The War and Democracy Part 18

Between them they own over half the merchant shipping of the world. A war in which they are both engaged, therefore, must have serious consequences not only to these countries themselves but to the countries with whom they carry on business relations, and through them, in a lesser degree, to all other commercial countries. But this is not all: France has a foreign trade amounting to 615,000,000 a year; Belgium's is valued at 326,000,000, Russia's at 275,000,000, and Austria-Hungary's at 256,000,000. Besides a gigantic foreign trade there is a domestic trade, which is on a larger scale than the external trade of these countries. Let us consider in more detail the case of Germany. Half her foreign trade is transacted with the nations now engaged in the great war. The trade of Britain, Russia, and France with the German Empire is now at a standstill, except possibly for a very small amount transacted via neutral countries; her trade with Austria-Hungary must seriously decline. Moreover, her imports from neutral countries and her exports to them have dwindled very considerably, and must remain small as long as British naval supremacy continues. More than one half of Germany's total imports are raw materials for manufactures, about two-thirds of her exports being manufactured goods. a.s.suming that she continues o conduct foreign trade through Norway and Sweden, Denmark, Holland, Switzerland, and Austria-Hungary, the volume will be small, and even if her whole trade with neutral countries could be maintained she would still be without the trade of her enemies. For example, in 1913 this country sold goods to the value of 40,000,000 to Germany and purchased from her goods to the value of 80,000,000.[1]

[Footnote 1: The following list indicates some of the chief articles of trade between the two countries:

German Imports into the United | British Exports to Germany, 1912 Kingdom, 1912. | | million. | million.

Sugar 62 | Cottons and yarn 83 Cottons and yarn 59 | Woollens and yarn 66 Iron and steel and | Coal, c.o.ke, etc. 44 manufactures 57 | Herrings 24 Woollens and yarn 26 | Ironwork 21 Machinery 24 | Machinery 21 Gla.s.s and Manufactures 11 |

It is not true, as Dr. R.G. Usher says, that Germany is "literally self-sufficing" (_Pan Germanism_, p. 65).]

In Great Britain, economic activity has been developed on the a.s.sumption of continued peace. In Germany, however, though there were those who would "base all economic policy on an imaginary permanent peace,"[1] the Government has had in view the possibility of war. "Every conscientious Government," writes von Bulow, "seeks to avoid [war] so long as the honour and vital interests of the nation permit of so doing. But every State department should be organised as if war were going to break out tomorrow.

This applies to economic policy as well."[2] It is with this idea in mind that the German Government has striven to maintain the importance of agriculture. "Economic policy must foster peaceful development; but it must keep in view the possibility of war, and, for this reason above all, must be agrarian in the best sense of the word."[3] It is held that in the event of war the home market in Germany would be an important factor in maintaining intact the fabric of industry. "The home market," we are told, "is ... of very great importance. It would be called upon to replace the foreign market if in time of war our national frontiers should be wholly or partly closed. But in the home market agriculture is by far the most important customer of industry; only if agriculture is able to buy, if it earns enough itself to enable others to earn too, will it be able, in critical times, to consume a part of the products which cannot be disposed of abroad. The old proverb, "If the peasant has money then every one else has too," is literally true, as soon as industry is forced, to a greater extent than is necessary in times of peace, to find its customers at home."[4] "As in time of war industry is dependent on the buying power of agriculture, the productive power of agriculture is a vital question for the nation."[5]

[Footnote 1: _Imperial Germany_, by Prince Bernhard von Bulow, p. 221.]

[Footnote 2: _Ibid._ p. 220. See also Bernhardi, _Germany and the Next War_, pp. 157-159 and 260 _et seq._]

[Footnote 3: _Imperial Germany_, pp. 220-221.]

[Footnote 4: _Imperial Germany_, p. 219.]

[Footnote 5: _Ibid_. p. 221.]

The importance of agriculture in Germany is undoubtedly great; it may be, as Bulow says, that "the value of its produce is equal to that of the produce of industry, or even surpa.s.ses it."[1] But if the demand for it were to shrink because the industrial population lost their work through a shortage of raw materials or in any other way, agriculture would also suffer. The population at present engaged in agriculture will in times of peace buy up to the practical limits of its purchasing power, and is hardly likely, especially in the early stages of a war, to "consume a part of the products which cannot be disposed of abroad," except in so far as they buy German goods (the production of which the declaration of the war may have seriously impeded), instead of commodities produced abroad. But it is questionable whether they will be able to maintain their aggregate purchasing power. Prince Bulow ignores the fact that production for the home market will be hampered by the possible non-arrival of foreign raw materials in war time; yet Germany imported raw cotton to the value of over 29,000,000 in 1913. Her foreign purchases of hides and skins amounted to over 22,500,000 and of wool to 10,000,000. With even a partial suspension of imports of these and similar commodities, industries dependent on foreign products must be severely hit; unemployment must increase and the purchasing power of the urban workers diminish. The agricultural community must suffer also, and in all likelihood will not be able to take their normal share of goods off the market. It is true, of course, that Germany buys large quant.i.ties of food-stuffs from abroad, and that home produce will be required to take their place; but they cannot be grown immediately; in the interval, industrial disorganisation must result, and before agriculture can begin to profit by the lack of foreign supplies the harm will have been done. Moreover, agriculture must be impeded, as, owing to the size of the German Empire, the transport of troops must seriously interfere with the conveyance of goods to the larger centres of population.

It would seem, therefore, that the policy of developing German agriculture at the same time that her dependence on foreign commerce is increasing is not an effective reply to the British Navy. The position in Germany then is that she must for the present be satisfied with a much smaller amount of imported food-stuffs and of the raw materials of industry; and that in any case, even if the industrial machine could be kept at work, there will be practically no outlet for goods abroad. Commercially isolated, she must, therefore, suffer an industrial and commercial collapse. On the other hand, the total volume of unemployment, which would have been enormous during the first weeks of the war, has of course been considerably reduced by the withdrawal of great ma.s.ses of men to join the colours, and by the stimulus which the war has given to industries supplying the needs of the German armies. Then also Rotterdam, through which Germany does a great deal of its trade, remains open, whilst a fraction of her foreign trade is being carried on through Denmark, Scandinavia, and Switzerland. Nevertheless, the amount of economic distress within a very few weeks after the outbreak of war, especially in the large towns, was considerable even on the showing of German newspapers.[2] The amount of distress was increased and intensified by steadily rising prices. As the rise has taken place not only in commodities of which there is a shortage, but in others such as sugar, it may be concluded that it is due largely to the inflation of the currency, owing to the adoption of the fatally easy expedient of issuing large ma.s.ses of paper money.

[Footnote 1: _Ibid_. p. 217.]

[Footnote 2: "Let us imagine," says Bernhardi, "the endless misery which a protracted stoppage or definite destruction of our oversea trade would bring upon the whole nation, and in particular on the ma.s.ses of the industrial cla.s.ses who live on our export trade" _(Germany and the Next War,_ p. 232).

According to _The Times_ (Sept. 18, 1914) the German nautical newspaper _Hansa_ on Sept. 12 admitted that England had captured many millions of marks worth of German shipping, and that "the cessation of business will cost our shipowners many millions more." "It will hold up the development of our shipping trade for years." The _Neue Freie Presse_ of Vienna on Sept. 11 admitted that the activity of the exporters in Germany had been crippled. According to _The Times_ (Oct. 7), the German Socialist paper _Vorwaerts_, stated that "the state of want has reached an alarming extent, even though we are now only at the beginning of the catastrophe which has befallen the people of Europe." "Ma.s.ses of unemployment grow every month."]

Austria-Hungary, which is not an advanced industrial country, will not suffer quite so keenly, though even here the German newspapers admit that trade has come almost to a standstill.[1] In the western theatre of war the fighting has centred largely round the Franco-Belgian Coalfield, on or near which stand on both sides of the frontier many industrial towns. Lille, Nancy, Epinal, Belfort, Reims, Amiens, and Valenciennes on one side, and Liege and Charleroi on the other, are all of economic importance. Even apart from the actual destruction due to the war which in some of these towns has been serious, the mere presence of the contending armies will have a more or less paralysing effect on industrial and commercial life in both France and Belgium.[2] The position in Belgium, however, is much more serious than in France. It may best be described in the words of Professor Sarolea, written after a visit of five weeks to his native country. "Other belligerent nations may suffer from unemployment. In Belgium alone there has been created a whole nation of unemployed. In other countries trade and industry are dislocated. In Belgium they have come to a complete standstill. Out of a population of eight millions, seven millions are under the heel of the invader. Railwaymen are starving, for railways have ceased to work. Office clerks are starving, for banks and offices are closed.

Public officials are starving, for no salaries can be paid.... Journalists and printers are starving, for newspapers and books have ceased to appear.

Mill hands and coal miners and ironworkers are starving, for mills and coal mines and iron works are closed."[3] Bad as this is, the condition of affairs is somewhat relieved so far as France and Belgium are concerned by the fact that the seas are open to them, but even then we must add these areas to Germany and Austria-Hungary as regions where industry and trade are at the best severely hampered, regions all of which are important factors in the markets of Europe, and whose commercial paralysis will re-echo through the whole commercial world.

[Footnote 1: "The shortage of raw materials, notably cotton, wool, jute, and petroleum, is greatly restricting production in many branches of manufacture in Austria-Hungary. According to official estimates, the supplies of some of the most necessary raw products are barely sufficient for two more months. Factories are closing down, and the number of unemployed is steadily increasing" (Reuter's telegram from Venice, Oct. 21, 1914).]

[Footnote 2: For example, the probable number of French factories in a position to produce sugar in 1914-15, will be 82 or 83 as against 206 during the year 1913-14 _(Times_, Nov. 3, 1914).]

[Footnote 3: Letter to the Press dated Sept. 12, 1914. Mr. J.H. Whitehouse, M.P., who visited Belgium says, "The whole life of the nation has been arrested."]

The most fortunately situated combatants in Europe are Russia and Great Britain. The former, covering half the area of Europe, has almost limitless resources, and is much more easily capable of being self-supporting than any of the other Great Powers engaged in the war. This country still has the seas open to it.[1] The State subsidy to marine insurance has encouraged overseas trade, and the re-establishment of the remittance market has removed an obstacle to the flow of exports and imports. Still, it is true that the financial world cannot recover all at once. "It is like a man whose nervous system has been shattered by a great shock. Tonics and stimulants may save him from complete collapse, but real recovery is a matter of months and even years."[2] Further, the work hitherto done and the services performed for Germany and Austria are now no longer called for; our allies in the west of Europe are suffering acutely from the immediate economic effects of the war and the large destruction of capital; our neutral customers have not escaped scot-free. It would seem, therefore, that in spite of the British command of the seas, production must necessarily be seriously curtailed and that, therefore, the volume of unemployment must be very considerable. On the other hand, though production in France, Belgium and Russia may diminish in many directions, what goods they do produce for export will find no market in Germany and Austria-Hungary and a proportion of them will find their way to this country. Such commodities will not only be valuable as food and raw material for industry, but will set up a flow of British goods in payment for them. Further, the production of commodities needed for the prosecution of the war, will increase the volume of employment. Goods of all kinds are required not only for the British armies but for the Allies generally. The manner and extent to which these factors have influenced unemployment will be considered presently.

[Footnote 1: According to an Admiralty statement, corrected up to Sept. 23, 1914, 12 British ships had been sunk by German cruisers, 8 had been sunk by mines, whilst a few fishing boats had been destroyed. British ships detained and captured by Germany numbered 86, with a total tonnage of 229,000. On the other hand, 387 German vessels had been detained or captured, the total tonnage being 1,140,000. According to _The Times_ (Oct.

9, 1914), up to date 1.6 per cent of the tonnage registered in the United Kingdom had been lost. The figures for Germany and Austria were 18 and 13 per cent respectively. The Committee which prepared the State War Insurance Scheme estimated that the loss during the first six months of the war might be about 10 per cent of all British steamers employed in foreign trade.]

[Footnote 2: _Round Table_, Sept. 1914, p. 704.]

Now the demand for the goods. .h.i.therto supplied by Germany to her foreign customers, though abated, will still continue. As we have seen, she cannot for the present supply them. By whom will she be superseded?[1] The Government of this country early in the war took steps to co-operate with British traders in an attempt to obtain some share of this trade, and the United States also strove to make the fullest use of the opportunity. In this country goods previously imported from Germany will, if still needed, either be bought from the next cheapest importer or produced at home.

Commodities which we have in the past produced for German consumption are not now required from us. If they continue to be made, it must be for other countries. In other words, whether the volume of British foreign trade remains the same or not, a proportion of it will be diverted into new channels during the progress 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 60,000,000 against her: 30,000,000 being the excess of her trade imports over her trade exports and the remaining 30,000,000 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 subst.i.tution 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.]

2. _Unemployment and Short Time_.--We are now able to understand how the war has affected the individual workman. As we have seen, the panic caused by the outbreak of war and the collapse of the remittance market meant in many industries the holding up of production and the stoppage of the workman's wages. If it had not been possible to restart the machinery of exchange, starvation would have walked through the land, and the industries dependent on foreign raw material would have closed down altogether. As it was, the inevitable dislocation increased the amount of unemployment.[1]

Whereas the trade union percentage[2] of unemployment amongst their members was only 2.8 at the end of July, it had reached 7.1 by the end of August.

This figure, however, is considerably below the percentage of unemployed during many periods of trade depression; the average for the whole of 1908 was 7.8 and for 1909, 7.7, whilst during the month of March 1912 it rose to 11.3 as a result of the coal strike.

[Footnote 1: Note that unemployment prior to the war was showing a tendency to increase.]

[Footnote 2: It should be observed that these figures relate only to about a million trade unionists, no non-unionists being included. Further, they ignore short time.]

The volume of unemployment during August varied considerably from trade to trade. In the cotton industry, which, however, appeared to be in for a bad time anyhow, 17.7 per cent of the trade union members were returned as unemployed during August 1914, whilst in coal mining the percentage was 1.3. As compared with the previous month of July, there was a general decline in all industries except shipbuilding, which benefited by increased activity on Government work. The contraction in the volume of employment was specially marked in the case of tin-plate works and in the textile, furnishing and woodworking, and pottery trades. Again, in the trades where the Government scheme of compulsory unemployment insurance applies, the volume of unemployment at the end of July was 3.6 per cent, but at the end of August it had reached 6.2 per cent or double the volume recorded in August 1913.[1] Beyond this, there was during the month of August, an enormous amount of short time; in several industries for which particulars are available, thousands of workpeople were working half-time or less.[2]

The rise which took place in the price of certain food-stuffs especially during the first part of August intensified the evil by reducing "real"

wages.

[Footnote 1: The gradual increase during the month may be observed from the weekly returns:--Aug. 7, 4.0 per cent; Aug. 14, 5.1 per cent; Aug. 21, 5.8 per cent; Aug. 28, 6.2 per cent.]

[Footnote 2: The Board of Trade receives monthly reports from employers and others in different industries. These returns, though they do not cover the whole of the industries, are sufficiently reliable to indicate the widespread character of short time. During August 1914, in slate quarries and china clay works, "there was a good deal of short time and some unemployment in consequence of the war"; in tin-plate and sheet-steel works, "short time was very general. In some cases discharges were obviated by the sharing of work at the mills remaining open. The decrease in employment is to be attributed to the effects of the war, and in particular to the general restriction of the European market"; some branches of the engineering trade, particularly agricultural and textile machinery, and the motor car and cycle trades, were "disorganised by the war; many discharges took place and a large amount of short time was worked." In the miscellaneous metal trades, except in the manufacture of articles required for military and naval purposes, "much short time was reported." In the cotton industry, "the trade as a whole was working less than three days a week, and large numbers of workpeople were entirely unemployed." In the woollen trade, "about 60 per cent of the workpeople covered by the returns received were on short time, including over 20 per cent who were working half-time or less." The returns showed a decrease of "21.5 per cent in the amount of wages paid compared with a month ago." In the worsted industry, "about 65 per cent of the workpeople covered by the returns were working short time during the month, including over 30 per cent who were working only half time or less." The returns showed a decrease "of 26.5 per cent in the amount of wages paid compared with a month ago." In the linen trade "short time was reported generally." In the hosiery industry, "short time was reported by firms employing over 40 per cent of the operatives covered by the returns." In the silk trade "a great deal of short time was worked in all the districts." In the levers and curtains branches of the lace industry "the majority of the operatives ... were only working half time, and large numbers were altogether unemployed." In the carpet trade "short time was general, most districts working only half the usual hours." In the furnishing trades "short time was worked in almost every district." "Short time was very generally reported" in printing. In the gla.s.s trades "short time was reported in several districts." In the potteries "most of the firms" were running short time (see the _Board of Trade Labour Gazette_, Sept. 1914).]

During the month of September, however, employment revived.[1] Besides Government work in shipbuilding yards, certain branches of the woollen industry were working at full pressure on the production of blankets and cloth for uniforms; the leather and boot and shoe industries on some sides received an impetus from the large orders placed for army boots; hosiery and knitted goods were required in large quant.i.ties. Speaking generally, industries whose products were required for the army and navy were strained to the extent of their resources. But each industry supplies a large variety of goods of many different grades, and machinery and works equipment cannot always be easily converted to the production of other cla.s.ses of commodities; so that even in the woollen and boot trades, for example, the whole industries were not uniformly busy. The many industries, however, to which the war brought no orders, enjoyed but a slight recovery, and in some cases none at all. As the month of September proceeded, the newspapers triumphantly referred to the fall in the percentage of unemployment. The truth is that the decline was by no means general or uniform, but was brought about, not so much by the gradual revival of normal activity, but by the rush of Government orders. For instance, the cotton industry remained in the trough of a deep depression, and the furniture and piano making trades profited little. Further, no account was taken of the prevalence of short time, though over a large field it was widespread especially amongst women. What the real position of the labour market was after we had been at war two months, cannot be precisely determined, but it was certainly more serious than the Board of Trade percentage would seem to indicate.[2]

[Footnote 1: The percentage of unemployment at the beginning of October in the trades compulsorily insured against unemployment was 5.1, as compared with 6.3 at the beginning of the previous month.]

[Footnote 2: "Certain confidential statistical enquiries on a large scale are said to support the inference to be drawn from the figures published by the Board of Trade, that at least 10 per cent of the fifteen million wage-earners in the United Kingdom are not at work at all, whilst quite as large a proportion are on short time. But out of more than a million men whose services the employers have thus temporarily dispensed with, some nine hundred thousand are being clothed, or are going to be clothed, in khaki, and given Government pay. Thus the actual unemployment among men is, except in (certain) black patches, only sporadic and scarcely more than we are accustomed to. Very different is the situation of the women wage-earners. Of these apparently half a million are now unemployed, and twice as many are working only short time. Though the industrial situation is considerably better than would have been predicted for the end of the second month of a world war, it was, in fact, worse than it has been at any time during the past quarter of a century" _(New Statesman,_ Oct. 3, 1914).]

The month of October saw a further recovery and a more normal state of affairs. The percentage of unemployment in insured trades continued to decline;[1] but whilst the number of men on the Labour Exchange registers fell (from 28,664 on October 2 to 24,690 on October 30), the number of women registered remained almost stationary. At the end of three months from the beginning of the war the condition of men's employment was about normal; but women were suffering from excessive unemployment, whilst short time was still common in many industries in which women are largely employed.

[Footnote 1: The percentages are as follows: Oct. 2, 5.11; Oct. 9, 4.80; Oct. 16, 4.46; Oct. 23, 4.29; Oct. 30, 4.16.]

The large volume of unemployment, which it had been antic.i.p.ated would accompany a great war, was avoided, partly because of prompt State action in maintaining the fabric of commerce and finance, and therefore the supply of raw materials, and partly because of the large demand for commodities for the Army and Navy--a war demand vastly in excess of that in any previous war. In other words, State intervention and the Navy have placed Great Britain in a much superior economic position to that of her adversaries.

3. _Trade Unions, Co-operative Societies and Distress_.--Before the outbreak of the war there were signs that the wave of industrial activity which reached a high point in 1913 was receding, and that unemployment was beginning to increase; but the trade unions did not antic.i.p.ate that the ordinary ebb and flow of trade was to be disturbed by a great war. Within a very short time after the declaration of war, the trade unions experienced a heavy drain on their funds in respect of unemployment benefit. It is, of course, obvious that the acc.u.mulated funds of trade unions were never intended as a subsidy to the community during a time of war, which is what, in point of fact, they became. It is true that the unions made efforts to conserve their resources in various ways, not least by advising their younger members without dependants to join the army; it is true also that most of them profited under Section 106 of the National Insurance Act by the State refund of one-sixth of their payments to their unemployed members; but these measures--and others--were inadequate to maintain the unions in a sound financial condition, and many unions trembled on the verge of bankruptcy.[1] Such a condition of affairs was viewed with apprehension not only by the trade union movement, but by the State, with the result that at the beginning of October the Government subsidy of one-sixth was under certain conditions increased.[2] But even with this a.s.sistance, many unions will undoubtedly experience considerable difficulty in avoiding financial disaster. Speaking generally, the trade union movement as a whole will emerge from the war in straitened circ.u.mstances.

Some unions may have collapsed, and amongst others the movement in favour of amalgamation may have received an impetus owing to financial embarra.s.sments.

[Footnote 1: Speaking generally, it cannot be said that the trade unions faced the crisis with either wisdom or courage. Their att.i.tude, on the whole, was one of utter bewilderment. The lack of the power of adaptability to new circ.u.mstances, together with the fact that sufficient pressure was not brought to bear upon the Government in the first weeks of the war, accounts for the unfortunate position in which the trade unions found themselves.]

[Footnote 2: The scheme applies only to unions suffering from abnormal unemployment. There are also conditions that they "should not pay unemployment benefit above a maximum rate of 17s. per week, including any sum paid by way of State unemployment benefit," and that they "should agree while in receipt of the emergency grant to impose levies over and above the ordinary contributions upon those members who remain fully employed."

The amount of the emergency grant in addition to the refund of one-sixth already payable will be either one-third or one-sixth of the expenditure on out-of-work pay, depending on the amount of the trade union levy. Under special conditions the grant is to be retrospective. It is, therefore, possible for trade unions to be subsidised so far as unemployment benefit is concerned, to the extent of one-half their payments. But this scheme does nothing to a.s.sist trade unions (of which there are many) which get no unemployment benefit.]

The decrease in earnings accompanying short time, and their total stoppage in the case of unemployment, mean amongst the workers a restriction of purchasing power. The shrinkage in the total wages bill, especially in Lancashire, must lead to a diminution in the income of small traders and the co-operative societies. Where trade is very bad the societies will be severely hit; smaller purchases will mean smaller profits, which, where there is no large reserve to fall back upon, will in turn mean the declaration of a smaller dividend. The "divi" received by the workers will be less, and the purchases which the thrifty housewife of the north usually makes with it in the way of clothing and replacement of household articles will be less also; where the "divi" has been left in the society, it will in a large number of cases be used to supplement the scanty wages earned on short time, or to provide the necessaries of life where the breadwinner is altogether unemployed. In places where times become very bad, the co-operative societies during the war, and for some time after, will suffer because of the conversion of the cash orders which ordinarily go to the "co-op" into credit orders at the shop round the corner. On the whole, however, the co-operative societies will probably come better out of the war than many cla.s.ses of small shop-keepers. The small tailors, drapers, earthenware dealers, etc., and others who sell all but indispensable commodities, will see a shrinkage in their sales, especially if prices rise. The co-operative societies will also lose in this respect, but they will lose less on the whole, owing to the fact that a good deal of their capital is used in the sale of food-stuffs, the consumption of which will be restricted last. But admitting this, they cannot expect to escape unscathed, and the blow they suffer will be felt on other sides of their activity, such as their educational work, the income for which usually fluctuates with the prosperity of the societies.

The diminution of the purchasing power of the working people because of the restriction of the national wages bill, however, may be minimised by common action. The National Relief Fund and the Women's Employment Fund are intended really for this purpose. The establishment of women's training workshops and of maintenance grants on condition of attendance at schools and cla.s.ses are steps in the same direction. The Government has increased the disgracefully low payments made to dependants of soldiers on active service, and its scale of pensions for widows of soldiers and sailors and for those totally or partially disabled in the performance of military or naval duties. Arrangements have been made for the payment of allowances of half wages up to a maximum of 1 a week to dependants of sailors employed on insured British merchant ships captured or detained by the enemy. More important from the point of view of industry as a whole are the steps which have been taken to minimise the effects of a diminution in the volume of employment by the development of new openings. The Government through the Board of Trade took the lead in the attempt to secure a share of the trade hitherto done by Germany and Austria. Special efforts were made to develop the manufacture of toys, and other industrial experiments were begun by the Central Committee on Women's Employment. The Government appointed a Chemical Products Supply Committee with a view to stimulating the production of dyes and drugs at home. These proposals are in the main an attempt to divert the trade of foreign countries, especially Germany, into British channels. The second line of action is fuller provision of home needs which cannot be satisfied by foreign producers, but are essentially domestic. Such needs are housing, public parks, roads, etc. Between August 4 and September 21, 1914, the Local Government Board received over 600 applications from local authorities for powers to borrow money amounting in all to over 2,500,000. About a fifth of this amount it was intended to expend on housing. During this period the Board sanctioned loans amounting in the aggregate to more than 3,500,000, as compared with rather under 2,000,000 in the same period in 1913. The Road Board arranged to put in hand the construction of certain new highways arranged for before the beginning of the war. In addition, in the first seven weeks of the war, the Board arranged to make grants amounting to about 450,000 in aid of new road construction and road improvements in many different parts of the country, which will involve a total expenditure of about a million sterling. The Development Commission began to consider schemes for the construction of light railways, for the improvement of the navigation of rivers, etc., in order that work of this kind should be ready to be put into operation when the necessity arose. The Board of Agriculture has urged that where practicable the acreage under wheat should be increased. This suggestion is, of course, valuable, but will not greatly affect the industrial situation. Even if the schemes sanctioned by the Local Government Board and those adopted by the Road Board were put into operation immediately, which is almost impossible, they would not make a very appreciable difference to the total wages bill of the country. But perhaps it is thought by the Government that the state of employment is not sufficiently grave to warrant a greater expenditure at the present time. In spite of the insistence on forestalling dest.i.tution, there is still among local authorities much confusion of charity and relief work with antic.i.p.ation of future needs calling for employment through the ordinary channels of trade. On the whole the Government has not met the domestic problems of the war with the unanimity and boldness which has characterised its actions in the actual prosecution of the war and in dealing with the financial crisis.

4. _The New Spirit._--The broader social effects which showed themselves in the early days of the war are ill.u.s.trated by the remarkable growth of State Socialism. The nation became a community, united in a single purpose; breaches which many imagined to be permanent, cleavages which were thought to be fundamental, no longer existed. None was for a party; all were for the State. The three political parties formed a Parliamentary Recruiting Committee, and altogether impossible teams of people appeared on public platforms with a common aim; Mr. Ben Tillett, in words that might have fallen from the lips of a Tory ex-Cabinet minister, declared that "every resource at our command must be utilised for the purpose of preserving our country and nation"; the anti-militarist trade union movement earnestly appealed to those of its members who were ex-non-commissioned officers to re-enlist; the Queen and Miss Mary MacArthur were members of the same committee. This unanimity, which has pushed into the background for the present causes of difference, has led the vast majority of people to submit cheerfully to the will of the State. The unity of to-day must necessarily make its influence felt even when the reason of its existence has pa.s.sed away. In the meantime it is a.s.sisting in the growth of a new spirit which the war itself has fostered. The social outlook of the people and their att.i.tude towards the larger problems of life is changing, and patriotism has taken a deeper meaning.