imports from India in 1913 were 2.8 per cent of the total value and in 1918 7.0 per cent. The imports from Japan in the same two years rose from 0.3 per cent to 5.5 per cent. Imports from the United States rose from 9.4 per cent to 13.8 per cent. Imports from the Argentine rose from 0.4 per cent to 1.3 per cent. But the imports from Germany, which in 1913 were 8.5 per cent of the total, and from France which were 1.5 per cent, were eliminated in 1918.

The exports illustrate the change in trade currents to an even greater degree. The exports to the United Kingdom were 91.1 per cent in 1913 and only 51.5 per cent in 1918. On the other hand, the exports to Japan rose from nothing in 1913 to 8.5 per cent of the total in 1918. The exports to the United States were 0.8 per cent in 1913 and 19.7 per cent in 1918.

As in the case of the other countries, the shortage of shipping eliminated the long voyage and stimulated trade with neighboring countries. The European belligerents were the international jobbers, and when they ceased to function as such, direct trade was established between countries that had utilized the jobbers' services.

CHAPTER IX

CONCLUSION

The supply of food and of raw materials is scattered all over the world. No country has the varieties of climate that yield all the food that its population requires, the geological formations that furnish all the raw materials that it uses in manufactures, or the types of mind and the craft traditions that produce all the finished goods it consumes. This is the basis of international trade. Man is a particularist in production and a universalist in consumption. He trades what he produces for what he consumes.

Before the war trade was largely unrestricted except for customs tariffs, and tariff wars were costly to the participants and therefore short-lived. Germany enjoyed the commercial freedom of the seas. For instance, her trade with British India was growing more rapidly than that of Great Britain, and in some commodities Germany controlled over 90 per cent of the trade of India.

The effects of the war were partly temporary and partly permanent. The trade of Germany and Russia in Europe was reduced. Normal industrial life in belligerent Europe was replaced by the production of materials of war. Therefore belligerent Europe imported more and exported less than before the war. The excess of imports was financed by credits. The neutral world and the inactive Allies increased their exports and decreased their imports, and in many cases an excess of imports was changed to an excess of exports. Governments restricted trade with the enemy. Traffic in luxuries was reduced. The heavy flow of trade to Europe created a shortage in tonnage, which was aggravated by submarine warfare. These changes were all tem

porary. Trade returns will in the main probably show a tendency toward a reversion to pre-war conditions.

On the other hand some changes seem to be permanent. For four years the countries dependent upon Europe have been compelled to seek new sources of manufactured goods and new outlets for their raw materials, or else to establish some local industries to satisfy their needs. Industry, hitherto concentrated chiefly in Europe, has been temporarily disrupted and to some degree permanently decentralized. The transshipment of goods from the Orient to America or from South America to North America by way of Europe has been partly replaced by direct trade. The international jobbing business has been reduced and in some lines eliminated. Countries were compelled to become self-sufficient during the war. The old creditor nations, clustered in Europe, have become borrowers of widely scattered countries, the United States, Japan, and Argentina, hitherto their debtors. The world has hastened upon a stage of economic development which it might have taken generations to attain. The predominance of Europe in trade has declined, and new commercial spheres have become defined in America and in the Far East, centering about the United States and Japan.

As our manufacturing is no longer centralized in New England, but is being distributed throughout the country, so internationally the industries of the world are becoming decentralized. As our domestic jobber is being eliminated because the manufacturer is trading directly with his customers, so internationally the jobber is no longer in all cases the most economical distributor of goods. The increase of facilities for communication and transportation is slowly eliminating the service of the middleman, internationally as well as nationally. As the Federal Reserve System replaced the concentration of financial power in New York, so the dominance of London seems to have been replaced by a wider distribution of financial resources. Federalism has tended to replace centralization, in industry, in trade, and in finance.1

This view is referred to by Walther Rathenau, head of the Allgemeine Electricitäts Gesellschaft of Germany, in his appeal for European unity against the too rapid disintegration of its economic prestige due to the rise of America and the Far East in industry and commerce.

The relation of nationalism and internationalism in the economic world has been vitally affected. The war has emphasized the essential unity of the economic interests of all the nations and has proved the costliness of extreme nationalistic policies. The threats of boycotts and of restrictions of trade have failed in practice. The predictions of economic war have proved idle and the resolutions to discriminate against enemy powers have already been largely abandoned. British merchants are eager to sell to Germany, and because of the exchange situation, French and Italian traders prefer to buy in Germany. Commercial policy, to be sound, must be determined not by political affiliations, but by economic considerations. Harriet Martineau, writing of the period after the Napoleonic Wars, said, "Europe gained everything when it gained thirty years of peace." The waste of the World War will be made good more quickly if an economic peace is established. On a liberal policy depends the restoration of Europe and the further progress of the world.

Before the war, economic interests crossed national boundaries. Labor was organized in international unions. Business was transacted increasingly by international trusts and corporations. Chambers of commerce were associated internationally. Governments were coöperating in various institutions, as the Scandinavian and the Latin Monetary Unions, the Postal Union, the Metric Union, the Radio-Telegraphic Union, etc. This mode of association, however, was largely fragmentary and not part of a whole plan.

During the war coöperation between the Allies became essential to victory. The Commission Internationale de Ravitailement, the Allied Maritime Transport Council, and finally the Supreme Economic Council were created to carry out the common will of the belligerents.

The League of Nations is merely the conscious projection of a movement, whose origins lay in international commercial intercourse and whose progress has been accelerated by the war.

An association of free peoples implies a fairly uniform degree of economic development. The political internationalism of Rome was based on centralized force. Political imperialism has,

with a few important exceptions, been replaced by our modern political system of independent governments, based on the principle of self-determination. These have become federated in international unions, having specific functions.

The commercial régime of the eighteenth and nineteenth centuries was based on the dominance of one or two of the great powers of Europe. The process of economic decentralization, of the emancipation of the young agricultural countries from the control of the old industrialized countries, grew under the protective tariff system. Alexander Hamilton in his "Report on Manufactures" and Friedrich List in his "National System of Political Economy" foreshadowed the methods of the industrial development of the United States.

Normally agricultural countries and raw-material producing regions develop eventually into centers of industry and trade. The war has hastened the growth of industrial self-sufficiency, the decentralization of trade, and the lessened dependence upon Europe of the rest of the world. The war has hastened the disintegration, not only of political imperialism, but of commercial imperialism as well. Decentralization is the prerequisite of federalism. In a more than superficial sense the war has prepared the world for an inevitable League of Nations. A degree of development, more uniform at the present time than at any other time in history, makes possible its formation. As the backward countries of the world become more industrialized, as the density of their populations tends to increase by migration, the economic dominance of Europe will probably decline still further but the interdependence of the nations of the world will increase. The process of economic decentralization will prepare for a truer political federalism. Nations, commercially interdependent and politically independent alone can constitute a League of Nations.