The War and Democracy - R. W. Seton-Watson; Arthur Greenwood; John Dover Wilson; Alfred Zimmern

[Footnote 4: See an article by Mr. Robertson Scott in The Nineteenth
Century, October 1914.]

Sir Charles Macara has put forward a scheme of State aid for the cotton industry. Owing to the war, a third of the total cotton crop (usually taken by the continental countries) was thrown on the market. Prices naturally fell, and there was a danger that the cotton planters might not be able to pay the debts they had contracted to enable them to grow their crops, in which case there would be a likelihood of the land being used for other saleable commodities, and the efforts which have been made in the past to increase the cotton crop would be nullified. In the meantime, the surplus cotton on the market created an uncertainty regarding prices, and buying came to a standstill, with the result that the position of the industry as a whole became very critical. The suggestion of Sir Charles Macara is that the Governments of this country and the United States, acting in conjunction, should take the temporarily unsaleable surplus of raw cotton off the market and store it for use in years when the crop is short. In other words, it is proposed to establish a permanent national cotton reserve. It is estimated that the cost of the scheme would mean an outlay of sixty to seventy millions sterling. If the plan were put into operation, however, it is claimed that it would restore confidence, prevent the wholesale stoppage of mills, and at the same time establish a cotton reserve to counteract the fluctuations of crops in the future.[1] These matters need but to be stated as examples of the remarkable adaptability of the State and the possibility of drastic action under the pressure of imperative needs.[2]

[Footnote 1: It should be pointed out that the serious condition of the cotton industry is not due to the war. The overstocking of the Eastern and Indian markets during the trade boom of 1913, together with the financial crisis in India last year, has reduced the demand for cotton goods. The war has merely emphasised a depression which had already fallen on the industry. Sir Charles Macara's scheme, whilst it may be desirable on other grounds, cannot compensate for the shrinkage in the demand for Lancashire products. The Government, it is interesting to note, have commissioned certain firms in Alexandria "to buy cotton extensively from small proprietors at a reasonable rate, on Government account, to be stored until the arrival of more prosperous times." (Press Association Telegram, Daily Press, Nov. 2, 1914).]

[Footnote 2: The voluntary gifts of different parts of the Empire should not be overlooked. Besides these other steps have been taken. The Australian Government, for example, in order to induce farmers to extend the area of cultivation, has guaranteed "a fixed minimum price of 4s." for all wheat grown on the newly cultivated land. (Reuter's Correspondent, Daily Press, Oct. 27, 1914).]

The course of events has shown the temporary collapse of economic individualism in the face of the European crisis. The economic system, which works during times of peace, could not meet successfully the crushing effects of a European war. It lacked not only adequate resources but the necessary power of corporate action and co-ordination. Immediate State action seemed to be the only way to avert disaster. In a month, Britain came nearer than ever before to being a co-operative commonwealth. It has been realised that industry and commerce are not primarily intended as a field for exploitation and profit, but are essential national services in as true a sense as the army and navy. The complexity of the modern economic world and the large individual gains which have been made in it have obscured the fact that the economic structure exists to serve the needs of the community. It was recognised by the Government, at any rate to some extent, that the success of our armies in the field would be nullified if, in the economic sphere, the production of commodities and services were seriously diminished and if their interchange were hampered in a large degree. People have felt that the spinner, the miner, the weaver, the machinist, are all by following their occupations performing a valuable service to the community. How far this attitude of mind will persist after the war, when normal conditions in industry and commerce gradually return, remains to be seen.

B. IMMEDIATE SOCIAL AND ECONOMIC EFFECTS OF THE WAR

1. Foreign Trade.—The effects of the war on industry and commerce will be complicated and far reaching. The British and German Empires together transact about two-fifths of the international trade of the world, the British Empire doing over a quarter and Germany almost exactly an eighth. Between them they own over half the merchant shipping of the world. A war in which they are both engaged, therefore, must have serious consequences not only to these countries themselves but to the countries with whom they carry on business relations, and through them, in a lesser degree, to all other commercial countries. But this is not all: France has a foreign trade amounting to £615,000,000 a year; Belgium's is valued at £326,000,000, Russia's at £275,000,000, and Austria-Hungary's at £256,000,000. Besides a gigantic foreign trade there is a domestic trade, which is on a larger scale than the external trade of these countries. Let us consider in more detail the case of Germany. Half her foreign trade is transacted with the nations now engaged in the great war. The trade of Britain, Russia, and France with the German Empire is now at a standstill, except possibly for a very small amount transacted via neutral countries; her trade with Austria-Hungary must seriously decline. Moreover, her imports from neutral countries and her exports to them have dwindled very considerably, and must remain small as long as British naval supremacy continues. More than one half of Germany's total imports are raw materials for manufactures, about two-thirds of her exports being manufactured goods. Assuming that she continues o conduct foreign trade through Norway and Sweden, Denmark, Holland, Switzerland, and Austria-Hungary, the volume will be small, and even if her whole trade with neutral countries could be maintained she would still be without the trade of her enemies. For example, in 1913 this country sold goods to the value of £40,000,000 to Germany and purchased from her goods to the value of £80,000,000.[1]

[Footnote 1: The following list indicates some of the chief articles of trade between the two countries:

It is not true, as Dr. R.G. Usher says, that Germany is "literally self-sufficing" (Pan Germanism, p. 65).]