# 39
In the Service of Evil
Economists Meet in England, 1913Part One
Disappointed, when the automobiles disappeared behind a nearby fieldstone farmhouse, the cows silently continued their grass nibbling. A couple of frisky calves ran in the damp meadow jumping and clicking their heels.
The thatched-roofed farmhouse was the main style found in Devonshire. In fact, it was for this reason that the men in dark suits felt most inconspicuous to prying eyes. A middle-aged woman clad in simple farm dress greeted them at the front door. Without ceremony, she led them into a large dining room the floors of which consisted of heavily oiled pine planks. The woman pointed to wall hooks on which the visitors deposited their hats and overcoats.
Finding a variety of chair styles, the men seated themselves around an oblong table covered with green cloth and began quietly chatting amongst themselves in English and French. One person’s speech occasionally included distinct Russian idioms.
Near the stone hearth lay a curled up, yellow tabby that seemed unperturbed by the strangers. One of the visitors leaned over the sleeping form and cooed, “Hello little kitty.” Receiving no reaction, the man returned to his comrades.
A thin, golden sunbeam played upon a crystal bowl at the center of the table. The hostess who waited in an alcove went to the window and pulled down a ragged shade blocking outside light and possible spying eyes.
After a few moments, a tall, smooth shaven, dark haired, rather suave gentleman entered and everyone stood up. He walked past each person and shook their hands while offering to each a few bon mots.
“Good morning, honored professors of economics. Thank you for being here. I am George Bacon, Undersecretary for Commerce. My regular secretary has a severe case of influenza and is bedridden. The doctors fear he has taken a turn for the worse. I am concerned about him. My assistant this morning is Lawrence Courtney who will take notes of our proceedings. He speaks German, French, Russian and a half dozen other languages. Mr. Courtney has graciously volunteered to join us at my last minute request.”
“The Prime Minister selected you gentlemen to attend today’s meeting because he believes you to be the most knowledgeable economists in England and Europe. I feel certain that each of you knows your colleagues here today. Just the same, for the record, today we have Professor John Lambner of the University of Edinburgh, Professor Victor Entaille of the Sorbonne in Paris, and Professor Leo Yamarov of Lumonosov University in Moscow.”
The guests stood up and patted each other on the back.
With a slight Scottish intonation, Lambner said, “Good morning, everyone!” “Bon jour!” laughed his French counterpart. Bowing deeply, the Russian exclaimed, “Dobrahyeee ootrah!”
“Now then, gentlemen, please be seated. The Prime Minister has requested your presence at this conference in Devonshire, and particularly in this out-of-the-way hamlet of Sticklepath, because of the top-secret nature of our conversations. The main topic of concern to us is what positive or negative effects do recent German economic successes have upon the relations among Great Britain, France and Russia? You are to feel free to express the results of your research as professionals and to answer any questions my government has to offer.
“I jest a bit, but I trust that today’s discussion of the so-called ‘Dismal Science’ will lead us to conclusions that, for each of our country’s economic outlook, is not gloomy in the least. However, I warn you again that this meeting and its results are top secret. Are there any questions?”
No one responded.
“This session will begin in a few minutes. In the meantime, tea, coffee and biscuits will be available on the buffet at the end of the room. Cigars, cigarettes are within reach on this table. If you need to visit the lieu d’aisance, or as we Brits call it, the loo, one does not have to raise one’s hand to ask for permission. Simply rise and leave the room.”
Everyone laughed.
At that point, the dining room door opened and two uniformed guards proceeded to set the table with cups and saucers that had seen their best days. Two soldiers placed assorted sweet buns and two urns containing hot coffee and tea upon the buffet. Finished, they quickly left the meeting room.
Rubbing his hands, the Undersecretary said, “I truly appreciate your kindness in leaving your very busy academic lives to spend a few hours with me. Right up front, I will tell you that my office requires the latest thoughts on economics. We need the input of England, France and Russia, as a team, so to speak, if we are to plan to meet our commercial strategies for the next decade.”
“First off, Professor John Lambner will give us his outlook on current economics from the British point of view.”
After lighting a cigar, Lambner reorganized several sheets of notepaper that lay before him. His large girth and puffed rosy cheeks gave him the appearance of a caricature of “John Bull.” He announced that his study of European economics led him to one premise.
“It is that each nation should be free to consolidate and build up its economic prosperity.”
He blew several smoke rings while gathering his thoughts. “That is to say,” he continued, “the right of each nation to secure its fullest economic development compatible with the wealth of its soil and its industrial capacity. Yes, colleagues, this is a natural right.”
“Let me begin today by stating that the aggregate of British overseas investment leads the world and is currently over ten billion pounds sterling. However, only four percent of British investment is in Europe. The remaining ninety-six percent is where it cannot suffer from war. However, gentlemen, therein lies our ‘Achilles’ heel’ that will I soon
make clear to you.” Looking at each person, the Scotsman went on. “No nation, in pursuing its economic development, can progress without constantly expanding its relations with other nations. A good example of this is the United States who makes the prime goal of its foreign policy to create good relations with nations great and small.
“Today, the world faces a growing system of nations protecting their domestic production by taxing imported goods. We know that when cheap goods are imported, local manufacturers often cannot compete with them and cut back on their work force or go out of business.”
“I am mainly concerned that today’s tariffs on imported goods, though beneficial to some, tend to inflame most nations. Tariffs are viewed by so-called ‘free-traders’ as commerce between nations upon a footing of mere tolerance that eventually turns to complete intolerance. Tariffs cause general instability and insecurity. Britain is a prime example of free trade. My fear is that tariffs against British goods could lead to
widespread British hostility and, God forbid, war!”
Waving his hand, petite Professor Entaille agreed with the speaker’s point by reminding the group of the problems caused by tariffs throughout history. “How many small nations suffer the lack of economic growth because of the strangle hold bully nations have over them?”
His colleague, Professor Yamarov, staring at his fingernails, nodded in agreement but also suggested that the group needed concrete examples to support Lambner’s hypothesis.
“Of course, my dear professor,” the Scotsman replied. “You recall that about ten years ago Austria pursued a merciless tariff war against Servia. The Serbs sought relief by concluding a commercial convention with Bulgaria to develop new channels for her foreign trade. It was the first time little Servia had resisted Austria’s long held commercial stranglehold on her.
“Just a couple of years ago, in an abrupt counterstroke, Austria annexed the Slavic nation of Bosnia and Herzegovina. If we look at a map of Europe, we find that Austria brazenly bars Servia from gaining free access to a harbor on the Adriatic Sea.”
“The tariff is ruinous to Servian trade which enrages the Serbs. In short, it put a stop to Servia’s dreams of expansion. From then on, the Serbs have made plans for their special brand of revanche against Austria. This is no secret.”
The Frenchman and the Russian lit up cigars and were soon competing with each other by blowing smoke rings.
In spite of the interruption, Professor Lambner continued his discussion. “This mess really started at the Congress of Berlin in 1878, when Great Britain, France, Russia, Austria and Prussia agreed to the creation of the Balkan Kingdoms of Servia, Rumania, and Bulgaria. Since then, because of long standing hatred among these three groups of people, Europe has seen a number of wars in the Balkans The hateful specter of tariffs stood behind those disasters. Now the Balkan nations are constantly at each other’s throats and may one day involve major Powers in a world war!”
“Oui!” Professor Entaille agreed, pounding the desk. “There is nothing but trouble there! It is just one big cat fight!”
Russian Professor Yamarov agreed. “Yes, the Congress’ action was publicized as a commercial decision, but behind it all was the military imprint of the European Powers."
“Austria-Hungary,” explained Professor Entaille, “immediately forced commercial agreements on Bosnia and Herzegovina. It all went well until, guess what?”
“I believe you suggest in your diplomatic Gallic way,” said Professor Lambner, “that Russia butted in when she sent agitators screaming ‘One Servia Now!’”
“Ahem,” Yamarov coughed to gain attention. “Perhaps that is true.” he said in undisguised anger, “However, Let us remember that Russia resents Austria’s dastardly attempt to control the Slavic people in the Balkans. It is common knowledge that the dual-monarchy is in its last stages of decay. Not for noble reasons, Germany supports Austria’s aggression. No, the Kaiser needs allies to meet a potential threat by Russia to its eastern borders.”
“What brings you to that conclusion?” said George Bacon.
Yamarov used his napkin to dry his bitter tears. “We were tricked at Bjorko by a devious Kaiser Wilhelm who sought an alliance with Russia in hopes that it would deter France from its goal of revanche for the loss of Alsace-Lorraine to Germany in 1871. Nothing in the Bjorko treaty benefited Russia.”
Again, Leo halted to control his emotion. “While Russia was involved in a struggle with Japan in 1905, Russia and German signed a commercial treaty that reduced a few duties on imports between the two nations. Russia now claims, and I certainly agree, that she got the short end of the stick and began to demand terms that are more favorable. Although Kaiser Wilhelm wasn’t about to budge on the changes, Germany feared
Russia’s improved army would soon enable Moscow to demand better terms. Until now Germany has played a waiting game.”
Yamarov pounded the table before him in order to emphasize each point he made. “The fact is,” he said, “The treaty was the price paid by us Russians for German neutrality in the war. The treaty, filled with a myriad of tariffs, drains Mother Russia of millions of rubles every year. I claim it enormously enriches Germany’s people. The commercial treaty has led to an increase in poverty among our peasants.”
“I hear that that several highly placed individuals,” said Entaille, “in the Russian government vow to make Germany suffer for her callous behavior. These agitators claim that the principle of give and take is not fairly applied. One chap, with whom I spoke, put it quite strongly that the treaty had reduced Russia to the role of Germany’s tributary!
Yes or no, Leo?”
The men stared at the Russian, whose body shifted back and forth, as he became more agitated. “The Russian press, inspired by the War Ministry, has begun to brag about the headway that the war department has made in reorganizing its imperial defenses. They
bluster that Russia will show the world that Muscovites are more formidable than the Germans think. The Russian Duma has voted large sums for the army and navy. It is a very dangerous time for all peaceful-thinking men. To the outsider, the Russian Bear may seem to plod slowly, but its plodding has created a revolution in commercial growth never before seen in Europe!”
Professor Yamarov chuckled, “I don’t want to brag, gentlemen, but in spite of our war with Japan in 1905, Russian industrial production made a miraculous advance. Our large operating reserves of oil, especially in the Baku fields, produced five hundred million gallons last year. Pig iron has increased ten times. Coal output increased thirty percent. French investments and loans have helped Russia build new steel mills and open new oil fields! Viva la France!” Undersecretary Bacon asked the Russian, “How much has France invested in your country?”
Professor Yamarov replied effusively, “This is an amazing tale! French capital investment in Russia amounted to ten billion francs. This compared to France’s total thirty billion francs invested elsewhere. France is Russia best partner! N’est-ce pas?
“Our Minister of Finance, Sergei Witte, brilliantly uses French investments for a program to expand Russian railways and in the past decade has expanded our railroad mileage by thirty percent.”
Professor Lambner said, “Then, I am at a loss to explain why any country with a high level of economic success would risk war. The odds are that war could cost more than it is worth.”
“Thank you, Leo,” said the Undersecretary, “for your acute analysis.” He then turned to the French economist.
“Now, Professor Entaille, will you please tell us about the French economic activities that affect and are affected by Germany?
“I will be delighted to do so, monsieur l’ Undersecretary!”
The professor inclined his head and placed his hands together, fingertip to fingertip.
“The French believe that a nation to become economically great must continually engage in a race for markets and spheres of influence. Thus, France built up a colonial empire whose growth the Germans envy.
"Credit must be given to our French leaders. Since the debacle of 1871, when Germany defeated us and grabbed our beloved Alsace-Lorraine, France’s economic recovery is miraculous. She hoarded her sources and was soon able to make loans to Russia. Our abundant financial aid led to an alliance with Russia. Gentlemen, we have financed Russian railways, Russian roads, and Russian armaments to what purpose?”
Professor Yamarov clapped his hands and laughed, “Dah! It is probably to gain Russia’s friendship and to put her more deeply into debt!”
“Yes, that is true,” chuckled Professor Entaille. “France has loaned her more than ten billion francs. It was a great risk, but in the end is worth it. At the same time, France does not want to lose her savings invested in Russia. To be honest, gentlemen, we fear the Tsar, who with a single stroke of the pen, can cancel Russia’s indebtedness. Both countries are fully affiliated financially.”
Pointing to his map of Europe, Entaille explained, “Frances’s colonial policy is one solely of competition, not of war. She owes her success to the efforts of her merchants who stress diplomacy in dealing with local businesses.”
The professor paused to gather his thoughts. “For France, it is more than revanche. France needs ores from Lorraine. We are short of native coking coal and that is a severe handicap to the French iron and steel industry. A number of the largest French steel works were lost to Germany along with large deposits of our iron ore. Ainsi, mes amis, France is obliged to import much German coke at controlled prices. If we don’t act now, we will become the economic slaves of Kaiser Wilhelm! Thus, step one is a close understanding among France, Britain and Russia to stifle German monopolies.”
“Yet, Gentlemen, in spite of our loss of the Lorraine iron fields France increased its production of pig iron and steel. We French know what we are doing!"
The Frenchman poured himself a glass of whisky and rested his case. The other members followed suit.
Undersecretary Bacon nodded his head in approval. He asked, “What about Great Britain and Germany?”
Professor Lambner, rubbing his eyes, said, “I believe that an accumulation of unfortunate events and commercial envy has brought Britain and Germany to loggerheads. We all remember when Germany was a conglomerate of small states, not one which economically threatened Great Britain. We would be happy if the map again reflected the three hundred or so tiny states that once made up Germany.”
“Besides, a sentimental yearning for national unity, two factors operated together to mold the many petty German states into a united nation. The spectacular part played by the Prussian army and the work of very clever capitalists, did the trick. Railways now unite the states together with bonds of steel. The Zollverein, a very powerful tariff league, was most instrumental in preparing the way for political union by 1871.”
“I often think how similar the history of the German unification is with that of the United States. Since their unifications, both have become economic powerhouses. After the defeat of France in 1871, and after the unification of the German Empire, the influence of two elements—the landed aristocracy and the wealthy businesses—were manifested in their demands for a protective tariff. The former demanded a high tariff on imported foodstuffs; the latter wanted a tariff to keep foreign manufactures from entering into competition with German articles in the home market.”
The tabby cat arose from its resting place by the fireplace and stretched himself. He calmly sauntered over to the door and meowed softly. Yamarov stood up and walked over to the door to let the small figure depart. The cat rubbed the Russian’s leg and then quickly disappeared.
Lambner quipped, “That cat most likely grew tired of our pontifications!
“At any rate, German genius for applying natural science to industry coupled with German thoroughness keeps business popping. Mills and mines multiplied wealth. Huge ocean steamships carry German wares to the four corners of the earth.
“In order to continue the trend, German manufacturers required a broader foreign market. By the turn of the century most of German trade was overseas
"German economists argue that the well being of Germany requires the sea be kept open to German merchant marine. Much of its population is dependent for their livelihood and work upon unrestricted imports and exports by water. Freedom of the sea and vigorous competition in the world’s markets are questions of life and death for Germany, as it is for Britain. To the surprise of everyone, in twenty-five years the German merchant marine is beginning to overtake British shipping. German businessmen recognize that the more ships that Germany possesses, the greater chance they have of shipping goods everywhere in the world!”
“So what? You may ask?” said Lambner pointing at Secretary Bacon. “To protect its merchant marine there is a crying need for a large German navy! Is this not one of my Prime Minister’s major questions about Germany? The Kaiser and Admiral Tirpitz seek to double the fleet size. It is a navy that Great Britain is beginning to fear and seeks to offset it by building bigger and better battleships. Have you gentlemen seen any of Britain’s new battleships called ‘Dreadnoughts’? I am told that they have firepower enough to sink any enemy warship in existence!”
Professor Yamarov interjected, “Yes, it is for we Russians just the same! We, too, need markets and we, too, need a large navy to support our enterprises.”
Professor Lambner said, “I recently spoke to a few British industrialists who agreed that we better wakeup and emulate German enterprise and industry in manufacturing or we might be outstripped in the commerce race.”
“The German iron industry, because of its improved methods, has obtained a great part of England’s trade. Today, German machinery is more efficient than that of the English. I believe we British have to retool. It will be expensive, but our future depends upon it. England abandoned the field of electricity and ceded it to America and Germany. German dyestuffs prevail. German proprietary medicines are number one in the world market. Just look at the Bayer industries. They monopolize everything from aspirin to hair gloss!”
“Now, my fellow economists, how does a nation prosper? The answer, of course, is by trade, trade, and more trade. Certainly not by sitting on our derrieres and bragging about how the sun never sets on the British Empire! Trade in Great Britain in the last thirty-five years has risen steadily. Whoopee! However, German trade is five times what it was in 1870. This figure, gentlemen, is very serious one for a commercial nation like England!”
`“Therefore, Britain faces the alternative of either getting better and more efficient habits of work from its employees, new and improved machinery, and better education, or, I say this in all sincerity, fighting the Germans militarily!”
Professor Entaille said, “No! No! My dear colleague! God forbid it! War would bankrupt the British Isles. Come to think of it, France and Russia as well!”
“I agree wholeheartedly with you, Professor Entaille,” said the Scotsman. “There is no such thing as a little war. We face a world war! We might get lucky and stop the Germans in their tracks with the united armies of France, Russia, Italy, Great Britain and, if needed, the United States. Or, dear colleagues, we could also see the end of life in Europe, as we know it. Its a throw of the dice, I say! In my humble opinion, we Britons do not fear German militarism at this time, but only German trade and commerce. I am not a general, so I cannot comment on things of war."
From Donald Britton Conrad, "In the Service of God and Evil."
