area of markets widened, some machinery had to be created which would facilitate exchange. The interests and needs of the mass could not do it at the time. They were not organized for the purpose, for communal organization was then in a most rudimentary form. The Guilds might organize for production, but the Guilds were not communal and only protected their own interests. What communal organ was there to bring Bokhara and Damascus, Iceland and the Indies on to the European markets? None. So self-interest came in. Thus capitalism began with exchange, not production. In due time, even the organization of trades in Guilds failed to control production. The new inventions and processes, the expansion of workshops, the growth of great business, especially after the industrial revolution, handed over the whole mechanism of production and exchange to the swiftly moving motive of self-interest, and the capitalist system was established.

The characteristic of that system is this:-that groups of people supply the public need in their own interests, for their own profit. These interests spur them on to perfect their organization of supply, not out of compassion for the public, but because it pays them to do so. The demand that comes to men to-day to work is a demand that they should go and make profits for those who own capital. Incidentally, they make a living for themselves, but, so far as the system is concerned, only incidentally. The first essential to their being employed at all is that their employers make profits by allowing them to work. This is the crux of the whole matter. The machinery of production and exchange has been constructed and is run in order that communal

need may be supplied by self-interest, and in the nature of the case the self-interest is the selfinterest of the owners of industrial capital.

How does the system work? Each individual owner, or company of owners, produces so as to gain or try to gain the maximum profit for himself. This may be done by limiting output or increasing it; by selling at high prices or low; by adopting the national policy of Free Trade or Protection; by competing or combining. But whatever policy is pursued its primary aim is to increase profits. It may lead to booms and depressions, to overtime and unemployment, to fortunes and bankruptcies, to economies and waste. No matter. Thus and thus only can venturous self-interest, always daring, always hoping, always acquisitive, serve the community and itself-itself first of all. It is controlled by the economic possibilities of the market, never by a conception of social duty. Thus, as during and after wars, when scarcity comes, or when money values alter and people have lost an accurate conception of cheapness and dearness, and when the control imposed during the war is removed from the system, it responds with an outburst of profiteering, just as a motor-car responds when its valves are opened and all restraint removed. When a new tax is imposed upon tea or tobacco, the price of old stocks goes up at once; when the tax is reduced prices remain high till old stocks have been sold off. The system is not bridled in its working by a just or moral relation to the community, but only by the limits of exploitable opportunity. Capitalism always tends to take the maximum possible reward for its services.

This is seen in indisputable plainness in what

has happened since the war. Standards of exchange have gone up with the depreciation of currency, and we have witnessed a deplorable scramble between labour and capital to fix these artificial standards each in its own interest upon Society-labour by demanding wages which have reference only to temporary values, but which, by being fixed in amount (so many pounds a week or shillings an hour), are not to fall smoothly with falling exchange values; the other, by a prodigal resort to watering capital, entrenching itself behind over-capitalization, and using the disturbance in price standards, which has for the time being destroyed the measure of money values in the public mind, to exact prices which are extortionate. Thus, the general interest of Society is to be sacrificed, and lowered standards of life are to be imposed upon it. We know that this change in standard will, as a matter of certainty, adjust itself in time, and, when the scramble has worked itself out, we shall be pretty much where we were when we began it. But during the throes of readjustment, revolutionary conditions will continue (for instance, the destructive spirit may not possess unemployment when the loaf is fourpence, but it will do so when the loaf is a shilling, whatever be the wages paid to those in employment), bankruptcy must be the means of lightening excessive loads of capital, untold suffering will have to be borne by large classes of the community whose incomes will not adapt themselves to the higher standards of exchange. This means an ever present menace. It also involves changes in intellectual life which will be serious. The costs of publishing will limit the supply of mental food. The production of literature will be forced more and more

into the broad and deep channels of enormous popular demand; organs of opinion will fall more and more under the control of concentrated capital and the independent voice will be stifled; enlightenment will have to struggle more and more with material disadvantage. With ominous persistence the conflict is joined between hard materialist power and the freedom of man's mind, and Capitalism challenges labour to fight a battle which, whatever side wins, can bring no victory, because, in such a conflict of interests as this, neither side is thinking of the true well-being of Society. Both are blinded by their immediate concerns in a system dominated by the working of an economic machine over which the community has no effective control, but which, possessed and fought for by special interests-those of capital on the one hand and labour on the other -uses communal needs for its own self-regarding ends.

CAPITALISM AND NATIONAL SECURITY

The war has taught us many lessons, but one of the most conspicuous is that no nation can develop an internal policy apart from other nations. The keystone of the arch of all our efforts is peace, and peace cannot come from the will of separate nations, however good that will may be; it is not secured by Leagues however strong they may be ; it is not maintained by armaments, however efficient they may be. Nations work together and are neighbourly only when there is a mutual sense of security and when goodwill rules in all things.

To-day, the great governing interests work on lines exactly the opposite to this. War is the crisis which ends bad policy. Diplomacy brings itself

to a dead stop and swords have to be drawn to quell temporarily the irreconcilable elements. When victory comes, the conquering nations have the choice of one of two policies, one hard to follow, the other only too easy. One is to use victory in order to do impartial justice and to set the world on its feet, the other is to punish and reward without thought of consequences and with no purpose but to gain an immediate and a lively satisfaction by imposing a victorious will on a beaten enemy. One removes the causes of war; the other re-establishes them in new forms. One is a carrying out of the moral professions upon which the war has been justified to the people; the other carries out the passions of fear and revenge that the events of the war have roused. It was this conflict between reflection and passion that made Bolingbroke exclaim that wars which bring honour to the arms of a nation often bring shame to its statesmen-and Horace Walpole: "How end all our victories? In debts and a wretched peace!' The triumph in the settlement of South Africa after the war there, was Sir Henry Campbell Bannerman's insight working in the teeth of the opposition of those who had carried on the war to a military victory which they would have destroyed as statesmen. The dissolution of political federations like the Austrian Empire, which followed the European war, must always be attended with manifold dangers. When bonds are broken we never know the amount of separatism that is to possess the minds of the disconnected peoples. But the statesmen who are victors and nothing else, not only do not understand these dangers, but increase them by making peoples mere pawns in a policy of victory. Thus, in sum and sub