714. Direct costs of the war.—For generations to come the effects of the World War will be working themselves out. This chapter and the following will attempt merely a survey of some of the more obvious effects upon the history of commerce. It will be convenient to have at hand for reference some estimates of the costs of the war, and the table gives those that were represented by the direct expenditure of money by the states involved. Some of the states advanced funds to their allies for the prosecution of the war, so a distinction is made between the gross sums raised, and the sums directly expended by each country; the cost of the war would be exaggerated if the same sum were counted twice. On the other hand it is apparent that the table of net cost is an accurate measure of the burden of the war on different countries only on condition that the advances to allies are treated as interest-bearing loans. To assist in an appreciation of the meaning of the costs estimates are supplied for some countries of the total national wealth in 1914.
| (Approximate figures in milliards of dollars) | ||||
|---|---|---|---|---|
| National wealth | Gross cost | Advances to allies | Net cost | |
| United States | 204 | 32 | 9 | 23 |
| United Kingdom | 71 | 44 | 9 | 35 |
| Rest of British Empire | ... | 4 | .. | 4 |
| France | 58 | 26 | 2 | 24 |
| Russia | 58 | 23 | .. | 23 |
| Italy | 22 | 12 | .. | 12 |
| Other Entente allies | ... | 4 | .. | 4 |
| Total | ... | 145 | 20 | 125 |
| Germany | 81 | 40 | 2 | 38 |
| Austria-Hungary | 30 | 21 | .. | 21 |
| Turkey and Bulgaria | ... | 2 | .. | 2 |
| Total | ... | 63 | 2 | 61 |
| Grand total | ... | 208 | 22 | 186 |
715. Indirect costs of the war.—Even the figures of direct costs are subject to correction on various accounts, and must be taken merely as approximate indications of the value of the wealth that was devoted to destruction. Still more uncertain, necessarily, are the estimates of losses due to the war which were not recorded in the expenditures of governments. Figures in the accompanying table give some idea of the nature and extent of these indirect costs.
| Indirect Costs of the War (Figures in milliards of dollars) | |
|---|---|
| Money value of lives lost, military | 34 |
| Money value of lives lost, civilian | 34 |
| Property losses on land | 30 |
| Property losses at sea | 7 |
| Loss of production by diversion of labor | 45 |
| Voluntary war relief | 1 |
| Loss to neutrals | 2 |
| Total | 153 |
| Grand total, direct and indirect costs | 339 |
A few words of explanation will make some of the items more clear. Human beings have not, since the days of slavery, been counted in a census of national wealth, but they represent nevertheless in every country the heaviest investment and the largest source of income. The figures in the text are based on the assumption of about 13 million deaths in military service, and a money value of the individual ranging from about $2,000 (southern and eastern Europe) to $5,000 (United States). The assumption that the war caused at least as heavy a loss in the civil as in the military population is probably conservative. The loss due to the diversion of labor from production is figured on the basis of 20 million men, of an average productive capacity of $500 a year, withdrawn from industry for four and one half years.
716. Effects of the war on commerce.—In a modern country there is a small group of men known as wreckers, whose business it is to tear down and destroy. During the war the world went into the wrecking business on a grand scale. The figure of twenty million men engaged in it is an average for the whole period; at the close of the war nearly double that number were under arms. We have now to study some of the effects of this situation on commerce.
In every country that entered the war there was an immediate and imperative demand for the tools of the wrecking trade, first of all for guns and ammunition. The wrecker was engaged in an arduous occupation; he demanded more food than he had been used to consume, and wasted more; he used up clothes and shoes and implements at an appalling rate; he was always on the road, requiring subsistence and shelter in all sorts of out-of-the-way places. War therefore put an immediate strain on the industries serving these needs: chemical, metallurgical, agricultural, textile, and the industries providing and operating the equipment of transportation on land and water. On the other hand war withdrew workers from constructive industry, and restricted supply at the very time it intensified demand. Every country at war, therefore, sought by means of commerce to relieve the strain on its own resources, importing needed supplies from abroad; each group of belligerents sought to prevent the other group from profiting by this process. The tendency to an increase of imports was accompanied by a tendency to a decline in exports. A country at war could not afford to do business as usual in its foreign trade. If it could supply its military necessities by paying actual cash for its imports, or by promising to pay for them at some future time, it could withdraw workers from export industries, serving the needs of foreigners, and make them serve more pressing needs at home.
717. Commercial position of the Central Powers and of the Entente.—Germany and her allies, Austria-Hungary, Bulgaria, Turkey, enjoyed a great military advantage of which the character is suggested by their name, the Central Powers; they had interior lines of communication and could move their forces from one to another front much more easily than could their opponents. They would have enjoyed a corresponding commercial advantage if they could have brought the war to a conclusion with stocks of supplies accumulated at home or acquired in invaded territory, which they could mobilize in one part or another of their territory as they pleased. The powers of the Entente, on the other hand, desired in vain to effect an exchange of the wheat of Russia for the guns and ammunition of France or England. In a long war, however, in which the decision was to be effected not by stocks accumulated in the countries immediately engaged but by a mobilization of the resources and activities of the whole world, the Central Powers were at a critical disadvantage. They had immediately open to them only the territory of small neutral states (the Netherlands, Switzerland, the Scandinavian states); the path to richer sources of supply lay across the sea; and control of the sea rested, from the beginning to the end of the war, in the hands of the Entente.
718. The war against commerce.—The conditions were much like those of a hundred years before, when England was engaged in the desperate struggle with Napoleon. In neither period had the belligerents any scruple in departing from established principles of international law. The Entente proposed to starve Germany into surrender. It stopped the outlets of Germany across the territory of neutral states by edicts which amounted in substance to a rationing of the people of those states; these people might have enough food, fodder, cotton, etc., for their own immediate needs, but no surplus that they might transfer to Germany. Germany protested against this infraction of the principle of freedom of the seas, and retaliated by proclaiming a war zone about the British islands, within which German submarines ruthlessly destroyed the merchant shipping on which England depended for her supply of food. These measures on either side, took shape in the early years of the war. The measures of the Entente were effective in sealing the Central Powers from commercial intercourse with the outside world. The German policy failed. It remained a menace, which grew more serious in the latter part of the war when the danger to England was very real, but in its moral influence, instead of breaking the spirit of the English, it did much to rouse the spirit of neutral countries. As the occasion for the entry into the war of the United States on the side of the Entente it was a decisive factor in bringing the conflict to a conclusion.
719. The war on shipping.—The war on shipping resulted in the destruction by enemy action of a tonnage amounting to more than one quarter of the world’s total tonnage in 1914. The figures in the following table indicate the extent and distribution of the losses, and show at the same time how rapidly they were repaired by the construction of new ships. Changes in the relative standing of the different countries, were affected also by another factor, namely by the distribution among other countries of ships of the Central Powers, taken during and after the war. Germany was second in rank among maritime nations in 1914, with a tonnage of 5.5 million; in 1920 its tonnage had been reduced to less than 1 million, almost entirely by forced transfer.