By Roland G. Usher.
Head of Department of History at Washington University; author
of "Pan-Germanism," "The Rise of the American People," &c.
_From The Boston Transcript, Sept. 2, 1914._
The events of the last few days of July, 1914, showed the Americans the
far-reaching effects of a state of war. There are now few who would say,
as used to be so common, that a European war would make no difference to
us. The closing of the New York Stock Exchange, the great shipments of
gold and its consequent scarcity in the United States, the closing of
the New England cotton mills, the cessation of export to Europe and of
transatlantic communication with the Continent were instantaneous
effects of a war 3,000 miles away obvious even to the apathetic and the
heedless. With these we have not here to do; such are already past
history. There is, however, a legitimate field for speculation as to the
probable effects on the United States of the continuation of the state
of war in Europe for months or years. The permanent results of a war
naturally cannot be predicted in advance, but in the light of the
history of the past, certain changes and developments in the United
States appear so probable if the war continues as to reach almost the
realm of certainty.
Needless to say, the European war will not involve the United States in
actual hostilities. It is highly improbable that either our army or our
navy will see service. We are too distant from the seat of war; too
entirely devoid of interests the combatants might seriously injure which
a resort to war could remedy; too completely incapable of aiding or
abetting one or the other in arms to cause them to assail us. Even were
we not as a nation of a peaceable disposition, even had we not a
President blessed with a singularly clear head and able to keep his
temper, we should still stand little chance of going to war. One
eventuality alone might affect us--Japan might attempt some measures of
aggression in the Far East which would interest us as possessors of the
Philippines, but that is practically foreclosed by her official
announcement that she will side with England. The effects of the war
upon the United States will be indirect effects; they will be economic
in character, though far-reaching and significant for every man, woman,
and child in the country.
The economic structure of the United States rests today upon the
assumption of the interdependence of international trade, upon an
international division of labor, where England makes some things,
Germany others, and we still more, all of which are exchanged. In a
sense each country manufactures and produces for the whole world, and in
turn expects the rest of the world to buy its products and to
manufacture and produce things for its consumption. While something of
this sort has always been true in international trade, the process
reached during the nineteenth century an unprecedented development which
actually made countries interdependent, or, if you will, actually
dependent for the necessities of life upon each other's prosperity and
continued activity. Hand in hand went the expansion of the international
credit structure, based upon public confidence in the mutual honesty of
merchants, until finally personal checks have begun to be exchanged
(between the United States and England at least) at par and without
investigation or previous indorsement by the banks on which they were
drawn.
With the outbreak of war a striking and artificial change, a totally
uneconomic and unnatural factor, came to transform the situation and
leave the United States for all practical purposes in contact with only
two of her really large customers. We have no merchant marine and cannot
therefore avail ourselves of our neutral status to trade with the
belligerents. We shall be compelled (for a time at least) to ship in
English bottoms to such ports as English ships can make--which will
practically be limited to England, France, Portugal, Spain, and the
Mediterranean ports. The ordinary commercial roads to Russia through the
Baltic are automatically closed by the location of the German fleet, and
probably England and France, deprived of other outlets for their own
trade, will nearly monopolize the trade with Russia through the
Mediterranean and the Black Sea.
On the other hand, the mobilization of armies and fleets in Europe will
draw millions of men from the field and factories where they have been
accustomed to make what we have usually bought. The war will vastly
diminish and in many cases stop altogether the stream of imports to the
United States. These millions of men in the field and on the sea will
not possess most of the economic wants they had in time of peace and
will become conscious of many which they usually did not feel. The war
will diminish and in many cases entirely stop the stream of ordinary
American exports to Europe. Because of the stoppage of the European
supply of things we have usually bought of them, and the cessation of a
European demand for things we have usually sold to them, the conditions
of the home market, both in regard to what we must buy in it, and to
what we must sell in it, will be vitally changed. When our present
supplies of European importations are exhausted, we shall be obliged to
make for each other and buy from each other the things which we happen
to be no longer able to import or export. A great readjustment of the
economic fabric in the United States will take place if the war lasts
longer than a comparatively short time.
How long a time that must be will depend entirely upon the sharpness of
the break in the economic life of Europe, and the amount of supplies
they have on hand, which, as they will not now need them at home, they
will be anxious to sell in the United States. Indeed, it would not be
surprising if there was for a short time a glut of English and French
manufactured goods in the United States market.
Europe May Depend On Us.
Of late years the commercial relationship between the United States and
Europe has changed very greatly. For centuries we were a debtor
community, buying largely from Europe, possessed only of crude staple
products for export, and scarcely able by a series of expedients and
exchanges to pay for what we bought. Tobacco for many decades, then
cotton, were the only commodities of which much was exported direct to
Europe. Then came, during the European famines of 1846, 1861, and 1862,
an enormous demand for American grain. Yet only during the last few
decades have we been able to export largely manufactured products or
been able to deal with Europe on an equality of terms. We are no longer
a debtor nation; we are no longer dependent upon Europe; the United
States is an integral and essential part of the interdependent
international economic fabric. Indeed, if the war continues ten years,
Europe may be dependent upon us.
In a sense we are not ready to meet the crisis. During the last ten or
fifteen years the exports of foodstuffs have fallen off greatly, and the
supply in this country has actually declined in proportion to
population. There has been also a most marked increase in the exports of
manufactured goods and a decided increase in the importation of raw
materials, including foodstuffs. Now will come an enormous demand from
Europe for the very things of which we have not produced so much and
exported little or nothing--bacon, eggs, butter, beef. The demand will
also be greatly increased for woolen cloth, raw leather, shoes, steel
in all its forms, railroad equipment of all sorts, automobiles and
machinery, and, in particular, coal and gasoline. To supply this demand
old industries will be expanded and new ones created, and a shift of
capital and labor will inevitably take place to the industries for which
a demand becomes clear in Europe, as soon as it seems reasonably certain
that the war will last, beyond the present year.
An American Merchant Marine.
Above all, an American merchant marine is likely to be seen again upon
the seas. There will be German ships in plenty for sale, in all
probability, unless Germany wins an immediate victory on the sea, and
the advantage of an unquestioned neutral status, easily obtained by a
bona-fide purchase, will be so great that American capital will probably
invest largely in freight steamers and ocean liners. It seems entirely
unlikely that England, while she remains mistress of the seas, should
recognize as valid the registration in the United States of vessels
actually owned by belligerents or regard as anything more than
masquerading their appearance under the American flag. England has never
recognized any one's "right" to do anything at sea in time of war which
did not accrue directly to her own benefit. It is scarcely necessary to
say that she will not allow trade with Germany or Austria while she can
prevent it. The only refuge will be the sale of the ship by the foreign
owner to Americans who will trade with England, her allies, and strictly
neutral nations. As always in time of war, privateering and smuggling
will be profitable, and trade with Germany, unless she is immediately
victorious at sea, will offer to the adventurous plenty of risk and the
certainty of huge profits. During the Napoleonic wars the flats and bars
of the German coast along the North Sea offered light vessels a great
opportunity and the pursuing warships great obstacles. A modern
motor-driven light craft will now have an enormous advantage over
destroyers or cruisers. Here, as a century ago, many an American will
find an opportunity to make a fortune.
The preoccupation of Europe with the war and the opening of the Panama
Canal will afford the United States an unrivaled opportunity to develop
trade with Canada, South America, Australia, New Zealand, India, China,
and the Far East in general. We have never bulked large in the eyes of
these countries and there has been much speculation as to the reasons
why the German succeeded so well in South America and why the Englishman
did so much business in China. Whether from sentiment or from a national
habit that prefers English goods, the English colonies have bought more
largely of the mother country than they have of us. But now that the war
has closed the German factories, called German commercial agents home,
and sent German ships racing to neutral harbors; now that the Panama
Canal brings us some thousands of miles nearer to Australia and New
Zealand than they are to London via Suez; now that England will be busy
manufacturing for Europe and will have less to sell her colonies, these
particular parts of the world will probably be compelled to look for
their manufactured goods to the United States. Indeed, if one were not
afraid of being accused of gross exaggeration, he might take heart and
proclaim his conviction that a long and really inclusive European war
would give the United States a practical monopoly of the South American
and Pacific trade, provided always that the United States acquire by
purchase a merchant marine and that the Panama Canal becomes feasible in
January for large ships.