I02 ECONOMICS OF THE WAR. 



product — Avhicli involves approximately 36 millions sterling 

 per annum — was arranged by the Bank of England, through 

 the British Government with the Union Government, so that the 

 Banks could advance the gold-mining companies here against 

 the delivery of their gold, and, in turn, the banks obtained from 

 the Bank of England in London the equivalent. Directly this 

 matter was arranged, South Africa could breathe freely, 

 because, had it been impossible to ship, and had the Bank of 

 England not devised this safeguard, the closing down of the 

 gold mines and the cessation of what, after all. is the chief 

 industry of this country would have followed. The Govern- 

 ment also arranged with the banks for the financing of the 

 wool industry, and many other smaller but important matters 

 were satisfactorily provided for in case of contingency arising. 

 Unfortunately, the diamond mines had to be closed down be- 

 cause their product, being an article of luxury, the demand 

 suddenly ceased, which entails a temporary loss to South 

 Africa of approximately 12 millions a year. The ostrich-feather 

 market in London was sui:)ended, but has since been partially 

 reopened. As against this temporary loss of turnover, the 

 Government's expenditure connected with the war in German 

 South-West Africa and the Rebellion has to be taken into con- 

 sideration. "This, however, is of only artificial assistance to 

 the countr}^, as taxation must be imposed to meet the costs of 

 the abnormal outlay, the cessation of which, moreover, must 

 naturally be felt by the commercial community in the Union. 



The large fabric of credit, which supports the commercial 

 Avorld, has stood the strain remarkably well, and the disastrous 

 forebodings of the pre-war prophets have not been realised. 



When the first blow of the declaration of war has passed, 

 and the initial financial crisis has been tided over, the economic 

 effects are n-^t intmediatelv felt. The Government regulation of 

 food-stuffs may be necessary; the abandonment of many luxuries 

 is forced upon the nation ; and there are many cases where manu- 

 factures have to be given up owing to the difficulty in obtaining 

 raw material. On the other side, however, there is the immense 

 demand for men for the army, the activity in the military and 

 naval factories, and also ni those centres engaged in supplying 

 the needs of an army. It is very probable that in the belligerent 

 countries trade is not feeling the eflfects of the war yet to any 

 great extent, because the huge expenditure necessary to keep the 

 large armies in the field and the manufacture of munitions keeps 

 labour more than fully employed, and, even if one trade is tem- 

 porarily closed, the relative labour can be transferred to the 

 making of munitions and so forth. In the meantime, the 

 various Government expenditures avoid any very great distress 

 Ijeing felt, and unless some of the belligerents find it difficult 

 to obtain food-stuffs on account of maritime blockade, it is quite 

 probable that trade in all the countries at war is, on paper, quite 

 good in the meantime. 



