nd 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.]

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 hold