of the war.  In a less degree, the trade of other states will be deflected from its accustomed channels.  Beyond this, special influences will be felt in the case of certain new countries, as for example Canada.  “Canada’s annual balance of trade is probably about L60,000,000 against her:  L30,000,000 being the excess of her trade imports over her trade exports and the remaining L30,000,000 representing her annual payment on money borrowed.  She has balanced her account hitherto by borrowing very large sums of money.  Now she will be unable to do that any longer.  Nor will she at present, at any rate, obtain the immigrants on which she is counting to enable her to pay her interest.  She cannot redeem the balance due by the export of gold.  The burden would be too great in any case, and moreover she has suspended specie payments.  A part of the balance due may be covered by the higher value of her exports, such as wheat.  The remainder she can only meet either by increasing her exports or by reducing her imports.  The latter she has already begun to do."[2] This new readjustment may be accompanied by great economic loss; in any case the dislocation will be harmful for the time, not only to the new countries, but to the countries with whom they trade.  It is clear that foreign trade generally will during the war gradually be readjusted to the new conditions of the times.  To what extent the various streams of the world’s trade will be directed into new channels it is impossible to say; the readjustment will be partly temporary, and partly permanent.[3] This redistribution of production, if it leads to production under less favourable conditions than before, will tend to raise prices, and thereby probably diminish the power to buy other commodities.  If it leads to the substitution of a well organised and well paid industry by an industry of a less skilled kind, there will be in effect a net lowering of wages.  The widespread effects of the war on industry and commerce must, therefore, have a profound effect on the whole of the economic world.

[Footnote 1:  Towards the end of August, the tin-plate and steel-sheet trade in this country which had suffered badly on the outbreak of war revived, and “several mills were reopened, owing to the obtaining of orders which formerly went to Germany” (Board of Trade Labour Gazette, Sept. 1914, p. 330).]

[Footnote 2:  Round Table, Sept. 1914, pp. 708-9.]

[Footnote 3:  This, of course, does not mean that Great Britain will “capture” German trade and increase its foreign commerce by the amount of its value.]