741. Effects of the war upon the commerce of belligerent and of neutral states.—The commerce of the United Kingdom in the period of the war has been treated at considerable length not only because it was itself an important factor in determining the outcome of the struggle, but also because it illustrated the general conditions of the period. War brought to the other belligerent states the same urgent need of imports, affected in a similar way the organization of production, and restricted exports. To the neutral states the war brought some dangers and some losses, but it brought also a great commercial opportunity. If they were in a position to supply the needs of the belligerents they could charge unheard of sums for their services. Individual merchants who seized the opportunity made great fortunes, in the Netherlands, in the Scandinavian states and in Spain. In neutral as well as in belligerent states, however, the waste of war brought loss and suffering; while some few individuals grew richer the mass of the people grew poorer.
742. Statistics of French commerce, 1913-1919.—The most important features in the commerce of France in the period of the war appear in the accompanying table. As the table does not take into account the depreciation of the French currency in the course of the war and gives merely nominal exchange equivalents, the reader should be cautious in the comparison of figures in the upper and lower part of a column, and in the comparison of these “paper” figures with figures representing actual gold dollars, as given in the statistics of the United States.[9] Figures in any horizontal row are strictly comparable, since they represent an equal amount of depreciation.
| Trade of France, 1913-1919. | ||||||||
|---|---|---|---|---|---|---|---|---|
| (Figures in hundred millions of dollars; 1 signifies approximately$100,000,000. The left-hand column under every heading gives imports;the right hand column gives exports.) | ||||||||
| Food products | Material for industry | Manufactures | Total trade | |||||
| I. | E. | I. | E. | I. | E. | I. | E. | |
| 1913 | 4 | 2 | 10 | 4 | 3 | 7 | 16 | 13 |
| 1914 | 4 | 1 | 7 | 3 | 2 | 5 | 12 | 9 |
| 1915 | 6 | 1 | 9 | 1 | 6 | 5 | 21 | 8 |
| 1916 | 8 | 1 | 13 | 2 | 9 | 7 | 29 | 10 |
| 1917 | 13 | 1 | 23 | 2 | 17 | 8 | 53 | 12 |
| 1918 | 10 | 1 | 18 | 2 | 12 | 5 | 40 | 8 |
| 1919 | 12 | 1 | 18 | 3 | 11 | 7 | 41 | 12 |
743. Changes in imports and exports.—Attending first to the horizontal row giving conditions in 1913 we find France able to enjoy a surplus of imports by reason of her foreign investments, in Russia and other countries; the imports consisted mainly of industrial raw materials, to a less extent of food products, still less of manufactures. The country made payment for its imports mainly by finished manufactures, but exported also raw materials and food products. Now following down the vertical columns the reader will note an absolute decline of the value of exports, even in terms of a depreciated currency; this implied, of course, a much more serious shrinkage in the quantities of wares sold abroad. Accompanying this movement was a rapid expansion in the nominal value of the imports, sufficient in some branches to indicate an actual increase in the volume of trade, and resulting in a divergence in the values of imports and exports which signified that France was incurring a heavy debt abroad.
744. Changes in the direction of trade.—From Germany France had received in 1913 about 13 per cent of the total value of her imports, from Belgium about half as much; so that the closing of those two countries alone involved the source of one-fifth of the French import trade. Russia had not been so important as a source of supply, and trade with the Central Powers aside from Germany had not been considerable. The following table indicates the sources to which France turned to obtain the means for carrying on the war.
| Imports into France, by Country from which Obtained | |||||||
|---|---|---|---|---|---|---|---|
| (Figures in hundred millions of dollars; .1 signifies approximately$10,000,000.) | |||||||
| 1913 | 1914 | 1915 | 1916 | 1917 | 1918 | 1919 | |
| United States | 2 | 2 | 6 | 9 | 19 | 13 | 11 |
| United Kingdom | 2 | 2 | 6 | 8 | 13 | 11 | 10 |
| Spain | .5 | .4 | 1 | 1 | 3 | 1 | 1 |
| Italy | .5 | .3 | 1 | 1 | 2 | 1 | 1 |
| Argentine | .7 | .4 | 1 | 1 | 2 | 2 | 2 |
| Algiers | .6 | .6 | 1 | 1 | 1 | 1 | 1 |
The exports of France, measured even in the inflated value of the period, declined in the case of most countries of commercial importance; the noteworthy exception was Italy, to which, in the course of the war, exports were double or triple the usual value of the preceding period of peace.
745. French finances during the war.—French finances were in bad condition at the outbreak of the war. Expenditures had increased greatly in the decade before 1914, and the government was slow to recognize the necessity of heavier taxes. In the years 1908-1914 every year but one had shown an actual deficit. After mobilization, which even in August, 1914, had called out nearly 4 million men and early in 1915 had called over 5 million, it was particularly difficult to devise and apply new taxes; while in the meantime the enemy had occupied some of the richest industrial districts, contributing normally about 15 per cent of the public revenue. In consequence the government raised by taxation only a small proportion of the funds required by the expenditures of the war period (Aug. 1, 1914—Apr. 1, 1919), about one-eighth, as compared with one-quarter in the United Kingdom and one-third in the United States. Stating figures approximately in milliards of francs the government incurred a total expenditure of 181, and met it as follows: 22 by taxes, 86 by loans placed at home, 26 by loans from the Bank of France, 27 by foreign loans, leaving a floating debt of 20 still to be provided for in 1919. The last three items had an important bearing on the commercial relations of France. Loans from the Bank of France took the form of bank notes, paper money, which inflated the currency and tended to raise the rate of foreign exchange on other countries far above the normal par; the unsettled finances evidenced by the floating debt tended to cause violent fluctuations of the rate; a foreign debt would, if interest were paid on it, involve remittance at high rates and would require an increase of exports if no other resource were available.
746. Damage done to the devastated districts.—The amount of the damage done to property in that part of France where the fighting took place will probably never be known with any approach to accuracy. The area affected was not very large, perhaps 10 per cent at most of the total area of France, of which the smaller part, perhaps 4 per cent of the total, lay in the devastated districts where the fighting was fiercest. Unfortunately for France her best coal and iron mines and almost one-third of her manufacturing industry lay within the area of invasion; from one-half to nine-tenths or more of some of the textile manufactures (woolen, cotton, flax and linen) and half of the metal workers, were in the occupied zone. France was seriously handicapped during the war by her inability to draw upon the resources of the occupied regions. Her dependence on imports from the United States and the United Kingdom would not have been nearly so great if she had been able to maintain her productive organization unimpaired. She suffered from the lack of product, but in spite of that she and her allies won the war. Then she faced a greater loss, that of plant, the accumulated capital of generations, represented not only in mines and factories, but also in dwelling houses, in roads and bridges, in the very fields themselves. In the devastated districts peace restored to her not an asset but a grievous liability. She owed to her own people the obligation of repairing the damage and restoring that which had been destroyed, at a time when she was crippled by other burdens which the war had cast upon her. Conservative estimates of the loss ranged from 10 to 15 milliards of gold francs; other estimates (unquestionably exaggerated for political purposes) went up to 65 or 75 or more.
747. Territorial gains of France.—The treaty of peace rendered France some benefits that may be put on the other side of the account. Most important to her, among the territorial changes, was the restoration of the provinces of Alsace and Lorraine, which Germany had taken and had held since 1871. Lorraine included the richest bed of iron ore in Europe; from that province Germany had derived, since the development of the basic process of steel manufacture, three-fourths of her annual supply of ore. The phosphate slag, which was a by-product of the basic process, was a valuable fertilizer; and a great bed of potash in Alsace offered another important agricultural resource. To atone to some extent for the wanton damage done to the French coal mines, which could not be repaired for years, Germany ceded ownership in the coal mines of the Saar basin, on the border of Lorraine, which did not, however, become a part of France, but was left under international control. These changes doubled French capacity for iron production. They left her still short of coal, particularly of the coking variety needed for blast furnaces; and promised to render her the greatest return if she shipped her ore to the Ruhr district of Germany to be smelted.