The Daily News. SATURDAY, AUGUST 29, 1914. ECONOMIC EFFECTS OF WAR.

Taranaki Daily News, Volume LVI, Issue 80, 29 August 1914, Page 4

The Daily News. SATURDAY, AUGUST 29, 1914. ECONOMIC EFFECTS OF WAR.

A very interesting and instruotivo. lecture was .recently given in Dunedin by 11. D. Bedford, dean of the-faculty of law'and commerce, on the 'Economic Efiects of War." He showed that war in the twentieth century liad more power to inflict disaster upon indi/stry and commerce than at any other period in human history. The statistics of foreign trade measure the dependence of nations upon each other. Jn 1912 the United Kingdom made commodities for other nations to the value of £556,87<8,090, Germany £4Ul,3B3,<)oo,.Belgium. .Clk r >S,SA3,©OO,« Russia £152,959,000, Austria £ 100,h79,000. Other nations made for the United Kingdom £080,158,000, for Germany £510,691,000, for France £■392,390,000, for Russia £114,409,000. The former are exports, the latter imports. These figures indicate the enormous extent to which the labor and capital of these countries are organised for the purpose of supplying the material wants of other countries. Now, what is the effect when great trading nations engage in a war? War, to the degree to which it is effectively waged, involves the destruction of trade. The more highly developed international commerce is, the more calamities war heaps upon a nation's industry. A glimpse of the terrible evils which necessarily ensue may be obtained by a moment's consideration of the present plights of Germany, 'file North Sea, her only outlet by sea, is blockaded. The vast industries organised to produce in 1913 £495,000,000 of exports have suddenly been cut oil' from their market. These industries, employing millions of men, must to a large extent close down. The vast body of consumers who were dependent oil the imports £534,000,000, and the multitude of industries that were dependent on imported raw materials, must experience a sudden shortage. Indeed, the gigantic industrial structure which peace had built up is shattered by the explosion of war. It is not' sufficient to say that i war produces economic ills, that it raises prices, and overtakes credit with cofiapse. What is wanted is to demonstrate fliow and why war entails these consequences. They arise from the effect on the production, exchange and distribution of wealth. War lessens the productive- powers of a nation. It musters all the impediments to the exchange of the diminished quantity of wealth produced. It occasions violent, and sudden redirections of the nations' expenditure, cutting off whole classes from their ordinary means of livelihood. The first proposition is easy of proof. The wealth of a country eonsisls in the abundance of goods that accommodate men's lives. Not money, but the things that money can buy constitute real wealth, Wjar withdraws a multitude of men from productive activity. In Germany, farmers are leaving their farms, workers their benohes—not in thousands, but in millions. The wheels of industry are stopping from sheer inability to get men to tend them. War involves an immense transference of labor from the fields of production to the fields of mere destruction of wealth. Ihe effect is just the same as that of a drought or a famine. Did n nation "'tain all of its money, this shortage of supplies for which the money could exchange would mean privation and poverty. If the monetary conditions of the countries at war could remain unaltered, it there was no tightness of money, if the banks were lending it out as freely as before, the effect of the diminished production would mean that the purchasing power of the money would be lessened. In other words, priced .would lie raised—tile rise measuring the short-' age. The point to grasp is that the mere relief of the monetary stringency occasioned by war cannot 'obviate the distress caused by reduced production. With her ports effectively blockaded and a large proportion of her producers tinned to soldiers, the German people might die of starvation with their pockets full of money. Only production, not money, makes a nation's wealth; and war. therefore, strikes at the root of a nation s prosperity. The Continental nations will .suffer more tlian our Empire from this cause. Indeed, the .greater the proportion of its men a nation can put on the battlefield the greater the economic weakness. War disorganises the machinery of the exchange of products. It not only lessens the output, but impedes the" lessened output in reaching its proper market. One of the terrible economic scourges of war is that it hinders that contribution of nations to each other's needs which! international tradit provides. The artificial want which war brings by hindering exchange may be illustrated in the following way.—lmagine two men, tied each to a post; one lias an abundance of fresh water, the other ail abundance of bread; yet one dies of thirst because he has no water, iand the other of hunger bis-ause lie has no bread. By being tied apart they cannot exchange their superfluities. t There is enough water and bread for both, but they are hindered in making that exchange which would mean life to both. This must be the position at present of Britain and Germany with respect to herrings and sugar. Britain exports £2.500.000 worth of herrings to Germany, and imports a greater value of sugar from Germany. The war means that sugar is too plentiful and herrings scarce in Germany, and sugar scarce .and herrings plentiful in Britain. But war still inllicts more loss by changing violently and suddenly the direction of expenditure. During war time there is en exceptionally heavy demand for foodstuffs. soldiers' habiliments and munitions of war. Other channels of expenditure are temporarily closed. I'u New Zealand the Premier expects £loo.noo of private money to be diverted to war purposes, provision of horses, shirts, etc.. and inan\ hundreds of thousands of the State's money will be diverted from public works to the (iiui)iment of our volunteers. In Europe the diversion of expenditure will he miieh more marked. But the concentrating of expenditure on the industries which make for the ellicienc-. of an army means the withdrawal of expenditure on ofher industries which were formerly well patronised. Pome industries therefore experience a sudden lioom. othcrskau equally sudden collapse. War means that the total amount of wealth produced will be lessened, and that of S'cat lessened amount a greater quan-

tity than before will be of those things which are specially required by a condition of war. Who will build houses in Germany while the war lasts? But this sudden withdrawal of expenditure weans bankruptcy to merchants and unemployment to laborers. The failure of one business often involves the failure of other businesses more or less dependent on it. Workers thrown out of employment means -lessened custom for the shops in which the workers spent tiheir wages. This, in turn, embarrasses the shopkeepers, in meeting their engagements and making further purchases from the wholesale dealers; and so the circle of disaster widens. Thus we see that war lessens \ the production of wealth, hinders its (beneficial and profitable exchange when produced, and just in proportion to the intensity of the war tends to withdraw money from all industries which do riot contribute to the maintenance of war. - This leads to the further proposition: Whilst greatly diminishing the amount of wealth that can be produced, war increases the need for it, and while increasing the need for it wantonly destroys it. It takes move labor and capital to supply, the. wants of an army on campaign than to supply an army in barracks. Those who are not at the wars liave not only to produce -sufficient food for the soldiers, but also for those attendant upon them. War further aggravates the trouble by wholesale destruction of wealth. War means burning granaries, crops laid waste, cattle destroyed.