NOTEBOOK “β” (“BETA”)

SCHILDER, FIRST VOLUME
OF DEVELOPMENT TRENDS IN THE WORLD ECONOMY

Dr. Sigmund Schilder , Development Trends in the World Economy , Vol. I, Berlin, 1912. (Vol. I: Planned?! Influences on the World Economy .)

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| | | The title is too sweeping, the subtitle plainly fraudu- lent, for the author has specialised in tariff policy = there you have his planned influence!! | | |
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| | The author is secretary of a trade museum. | |
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p. 4—Disagrees with Sombart (with his theory of declining “export quota”). Says this “quota” is increasing .

p. 6. An apparent weakening of protectionism (“signs of this”), 1910-11.

p. 6—“Unrest caused by high prices” in France in August and September 1911. Dates ( N.B. ): Vienna, September 17, 1911.

27-28. Agriculture too , is developing (not only industry), “even” (“sogar”) (p. 28, line 8 from below): “in European industrial countries”. (This “even” is a gem!)

N.B.: approach to the problem of equilibrium—is “world agricultural purchasing power” sufficient? p. 27.)

28-29. The development of agricultural associations (even India has 3,498 with 231,000 members, according to The Times , July 27, 1911).

Especially rapid development of agriculture in the United States .

In the 20th century one can expect the same in Rhodesia , 30: Canada, Sudan (Egyptian), Mesopotamia.

31—Governments develop agriculture in the colonies “to obtain buyers of industrial goods”. (In India (until recently), and in Egypt, with this aim in view, Britain has artificially “hampered” the development of industry.)

35-36—Fear of a shortage of agricultural products is unfounded. Tropics and subtropics N.B. Philippines . Only 3-5 million acres are cultivated out of 74 million. (Population is 27 per square kilometre.)

| 38: “Though it may sound paradoxical to some, the growth of the urban and indus- trial population in the more or less near future is more likely to be hindered by a shortage of industrial raw materials than by a shortage of food.” | |
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A shortage of timber : it becomes steadily dearer; idem leather ; idem textile raw materials (39).

| “Associations of manufacturers are mak- ing efforts to create an equilibrium between agriculture and industry in the whole of world economy ; as an example of this we might mention the International Feder- ation of Cotton Spinners’ Associations in several of the most important industrial countries, founded in 1904, and the Euro- pean Federation of Flax Spinners ’ Asso- ciations, founded on this model in 1910” (42). [1] | |
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Within the countries—an agreement between the growers of sugar beet and the manufacturers.

| “Eastern Europe” (an economic and political concept....) | | | | The agricultural crisis, the drop in prices from the seventies to the nineties of the nineteenth century. Caused by American competition? + the impover- ished position of the farmer in “ Eastern Europe ” and India (cf. Engels). |

| well said! | | | (43-44) “Thanks alone to the agricultural co-operatives combined with better edu- cational facilities in the countryside, the letter of the law on emancipation of the peasants became a real fact.” |

47: The peasant revolt in Rumania in 1907 (spring) played a role, similar to that of the 1905-07 revolution in Russia, in improving the peasants’ position.

| N.B. | | | 51: Only in New Zealand (from the early 1890s) has “Henry George’s theory, [11] that of British land nationalisation”, been applied “ in practice ” (population consists mostly of small-landowner families).... In Austra- lia, from 1910 , “a similar course”.... |
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| | 63: The role of cartels (dumping and the struggle against free-trade countries) “dur- ing approximately the last three decades”.... |
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| cartels 1882-1912 | | | | | |

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| | | The argument of English protectionists N.B . | | |
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[N.B.: This caused the protectionist trend in Great Britain, Belgium and Holland : 67.]

66: The Brussels sugar convention (March 5, 1902; renewed August 28, 1907) put an end to the unification of government and cartel export subsidies (for sugar).

| N.B. | | | 72 . Extreme protectionism resembles free trade in that, by making sales within the country more difficult (high prices), it stimulates foreign trade (imports (a) of cheap raw materials, etc.) (selling (b) abroad, for its own population grows poorer). |

87—It is not true that “trade agreements” have prayed “bankrupt”.

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| | writing on questions of tariff policy, the author adduces a host of unnecessary and boring details; I omit them. | |
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98—Examples of trade agreements: an agrarian country needs cheap machinery (and its customers need cheap grain): the Bulgarian tariff of March 6-19, 1911—Austria’s agreement with Germany (1905) (chemicals; artificial indigo, etc.).

(99)—reciprocal concessions (Germany’s trade agreement with Portugal, November 30, 1908), etc.

Subtitle of Chapter IV, “Tariff Wars”:

118—“Examples of the considerably useful impact of specific tariff, wars in promoting international trade”... Russo-German war of 1893-94,—Franco-Swiss war of 1893-95.

Those of Switzerland and Spain in 1906 (from June to September 1, 1906) (they led to a lowering of tariffs).

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| | | Ended in agreements :1909 :1910 | |
| Austria—Rumania (1886-94) |
| Austria—Serbia (1906-10) |
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| 127. | { | Tariff wars are becoming rarer, giving way to threats, negotiations, etc. |

145. British free trade has been based both on her military might (the navy) and colonies.

True, an attitude of indifference to maintaining and increasing colonial possessions prevailed in Britain up to 1860s (in 1864, she even gave Greece the Ionian Islands gratis , without political or economic compensation).

146-48 : Intensified acquisition of colonies by Britain began in the eighties . ((Cf. Hobson .)) About 1/3 of Britain’s total exports goes to her colonies; no small amount and N.B. : this export is “especially profitable”

| N.B. (149) | ⎧ ⎪ ⎪ ⎨ ⎪ ⎩ | owing to: | (1) investments of capital in colonies |
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| | (2) “ contracts ” (“public contracts”) ( very important!!) |
| | (3) “Colonial preferential tariffs for British manufactures”: (in the majority of the colonies) |

151: state power (concessions, municipal and state institutions, etc.) and trust likewise important for capital investments: in this respect (among the factors of “imperialism”)

| | 151—“Of service to the British” (facilitating invest- ment) “is the legend, assiduously cultivated by ruling circles of the British Empire and by the British press, in spite of Ireland and of certain measures in India, Egypt, etc.—the legend of the special liberalism and humanity which are alleged to be characteristic of the British regime at all times and in all places.” (Written in 1912.) |
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154: “Inter-colonial preferential tariffs” are widely applied also in the British colonies.

| ⎛⎛⎛ ⎝⎝⎝ | N.B.: a step towards a customs union of the whole empire. My addition . | ⎞⎞⎞ ⎠⎠⎠ |

Britain’s virtual protectorate over Portugal , and partly over Spain (1901-10) ... Norway (from 1905) ... Siam (the 1860s up to 1904; in 1904 a treaty with France; their joint protectorate)....

“More interesting and perhaps even more significant than the examples so far mentioned [Egypt, Zanzibar...], where subtropical or tropical semi-civilised countries, after relatively short transitional stages of some few decades, have become or appear to be becoming real British colonies, are a number of other cases. These are cases where for a long time, decades or even centuries, a country with a European civilisation may virtually be a British protectorate, without, at least formally, being deprived of any external mark of full sovereignty.

“ Portugal is the best known and outstanding example. Since the war of the Spanish Succession (1700-14) Great Britain has almost continuously used her navy, and on occasion her army, to defend Portugal’s European or over seas possessions from attacks or claims by Spain, France, etc. Conflicts between Britain, the protector, and Portugal, the protected, were accidental and, to a certain extent, family quarrels ... as, for example, the British ultimatum of January 11, 1890, against Portugal’s attempts to land-link her western and eastern colonies in Africa.

“At any rate, only British support enables Portugal to maintain her possessions—which, though not large, are nevertheless important for such a small country—on the west coast of India, in South China (Macao) and on Timor, in face of the intense international political rivalry in southern and eastern Asia. In Portuguese East Africa a kind of customs union with British South Africa has even been added to Britain’s political protectorate over Portugal” (treaty of December 18, 1901).... “And it has so far proved economically highly profitable for Portuguese East Africa. It is also a valuable acquisition, now and for the future, for British South Africa and, therefore, for Great Britain.

“This virtual protectorate of Great Britain over Portugal during its more than two hundred years’ existence has proved extremely useful to British trade and shipping [the 1703 treaty with Portugal]....

“However, ever since Great Britain adopted peaceful free trade, she has been able through diplomatic action to influence the Portuguese customs tariff in a way hardly to be achieved by any other country, even by the offer of commercial privileges or the threat of a tariff war. Besides, as the dominating power, Great Britain can make especially wide use of all export and investment opportunities involving Portuguese government concessions” (railways in Portuguese Africa, etc.)....

“And indirectly, again owing to her protectorate over Portugal, Great Britain maintains not only her position in South Africa and her influence in the Congo, but also her maritime supremacy, the firm pillar of her colonial and world-wide political and economic power. For in war or peace, Portugal puts her ports and islands at the disposal of the British fleet for training purposes and as intermediate shipping stations, allows the use of telegraph cables, etc.” (159-61).... [2]

| Bismarck's saying | | | | | 169—In wartime Britain used the Euro- pean states as “ excellent infantry ” (“accor- ing to Bismarck’s description, as the ‘silly strong man’ of world politics”). |

170—Britain supported Belgium’s separation from Holland (Holland was “cut in half” as a rival) so as not to permit a powerful state near London.

175-76. The struggle (of Britain it) against Russia over Persia (long-continued) until the agreement of June 9, 1908.

The struggle (of Britain ) against France over Siam (long-continued) until the agreement of April 8, 1904.

178 et seq . “ Four periods of British world politics” (their designation, p. 184):

| 1) | First Asiatic period (against Russia), approximately 1870-85. |
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| | { | 1870—against Russia’s Black Sea rights. |
| 1885—agreement on frontiers of Afghanistan. |
| 2) | African period (against France and in part Portugal and Germany), approximately 1885-1902 (1898 “Fa- shoda”). |
| | { | 1885—agreement on the Congo: “independence” |
| (Britain wanted to devour it). |
| 1902—end of the Boer War. |
| 3) | Second Asiatic period (against Russia): approximately 1902-05. |
| | { | Treaty with Japan, 1902. Russo-Japanese War, 1904-1905. |
| 4) | “European” period (against Germany), approximately 1903—(“anti-German”) [3] 1903: friction over the Baghdad railway. |

194: The British Empire (with its colonies) accounts for: “>one-quarter of international trade turnover” (reference to Vol. II, appendix IX)

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| | too small: cf. Lansburgh: 3 ⁄ 4 [4] | |
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214. Bukharin’s table + Japan? + Portugal (216)— 2.18 million sq. kilometres—13 million inhabitants.

220. The outlying regions often have a special (tariff) structure (distances too great even for modern facilities).

— Eastern Siberia in Russia

— Philippines in America, etc.

226. Six “special economic areas” in Russia: (1) Poland (Poles speak of “exports to Russia”); (2) the South; (3) Archangel; (4) Urals; (5) Moscow; (6) the Baltic (+Finland).

| 237 ...A trend “emerged” in 1911 towards a “Greater Colombia” in the northern part of South America against the United States. | | | | | N.B. |

237 and others . The union of the modern gigantic world states into a single economic whole is stated to be an “approach” to “ universal free trade ”.

| | “As far back as the eighteenth century, after the secession of the North American colonies from Great Britain, it became apparent to the more far-sighted colonial peoples that such a brutal colonial policy [ suppression of all industry in the colony] aimed exclusively at promoting the real or apparent interests of export of manufactures from the metropolis, could not be maintained for long. At any rate, that applied to regions of the temperate zone with active, intel- ligent populations whose living conditions do not substantially differ from those of European nations. In the tropical and subtropical regions, however, with populations at a lower cultural level, less ener- getic and militarily and politically weaker, this old colonial policy was still retained, even though to a lesser extent. True, nowadays, in both the tropics and subtropics, outright suppression of incipient industrial activity is as a rule avoided. But in most cases colonial governments devote more attention to developing agricultural and mining raw-material out- put than to industrial and political problems. And that for the most part they can do this without much damage to the economic development of the tropical or sub- tropical areas concerned is all the more important, since this enables them to operate this type of colonial policy for a long time. For the present acute political rivalry throughout the world, and the emergence of overseas Great Powers (U.S.A., Japan), afford the population of the tropics and subtropics—resentful at the forcible, ruinous retarding of its economic development—many means of creating difficulties for its oppressors and of giving them a distaste for brutal methods of rule” (240-41). |
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| | For example, Britain is more and more converting Egypt into a country producing only cotton (in 1904, of 2,300,000 hectares of cultivated land, 600,000 were under cotton) and hampering industrial develop- ment (for instance, two cotton textile mills founded in Egypt in 1901 were made to pay the cotton tax , that is, the government imposed a “consumers’ tax” on cotton!!!) (244-45). |
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| | In general, “modern” colonial policy is supposed to encourage production of raw materials and react to the development of industry “with indifference, if not with hostility” (247). |
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| N.B. | | | “However, it is probably no longer possible to apply that type of colonial policy to the physically and intellectually more vigorous peoples of temperate climates; it can be applied only to the weaker peoples of the tropics and, in part, the subtropics. But even here it can be carried out only by the more powerful European metropolitan countries, Great Britain, France and Germany. The Netherlands, Spain and Portu- gal, on the other hand, have lost some of their colo- nial possessions and are able to retain others only because of the good will and mutual rivalry of the big colonial powers. Belgium is a notable example. |
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| “... But even the strongest colonial power, Great Britain, in its biggest and most important colony, India , is compelled to depart considerably from strict observance of the above—mentioned principle in its trade and industrial policy, so as not to make her position more difficult than it actually is in the face of popular, hostile agitation” (247-48).... | | | |
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247, note.

| “After many years of stubborn bloody strug- gles against the natives in revolt, the U.S.A., in the end, conceded the Philippines parlia- mentary representation (a Congress) with wide powers. This testifies to the acumen of North American statesmen in colonial policy. Less flattering evidence of this acumen, however, is the land policy of the North Americans in the Philippines, which is leading to the formation of latifundia.” | | N.B. N.B. the Americans in the Philip- pines |
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Methods of colonial exploitation: appointment of officials from the ruling nation;—seizure of land by ruling-nation magnates; high taxes (“training in labour”).

| “For colonial peoples in subtropical areas ... such as the Indians of North India and the Egyptians, the educated strata of which have already assimilated European-American civilisation, the very fact of foreign rule is an insult that is borne with difficulty and thought of with extreme hatred” (249). | | | |
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| In Egypt, the population is much more homogeneous (in language, nationality, etc.) than in India, “and the country (Egypt) is more European than, for instance, some areas of European Russia” (252). | |
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(similarly, the “semi-civilised” population in Ceylon, the Straits Settlements, Algeria, Tunisia, etc.) (258).

| N.B. | < | | | | Holland , like Great Britain..., in her colo- nies follows a “free-trade policy which, at the same time, is mainly aimed at developing the output of agricultural and mining raw materials” (259). |
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Germany waged a tariff war against Canada (from July 31, 1898 to March 1, 1910) because of the latter’s preferential tariffs in favour of Britain. It ended with the retention of these tariffs and a customs treaty with Germany.

Most British, Dutch and German colonies, “as far as can be foreseen”, will remain under the open-door regime in relation to a all countries (271). Trescher ( Preferential Tariffs , 1908) contested this, and Schilder says that he has toned down his conclusions.

As regards state contracts (269-70), the custom every where is: preference for “ one’s own ” country.

“‘ Open-door’ areas ” (old type: Turkey (until 1908), Rumania, Bulgaria, Egypt, Morocco, Persia; new type: Congo, Afghanistan) “are almost always independent or, at least, formally independent states, and in most cases semi-civilised countries”... (274).

(1) They usually lack sovereignty . They usually pass into the hands of the Great Powers: separate parts of these areas split off .

| N.B. | | | (2) “Individual areas of the ‘open-door’ country split themselves off from the state that previously ruled them and, after a more or less prolonged tran- sitional period, acquire full political and economic sovereignty, the small and medium-sized Balkan states being in that category. On the whole, this phenomenon is not so frequent as that indicated under point 1” (274). | (3) Full independence (Japan) is extremely rare .

Ad. 2. Growth of independence:

Japan in the 1890s.

Bulgaria in 1897-19 09 (fully sovereign!).

Siam just now .

| Heading of § VI: “The swallowing-up of ‘open-door’ areas by the Great Powers: the world econom- ic usefulness of this historical process is seen from the examples of Bosnia, Algeria, ... Formosa, the Belgian Congo, etc....” | |
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| | | apolo- gist!!! |

| ⎧ ⎪ ⎨ ⎩ | These advantages (like the benefits of independence of former “open-door” areas: § VII) the author sees in the growth of trade!! Only that!! The book is de- voted mainly to customs policy . | ⎫ ⎪ ⎬ ⎭ |

Siam , especially since the Russo-Japanese War of 1904-05, has been developing towards independence (p. 318 et seq.).

Growth of the national movement in China—Persia—Arabia—Egypt (p. 329), etc., etc.

§ IX: “The disappearance of ‘open-door’ areas is an irreversible but beneficial process for the world economy (337)... These areas are “semi-barbarian”, mostly semi civilised.... “Apple of discord of the Great Powers” (337-38)....

Chapter IX. “ Foreign Capital Investments ”.

| | | no longer free comp- etition | | | | (Subtitle of section I. “Foreign Invest- ments as a Means of Promoting Ex- ports ”.) | | | N.B. |

Customary condition: expenditure of part of the loan on products of the creditor country (“unusually frequent”, 342).

Examples: Paris refused Bulgaria a loan in December 1909, and Hungary in September 1910.

| ...“these conditions prevent extreme aggrava- tion of competition on the world market . Inter- national rivalry is replaced by a more restricted form of competition, involving only the relevant industrial enterprises of the creditor state, in some cases—and—this borders on cor- ruption [5] —only certain enterprises which I for one or another reason are especially favour- ably placed ... for example, Krupp in Germany, Schneider & Co. in Creusot in France, etc.” (346).... “Although it might be thought that such a monopoly could not be abused”... I for one could apply to another country, in reality the choice is not easy... (346). | | | N.B. |
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During the last two decades, France has especially often had recourse to this method.

348, note, “accumulated capital”... annually in France > 3,000-4,000 million francs
in Germany 5,000 million francs (Delbrückin the Reichstag, February 12, 1911).

| | | | The “tariff war” between Austria and Serbia (from July 7, 1906 to January 24, 1911 with a seven months’ interval in 1908-09) was partly caused by competition between Austria and France (both backward countries) for supplying war materials to Serbia: Paul Deschanel told the Chamber of Deputies in January 1912 that from 1908 to 1911 French firms had supplied war materials to Serbia to the value of 45,000,000 francs (350). [6] |
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Another method: granting a loan (or with a loan in view) to bargain for “advantages” in a trade treaty :
For example, Britain (my expressions “robbed”, “squeezed”, etc.)

| Austria in this way by the trade treaty of | Dec. 16, 1865 |
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| France—Russia—  ”   ”  ” | Sept. 16, 1905 |
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| ”  —Japan—  ”   ”  ” | August 19, 1911 |

Sometimes countries which borrow capital lend it to other countries, “trading in capital”: e.g., the United States borrows from Britain and lends to South America, etc., etc. (p. 365 et seq.).

Switzerland readily lends to other countries (higher rate of interest), sets up factories in protectionist countries, and so on (p. 367).

| | ...“The 1909 annual report of the Austro-Hungarian consulate in Sao Paulo (Brazil) states: ‘The Brazilian railways are being built chiefly by French, Belgian, British and German capital. In the financial operations connected with the construction of these railways, the countries concerned stipulate for orders for the necessary railway materials’” (371).... [7] |
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The 1909 report of the Austro-Hungarian consulate in Buenos Aires calculates the capital invested in Argentina as follows (p. 371)

| British . . . . . . | 8,750 | mill. | francs (=£350,000,000) [8] |
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| French . . . . . . | 800 | ” | ” |
| German . . . . . . | 1,000 | ” | ” |

— Foreign capital in Canada (1910)—12,687 million francs (p. 373)

| including | 9,765 | British |
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| | 2,190 | U.S. |
| | 372 | French |
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— Foreign capital in Mexico (1886-1907)—3,343

| including | 1,771 | U.S. |
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| | 1,334 | British | (the remainder) German, French, Spanish, etc.

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| British Imports and Exports (381-82) (in £ million) |
| Average | | Imports gross | | Imports net without re-exports | | Exports without re-exports | | Excess of foreign trade imports net | British capital investment abroad and in the colonies £ million (seven-year periods) (pp. 386-87) — 235 (1856-62) + 196 (1863-1869) — 288 (1870-76) 94 (1877-83) + 430 (1884-1890) — 223 (1891-1897) — 107 (1898-1904) + 792 (1905-1911) My total: Σ = =(1856-1911) £ 2,365 million |
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| 1855-59 | 169 | 146 | 116 | + | 33 | [9] |
| 1860-64 | 235 | 193 | 138 | + | 55 | — |
| 1865-69 | 286 | 237 | 181 | + | 56 | — |
| 1870-74 | 346 | 291 | 235 | — | 56 | + |
| 1875-79 | 375 | 320 | 202 | + | 118 |
| 1880-84 | 408 | 344 | 234 | — | 110 | — |
| 1885-89 | 379 | 318 | 226 | + | 92 |
| 1890-94 | 419 | 357 | 234 | + | 123 | + |
| 1895-99 | 453 | 393 | 239 | + | 154 | + |
| 1900-04 | 533 | 466 | 290 | + | 176 | — |
| 1905-09 | 607 | 522 | 377 | + | 143 |
| 1910 | 678 | 575 | 431 | | 144 | — |
| 1911 | | 578 | 454 | 124 |
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The author gives the table only on pp. 381-82 (without + and —), the remaining figures (capital investment) from The Statist are only in the text, moreover (curiously!), while giving annual data on imports for 1870-1911, he does not compute them in seven-year periods!

The author’s conclusion is that, though the capital investment statistics are not fully accurate (none of private capital investments), they adequately show the correlation (between the decline in the excess of imports and the growth of capital investment) (p. 392).

| ⎧ ⎪ ⎪ ⎪ ⎨ ⎪ ⎪ ⎩ | pp. 392-93: five industrial countries are “ definitely pronounced creditor countries ”: Great Britain, France, Germany, Belgium and Switzerland. Hol- land is “industrially little developed” (“industriell wenig entwickelt” (393)); the United States is a creditor country only in America [10] ; while Italy and Austria are “only gradually developing into creditor coun- tries” (393). |

|| End of Volume I ||

| N.B. | | | p. 384, note. At the close of 1910, British foreign investments totalled £1,638 million (=40,950 million francs), of which £709 million (=17,725 million francs) in the United States =43.3% + £1,554 mil- lion (=38,850 million francs) in British colonies; foreign investments + private capital + £1,800 mil- lion (=45,000 million francs). |
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Notes:
[1] See present edition, Vol. 22. p. 261.— Ed .

[2] See present edition, Vol. 22, pp. 288-64.— Ed .

[3] Ibid., p. 296.— Ed .

[4] See p. 78 of this volume— Ed .

[5] See present edition, Vol. 22, p. 244.— Ed .

[6] See present edition, Vol. 22. p. 245.— Ed .

[7] Ibid., p. 245.— Ed .

[8] Ibid., p. 263.— Ed .

[9] Thus given by Schilder.— Ed .

[10] See present edition, Vol. 22, p. 278.— Ed .

[11] The petty-bourgeois American economist Henry George (1839-1897) maintained that the chief and universal cause for the division of the population into rich and poor was expropriation of the land from the people. Poverty was thus due to the land monopoly, and it could be eliminated, he declared, by the bourgeois state nationalising the land, leasing it to individuals and using the rent for social needs. In reality bourgeois land nationalisation does not undermine the foundations of capitalism, but assists its development, and does not save the working people from poverty and ruin. Of the “declamations of Henry George” and similar petty-bourgeois doctrines, Karl Marx wrote: “The whole thing is thus simply a socialistically decked-out attempt to save capitalist rule and actually re-establish it on an even wider basis than its present one.” (See Marx’s letter to Sorge, June 20, 1881, and Engels’s preface to the American edition of his Condition of the Working Class in England .) p. 98