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.]