27. WAR AND ITS RELATION TO WORLD COMMERCE, The. To dis cuss the relation of the World War to world commerce implies (1) a consideration of politi cal and commercial conditions at the beginning of the war; (2) the political, commercial and industrial conditions developed during the war; (3) the conditions at its close, and (4) the probable effect of the many changes which it made in the political, industrial, economic and commerdal power of the areas which ordinarily produce or participate in commerce.
International commerce of the world at the beginning of the war consisted of annual ex change between nations of about $20,000,0000,000 worth of merchandise, but as the value of mer chatulise was counted twice, once when exported from the country of production and again when imported into the country of consumption, we are accustomed to say that the pre-war com merce was about $40,000,000)000 per annum. About one-third of this, spealung in very round terms, was foodstuffs, another third was manu facturing material and another third was manu factures. Most of the food and tnanufacturing material entering international trade was pro duced in the Atnericas and Australasia and wa.s talcen by Europe and paid for in her chief product for exportation, manufactures, to which she added the services of her merchant marine and the earnings of her in vested capital in the producing countries. Of the $7,000,000,000 of manufactures enteri. • in ternational trade in 1913 about $6,000,111,000 was supplied by Europe and $1,0(X1,000,000 by the United States, and they took manufacturing materials and foodstuffs in exchange. Much of this manufacturing material and food came from the Americas and Australasia, though Rus sia supplied a part of the food, and tropical Asia and Africa a part of the manufacturing material.
Of the manufactures which were exchanged for the food and raw material a very large pro portion was produced in those European coun tnes which actively participated in the war, and they were large purchasers of manufacturing material and food. Much of their power of production in manufactures for ex.port was sus pended, while in the case of the other great manufacturers, the United States, production and exportation were stimulated. The European manufacturers thus lost to a considerable de gree their hold upon the world's markets and the United States gained largely in those areas formerly supplied by Europe, our own exporta tion of manufactures in the year following the close of the war having been over $3,000,000,000, against $1,000,000,000 in the year preceding the War.
Great Britain, France, Belgium, Italy, Ger many and Austria-Hungary supplied about $6,0M,000,000 worth of manufactures for in ternational trade prior to the war, and while they bought a part of their food from Russia, the bulk of their purchases of this character came from the parts of the world in which there was during the war no suspension of pro ducing power but rather an increase in produc tion, and, therefore, of purchasing power. With the inflation of world currency and increased prices which followed, the nominal value of commerce increased. The belligerent countries of Europe necessarily increased their imports, buying largely on credit and with money bor rowed from their own people, and the valuation of world commerce, measured in the high prices which followed world inflation, was in the clos ing years of the war over $60,000,000,000, as against $40,000,000,000 in 1913, despite the fact that Germany, Austria-Hungary, Turkey, Bul garia, Belgium and Russia were cut off from participation in international trade.
The effect of the war upon world commerce in the years to follow will depend chiefly upon the recuperative power in production, and, therefore in consumption, of the areas in which the war was waged. The other parts of the world find themselves 1.vith increased producing power, higher prices for their products and, therefore, higher purchasing power, and while they must pay to labor a higher wage for its services and to shipping a higher charge for transportation, their exchanges with each other will be larger, at least when measured in the inflated currency, and their power to supply food and raw material to manufacturing Europe will exceed that of the pre-war period. The proper relation of wages to the high prices which have followed the quadrupling of world currency will be slowly adjusted, the purchasing power of the masses measured in larger figures, and world interchanges, except as to the war torn sections, will move on at a new level of stated values, for it cannot be expected that prices will materially decrease unless the in flated currency is deflated, and that will not be easy in view of the fact that the countries hav ing this inflated currency must now detnand from their people three times as much in taxes as before the war.