ECONOMICS OF THE WAR. 



By E. C. Reynolds. 



The economical effects of a European war have been the 

 subject of discussion for many years. The interdependence of 

 the financial and commercial relations of the leading nations 

 has increased so rapidly within the past half-century that the 

 problem has become one of extreme complexity, and the old 

 days, when a nation was more or less self-contained, have long 

 since passed away. 



Unfortunately, the commercial rivalry and the land hiniger 

 of those nations having steadily increasing populations have 

 been backed by the establishment of immense armaments, and 

 the menace of these armaments has been particularly grave for 

 the last five or six years. It was hoped that the great economical 

 sacrifices that war involved, would prevent a general 

 coniiagration, and a school of thought, of which '\h\ Norman 

 Angell is the exponent, has shewn, and in my opinion con- 

 clusively shewn, that the economical advantages to be gained 

 by war are a myth. Prior to the war, the opinion was freely 

 expressed by prominent commercial and financial authorities 

 that, for economic reasons, a European war could not last 

 many months. The food supply, and also the supply of the 

 raw material necessary in connection with the highly complex 

 business of modern warfare, such as petrol, nickel, copper, and 

 many other items of this nature, would be exhausted in the 

 very early stages, and importations would be prohibitive. Fur- 

 ther, all importations would have to be paid for in gold or by 

 the realisation of foreign investments, and such a drain could 

 not be met for any extended period. A very severe and 

 disastrous financial crisis in London and the foreign capitals 

 was anticipated, — the extent of which could not be foreseen, 

 but at which the financial world shuddered. These forecasts 

 are of no particular value now, but are interesting as indicating 

 how exceedingly difficult it is to follow out the ramifications 

 of modern finance and commerce, and the effects of a general 

 disturbance such as we are now passing through. I am. of 

 course, dealing with the material side of the question, leaving out 

 the pain, anguish, and sorrow caused by war under the most 

 humane conditions. 



Before war actually broke out, the financial barometer 

 plainly shewed that storms were ahead. Prior to the declara- 

 tion of war by Austria and Germany against Servia, Russia, 

 and France, a depression had come over the various bourses of 

 the world which, to those not behind the scenes, could not be 

 explained. We now know that Germany, particularly, was 

 selling a large portion of her foreign securities through the 

 agencies of the German Banks, and, further, the German and 

 Austrian Banks, having foreign agencies — particularly in 



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