of comparative costs is still to be determined, yet if a continuation of wars is to be provided for and if nitrate must be produced as a war necessity, the governments may charge the high cost of domestic nitrates to the budget for national defense. At all events, there has undoubtedly been a permanent change in the currents of nitrate trade of the world.

(d) International Economic Coöperation

But if the war has increased the decentralization of industry and resulted in greater national economic independence, it has on the other hand afforded unique examples of the benefits of international coöperation. Indeed, it has demonstrated that in the great crisis joint economic action was indispensable.

To eliminate the disadvantages of bidding against each other, the Allies organized in 1914 the Commission Internationale de Ravitaillement. To fight a world war which drew upon the world's resources, it was necessary to have an international organization. The Commission Internationale de Ravitaillement resulted from an agreement at a meeting held on August 13, 1914, between delegates representing the French Ministers of Finance, War, and Marine, and representatives of the British Foreign Office, Treasury, Admiralty, War Office, and Board of Trade. The functions of the commission were to coördinate purchases of munitions, military and naval equipment, and food supplies by the two governments, so as to prevent competition in the same markets and consequent inflation of prices. As the war went on, the other governments were invited to appoint delegates so that in July, 1918, the organization included representatives of Belgium, Serbia, Russia, Italy, Roumania, Japan, Portugal, Greece, the United States, and Brazil.

The duties of these delegates were to formulate and present to the British Government 18 the requirements of their own governments for supplies, finance, and tonnage; and to ascertain how they may be met; to advise as to priority of manufacture and

"From the Report of the Committee on Commercial and Industrial Policy After the War.

shipment; to sign and approve contracts; to authorize payments by the British Government for the account of Allied Governments; to inspect materials delivered, etc. The delegates included the representatives of various Allied Governments on joint committees such as the Inter-Allied Wheat Executive, the Inter-Allied Meat and Fats Executive, the Nitrate of Soda Executive, and other inter-allied bodies connected with finance and shipping. In order to unify further the activities of the Allied Powers and eliminate conflicting requirements, a further coördination was achieved in October, 1918, which unified the control of raw materials, manufactured products, shipping, finance, food, and exports and imports. The Inter-Allied Finance Commission, the Inter-Allied Shipping Council, and the Inter-Allied Boards of War Trade, coördinated the economic activities needed to conduct the war.

From time to time plans have been projected for a continuation of an Inter-Allied Economic Commission after the war, or at least during the reconstruction period. In the words of the political editor of the Temps, "More than ever must France remain in close union with her companions in arms. To be efficacious this union must be general. It is not alone the European Allies which must remain hand in hand. The rôle of the United States, which was decisive in the later stages of the war, is no less decisive in preparing for peace." 19

B. Foreign Commerce and National Economics

(i) International Influences in Trade

(a) Pre-war Influences

The very concept of trade assumes international relations. It is opposed to the hyper-nationalism of the "closed state." International commerce is one of the powerful bonds which ties the world together in myriad inter-relations. Because of the organic unity of international commercial relations many regarded a great war as impossible. The many elements of economic life are 10 New York Times, Dec. 2, 1918.

19

so diversified as to compel men in all parts of the world to coöperate. The mineral resources of the world are widely scattered. The climate of no one country is so varied as to embrace all the fauna and flora upon which its population has come to depend for food and clothing. In addition, the peoples of the world differ in their types of mind and aptitudes. Each is distinctive and serves best in a special capacity. Industrial tradition and craft skill are therefore localized. Man is a particularist in production, and a universalist in consumption, was the phrase of the late E. B. Andrews. The trade statistics of the world show the infinite complexity of commercial relations. There probably is no country on the face of the earth which does not directly or through transshipment import from or export to every other country. The needs of the nations are reciprocal. A highly developed country like Germany, for instance, before the war, gathered raw materials from the four corners of the earth, transshipped part of them, and manufactured or consumed the rest of them. The industrial countries depended upon others for much of their raw materials and the immature countries looked to the manufacturing nations for their finished goods.

Among the manufacturing nations themselves the streams of commerce were very broad. Indeed the development of Germany enriched France and England. Commerce was free from boycotts and the other artificial restrictions that are regarded as possible elements in the after-war trade policies. Shipping service was international. England, Germany, France, and Holland carried the bulk of the world's goods, serving each other as well as the nations that had few or no shipping facilities. Investments were international. The rich countries of Europe had poured out their savings practically without regard to national lines. Great Britain and Germany were to be found working side by side in South America as well as in the British Possessions. In truth, so widespread was the international conception in commerce that Germany was able to insinuate herself into the internal life of the other powers, great and small. She manufactured their dyes, their lenses, and their specialty goods. She transported their commodities. She directed their banks. Germany's amazing

progress since 1870 is the most convincing evidence of the prevalence of the international mind in the world of commerce.

(b) War-time Influences Favoring Internationalism

The economic blockade of Germany and her allies was merely the logical extreme of the conception of the "closed state." How thoroughly the various parts of the world were inter-related is strikingly proved by the vigorous efforts that Germany made to have the blockade lifted, first through appeals to international law, then through threats, and finally through resort to force and the employment of the murderous submarine against neutral noncombatants. Existence in economic isolation is impossible for any country. During the war, when trade was limited by the belligerents, the very existence of the population was threatened in some countries. Neighboring states entered into special trade agreements, like that cited above. A new type of commercial treaty involving "compensation" trades had to be devised, so as to supply the countries affected with their minimum requirements for existence. Again, the failure of the much vaunted substitutes bears eloquent testimony to the essential economic interdependence of the nations of the world. On the other hand, the success attending the coöperation of the Allies, in spite of the scarcity of raw material and of foodstuffs, was another war-time proof of the necessity for economic internationalism. Even the after-war programs bear witness to the error in concept of the self-sufficient state. The Allies at the Paris Economic Conference threatened to use the economic boycott against the Central Powers after the war. The decision produced consternation in Germany and aroused considerable thoughtful opposition on the part of economists in both England and France. It was felt that the hundred odd million people in Central Europe could not be shunted out of the world's trade currents without a reaction upon the prosperity of the boycotting powers. Economists in Allied countries insisted that the boycott would be a boomerang. A four-years' blockade has seared into the hearts of Central Europe a sense of the international community of inter

ests. The Allied peoples have learned the same lesson, although less painfully.

It would be useless to deny, however, that the war has promoted the economic independence of many countries. New sources or substitutes were found for many raw materials. New industries were established. The concentration of industry in a few of the older countries was diminished and countries formerly dependent upon them became self-sufficient with respect to particular commodities. Commerce and industry tended to become decentralized during the war.

However, the nationalistic idea in commerce may be carried to an extreme. The Germans, for instance, still think that instead of proving the basic internationalism of commerce the war demonstrated the need for greater economic independence. Indeed, Moritz Bonn, professor at Munich, states that the war showed the necessity for large empires.20 He also asserts that belief in the benefits of international finance is a dangerous delusion and that the war has proved the need for confining investments to the domestic market.21 The same view is expressed by another German writer who shows that the advantages that Germany expected to derive from foreign investments did not materialize under the test of war. Germans had believed that foreign investments would help maintain the rate of exchange and create a reserve in the event of war. He concludes that German investments in English securities or in colonial enterprises should be avoided after the war, and that in future all surplus wealth should be retained for domestic uses.22 Underlying this point of view, however, is the basic assumption that the investing nation contemplates military aggression. The two thoughts are incompatible, for trade is an affirmation of internationalism of which war is the negation. Forty years of international commerce made possible the unparalleled development of Germany. Fifty-two months of war caused her complete collapse.

London Economist, Dec. 22, 1917.

"American Academy of Political and Social Science, Nov., 1916. "Norddeutsche Allgemeine Zeitung, Jan. 19, 1918.