Part 4

After the Franco-Prussian War of 1870-71, and while the Peace of Versailles was being negotiated, commercial travellers of each nation, laden with samples, filled the border villages, ready to dash across the frontier and open accounts. Of course no one dreams that such history will repeat itself after the present war; but there are many persons in England and France to-day who contend that the business needs of peace will be stronger than the costly hang-over of wartime passions.

Trade, after all, is a Colossus that rests with one foot upon Necessity and the other foot upon Convenience.

Will the Allies be such valued commercial helpmates to each other? Perhaps not. When this war is over the fighting countries will be impoverished by years of drain and waste. As a result, they will be poorer customers for each other, but very sharp competitors. International trade is merely an exchange of goods for goods. You cannot sell without buying, and vice versa. No groups of nations can live by taking in each other's washing. They are bound to get outside linen. When peace comes we shall have the lending and purchasing power of the world. Can anybody afford to shut us out?

Again: Can the Allies present a united front or carry on a uniform line of conduct? Will not their interests overlap and cause an inevitable conflict, even when intentions are of the very best?

France, for example, competes with England in chemicals, surgical instruments, high-speed tools, scores of things; Russia's competitors in wheat are not Germany, but Canada, India and Australia; Italy and France are rivals for the same wine markets. Russia for years has kept down the high cost of her living by buying cheap German goods at her front door and having her projects financed by German capital. Will she face bankruptcy by going hundreds--even thousands--of miles out of her way and paying more for products? England for years has made huge profits out of the re-export of Teutonic articles, thanks to the grace of free trade and huge carrying power. Is she likely to forego all this?

In the last analysis Propinquity and the Purse are the Mothers of Trade Alliance.

Finally, will not any organised exclusion of German products, coupled with a definite and organised campaign to throttle German trade the world over, throw the business of the Kaiser's country smack into the lap of the United States? Sober reflection over these possibilities may stay economic reprisal.

On the other hand, there are many ways by which even a near translation of the economic pact into actuality may work hardship--even disaster--to American commercial interests. No matter which way we turn when peace comes we shall face the proverbial millstones in the shape of two great alliances. One is the Allied Group, jealous of our new wealth and world power, bitter with the belief that we have coined gold out of agony; the other is the Teutonic Union, smarting because of our aid to its enemies, stinging under reverses, mad with a desire to recuperate.

Examine our trade relations with warring Europe and you see how hazardous a shift in old-time relations would be. To the fighting peoples and their colonies in normal times we send nearly seventy-eight per cent of our exports, and from them we derive seventy per cent of our exports. The Allies alone, principally England and her colonies, get sixty-three per cent of these exports and send us fifty-four per cent of all we get from foreign lands.

As the National Foreign-Trade Council of the United States points out: "Any sweeping change of tariff, navigation or financial policy on the part of either group of the Allies, and particularly on the part of the Entente Allies, may seriously affect the domestic prosperity of the United States, in which foreign trade is a vital element."

Why is this foreign trade so vital? Because, during these last two years of world upheaval we have rolled up the immense favourable trade balance of over three billion dollars. In peace time this would be paid for in merchandise. But fighting Europe's industries, with the exception of a part of England's, are mobilised for munitions. Therefore, these goods have been paid for largely in gold.

This gold is now part of our basis of credit. When the war ends Europe will make every effort that ingenuity, backed up by trade resource, can devise to get that gold back. One way is through loans from us; the other is by exports to us. Now you see why we must maintain our foreign commerce.

Our huge gold reserve hides another menace: The war demands for our commodities, paid for with the yellow metal, have increased the cost of production; and it will stay up. This will lead to an unequal competition with the cheap labour markets of Europe when the war is over. Both groups of Allies will be able to undersell us.

Turn to the raw materials and you encounter a further danger in the economic pact. If the Allies develop their own sources, it will cut down our export of cotton, copper and oil. If they cannot develop sufficient sources for self-supply they may, through co-operative buying outside their dominions, satisfy their needs. In the third place, they may stimulate, through tariff or shipping concessions, or by subsidies--which are much talked of in Europe to-day--a preference for their own manufactures over American products in both allied and neutral markets.

Take navigation: England controls an immense shipping. As a matter of fact, outside the three-mile limit, she practically owns the waters of the world. If she makes lower rates for her allies, or others to whom she gives preference, where shall we be in our chronic and unpardonable dependence upon foreign bottoms? Here is where we shall pay the price for neglecting our merchant marine.

Still another menace to our trade lies in preferential alliances between Mother Countries and their colonies, which is part of the projected programme. Our next-door neighbour, Canada, has just given an illuminating instance of what may be in store for us. A Co-operative Export Association has been formed in the Dominion to get business throughout the British Empire and the other allied nations. In the circular announcing its organisation it declares that "the products of Canada will be preferred against the products of her great neutral competitor, the United States, who has stayed outside of the war and has borne no sacrifice of life and money made by the allied countries."

Return to the economic pact again and you find that it continues to bristle with dangerous possibilities for us. You will recall that one of the clauses forbids the resumption of a favoured-nation arrangement with enemy countries for a period "to be fixed by mutual agreement." This may be for an indefinite time.

Now the danger here lies in the European interpretation of the favoured-nation idea. To quote an authority: "Most of these countries have treaties under which each must grant most-favoured-nation treatment to the other; and this means that a reduction in duties granted to one country is automatically extended to all other countries with whom such treaties exist. The result is that the lowest rate in any treaty becomes, with exception, the rate extended to all countries."

We have the favoured-nation relation with many European countries, and herein lies the possible danger: The war automatically annulled all treaties between belligerents. When the day of treaty making comes again shall we suffer for the sins of friend and foe in the rearrangement of international trade and lose some precious commercial privileges? It is worth thinking about.

II--England Awake

Meantime, regardless of how the economic pact works out, England's policy is "Deeds, not Words," as she prepares for the time when normal life and business succeed the strain and frenzy of fighting days.

No man can range up and down the British Isles to-day without catching the thrill of a galvanic awakening, or feeling an imperial heartbeat that proclaims a people roused and alive to what the future holds and means. The kingdom is a mighty crucible out of which will emerge a new England determined to come back to her old industrial authority. It is with England that our commerce must reckon; it is English competition that will grapple with Yankee enterprise wherever the trade winds blow.

There are many reasons why. "For England," as one man has put it, "victory must mean prosperity. However triumphant she may be in arms, her future lies in a preeminence in world industries. Through it she will rise as an empire or sink to a second-rate nation."

In the second place, as all hope of indemnity fades, England realises that she will not only have to pay all her own bills but likewise some of the bills of her allies. Already her millions have been poured into the allied defence; many more must follow.

Hence, the relentless energy of her throbbing mills; the searching appraisal of her resources; the marshalling of all her genius of trade conquest. Dominating all this is the kindling idea of a self-contained empire, linked with the slogan: "Home Patronage of Home Product." The war found her unprepared to fight; she is determined that peace shall see her fit for economic battle.

This is what she is doing and every act has a meaning all its own for us. Take Industry: Forty-eight hundred government-controlled factories, working day and night, are sending out a ceaseless flood of war supplies. The old bars of restricted output are down; the old sex discrimination has faded away. Women are doing men's work, getting men's pay, making themselves useful and necessary cogs in the productive machine. They will neither quit nor lose their cunning when peace comes.

I have watched the inspiring spectacle of some of these factories, have walked through their forest of American-made automatics, heard the hum of American tools as they pounded and drilled and ground the instruments of death. What does it signify? This: that quantity output of shot and shell for war means quantity output of motors and many other products for peace. You may say that quantity output is a matter of temperament and that the British nature cannot be adapted to it; but speeded-up munitions making has proved the contrary. The British workman has learned to his profit that it pays to step lively. High war wages have accustomed him to luxuries he never enjoyed before, and he will not give them up. Unrestricted output has come to stay.

Five years ago the efficiency expert was regarded in England as an intruder and a quack; to use a stop watch on production was high crime and treason. To-day there are thousands of students of business science and factory management. In the spinning district girls in clogs sit alongside their foremen listening to lectures on how to save time and energy in work. Scores of old establishments are being reborn productively. There is the case of a famous chocolate works that before the war rebuffed an instructor in factory reorganisation. Last year it saw the light, hired an American expert, and to-day the output has been increased by twenty-five per cent.