. And the world can fight in that way to protect the civilization that has been slowly and painfully built up through the centuries if it will use the force of commerce that stands ready to its hand. This force of commerce can be applied from within. Nations can declare an economic embargo against an offending nation. Or it is more accurate to say the offending nation raises an economic embargo itself by its own act in breaking its pledge to other nations and placing itself outside the pale of civilization by becoming an outlaw.

THE QUESTION OF PROFIT OR LOSS

Or course, the one apparently strong and valid argument to be brought against economic pressure is that it would bring great loss to the commerce of the nations applying it. But that loss would be far less than the loss brought by war. And there would be no loss whatever if war were avoided. Still to the automobile factories in these great Lake Cities, working over time on war contracts, to the farmer enchanted with the magic of “dollar wheat” and to those especially affected by mounting export balances an economic pressure that resulted in smaller trade may seem an astonishing measure to adopt. But ask the cotton growers who had their market cut from under them by war; consider the virtual moratorium in this country when the exchanges closed, bringing an incalculable loss in shrinkage in security values and affecting all business; consider the industrial survey made in New York and other cities during the past winter showing that unemployment had increased threefold; listen to the poignant human appeal from our Charity Organizations; at least one must grant that the shield of Mars has two sides. And it has always had two sides. But the burnished side37 is not that which reflects the ghastly image of war.

WHAT A TRIAL BALANCE OF COMMERCE SHOWS

If a balance could be rightly struck in this country is there any one who believes that our interests would be best served by war in some other country? This is quite apart from any question of humanity or civilization. Let it be a trial balance of commerce alone and it will show a heavy debit against war. And an accounting will show the same result in all other countries. If this be true, with only current commerce entering into the equation, how staggeringly true it becomes when the piled up debts caused by war are considered. Economists who have examined the matter state that this war has already cost over forty billions of dollars. And the end is not yet.

So why shouldn’t business, which has been binding the world more closely together for centuries, be employed to protect the world against the waste and loss of war? Hague Conferences have sought earnestly for penalties that would save their Conventions from being treated as mere “bits of paper.” Penalties that every nation would be bound to respect could be enforced through economic pressure. The loss in trade would be small or great in proportion to the amount and duration of the pressure; but it would be at most only an infinitesimal fraction of the loss caused by war.

THE WORLD COURT CAN BE ESTABLISHED

The Chairman reminds me that my twenty minutes is expiring. So let me briefly refer in conclusion to that wonderful address made by Rabbi Silverman yesterday. In it he seemed to say that religion had broken down because the war had come. As he spoke I was reminded of going across Illinois a week ago this morning. I lifted the curtain of my sleeper berth and there in a little town we were passing through stood a church with the cross shining above it in a golden radiance across the great green stretches of the valley—a scene of peace. Then I thought how the cross and the temple and the mosque were looking down that very May morning in the valleys of the Vistula, the Marne and the Rhine on guns, on soldiers and armed camps—a scene of war. Then I thought that the other strong spiritual forces of the world had not been sufficiently powerful to bring wars to an end. In the great Public Library here in Cleveland and in the Libraries of all the warring nations are the works of Goethe and Schiller, of Hugo and Balzac, of Shakespeare and Milton, of Tolstoi and Turgenieff—all imperishable contributions to the world’s intellectual life, but still they have not ended war. Your orchestras as well as those of Paris, Berlin and London, play the music of Beethoven, Tschaikowsky, Berlioz and Haydn, and music is one of the most spiritual of the arts, but it has not ended war. Painting and sculpture are part of the common heritage of mankind but they have not ended war. Isn’t it possible that the world has depended too much on these spiritual forces? By that I mean, the world has not yet been brought to the stage of civilization by these forces where it can depend on them wholly to end war. The world has had churches and schools and libraries and galleries—but the world like this great city and this country and every other city and country needs a Court House. To my mind, all these spiritual forces have been working through the generations toward a time, toward this very time, when the world would be ready for a World Court. That Court is within our grasp. What is needed is to give it force and power through economic pressure that will compel its use and it will forthwith become a mighty bulwark of civilization, protecting the world from the waste and futility and the utter tragedy of war.

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