So far we have devoted our attention to some of the immediate effects of the war. But on the return of peace there will be new influences at work, the immediate and ultimate effects of which will powerfully affect the course of future development. The European War will mark an era in international politics. It may also stand as a landmark in the history of the social and economic life of Western Europe. It is not unlikely that in this respect it will surpa.s.s in its importance all the wars of the past.

The reasons are to be found in the magnitude and costliness of the war, the highly developed character and the inter-relatedness of foreign commerce, the possibility of new industrial forces coming into play, and the influence of the war on the political and social ideas of the European peoples. It may be that in this country the war will let loose economic forces destined to modify industrial organisation very profoundly; and that social forces, especially on the Continent, will be liberated to work towards fuller political freedom. These things lie in the veiled future, and prophecy is dangerous. We may, however, turn to consider some of the probable effects the war will leave behind it.

C. AFTER THE WAR

1. _General Effects_.--When the war comes to an end, an immediate revival of commercial relations between the combatant States and a general revival of foreign trade cannot be reasonably expected. After the Napoleonic Wars, English manufacturers, a.s.suming the eagerness of continental peoples to buy their goods, were met with the obvious fact that impoverished nations are not good customers. When peaceful relations are resumed in Europe, we shall recognise very vividly the extent to which industry and commerce on the Continent have been closed down. Even a.s.suming that British production continues, Germany, Belgium and Austria will have little to send us in exchange. The closing of the overseas markets of Germany, and the consequent shrinkage in production, the disruption of normal industrial life by the withdrawal of millions of men to join the colours, and the abnormal character of existing trade, due to the needs of the armies in the field, are not conditions favourable to the easy resumption of normal commercial relations. The dislocation of the mechanism of industry and commerce in Europe, on a much larger scale than ever before--a mechanism which has with growing international relations and interdependence become more complicated and more sensitive in recent years--cannot be immediately remedied by a stroke of the pen or the fiat of an emperor. The credit system upon which modern industry and commerce are built depends upon mutual confidence. This confidence will not be restored among the combatant nations immediately on the cessation of war; it will require time to grow.

Further, Europe during the war has been spending its substance and must emerge much poorer. This applies not only to combatant States, but to neutral countries, some of which have floated loans to meet the abnormal expenditure thrown upon them by prolonged mobilisation. The capital and credit of a large number of people will have suffered great loss or have vanished into thin air. Houses, shops, and buildings of all kinds, produce manufactured and unmanufactured, bridges, ships, railway stations and stock of enormous value will have been destroyed. The community will have been impoverished, not only by the expenditure of great armies and the destruction of wealth, but by the utilisation for immediate consumption of wealth which would have been used as new capital, and by the withdrawal of probably close upon fifteen million men from production during the period of the war. Even if we a.s.sume that the world has lost the production of only twelve million men[1], the loss is enormous. If each man were capable of producing, on the average, wealth to the value of 100 per year, the loss of production per year during the continuance of the war would be about 1,200,000,000. The effect of these factors will be heightened by the fact that the millions of men whose needs during the war have been satisfied by their non-combatant fellow-countrymen will be thrown upon their own resources. And though Europe will still need to be fed and clad and housed, the effectual demand of the population for the goods and services it needs, a demand which it is able to satisfy because of its possession of exchangeable wealth, will be smaller than before the war.

The demand will be more or less stifled until the credit system is re-established and mutual confidence restored, and until industry and commerce have adjusted themselves to the new situation. The volume of employment in this country during the war will have been swollen by temporary demands for war supplies which will cease when the war ends; foreign trade will be uncertain; a larger number of soldiers will be thrown on the labour market than ever before. It would seem, therefore, that in the absence of special steps, the volume of unemployment at the close of the war will be a good deal greater than during the progress of the war[2].

[Footnote 1: The number must be larger than this, as the mobilisation of the armies of neutral states should be taken into account.]

[Footnote 2: It is thought by some that the war will be followed by a short boom, when Europe will make good the necessities of industry and civilised life, but it is at least doubtful whether there will be a rapid reproduction of these commodities, owing to the conditions, already described, which will obtain at the close of the war. In any case, however, it will be merely a flash in the pan, and there will follow the gloom of a deep depression, unless there is clear-sighted State action.]

It is just conceivable, though one hopes not probable, that the economic effects of the war will be complicated by the imposition of war indemnities. The indemnity is really a means of obtaining booty from a vanquished State, and has been looked upon as a justifiable means of further humiliating an already beaten enemy. It has been pointed out[1], however, that the advantages derived from an indemnity are not an unmixed gain. The indemnity recoils on the heads of those who impose it. It is unnecessary here to enter into a consideration of the detailed effects of huge payments by defeated nations; though it may be remarked that the ramifications of such payments are so intricate and often so incapable of measurement, whilst other economic influences are at work at the same time, that it is impossible to draw an accurate conclusion as to the net advantage or disadvantage of indemnities to the State which levies them.

But the point to be borne in mind is that the addition of a great debt to the already large burden of an unsuccessful war reacts upon all countries with which the defeated state enters into business relations. The losses due to this cause will not necessarily be counterbalanced by gains from increased trade with the country receiving the indemnity; and even if they were, the latter trade might be of a different character. In any case, countries not parties to the indemnity will be affected by it in some way or other; war indemnities, like wars, do not pa.s.s by neutral countries and leave them untouched.

[Footnote 1: See Norman Angell, _The Great Illusion_, Part I. chap. vi.]

It is important to remember that, though modern warfare is much more costly and more exhausting than in the past, there is another side to the matter.

Society has also gained remarkably in its powers of recuperation. The blight of war is not as terrible as might be expected. The acc.u.mulated knowledge, the vastly increased productivity of industry, and the high organising ability, which have made the modern industrial and commercial world, will not be obliterated by the war. And though there will be difficulties in the way of their full operation when peace returns, they will aid powerfully in shortening the period of recovery. The forces which have transformed mediaeval into modern cities in a few short years will still exist. Though they can hardly be expected to overcome all the many factors likely to restrain economic activity, they may be relied on to stimulate the revival of normal economic life. Indeed, the knowledge of science and the faculty of organisation are likely to be applied more extensively than in the past to productive processes.

After the war, when the States of Europe begin to tread the paths of peace again, one of the first things to be done will be to repair as far as possible the damage done by the war. Take Belgium as an extreme example; leaving aside the irreparable destruction of historic buildings and priceless treasures, there are many million pounds' worth of houses and farm buildings, shops, warehouses, factories, public buildings, ships, railway stations, and bridges to be replaced. This work will take precedence over other kinds of production. Sugar, motor cars, gla.s.s, etc., will still be manufactured, but chiefly in order to buy the requisite raw materials and finished goods for the replacement of the wealth destroyed by the ravages of the war. Speaking generally, Belgium will probably consume less food than ordinarily, wear less clothes, and consume less luxuries.

Savings, which would normally have been devoted to new industrial developments, will be needed to make good the losses in existing industrial establishments. It is clear, therefore, that the economic growth of Belgium will be r.e.t.a.r.ded in a great degree.[1] The same holds good of Germany, though probably not to the same extent unless the theatre of war is extended to cover a considerable part of the Empire. In the case of our own country, provided it remains free from invasion, there will not be such a large replacement of lost wealth and capital destroyed by the war, except in the case of shipping; but in common with other States there will be the war to pay for, and certain obligations to meet regarding the maimed and the relatives of the slain. Taxation will be heavy, and therefore, on this ground alone the acc.u.mulation of new capital will be r.e.t.a.r.ded. Industrial organisation, having been re-arranged and modified to meet the requirements of the war period, will not resume its old form without a good deal of creaking and jolting. And even if it could, it will not be able to face the new conditions arising out of the war at all rapidly. There is every prospect, therefore, of a time of great difficulty after the war is over, before the normal course of industrial and commercial activity is fully resumed. In all likelihood, we shall find that the relative importance of our various industries will have altered to some extent, and that the nature of our trade will have been modified also. Then also the relative positions of our home and foreign trade may shift; in other words, if the war lasts sufficiently long for new industries to develop and become efficient, they may survive the compet.i.tion of foreign goods after the war; in which case, the goods which have hitherto been produced to buy the foreign goods will not now be required for foreign trade. It may be that on the return of peace, some European States, in order to give their industries an opportunity to recover from the effects of the war, will inaugurate new tariffs; there is, indeed, a strong possibility that on these grounds, and because of the dependence of the United Kingdom on the products of Germany, the Tariff Reform Movement here may be electrified into life.

[Footnote 1: If Germany be required to compensate Belgium for the damage done, these effects will in large part disappear; though the burden would still remain. The difference would be that it would be more widely distributed.]

2. _Possible Industrial Developments_.--But industrial changes will not be confined to the direction and form which economic activity will take. As has been suggested above, there may be far-reaching changes in the methods of production. It has been said that "there is only one way by which the wealth of the world will be quickly replaced after the war and that is by work. The country whose workers show the greatest capacity for productiveness will be the country which will most rapidly recuperate."[1]

The question goes deeper than the replacement of wealth. The position after the war will be that production will be r.e.t.a.r.ded because of the diminution in the rate of acc.u.mulation of new capital since the beginning of the war; there will be a certain amount of leeway to make up. Consequently, there will be every incentive towards the greatest possible efficiency in production. It is here that the workers are likely to be affected. Has labour reached its maximum efficiency? It has been shown by the application of what is called "scientific management," that the output of labour can be increased to a remarkable extent. For instance, instead of shovelling 16 tons a day, a man can shovel 59 tons; a man loading pig-iron increased his total load per day from 12-1/2 to 47-1/2 tons; the day's tale of bricks laid has been raised from 1000 to 2700. The list could be extended to cover operatives working at machines. In the endeavour to screw up industry to a maximum of production, it is not likely that the expedients of "scientific management" will long remain untried. Already the system is making considerable headway in the United States, and it is not altogether unknown in this country. It is not possible to enter into a full explanation of the methods of "scientific management." Briefly, by a process of scientific selection it puts each worker in the job for which he is best fitted, and teaches him exactly how to use the most efficient tools with which he would be provided. The method of teaching may be ill.u.s.trated from Mr. F.W.

Taylor's own example: "Schmidt started to work, and all day long and at regular intervals, was told by the man who stood over him with a watch, 'Now, pick up a pig and walk. Now sit down and rest. Now walk--now rest,'

etc. He worked when he was told to work, and rested when he was told to rest, and at half-past five in the afternoon had his 47-1/2 tons loaded on the car."[2] By elaborate experiments the exact shape and size of a shovel is determined; by long observation useless and awkward movements of a workman are eliminated or replaced by the correct movements giving the maximum return for the minimum of effort. In this way, and by a bonus on wages, a largely increased output is obtained. It is clear that the adoption of such methods gives the "scientific manager" great power; it also seems inevitable that the workman should degenerate into an automaton; it is obvious that in the hands of employers ignorant of the principles underlying it, and seeing merely a new and highly profitable method of exploitation, it will be open to serious abuse, as experience has already shown in America.

[Footnote 1: _Round Table_, Sept. 1914, p. 708.]

[Footnote 2: _Scientific Management_, by F.W. Taylor, p. 47.]

So far the tremendous significance of "scientific management" has not been fully recognised. Properly understood, it is the complement to the industrial revolution, which by the more extensive use of machinery, etc., increased the efficiency of capital. The present movement aims at a similar increase in the efficiency of labour as an agent of production. The new revolution in industry has as yet merely begun, because employers, in spite of the motive of self-interest, are conservative; but it will receive an enormous impetus from the conditions arising out of the war. Like the introduction of machinery and factory industry a century and a half ago and onward, it may be accompanied by widespread evils and cruel exploitation.

Indeed, there is every likelihood that the methods will be distorted and misused. By their careful application there is no doubt that the output of the labourer can be increased without the expenditure of greater effort than before, but even then there would be the tendency towards becoming de-humanised. This, however, might be overcome by shorter hours and higher wages, which would raise the standard of comfort and widen the worker's interests. Unwisely used, "scientific management" will become an instrument for shackling the worker, and increasing at a great rate the wealth of the capitalist. It will be freely admitted that anything that will increase the productivity of the labourer, and therefore the wealth of the community, is advantageous, provided there is an equitable distribution of the product, and that the effects on the working members of the State are not socially injurious. But the hidden evils that may manifest themselves are very real, and it is important that not only the workers, but the State should be prepared to save the good and prevent the evil. There will, however, be large numbers of employers of labour who will not avail themselves of the new-fangled methods, and who will endeavour to increase production by the old policy of "driving." And even without driving, wage-earning labour under present conditions may be carried on under circ.u.mstances unfavourable to industrial efficiency, and for hours inimical to the welfare of the community and actually injurious to industrial productivity. In the future the State will be more closely concerned with industry and commerce than hitherto; there will probably be a more clearly defined State policy aimed at the encouragement of production. Its view will be wider than that of the individual employer, and we may expect therefore, providing there is no serious reaction after the strain of the war, that the State will impose working conditions which will favour maximum production in the long run. It will be to the interest of the community to maximise the efficiency of the industrial system; and enlightened statesmanship will overhaul our existing code of industrial laws to achieve this object as far as possible, as well as to guard the community against the evils inherent in a misapplication of the principles of "scientific management."[1]

[Footnote 1: See an article on "Next Steps in Factory and Workshop Reform,"

by Arthur Greenwood, in the _Political Quarterly_ for September 1914.]

After the war, unemployment is likely to increase. The work of new production will be put into operation only gradually; there will be every inducement to economise the use of labour as far as possible; wages during the depression will most probably fall; there will be disaffection in the ranks of the trade unionists; the possible consolidation of industries into the hands of fewer employers will increase the strength of the masters; the funds of the trade unions will be depleted by the heavy strain on their resources, and subject to a further drain after the war. The outlook of the trade union movement is, therefore, far from bright. It will be generally agreed that the bankruptcy or serious impoverishment of the unions of this country would be nothing less than a national disaster; but unless action of some kind is taken, they will become greatly weakened and almost impotent, and one great bulwark against unjust encroachments upon the rights of labour will be removed.

It is not improbable, however, that the community will indirectly a.s.sist the trade unions by the steps taken to mitigate the evils which the war will leave in its train. The army instead of being immediately disbanded may be gradually dismissed over a period of, say, five years; the widows and dependants of soldiers and sailors, and those who have returned maimed and crippled from the war, may be adequately provided for, and, together with children of twelve and thirteen, kept off the labour market; the larger schemes of the Development Commission may be put into operation; the legal minimum wage may be extended to all low-paid trades. In these and other ways the community may deal comprehensively with the problems it has to face. The difficulties of the aftermath period will call for both clear-sighted action and public spirit; and if it is to be bridged over successfully, the transition from a war to a peace footing must be gradual; the community must continue its state of mobilisation in order to meet the enemy within the gates. Provided the united wisdom of the nation is thrown into the task, the evil after-effects of the war may be, if not altogether avoided, restricted within narrow limits. At the bottom, therefore, the future course of events depends upon the temper and spirit of the people at the close of the war.

3. _Social Effects and the New Outlook_.--The European conflict will probably exercise a strong sobering influence upon the minds of the people.

The gravity of the crisis, whatever victories may crown our arms, will be reflected in the gravity of the people. A new dignity, a greater self-respect, a deeper earnestness may arise among the ma.s.s of the people, to which the conduct of our soldiers in the field will contribute. High qualities of leadership win their admiration; but for them they claim no credit. The army is officered for the most part by people of a higher social standing, whose qualities they will willingly admit; but the social gulf debars them from gaining inspiration from their achievements. In the case of the rank and file, largely drawn from their own cla.s.s, the effect is different. The Tommy is flesh of their flesh and blood of their blood.

The qualities he displays reflect credit upon his cla.s.s. The working man is not unmindful of the high opinion in which the British private has been held by a line of continental soldiers from Napoleon to Bernhardi. The exploits of his fellows in the field have given the lie to stories of deterioration; and working people are experiencing a sense of pride in their cla.s.s which may have no inconsiderable effect on their att.i.tude regarding social developments in the future.

Already the national temper has not submitted without protest to the disgraceful sweating of our troops merely because their patriotism has led them to sacrifice their lives, which are beyond all money payment. But the feeling in favour of the war and the spirit of trust in the Government has, up to the present, overridden serious criticism. The result has been that the Government has often remained inactive when action was needed and has acted unwisely and ignorantly at times; for example, in the case of the Local Government Board circular, stating that the Army Council are prepared to issue allowances through the Soldiers' and Sailors' Families a.s.sociation or the Local Representation Committees. It has been said that "the whole system is an outrage on democratic principles. The State sweats its servants and then compels them to take the n.i.g.g.ardly wages it allows them from a charitable society[1]." This type of action may pa.s.s muster during a time of stress, but whether the spirit of the people will accept it after the war is over and there are the dependants of the slain to be maintained and the permanently crippled to be provided for is a different matter. Not merely justice, but the new pride of the people will rebel against it.

These are but phases of the larger social problem. There is the question of poverty in all its ramifications. For the moment, economic injustices and social evils have fallen into the back of people's minds, and the new and abnormal causes of dest.i.tution are calling forth special measures of a.s.sistance. After the war, the ever-present deep-seated poverty will rea.s.sert its presence, and in the hearts of many people the question will arise as to whether the community which courageously and whole-heartedly fought the enemy without the gates will turn with equal courage and determination when the time comes to fight the enemy within the gates. The experiences of the war time, the willingness to embark on great projects in face of a national crisis, will not be forgotten, but will inspire in social reformers the hope that the country may also face the internal national peril in a similar spirit. The national--as opposed to the individual--poverty which the war will cause may itself be a force making for good. As Mr. Lloyd George well said, "A great flood of luxury and of sloth which had submerged the land is receding and a new Britain is appearing. We can see for the first time the fundamental things that matter in life, and that have been obscured from our vision by the tropical growth of prosperity."[2] There seems a prospect of an era of social growth and regeneration following the war. In other European countries there may be equally important developments. It may well be that in the event of German defeat the democratic movements of that country will gain a great impetus from the blow given to the Prussian hegemony. In Russia there is an expectation of a new freedom. At the first meeting of the Duma after the opening of hostilities the Labour Party declared its opinion that "through the agony of the battlefield the brotherhood of the Russian people will be strengthened and a common desire created to free the land from its terrible internal troubles."

[Footnote 1: _The Nation,_ Sept. 19, 1914.]

[Footnote 2: Speech at the Queen's Hall, London, Sept. 19, 1914.]

It must be admitted, on the other hand, that there is a possibility of a period of reaction and torpor after the strain of the war; the country will be seriously impoverished, and there will be a heavy burden of taxation in spite of some probable relief from the burden of armaments. Still, social evils and injustices will be more obvious than ever. There will be many new national and imperial problems clamouring to be faced. The intellectual ferment which has had its source in the war will remain at work to widen the mental outlook and deepen the social consciousness. On the whole, it will probably be true to say that, though circ.u.mstances may postpone it, there will sooner or later arise a great movement pledged to cleanse our national life of those features which bar the way to human freedom and happiness.

It also seems undeniable that the deep interest taken by large numbers of people in the war will rouse them to a sense of the importance of problems of government and of foreign policy. The working men's committees on foreign affairs of half a century ago, which have left no trace behind them, may be revived in a new form, and the differentiation of economic and social questions from political and foreign problems may be obliterated.

The importance of the gradually widening area of vision among the more thoughtful section of the people can hardly be exaggerated. In no respect is the broadening of outlook more discernible than in the sphere of imperial affairs. Hitherto the Empire to the working man has been regarded as almost mythical. In so far as it did exist, it was conceived as a happy hunting ground for the capitalist exploiter. The spontaneous a.s.sistance given to the mother country by the colonies and dependencies has convinced him of the reality of the Empire, and vaguely inspired him with a vision of its possibilities as a federation of free commonwealths. In other words, the British Empire, contrasted with that of Germany, is gradually being recognised as standing for Democracy, however imperfect its achievements may be up to the present. Consequently, the return of peace will see a deeper interest in imperial questions; indeed, it is not too much to say that there will be an imperial renaissance, born of a new patriotism, "clad in glittering white." The change of heart which is taking place in the people of this country, through the opening of the flood-gates of feeling and thought by the unsuspecting warrior in shining armour, may bring a new age comparable in its influence on civilisation with the great epochs of the past. To-day is seed-time. But the harvest will not be gathered without sweat and toil. The times are pregnant with great possibilities, but their realisation depends upon the united wisdom of the people.

BOOKS

In order to understand the machinery of international trade, reference should be made to Hartiey Withers' _Money Changing_ (5s.), or Clare's _A.B.C. of the Foreign Exchanges_ (3s.); an outline of the subject will be found in any good general text-book on Economics. On the financial situation, see articles on "Lombard Street in War" and "The War and Financial Exhaustion" (_Round Table,_ September and December 1914); "War and the Financial System, August 1914," by J.M. Keynes (_Economic Journal_, September 1914); and articles in the _New Statesman_ on "Why a Moratorium?"

(August 15,1914), and "The Restoration of the Remittance Market" (August 29, 1914). Norman Angell's _The Great Illusion_ (2s. 6d.) should be consulted for an examination of the relations between war and trade.

The most accessible book dealing with the foreign trade of the European countries is the _Statesman's Year-Book_, published annually at 10s. 6d.

The chapters reprinted from the _Encyclopaedia Britannica_ are also useful.

A valuable article on "The Economic Relations of the British and German Empires," by E. Crammond, appeared in the _Journal of the Royal Statistical Society_, July 1914. The same writer published an article on "The Economic Aspects of the War" in _The Quarterly Review_ for October 1914 (6s.). A grasp of the economic development of Germany may be obtained from W.H.

Dawson's _Evolution of Modern Germany_ (5s.) and the same writer's _Industrial Germany_ (Nation's Library, 1s.). Mr. F.W. Taylor's _Scientific Management_ (5s.) and Miss J. Goldmark's _Fatigue and Efficiency_ (8s.) explain scientific management. A short account is also given in Layton's _Capital and Labour_ (Nation's Library, 1s.).

The course of unemployment in this country may be traced from the returns published each month in the _Board of Trade Labour Gazette_ (monthly, 1d.).

Proposals for dealing with possible and existing distress during the war are to be found in a pamphlet on _The War and the Workers,_ by Sidney Webb (Fabian Society, 1d.). For the possible use of trade unions as a channel for the distribution of public a.s.sistance, see an article in _The Nation_ for September 5, 1914, and Mr. G.D.H. Cole's article on "How to help the Cotton Operative" in _The Nation_ for November 7, 1914. The same paper published two suggestive articles on "Relief or Maintenance?" (September 19 and October 3). The situation which has arisen in the woollen and worsted industries owing to the large demand for cloth for the troops is dealt with in an article on "The Government and Khaki," by Arthur Greenwood in _The Nation_ for November 28, 1914. Reference may be made to the official White Paper on Distress; other official doc.u.ments of note are the following:

"Separation allowances to the Wives and Children of Seamen, Marines, and Reservists." Cd. 7619. 1914. 1/2d.

"Increased Rates of Separation Allowance for the Wives and Children of Soldiers." Cd. 7255. 1914. 1/2d.

"Return of Papers relating to the a.s.sistance rendered by the Treasury to Banks and Discount Houses since the Outbreak of War on August 4, 1914, and to the Questions of the Advisability of continuing or ending the Moratorium and of the Nature of the Banking Facilities now available." H.C. 457 of 1914. 1d.

"Report, dated April 30, 1914, of a Sub-Committee of the Committee of Imperial Defence on the Insurance of British Shipping in Time of War, to devise a scheme to ensure that, in case of war, British Steamships should not be generally laid up, and that Oversea Commerce should not be interrupted by reason of inability to cover war risks of Ships and Cargoes by Insurance, and which would also secure that the insurance rates should not be so high as to cause an excessive rise in prices." Cd. 7560.

1914. 2 1/2d.

The Government has issued a _Manual of Emergency Legislation_ (3s.

6d.) containing the statutes, proclamations, orders in council, rules, regulations, and notifications used in consequence of the war; the appendices contain other doc.u.ments (the Declarations of Paris and of London, the Hague Convention, etc.).

CHAPTER IX

GERMAN CULTURE AND THE BRITISH COMMONWEALTH

"Peace cannot become a law of human society, except by pa.s.sing through the struggle which will ground life and a.s.sociation on foundations of justice and liberty, on the wreck of every power which exists not for a principle but for a dynastic interest."--MAZZINI in 1867.

"The greatest triumph of our time, a triumph in a region loftier than that of electricity or steam, will be the enthronement of this idea of Public Right as the governing idea of European policy; as the common and precious inheritance of all lands, but superior to the pa.s.sing opinion of any. The foremost among the nations will be that one which, by its conduct, shall gradually engender in the minds of the others a fixed belief that it is just."--GLADSTONE.