727. Statistics of English trade, 1913-1919.—Statistics of the general trade of the United Kingdom in the war period are given in the following table, to which is added a column showing the excess value of the imports of merchandise and a column showing the excess value of the import (I), or export (E), of gold.
| (Figures in millions of pounds sterling.) | ||||||
|---|---|---|---|---|---|---|
| Total imports | Domestic exports | Foreign exports | Excess imports | Excess gold | ||
| 1913 | 769 | 525 | 110 | 134 | I | 13 |
| 1914 | 697 | 431 | 95 | 170 | I | 28 |
| 1915 | 852 | 385 | 99 | 368 | E | 29 |
| 1916 | 949 | 506 | 98 | 345 | E | 21 |
| 1917 | 1,064 | 527 | 70 | 467 | E | 150 |
| 1918 | 1,316 | 501 | 31 | 790 | I | 51 |
| 1919 | 1,626 | 799 | 165 | 662 | [4] | |
728. Interpretation of the statistics.—Statistics of commerce in the war period are necessarily inaccurate, and two points particularly should be borne in mind in analyzing these figures. (1) The statistics omitted an immense trade in government-owned goods; figures of the actual movement of merchandise should be much larger to give an accurate idea of the facts. The correction would apply particularly to the earlier years of the war, and would affect imports more than exports.[5]
(2) Prices were rising rapidly, with the inflation of the currency; in 1919 they were about two-and-one-half-fold the prices of 1913. The correction to be applied, to ascertain the physical volume of trade, would affect both imports and exports.
Clearly the trade of the United Kingdom, if measured not in paper values or in gold values but in quantities of physical goods, declined during the war. The shrinkage was most marked in re-exports, of foreign and colonial merchandise. The English had to renounce most of the business that they had been used to transact as middlemen, distributing through the world the goods of other countries. The values of domestic exports also declined at the beginning of the war, and though they returned later to about their former level, the volume of actual wares must have shrunk seriously, to half or less. Only in the case of imports do we find a rise in value that keeps pace with the rise in prices, and indicates a flow of goods that persisted and perhaps increased in amount. These results are what we should anticipate. “Business as usual” is a motto favored by the private merchant, but one which spells ruin for a people engaged in war. To make war effectively they must abandon their usual employments, turn away their regular customers, seek from outsiders only the things that offer a military advantage, but seek all that they can get of those things.
729. Problem of acquiring and of paying for the imports.—The most serious problem for England was to get the goods across a sea infested by submarines, in ships that had constantly to be renewed, through terminals choked by an extraordinary congestion of traffic. This was the vital problem, which strained the energies both of the military and industrial forces of the country, but which by their cooperation was solved. A problem of secondary importance at the time, but important always, was that of paying for the goods.
England had long been used to import goods in excess of those exported. The figures for 1913, £134 million excess value of imports over exports, may be taken as a normal measure of conditions in the recent period of peace. Let the reader, however, glance down the column giving the excess of imports in the years following, amounting 1914-1918 to more than £2,000 million, and he will appreciate the magnitude of the problem involved.
730. Details of the method of payment.—One mode of payment is indicated in the table, in the column of gold shipments. £200 million of gold were exported (in excess of imports) in the three years 1915-1917. The fact that in the year 1914 and particularly in 1918 England was able to add to the government’s gold reserve is striking evidence of the country’s financial strength. The net excess of gold exported, 1914-1918, amounted only to about £120 million, and went but a little way toward payment for the excess of merchandise imported. Reference to an earlier chapter (section 448) will indicate other resources which the country had at its disposal. British ships which carried freight for foreigners during the war received extraordinarily high rates, but many ships were pressed into government service, many were lost, and considerable sums had to be paid to neutral carriers. Net earnings on shipping could hardly have maintained the level of the period before the war, although in one estimate they are credited with a contribution, 1914-1918, of £600 million. A more considerable resource, ideal as a “liquid” asset and adequate in amount to more than any demand that was made upon it, lay in the vast investments that England had made in other countries. The sum of these investments is estimated to have amounted in 1914 to £4,000 million—twice the total adverse balance of merchandise imports. If they had been kept intact the annual returns from them in the five years 1914-1918 would have amounted to nearly half of the bill to be met. Actually they were “mobilized” by the government early in the war, by an arrangement under which the holders exchanged them for government bonds; they were then used as collateral for loans abroad or were sold outright. Estimates of the amount of foreign investments thus sold vary from £500 to £1,000 million. Finally the government borrowed abroad over £1,000 million; that is, it paid the foreigner for the merchandise which he had shipped by getting another foreigner to advance the money to him.
The figures given above are in most cases rough estimates, but even at the minimum they amount to a total considerably above the £2,000 million which was suggested as the sum required. In fact, England was herself lending large amounts abroad in the very period in which she was herself borrowing. She found it necessary to support some of her dominions and allies by loans which amounted altogether to about £1,800 million.[6]
731. Character of exports and imports.—In general character the trade of the United Kingdom remained unchanged through the war. Four-fifths of the exports, roughly, continued to be articles wholly or mainly manufactured; coal was the all-important item among the raw materials. On the other side of the account three-quarters of the imports continued to consist of food-stuffs, raw materials and articles mainly un-manufactured. On both sides of the account, however, there were great changes in the relative standing of the items in detail, to accord with the shifts in demand occasioned by the war. The exports of textiles were fairly well maintained; they were largely produced by women, and the factories were not adapted to serve other military needs. The exports of iron and steel and their products to all countries except France declined sharply. The production of iron remained nearly constant, and the production of steel increased by one-half, but the metal was urgently needed for military purposes, the shops that worked it up were turned into military establishments, and their products were in large part withdrawn from general trade. In recent years before the war the United Kingdom had exported every year nearly 5 million tons of iron and steel and manufactures thereof. The quantity fell in 1914 to below 4, in 1915-1916 to about 3, in 1917-1918 to about 2. The metal was still leaving the country in this period, but it was destined to a more grim purpose than money-making, and was not recorded in the statistics. Among the imports those items showed the most marked increase which served the primary needs of subsistence (rice, wheat flour, bacon and hams, cheese, milk, cocoa, etc.), or were directly available for military use (fuel oil, gasoline, copper, arms and ammunition, chemicals, etc.).