When the War Office Buys the Well

That a government’s war department should acquire majority control over more than sixty‑five billion barrels of a foreign nation’s oil is, even to eyes long accustomed to mercantile projects, a novelty. We are told that the Pentagon, through an office contrived to assist its own defence industry, is to help lead this Venezuelan venture. The transaction is announced as a triumph of strategy and statecraft; the visible benefits are paraded, the flags are unfurled, the barrels are counted. Yet, as I argued in the Wealth of Nations, in publick affairs the benefits present themselves in a small number of brilliant points, while the costs lie dispersed, obscure, and long delayed, like a mist that thickens as the spectators disperse.

Let us therefore ask the prosaick question which enthusiasts most dislike: who pays, and in what coin? Oil is not merely a treasure in the ground; it is a principal ingredient in the prices of almost every modern convenience, from carriage to heat to the fertiliser that feeds the people. When the supplier is an army, the price is no longer shaped solely by the higgling and bargaining of the market, but by calculations of power, prestige, and fear. The consumers who will bear higher prices, the Venezuelan citizens whose patrimony is bargained away, and the taxpayers who must guarantee distant wells with costly ships and soldiers, are not invited to the ceremony. Their scattered losses are no less real because they are uncounted.

In my own time I observed that people of the same trade seldom meet, even for merriment, without contriving some advantage against the publick. When I read that defence contractors and merchants of oil stand beside ministers of state to design this arrangement, I do not assume unusual wickedness; I assume the ordinary operation of interest. A majority stake in reserves, under the wing of the world’s greatest military establishment, is a most effectual means of narrowing competition, discouraging rivals, and securing profits that risk could never have earned. Such projects, presented as instruments of national greatness, are too often but a more splendid form of that old device, the monopoly, and deserve the most suspicious attention.

Yet I have never denied the lawful functions of the state. Defence, the exact administration of justice, and certain great works that could never repay a private undertaker, are proper publick charges; forts and lighthouses, not haberdasheries, belong in the portfolio of a war office. To place foreign oilfields under military custody is to confound these roles. The habits of mind that fit a man to command regiments are not those that qualify him to direct a great commercial concern; and when the same hand orders both the drum and the dividend, it becomes perilously hard to distinguish what is done for the safety of the people from what is done for the profit of their suppliers. Other people’s money is then risked in quarrels coloured as patriotism and in bargains disguised as defence.

Consider also the effect upon the natural progress of opulence. The wealth of any country grows as the division of labour deepens and the extent of the market widens: as producers, undisturbed by caprice or violence, find ever more distant customers for ever more specialised wares. To politicise so great a staple as oil, to make its flow depend not on the ordinary motives of trade but on the councils of war, is to fragment the market along lines of alliance and enmity. Every embargo that follows, every threatened closure of supply, narrows the field in which merchants may lawfully compete. What might have been a universal market in fuel becomes a chess-board of favoured and proscribed consumers, and the annual produce of the world’s land and labour is less than it might have been.

In The Theory of Moral Sentiments I asked my reader to consult an impartial spectator, a wise and well-informed bystander, before approving any action. Let that spectator imagine a Venezuelan labourer, whose children go poorly fed while the wealth beneath his soil is pledged to foreign soldiers; let him imagine also the citizen of the purchasing nation, told that the same arrangement which secures his heating also justifies future wars to protect it. Would he judge this mixture of commerce and conquest to be praise-worthy, or only convenient to those who profit by it? The splendour of being loved as a great power is a bauble; the loveliness of acting with justice toward weaker peoples is a virtue.

Some will reply that such entanglements are the price of security, and that in a turbulent world energy is as much a weapon as a ware. I do not doubt that men of system, enamoured of their own contrivances, sincerely believe they can steer both markets and armies by one grand design, the pieces on the great chess-board moving as their hand directs. Experience teaches otherwise. When governments speculate in distant resources, when merchants lean upon bayonets, the invisible hand that often turns private pursuits to publick benefit is restrained, and the vile maxim of the masters of mankind — all for ourselves, and nothing for other people — is furnished with battalions. That is a maxim which no prudent nation should arm.