hitherto done and the services performed for Germany and Austria are now no longer called for; our allies in the west of Europe are suffering acutely from the immediate economic effects of the war and the large destruction of capital; our neutral customers have not escaped scot-free.  It would seem, therefore, that in spite of the British command of the seas, production must necessarily be seriously curtailed and that, therefore, the volume of unemployment must be very considerable.  On the other hand, though production in France, Belgium and Russia may diminish in many directions, what goods they do produce for export will find no market in Germany and Austria-Hungary and a proportion of them will find their way to this country.  Such commodities will not only be valuable as food and raw material for industry, but will set up a flow of British goods in payment for them.  Further, the production of commodities needed for the prosecution of the war, will increase the volume of employment.  Goods of all kinds are required not only for the British armies but for the Allies generally.  The manner and extent to which these factors have influenced unemployment will be considered presently.

[Footnote 1:  According to an Admiralty statement, corrected up to Sept. 23, 1914, 12 British ships had been sunk by German cruisers, 8 had been sunk by mines, whilst a few fishing boats had been destroyed.  British ships detained and captured by Germany numbered 86, with a total tonnage of 229,000.  On the other hand, 387 German vessels had been detained or captured, the total tonnage being 1,140,000.  According to The Times (Oct. 9, 1914), up to date 1.6 per cent of the tonnage registered in the United Kingdom had been lost.  The figures for Germany and Austria were 18 and 13 per cent respectively.  The Committee which prepared the State War Insurance Scheme estimated that the loss during the first six months of the war might be about 10 per cent of all British steamers employed in foreign trade.]

[Footnote 2:  Round Table, Sept. 1914, p. 704.]

Now the demand for the goods hitherto supplied by Germany to her foreign customers, though abated, will still continue.  As we have seen, she cannot for the present supply them.  By whom will she be superseded?[1] The Government of this country early in the war took steps to co-operate with British traders in an attempt to obtain some share of this trade, and the United States also strove to make the fullest use of the opportunity.  In this country goods previously imported from Germany will, if still needed, either be bought from the next cheapest importer or produced at home.  Commodities which we have in the past produced for German consumption are not now required from us.  If they continue to be made, it must be for other countries.  In other words, whether the volume of British foreign trade remains the same or not, a proportion of it will be diverted into new channels during the progress