Of late years the commercial relationship between the United States and Europe has changed very greatly. For centuries we were a debtor community, buying largely from Europe, possessed only of crude staple products for export, and scarcely able by a series of expedients and exchanges to pay for what we bought. Tobacco for many decades, then cotton, were the only commodities of which much was exported direct to Europe. Then came, during the European famines of 1846, 1861, and 1862, an enormous demand for American grain. Yet only during the last few decades have we been able to export largely manufactured products or been able to deal with Europe on an equality of terms. We are no longer a debtor nation; we are no longer dependent upon Europe; the United States is an integral and essential part of the interdependent international economic fabric. Indeed, if the war continues ten years, Europe may be dependent upon us.
In a sense we are not ready to meet the crisis. During the last ten or fifteen years the exports of foodstuffs have fallen off greatly, and the supply in this country has actually declined in proportion to population. There has been also a most marked increase in the exports of manufactured goods and a decided increase in the importation of raw materials, including foodstuffs. Now will come an enormous demand from Europe for the very things of which we have not produced so much and exported little or nothing—bacon, eggs, butter, beef. The demand will also be greatly increased for woolen cloth, raw leather, shoes, steel in all its forms, railroad equipment of all sorts, automobiles and machinery, and, in particular, coal and gasoline. To supply this demand old industries will be expanded and new ones created, and a shift of capital and labor will inevitably take place to the industries for which a demand becomes clear in Europe, as soon as it seems reasonably certain that the war will last, beyond the present year.
An American Merchant Marine.
Above all, an American merchant marine is likely to be seen again upon the seas. There will be German ships in plenty for sale, in all probability, unless Germany wins an immediate victory on the sea, and the advantage of an unquestioned neutral status, easily obtained by a bona-fide purchase, will be so great that American capital will probably invest largely in freight steamers and ocean liners. It seems entirely unlikely that England, while she remains mistress of the seas, should recognize as valid the registration in the United States of vessels actually owned by belligerents or regard as anything more than masquerading their appearance under the American flag. England has never recognized any one's "right" to do anything at sea in time of war which did not accrue directly to her own benefit. It is scarcely necessary to say that she will not allow trade with Germany or Austria while she can prevent it. The only refuge will be the sale of the ship by the foreign owner to Americans who will trade with England, her allies, and strictly neutral nations. As always in time of war, privateering and smuggling will be profitable, and trade with Germany, unless she is immediately victorious at sea, will offer to the adventurous plenty of risk and the certainty of huge profits. During the Napoleonic wars the flats and bars of the German coast along the North Sea offered light vessels a great opportunity and the pursuing warships great obstacles. A modern motor-driven light craft will now have an enormous advantage over destroyers or cruisers. Here, as a century ago, many an American will find an opportunity to make a fortune.
The preoccupation of Europe with the war and the opening of the Panama Canal will afford the United States an unrivaled opportunity to develop trade with Canada, South America, Australia, New Zealand, India, China, and the Far East in general. We have never bulked large in the eyes of these countries and there has been much speculation as to the reasons why the German succeeded so well in South America and why the Englishman did so much business in China. Whether from sentiment or from a national habit that prefers English goods, the English colonies have bought more largely of the mother country than they have of us. But now that the war has closed the German factories, called German commercial agents home, and sent German ships racing to neutral harbors; now that the Panama Canal brings us some thousands of miles nearer to Australia and New Zealand than they are to London via Suez; now that England will be busy manufacturing for Europe and will have less to sell her colonies, these particular parts of the world will probably be compelled to look for their manufactured goods to the United States. Indeed, if one were not afraid of being accused of gross exaggeration, he might take heart and proclaim his conviction that a long and really inclusive European war would give the United States a practical monopoly of the South American and Pacific trade, provided always that the United States acquire by purchase a merchant marine and that the Panama Canal becomes feasible in January for large ships.
Foreigners Leaving America
One other effect of the war has already begun to reveal itself in the emigration from America of thousands of Servians, Austrians, Russians, Germans, Frenchmen, going home to take their places in the ranks. While many of these men are brave and honorable citizens, the fact that they respond to such a call proves them not yet Americans. The war will tend to remove a goodly part of the distinctly foreign element in the country, the part not yet amalgamated, and therefore the part most alien to our institutions and the most difficult to place in our social structure. If the war continues, Europe will draw every able-bodied man who can be influenced to go. Far more important, immigration will probably become negligible not only during the war, but for some time after it. Usually the reason for leaving home lies in the crowded population of European States and the lack of opportunity for advancement, plus the glib tongue of some agent of a contractor or of a steamship company. In recent years those who have come have not been desirable additions to our population because they came from nations alien in blood, language, religion and institutions, and were not therefore easily knit into our national structure and absorbed. There will be little, if any, further immigration. The men are wanted for the army and will not be allowed to leave during the war. After peace is restored, they will be imperatively needed in the fields and factories and every effort will be made to retain them. In fact, it does not take any wild stretch of the imagination for one acquainted with the results of the Thirty Years' War and of the Napoleonic wars to conceive that, from the view of economic opportunity and rewards, Europe might become a more favorable scene for the truly capable and ambitious than America is today. The tendency of a war is to absorb the best of a nation and to leave the dregs. For the power of organization and the fire of initiative Europe will at no distant date be ready to pay well.
The Effect of Economic Readjustment.
Unquestionably the economic readjustment which the war will force upon the United States will have an immediate and serious effect on individuals. Some will profit largely and promptly. All who at present possess large stocks of food, leather, oil, woolen cloth will be able to dispose of them at enormous profits. From the greater volume of freight the railroads will benefit directly. But while the farmers and cattle-men, the steel and oil kings are rejoicing in the opportunity, all industries which depend chiefly upon exportation or which manufacture an amount beyond the normal American demand, will be closing the factories or curtailing the output. For a time certain individuals, perhaps a relatively large number of individuals, will suffer inconvenience, loss, anxiety, and even privation. But the vast demand for labor in other industries, and the almost certain extensive demand for relatively unskilled labor ought not to make the period of transition long or the amount of suffering considerable. After all, the vast majority of the people of the United States are connected with farming, with the manufacture or production of the very things for which there will most likely be a great demand, or with the transportation and distribution of both imports and exports to the rest of the community. In certain industries, like the manufacture of cotton cloth, which is localized in New England to such an extent that whole districts are dependent upon it for a livelihood, the distress will be great, for the factories closed upon the declaration of war and the workers are a long distance from the Western fields, where laborers are only too scarce. The cheapening of transportation, the rapidity of communication, the superior mobility of the population today over ten years ago, make it probable that these people will soon find new places.
Concomitant with the war came a rise of prices. Foodstuffs especially advanced sharply and will certainly continue to rise until some material increase of the supply is assured beyond a peradventure. The tendency in England and above all on the Continent for the cities to buy great supplies to guard against possible want will increase this tendency. But, without question, should the war last, a rise in the whole level of prices of everything, including labor, will take place in the United States. It will affect some individuals adversely, but for most will be in the long run almost negligible. For those who actually produce or handle goods which advance in price the result will be a profit, because the price of the commodity they have to sell will almost certainly advance sooner and faster than the prices of the commodities they themselves are compelled to buy. In time the two will equalize and they will be precisely where they were before the war; they will pay out with one hand what they take in with the other. In nearly all cases where the individual produces or shares in the production of an actual commodity a general rise in prices, even to the extent which this war threatens to produce, will be to him only a temporary advantage or disadvantage. True, wages and salaries in industrial pursuits will not quite keep pace with the rise in foodstuffs, and factory workers and clerks will not benefit to the same extent nor as soon as the farmers will. People whose incomes are derived from stocks in the businesses which prosper will probably receive much more than they pay by reason of the increased prices of other commodities, and certainly cannot be worse off than before.