Economic and Financial Conditions

Effects of World War Conditions.

These were, broadly speaking, the conditions of the leading trades of Norway when the outbreak of the World War suddenly upset the economic stability. But the nation soon adapted itself to the new state of things.

During the whole of 1915 the chief trades of the country achieved very considerable revenues. This especially applies to the shipping trade, and some of the leading manufacturing in dustries, while in other trades, e.g., the wood and the fishing trades, the deficiency as to quantitative returns were amply counter-balanced by the excellent prices obtained. During 1916 this development was even more pronounced. The revenues scored by shipping broke all previous records; the manufacturing industries were working under high pressure, while agriculture and the fisheries, although unsuccessful as to quantities, were re markably profitable, owing to the unparalleled prices obtained for the products. At the same time the figures of the trade bal ance went up by leaps and bounds. Generally speaking, the dos ing months of 1916 mark the culmination of economic expansion during the war, and although extraordinary revenues were scored in the two following years, conditions were fraught with diffi culties, owing to the more and more extraordinary character of the war by which Norway was affected, as perhaps no other neutral State, owing to her large mercantile fleet.

One of the first economic consequences of the war was, as al ready hinted at, the substantial rise in the international freight market in connection with a no less pronounced rise in the prices of all sorts of commodities and raw material, which quite nat urally also brought about a constant rise in wages. During the first two years of the war the advantages derived from the enor mous revenues more than counterbalanced these drawbacks. and in a number of fields important results were achieved in the direc tion of consolidating the economic life on a national basis ; on the other hand, the enormous influx of capital created exceed ingly easy conditions in the money market, which very soon re sulted in excessive speculation, chiefly in shipping and industrial shares, which threatened to become fatal. It should always be

borne in mind that the losses inflicted upon Norway, chiefly through the German submarine war, were enormous—say 1, 237,000 gross reg. tons—not to speak of the lives of nearly 2,000 seamen. After the war Norway had to rebuild a mercantile fleet of, roundly, 1.2 million gross reg. tons. This achievement, suc cessfully performed within less than ten years after the war, under exceedingly difficult circumstances, will always rank among the most remarkable feats of Norwegian enterprise.

Post War Reaction.

Owing to a number of circumstances too intricate to be detailed, the economic reaction only became general towards the end of I920, when the note circulation of the Bank of Norway reached an amount corresponding to £26, 700,000, as compared with £6,000,000 in 1913, while, by an Order in Council of Aug. 1914 the bank had been exempted from re deeming its notes with gold. The increase of the loans of the private joint stock banks from, roundly, £35,555,00o at the out break of the war to £172,780,000 at the expiration of 192o, was another evidence of the inflation of the war period, along with the fact that the price index rose to 435 in the autumn of 192o (1913 being ioo). Yet it should not be forgotten that the item of deposits simultaneously rose from L32,900,000 to £172,888,000 while the deposits of the savings banks also increased heavily.

From the beginning of 1921 the reaction revealed itself in a way which makes that year a most gloomy one in the economic history of Norway. The fishing, mining and wood industries, her chief export industries, as well as shipping, suffered by the general collapse in the foreign markets, which led to a wide spread cancelling of purchasing contracts. At the same time Norwegian money depreciated substantially, especially in relation to sterling and dollars, while the economic structure was severely shaken by an increasing number of banks being compelled to suspend payments. In addition to this may be mentioned the heavy increase in debts of the State and the municipalities.