EUROPE AS AN ECONOMIC UNIT. The line of divi sion between Europe and Asia has been obliterated by the Soviet Government. Border provinces have been amalgamated into new administrative areas which straddle the ancient frontier in complete disrespect for geographical dogmas. The exact population of Europe in 1928 is thus unknown, and the European area can only be stated on the hypothesis that reference is made to an historic and not to an actual fact. But the convention of the existence of Europe is worth preserving; the medley of races which dwell between the Ural River and Ural Mountains on the east and the coasts which face the Atlantic on the west do con stitute, despite all political fissures and commercial barriers, an economic unity with a being, personality and character essentially its own.
The climate of the extreme north may be sub-arctic and of the southern peninsulas sub-tropic, but that of the great bulk of the continent is temperate ; rainfall is almost everywhere adequate for the cultivation of the soil, and by far the larger portion of the ten million odd square kilometres of area is nourished by a single vascular system of rivers which flow without exception into the seas embracing the mainland, none twisting round the eastern watershed into Asia. Of the 47o million inhabitants (estimated 1928) the great majority are of Indo-European stock and of one religion. Almost all are settled tillers of the soil or fixed residents of towns. Stretching as Europe does from north of the loth to the 36th degree of latitude, exceptions to this rule of essential unity are inevitable. Thus, the Tartars pursue a nomadic life over the arid steppes of south-eastern Russia, the Vlakhs wander unimpeded, as the seasons change, through half a dozen states; the Magyars in the heart of Europe, the Finns and Lapps in the north are of another racial stock ; there is little in common between the reindeer pastures of the Russian tundra and the volcanic gardens of Naples. But these exceptions serve to emphasize the characteristic homogeneity of the whole.
If the local distribution of the population of Europe be studied it will be found that its lower densities tend to vary with the fertility of the soil and the clemency of the climate, its intenser densities with the richness of the subsoil and the natural means of communication.
This greater eastern half of Europe produces mainly for its own needs. It exports not more than 5% of its average cereal harvest. But it forms, nevertheless, the main granary of Europe, produces a half of Europe's wheat and maize crop, nearly two thirds of her rye and about one-half of her oats. For the industrial population of the west the surplus is too small, and over io% of the total bread corn is imported from other continents.
Densely Populated West.—West of the loth degree of longi tude the populations are congregated in much closer masses, the greatest density being found in the valleys of the Rhine and the Scheldt, on the lower reaches of the Thames and between Birmingham and Bradford. Though in the whole of this area there are no tracts of land comparable at once in fertility and size with the black soil of Southern Russia, the tillage is more scientific, the production per hectare, save in the Iberian pea insula, is higher and the organization of agriculture more nearly approaches that of industry. The wine of France, the sugar of Germany or Czechoslovakia, the butter and bacon of Denmark, the cheese of Holland, are all produced with the aid of an elaborate economic organization which more closely resembles the business mechanism of industry than the primitive labour of the eastern peasant. The higher output per hectare and the higher average value of the crops produced enable the land to carry a heavier population than elsewhere. But in these countries the proportion of land to total workers is with but few exceptions relatively low. In agriculture, unlike industry, machinery directly and con tinuously competes with labour after a certain stage of efficiency has been reached, and while the growth of industry has attracted labour to the towns the increased use of mechanical appliances on the land has tended to reduce the demand for labour. To some extent this tendency has been counteracted by other forces. The demand by towns for vegetables and fruit, as in Belgium and round almost all the great industrial centres, has gradually con verted agriculture into horticulture, while the laws of inheritance in France and elsewhere have led to the incessant sub-division of properties and impeded the use of mechanical processes. But throughout western Europe, with the possible exception of France, the march from village to city has been uninterrupted. In Europe, indeed, the towns have grown up from the country-side, while in more recently colonised lands, after the first few years of struggle, the circle of cultivated land has slowly expanded as demanded by the increasing population of the towns.
Across the whole of the alluvium deposits of the North Ger man plain rye and oats predominate, intercepted in the richer river valleys by wheat and alternated with potatoes and sugar beet. Czechoslovakia is a transition land where rye and wheat and potatoes compete on almost equal terms; in the Valley of the Danube rye gives way to wheat and after its junction with the Drave wheat in its turn is alternated with maize. West of the Rhine, the hardier cereals almost disappear to be replaced by wheatfields and vineyards, by mulberry groves in the south of France and the Lombardy plain, by olives and rice in Italy and Spain, and by oranges and lemons along the Mediterranean littoral.
The southern littoral is devoted to fruit trees, much of the northern to pasture land and dairy farming. Denmark, Holland and Estonia are essentially dairy countries, Great Britain is the greatest breeder of cattle for stock and beef, and after Russia the owner of the largest flocks. But elsewhere sheep are to be found in the largest quantities, not on the fat pastures of the valleys, but on the mountain slopes moving with the seasons, on the high uplands of Spain, on the Carpathians and the Apennines.
Europe Does Not Feed or Clothe Herself.—Europe pro duces a quarter of the world's supply of wool, a half of its crop of wheat and oats, over nine-tenths of its rye, two-thirds of its barley (excluding China's production). But she does not feed herself or clothe herself. The denser agglomerations of her popu lation live not by the interchange of products with the agricultural area, though those areas meet the great bulk of their requirements within the continent, but by the sale of manufactured goods to all parts of the world. The raw materials exported are few—coal, wood-pulp from the north, some silk and wool, some platinum from Russia. The raw materials derived from the soil or subsoil are far from adequate for her industrial needs. But though Europe looks to other continents for her raw textiles, and rarer metals, for her vegetable oils and rubber, even for a large pro portion of her hides and tanning materials, the seat of her great industries has been determined mainly by the deposits of coal and the proximity of raw products.
Of all factors determining the distribution of population, the most powerful have been the depth and availability of the coal seams and the natural means of communication. Coal is found in the great majority of European States, but Great Britain and Germany together are responsible for over two-thirds of the total supply and these two countries, Belgium, France and Poland, for nearly nine-tenths. Round the coalfields in these countries, in Lancashire and Yorkshire, in the valleys of the Sambre and the Meuse, in the Ruhr and the Saar districts, round Creusot, in Saxony and Silesia and in Bohemia, lie the great industrial centres. On the continent of Europe they are thus largely concentrated in the territories drained by the Rhine, the Meuse, the Elbe, the Oder, and their tributaries, and it is in these valleys that the density of population is thickest. Indeed, their only serious rivals are the rich Lombardy plain with its centre at Milan, and the scattered points constituted by the great capitals Paris, Berlin, Stamboul, and the volcanic oases in Southern Italy and Sicily. But none of these points can rival the Rhine valley and more especially the wealthy zone which lies between Dortmund and Lille.
Coal as a European Industrial Factor.—Coal has been and is the greatest natural factor determining the industrialization of Europe, and her greatest natural source of wealth. It accounts still for some 62% of British exports, and of the total amount enter ing into international trade, Great Britain and Germany are to gether responsible for almost two-thirds. But only from these two countries and from Poland is there a net surplus for ex port. It is the magnet which has drawn the country population and all types of industry to itself. It is often cheaper to transport even iron ore to coal than coal or coke to the iron mines, and the economy in the case of other raw materials is determined jointly by their requirements of power for treatment and by their weight and bulk.
On coal and iron the European industry of the nineteenth cen tury was based. Europe still produces about 45% of the world's supply both of pig-iron and steel, and of Europe's output over five-sixths of the pig-iron and over three-quarters of the steel are manufactured in Great Britain, France, Germany and the Belgo-Luxemburg Union. Coal and iron in these four countries lie for the main part not only in juxtaposition to one another, but near either to the sea coast or to rivers which could be and have been connected by a network of canals. Thus, to the north of the Tyne lies the Durham and Northumberland coal, to the south the Cleveland ore ; in Ayrshire and the Clyde basin the black band ironstone extends to the coalfields; the iron works on the coast of South Wales were based originally on local ore and worked with local coal. In Belgium and Luxemburg, France and Germany, the main deposits lie in the basins of the Meuse and Moselle, or between the Moselle and the Rhine in Lorraine, and north to Luxemburg, in the provinces of Namur and Liege, round Saarbriicken ; in the neighbourhood therefore of their greatest coalfields, and in easy access to the sea. The great inland iron works of Europe, at Creusot, in Silesia, in the Erzgebirge, west of the Ural Mountains, and south of Moscow likewise are all situated in the vicinity of coal. The works on the Donetz basin are at once near coal and near the Black sea at Rostov.
Here, too, in these valleys, where coal is mined and access to the sea is ready, many of the other major industries of Europe have concentrated, as cotton in Lancashire, round Chemnitz and the Saxon coalfield, in the Rhine valley at Mulhouse, Colmar, etc., in Bohemia; wool in Yorkshire, at Roubaix, Amiens, Tourcoing, etc., at Barmen and Elberf eld ; machinery again largely round the central British coalfield, at Creusot, Essen, Krefeld, Barmen, Chemnitz, etc. Indeed an almost unlimited range of examples might be quoted.
But although coal has been the prime factor in determining the localization of European industry, it would be easy to ex aggerate its importance. On the continent of Europe as a whole, industrial energy is both less specialized and less topographically centralized than in Great Britain. In France this is due in part to the fact that she has many coal mines scattered throughout the central region at Creusot, St. Etienne, Alais, Carmaux, etc. But other forces, some natural, some historical, have com peted. Her woollen industry has grown up near the downs of Champagne where her flocks were fed, at Rouen within the pas tures of Normandy and close to Le Havre where foreign fleeces are transshipped. Rouen, too, for its closeness to the sea, is one of the centres of cotton spinning. The mills in the Vosges, at Epinal, St. Die and Senones, date from the transference of the Alsatian industry to Germany after the wars of 1870. The textile in dustry of Lodz is an artificial creation ; the silk industry of Krefeld and the cutlery of Sheffield owe their prosperity to the properties of the local water. Lyons, where also the water meets to a peculiar degree the requirements of the silk industry, is in the centre of the mulberry area ; the chemical industry at Stras bourg has been built up on the deposits of natural potash salts. But quite apart from natural causes the whole history of Germany with its multiplicity of states and far-flung seats of learning has naturally conduced to the decentralization of industry. European industry has been built on the natural resources of the soil and the sub-soil. But it has been preserved and extended by acquired skill and technical education. The cork and wine of the Iberian peninsula, the steel or pulp of Sweden, the zinc of Upper Silesia, the attar of roses of Bulgaria, the linen of Ulster or Cambrai, even the tulips of Haarlem and the carnations of San Remo are the natural outcome of favourable local conditions. But the chemical industry of Germany has its roots in her thorough system of technical education, the scents and dressmaking of Paris spring from a national talent, as do the luxury goods and wares of Vienna. Again, the European countries which have been most successful in the manufacture of artificial silk—Italy, Great Britain, Germany and France—are not those in which the raw materials are most plentiful. The motor-car industry of Italy has been based on the skill of her mechanics, the watches and chocolates of Switzerland on native ingenuity and the absence of reasons for other occupations, and the rubber sponges of Moscow on the invention of a single individual.
Thus, the forces which have determined the character and the place of European industry have been manifold. Her industries were highly developed when the newer industrial countries were still in the process of early colonization and settlement. As these countries have gradually discovered and exploited their natural resources, a change has taken place in the economy of Europe, caused in part by their increasing competitive power and in part by the normal progress of science. Both causes have tended towards the decentralization of industry. The first because the increased competitive power of these younger countries has at tacked particularly the basic industries of Europe, coal and cot ton, wool and pig iron; the second because it has affected above all the means of transport and the source of power.
That form of economic organization which is vaguely defined as modern industrialism has been slowly spreading from the mid lands of England, where it had its birth in the eighteenth cen tury, east to the great centres of economic activity which have been considered, and from these centres, through a multiplicity of trickling, often scarcely perceptible, streams to new basins. But it still remains true that if a line be drawn from Reval to Minsk and through Lemburg down the river Theiss to Belgrade and then west along the line of the river . Save to Fiume, and across the north of Italy from Ravenna to Leghorn, south and east of that line the characteristic industry is handicraft. In Russia, Rumania and the Balkan peninsula, for all the big towns which exist, the typical centre of economic activity is the market village. The peasants clothe and feed themselves and the division of labour is between individuals, not between armies of specialized trade unions. In Italy the industrialized north has naturally af fected the habit of life throughout the peninsula. Owing to the peculiar adaptability of the Italian workman to highly skilled individual effort, however, the workshop has continued to com pete on equal terms with the factory. But the pressure of increas ing population and the infiltration of capital from abroad are, except in Russia where other forces are at work, furthering the movement towards industrialization. The oil deposits in Galicia and Rumania likewise tend to this development. Indeed, all the petroleum fields of importance in Europe lie east of the line from Reval to Leghorn traced above. They lie in fact along the line of the Caucasian and Carpathian mountains, from Baku on the Caspian sea across the Crimean peninsula, a line which is broken by the Black sea and the Danube plain to be renewed at the Buzau–Dambovita fields in Rumania. But of all forms of energy petroleum is the most easily transported and industries, though aided by its proximity, are not tethered to it as they were to coal mines. Indeed, the influence of petroleum and its use in road transport has been rather to knit Europe more closely to gether as a whole than to intensify the development of isolated spots. For it has added a new means of international communi cation to the old network of waterways and railways, which crosses national frontiers with infinitely greater frequency than either of these. Moreover, rivers, though some of them, the Danube, the Rhine and the Elbe, may be the greatest of Europe's international highways, frequently divide while they join, and the obstruction caused by political boundaries is appreciably less for traffic by road than by rail. Petroleum again has rendered possible transport by air, which is, of all forms, the freest from artificial hindrances.
But the essential unity of any living organism is more easily apprehended by regarding it in its relations to other organisms than by studying with close inspection the cells of which it is itself composed. Europe, at the close of the nineteenth century, represented to the rest of the world a form of economic structure, which, though not unique, was uniquely perfected, instrumental in the provision of certain services upon which the other con tinents were largely dependent. She purchased their raw materials and foodstuffs, gave in exchange manufactured articles destined either for immediate consumption or for the further exploitation of undeveloped regions. She also provided goods largely in the form of loans, thus supplying at once the capital needed and through her streams of emigrants, the labour to manipulate that capital. The raw products she bought, the manufactured goods she sold and lent, the labour she released were all alike carried on her vessels. Europe was thus to those outside her essentially the centre of commerce and the source of labour and capital. By the beginning of the second quarter of the loth century these characteristics had become less striking; her services were less urgently required, partly on account of the growth of rivals to her position, partly because, as has been seen, the traits of her character had changed. Raw materials are increasingly manufac tured elsewhere, North America can export capital in large quan tities, the stock which Europe has planted throughout the Amer ican continent, in Australasia and Africa has multiplied, and Europe is herself borrowing abroad. But she remains the great est centre of world trade; nearly two-thirds of the world's mer cantile marine belongs to her; her foreign investments still greatly exceed those of any other continent.
Europe as Trader.—Where the great industries lie, there naturally does trade demand the most of the people's energies—in Great Britain, France, Germany, Belgium and Switzerland. But the distribution of trade and industry is not identical. The size of the seats of commerce depends on the wealth of their hinter land, but the overseas carrying trade is conducted largely by nations such as Norway and Greece, Holland and Denmark, naturally thrust upon the sea. In these countries and in those such as Austria and Switzerland which lie across the inland routes east and west or north and south, the largest proportion of the active population, after Great Britain, is engaged in trade and transport. But the services rendered vary. In London and Liverpool, Hamburg and Bremen, Rotterdam and Antwerp, Le Havre and Marseilles, the goods produced in the neighbouring factories and the raw materials required are congregated, bought and sold, unloaded and shipped. But Norwegians send their ships to collect goods in foreign ports, the Greeks both collect and trade widely themselves, Switzerland, though a centre of commerce, is essentially a transit country, Austria, though a country of transit, is essentially a centre of commerce with a network of banks and merchant houses spread over all the neighbouring States.
The mercantile marine of all the Mediterranean peninsulas is considerable, but the distribution of the products not only of Western and Central but also of Eastern Europe is largely con ducted by the countries giving on the Atlantic and the North Sea, and it is in the North Sea ports that the markets both for raw products of warmer climates and the cereals of Eastern Europe centre. Thus Liverpool, Antwerp and Bremen are the central points for the distribution of raw cotton, London and Hamburg for wool, Bermondsey and Hamburg for hides; the wheat and maize of the Danube valley is graded for further distribution at Antwerp and Rotterdam. The largest international European markets for petroleum are at Liverpool, Glasgow and Swansea, the largest market for rubber at Liverpool. Of the distributing centres in the south of Europe which can claim international importance, the greatest are Lyons and Milan—the two main arteries of the silk trade.
But both in the distribution and in the overseas transport of goods, Great Britain plays a preponderant part. She stands at the Atlantic gate of Europe, unhampered by contiguous frontiers and unimpeded by artificial barriers. She stands, indeed, without the unity of Europe, attached by trade more to her Empire than to the continent—a focus of that trade, and a distributing centre not only for Europe but for the whole Atlantic. Despite her partial isolation, she represents in large measure the prototype of the economic organization to which continental Europe has tended to conform—a model it is true never exactly copied. With her extra ordinary specialization in industry and commerce, and, at least before the World War, in output of a few major products; with her deliberate sacrifice of agriculture, and the urban massing of population, she has exaggerated the features which are largely characteristic of the economy of Western Europe to a point far beyond that which other countries have reached or attempted to reach. From the specialization on a few industries there is, as has been observed, a reaction in most European countries, and in east ern and central Europe an attempt has been made to check the drift towards the towns by dividing the large landed estates into smaller holdings. But this revolution in agriculture has been accompanied by a deliberate policy of industrialization. The east, up to the Russian frontier, looks to and imitates the west, and in doing so breaks the unity and spreads the uniformity of Europe. It breaks the unity because with the industrialization of the agri cultural countries the surplus of bread corn available for the rest of the continent is likely to be diminished and the demand for the manufactures of the north and west weakened. New or higher barriers obstructing the free flow of goods are constructed, the markets within Europe are restricted and the opportunities for large scale production reduced. But Europe is necessarily depend ent on other continents and on warmer climates for many of her raw materials, and these she can only buy with what she herself produces. To buy cheaply she must produce cheaply, to produce cheaply she must be permitted to devote her energies free from artificial impediments to the manufacture or the cultivation of those goods for which the natural conditions or the quality of her workers best fit her.
The New, Post-war Barriers.—The war and its settlement increased the impediments to the exchange of goods and inevi tably upset the balance and distribution of productive forces with in Europe. Almost I 1.000 kilometres of new frontiers were traced and along every kilometre was built a new tariff wall, here high, there low, behind which national economic lakes stagnate. The political frontiers themselves, even when as in Holland surmounted only by the tiniest parapet, must to some extent check the free flow of the forces of production. Goods move more readily than capital, and capital incomparably more willingly than labour. Even had there been no new tariffs the new political demarcations scored across the face of Europe would inevitably have affected the existing economic equilibrium.
Industrial Europe has never known free trade and the equilib rium which existed in 1913 was determined largely by the political boundaries which then existed. The new frontiers determined at Versailles sometimes cut and sometimes joined the natural fields of wealth. Thus the Lorraine iron field, previously divided between France and Germany, was reunited, but the whole was separated from the Ruhr coke with which the eastern half had previously been supplied without hindrance, and many of the German blast furnaces were cut off from their supplies of ore. Upon the iron and steel of the Lorraine, Luxemburg and the Saar, the iron works of Westphalia, and the engineering and shipbuilding industries throughout Germany had largely relied. Similarly, the division of Upper Silesia separated the blast furnaces of the Polish half from the hard coke for which they had been constructed, and many of the industries of eastern Germany from their supplies of coal, and severed or half severed, innumerable meshes of the net-work of lead. zinc and coal mines, furnaces and factories which had been gradually perfected during the last fifty years.
The new frontier cut through both the existing economic organ ism and the natural supplies of wealth which lay in the subsoil; but by the Treaty of 1922 between Germany and Poland time was allowed for the regrowth and training of that organism before the separation of the two parts was made complete.
The cotton mills of Lodz and Narva lost their Russian mar ket ; the engineering shops of Riga and Tallin and the dairy farms of the surrounding country were cut off from Petrograd.
Industrial Czechoslovakia could no longer readily dispose of her goods in her old markets in Austria, Hungary, Galicia, Transylvania and the southern littoral of the old Austro-Hun garian Empire : the spinning mills of Austria were divorced from the looms of Bohemia, the Styrian iron ore from the Moravian coke, the flour mills of Budapest from the corn lands of Transyl vania and Croatia. The road between Central Europe and the Mediterranean at Fiume and Trieste has been obstructed; Bul garia has been cut off from contact with the Aegean at Dedeagatch. European Trade Frustration.--All these modifications of national boundaries have checked the growth of old economic organisms and caused a loss to vested interests. All large modifi cations of frontier must have this result. The frontiers which existed in 1913 could claim no very special economic virtue.
Transylvania is the natural complement to the old kingdom of Rumania ; Posen, Congress Poland and Galicia were disintegrated by the treaties of the eighteenth and the legislation of the nine teenth century, not by natural forces. Of permanent significance as affecting the circulation of goods in Europe, the distribution of industry, and the growth of wealth is not the fact that frontiers have been changed, but that they have been increased in length, that they embrace more and smaller states, and that along their length higher protective tariffs have been constructed. Each new state has endeavoured to fabricate with the help of such tariffs those parts of the general mechanism of production of which it found itself deprived when its new frontiers were constituted, or to build up new industries for the employment of those who were temporarily thrown out of work. Thus have been forced into existence a new textile industry in Hungary, new engineering shops in Rumania, new motor-car factories in Czechoslovakia. Behind the quickset hedges planted at Versailles have been built formid able walls from which now a coping stone, now a whole line of bricks may occasionally be removed by way of reciprocal conces sion. The centre and south-east of Europe has thus been divided into allotments, and the agricultural produce of Russia is crushed painfully through a few state-guarded gates on a closed frontier stretching from north to south across the whole breadth of Europe. So the natural interchange of goods between east and west, or between the industrial and agricultural areas of the centre of Europe is impeded. But the new obstructions are not confined to the new frontiers. The highest tariffs in Europe are those of Spain; Britain has ceased to be a free-trade country.
Europe must export manufactured products to feed herself. Supplies of grain from Russia are reduced and controlled and from the rest of eastern Europe greatly curtailed. But it is on industrial products that her new and higher duties are imposed. The cost of production to the European agriculturist is thus raised and the possibility of cultivating poorer land reduced. The cost of living, the costs of production and the price at which manu factured articles can be sold in exchange for the raw materials and foodstuffs of other regions of the world are all enhanced. The power of Europe to compete is weakened by every denial of her essential unity and by every obstruction to her liberty of internal intercourse.
From century to century the political scene has changed; now this nation, now that, has occupied the forefront of the stage. But what Europe as a whole has had to offer has changed but little. Some of her minor gifts have been exhausted, part of her major legacies expended; one generation has chosen this source of wealth, another that, tin or copper or iron or coal. With the growth of science, unknown wealth has been discovered and old forms put to new uses. Timber to-day is converted more into pulp for paper than into charcoal for crucible steel; the platinum of the Urals, the uranium ore of Czechoslovakia, the bauxite de posits of Jugoslavia have lain awaiting the knowledge to employ them. Some other mines may have been worked out, but to the natural gifts has been added a vast accumulation of capital built up through centuries, and the essential heritage of Europe, her soil, her climate, her central position and great mineral wealth, still remain. (A. Loy.)