olours, 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 assume 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 L100 per year, the
loss of production per year during the continuance of the war would be
about L1,200,000,000. 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